Rolls-Royce Finds New Problem With Trent 1000 Engine -- Update

(Updates throughout)

By Robert Wall and Carlo Martuscelli

Rolls-Royce Holdings PLC (RR.LN) said Monday that it has identified a new problem with its Trent 1000 engines used on some Boeing Co. (BA) aircraft.

The latest setback will further increase costs Rolls-Royce is incurring to check and repair engines used to power some of Boeing's 787 Dreamliners, the U.K. aircraft-engine maker said. Rolls-Royce said it would conduct inspections of 166 Trent 1000 Package B engines with agreement from Boeing and relevant regulatory authorities.

In April, Rolls-Royce said it would conduct extra checks on a newer version of the Trent 1000 engine, called Package C. Airlines have had to ground planes and rent alternative aircraft because of inspections Rolls-Royce had to carry out. Regulators have imposed limits on some Trent 1000-powered planes flying over water.

Rolls-Royce had previously estimated it would be hit by 340 million pounds ($455.7 million) in cash costs from additional inspections and fixes to the Dreamliner engines and others powering Airbus SE (AIR.FR) A380 superjumbos this year. Rolls-Royce has said since April that the sum would be higher and the total could now rise further, though the company hasn't yet revised the forecast.

Rolls-Royce hopes to introduce a fix to the Package C engines starting late this year. The company said it doesn't know for certain what fix may be required for the new problem or when it might be ready. Rolls-Royce previously said it could take until around 2021 to get all Dreamliner and A380 engines fixed.

Despite the additional costs, the company backed its 2018 guidance for free cash flow of about GBP450 million, plus-or-minus GBP100 million.

At 1205 GMT, shares of Rolls-Royce were down 11 pence, or 1.3%, to 824.40 pence.

Write to Robert Wall at robert.wall@wsj.com and Carlo Martuscelli at carlo.martuscelli@dowjones.com

(END) Dow Jones Newswires

June 11, 2018 08:24 ET (12:24 GMT)

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