Rolls-Royce, the British manufacturer of aircraft engines is setting aside another 1.4 billion pounds this year due to problems with its Trent 1000 engines. This provision is at the expense of the operating profit for the entire year.
Problems with the aircraft engines in question, which were designed for the Boeing 787 Dreamliner, have been noticed in 2016. Due to a design flaw, cracks could occur in certain turbine components. Rolls-Royce reports in its third-quarter trading update that progress is being made in overcoming design problems with that engine. Only one major shortcoming should be corrected.
The total costs involved with the offending aircraft engine are expected to be 2.4 billion pounds, Rolls-Royce now states. That is 400 million pounds more than previously estimated. Rolls-Royce expects the operating profit and free cash flow to be on the low side of a previously issued bandwidth.