Rolls-Royce shares opened higher Tuesday, making up some of the previous session’s losses after Cathay Pacific cancelled several flights upon discovering technical issues in aircraft utilizing the British manufacturer’s Trent XWB-97 engines.
Rolls-Royce shares were 4.6% higher at 8:46 a.m. London time Tuesday, after falling 6.5% on Monday.
Cathay Pacific on Tuesday announced it had identified an engine component failure in 15 of its Airbus A350 aircraft — a long-range, wide-body that uses Rolls-Royce engines. The issue was found following an engine component failure on a Zurich-bound flight operated by the carrier from its base in Hong Kong on Sept. 2. The plane did not complete its journey and returned to Hong Kong.
The airline said three aircraft had already been successfully repaired, with the remaining aircraft expected to resume operations by Sept. 7.
The issue led to the cancellation of nearly 40 flights on Monday. Long-haul flights are not expected to be affected going forward and customers will be offered alternative routes, Cathay Pacific said.
Details on cancellations up to Sept. 7 will be released by 2 p.m. local time Wednesday, the company added.
Rolls-Royce on Tuesday confirmed its Trent XWB-97 was used in the aircraft. Investors are sensitive to such problems given the engine issues at Pratt & Whitney which have caused significant delays to Airbus deliveries of some aircraft; and the long-running series of manufacturing problems at the U.S.’s Boeing.
Rolls-Royce said that Hong Kong authorities had launched an investigation that restricted the company’s ability to comment, but noted that it was “committed to working closely with the airline, aircraft manufacturer and the relevant authorities to support their efforts.”
It added it would keep other airlines that operate Trent XWB-97 engines “fully informed of any relevant developments as appropriate.”
“While the news raises some concerns, our preliminary analysis is that the financial liability could be contained. Hence, our positive view of the equity story is unchanged,” Deutsche Bank analysts said Tuesday.
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