Japan's ANA finds problem with Boeing 787 Rolls-Royce engines, cancels some flights

August 25, 2016 5:50 AM EDT

A Boeing 787-9 jet ready for delivery to ANA Holdings Ltd is seen at Boeing's delivery center in Everett, Washington, U.S. August 17, 2016. The jet is the 50th 787 airplane for ANA, the first 787 customer. REUTERS/Alwyn Scott


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TOKYO/LONDON (Reuters) - Japanese carrier ANA Holdings <9202.T> needs to replace damaged compressor blades in the Rolls-Royce (NYSE: RR) engines powering its Boeing (NYSE: BA) 787s, it said on Thursday, forcing it to cancel some Dreamliner flights over the coming weeks.

The carrier said that under certain flying conditions the compressor blades in the engine's interior showed corrosion. It said it will cancel nine domestic 787 flights on Friday, with other cancellations likely in the coming weeks.

ANA's Dreamliners are powered by Rolls-Royce Trent 1000 engines. The Japanese airline is the biggest operator of the Boeing model with some 49 aircraft, or around a tenth of the global fleet. Of the 445 Dreamliners in operation worldwide, 168 use the Rolls-Royce engines, according to Boeing's website.

"We are aware of the situation and are working with Rolls-Royce and ANA to resolve any issues impacting the airplanes in service," a spokesman for Boeing in Tokyo said.

Rolls-Royce Holdings said in an e-mailed statement it was "working closely with ANA to minimize the effect on aircraft service disruption".

It did not say whether the problem had been found in 787 engines on aircraft operated by other airlines, but when asked about any requirement to take additional action a spokesman said the issue was limited to a small proportion of the ANA fleet.

Shares in Rolls-Royce traded down 2.2 percent at 771 pence at 1505 GMT, making the company one of the biggest losers on Britain's bluechip index.

Airlines that order the Dreamliner can choose either the Rolls-Royce engines or General Electric Co's (NYSE: GE) GEnx engines for their aircraft.

ANA said vibrations resulting from the problem with the compressor blades had occurred on a flight from Japan to Malaysia in February and on one to Vietnam in March. A 787 traveling on a domestic route on Aug. 20 had also experienced trouble, it said.

Rolls-Royce is in turnaround mode after a tough 18 months after being hit by a low oil price and lower demand for servicing of some of its older engines. It has a plan to cut costs by 150 million to 200 million pounds by the end of 2017.

In a note, Morgan Stanley analysts pointed out that a previous corrosion issue on the Trent 1000 gearbox in 2012 was quickly resolved and the then chief executive said the financial consequences were not material.

(Reporting by Maki Shiraki and Tim Kelly in TOKYO and Sarah Young in LONDON; Editing by Christopher Cushing and Susan Thomas)



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