Rolls-Royce shares top the FTSE 100 despite Cathay Pacific engine issues
Rolls-Royce shares topped the FTSE 100 on Tuesday morning after Cathay Pacific announced it would resume full flights by the weekend.
Hong Kong’s flagship carrier was forced to ground fleets for inspection after a “first of its type” component fault in its Rolls-Royce supplied engines caused a Zurich-bound flight to turn back. At least 34 round-trip flights have been cancelled amid “precautionary” inspections of its A350 aircraft fleet.
However, the airline said three of its planes had already been through successful repairs and all of the aircraft would be in the air by the weekend.
Shares in Rolls-Royce were up 3.14 per cent by mid-morning, rising to the top of London’s premier index, after falling 6.5 per cent on Monday.
“Each aircraft is undergoing a rigorous inspection,” Keith Brown, Cathay’s engineering director, said.
“Upon completion, the aircraft cleared for operation will return to service, while those identified with technical issues will undergo further repair and maintenance work.”
He added: “Meanwhile, we are liaising with the Hong Kong civil aviation department and the aircraft and engine manufacturers. We sincerely apologise for the inconvenience caused and appreciate our customers’ patience and understanding.”
Rolls-Royce suffered a £2.7bn writedown in its stock market value on Monday as investors fretted over the news.
However, analysts at Morgan Stanley are upbeat about the current situation. “The issue appears to be isolated to the engine fuel nozzle, according to a person familiar with the matter contacted by Reuters, rather than a more widespread issue,” analysts wrote in a note.
“Cathay is only planning for the grounded aircraft to remain out of service for ‘several days’, suggesting the issue requires a fairly minor and quick fix, and therefore does not call into question the engine’s design or architecture like we saw with the Trent 1000,” they added.
Generally, Rolls-Royce has performed incredibly well over the last two years after the company brought in Turkish businessman Tufan Erginbilgic to lead a turnaround.