Rolls Royce share price fell 1.5 per cent in early trading after ratings agency Moody’s downgraded the company, citing issues with the Trent 1000 engine and the possibility of “material reputational risks as a result of continued customer disruption”.
The engineering firm has been plagued with an onslaught of setbacks in recent months, including the ongoing issue with the high-pressure turbine blades in the Trent 1000 engines used for Boeing 787-9 aircraft. As a result of this, the company has now asked operators of the engine to carry out more frequent maintenance checks. A number of major airlines who operate Boeing 787s, such as British Airways, Virgin Atlantic and Norwegian Air Shuttle have been forced to ground their aircraft earlier than normal for repairs and inspection because the Trent 1000 engine blades deteriorated faster than expected.
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Moody’s downgraded the company’s debt from Baa1 to Baa2.Although it noted that the company had strong liquidity and a strong business profile, the agency also pointed to high leverage and increasing costs of rectifying the Trent 1000 engine problems.
On Monday, Air New Zealand announced that around 14,000 customers would be affected by cancellations this summer because of ongoing Rolls-Royce engine checks on its Boeing 787-9 aircraft, describing the situation as “unavoidable”.
However, there was good news for the company earlier this week when Emirates signed a deal to buy 50 new Airbus aircraft powered by Trent XWB engines.