A DARK TIME FOR ROLLS ROYCE – AS ACTION BY UNITED TECHNOLOGIES MAY AFFECT 787 AND A380 DELIVERY TIMES

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By TESTCustomwebLP TESTCustomwebLP November 8, 2010 09:57

A DARK TIME FOR ROLLS ROYCE – AS ACTION BY UNITED TECHNOLOGIES MAY AFFECT 787 AND A380 DELIVERY TIMES

Two stories are combining to bring Rolls Royce shares into unknown territory this week … … …

United Technologies’ Pratt & Whitney aircraft engine unit has filed patent-infringement complaints against Rolls-Royce Group, a move that may well affect delivery times of Trent 900 and Trent 1000 engines which in turn will affect delivery schedules for some A380s and 787s.

Pratt & Whitney said it filed a complaint on Friday (5 Nov) at the US International Trade Commission (ITC) in Washington which claims the Trent 900 and Trent 1000 model engines made by Rolls-Royce are infringing a patent for a swept-fan blade. A complaint making similar allegations was filed at the High Court in London at the same time.

A ruling in favour of Pratt & Whitney by the ITC would mean Rolls-Royce would be blocked from shipping engines for the Boeing 787. By the same token the UK lawsuit could interrupt engine deliveries for the Airbus A380 and it is also likely that any ruling will affect the Airbus A350XWB schedule.

“Pratt & Whitney’s case is very strong and we were left with no choice but to take these actions in light of Rolls- Royce’s aggression,” said Katy Padgett, a spokeswoman for Pratt & Whitney. “We regret that these actions are necessary, and we continue to be willing to discuss a mutually acceptable resolution to this dispute.”

The complaint escalates a legal battle that started when Rolls-Royce sued Pratt & Whitney in May, claiming the GP7200 Fan Stage infringed a patent for a design that gives the largest part of a jet engine greater resistance to damage by foreign objects, more stability and lower noise levels. It later added Pratt’s Geared TurboFan engines, as Airbus and Boeing considered getting more efficient engines on the bestselling A320 and 737 planes.

The Trent engine that powers the A380 competes with one built by a venture between General Electric and Pratt, the GP7200. GE is the biggest jet-engine maker, ahead of Rolls-Royce and Pratt & Whitney.

Pratt & Whitney’s move follows a lawsuit in September in a federal court in New Haven, Connecticut, accusing Rolls-Royce of trying to interfere with potential business and unfair business practices. It amended that complaint to add the patent-infringement claim and escalated the case to the ITC. The ITC will rule within 15 months, so for at least the next year there will be uncertainty surrounding Rolls Royce’s future direction.

This news is very good for the Engine Alliance A380 offering which, if there were any orders to come over the next few months, would surely be in the best position to receive orders.

Meanwhile tests have uncovered oil leaks in three Rolls-Royce engines on Qantas’ grounded Airbus A380s, the airline’s CEO said today, following the near disaster of last week.

Engineers conducted eight hours of extensive checks on each engine over the weekend leading to Qantas CEO, Alan Joyce, confirming: “The oil leaks were beyond normal tolerances…So Rolls-Royce and our engineers have looked at what we have gathered as an accepted level and they have passed that threshold.”

As a result of “the engines … not performing to the parameters that you would expect” Joyce said that all of the airline’s A380s will be grounded for at least an additional 72 hours. The three engines have all been removed from aircraft for further tests.

Lufthansa and Singapore Airlines, the other airlines that fly A380s fitted with Rolls-Royce’s Trent 900 engines, also briefly grounded their planes last week but resumed services after completing checks.

Investigators have focused their search on a missing piece of turbine from the Rolls-Royce engine. The Australian Transport Safety Bureau, which is leading an international investigation into the failure on the A380, appealed for help from residents of Indonesia’s Batam island to find the missing turbine disc which they believe is the possible cause of the failure. “The recovery of that disk could be crucial to a full understanding of the nature of the engine failure, and may have implications for the prevention of future similar occurrences,” the bureau said in a statement.
It released a photograph of a jagged and bent piece of turbine disc from the Trent 900 engine and asked that anyone who might have found a similar piece should hand it to police. It said one piece of the shattered engine that had been found on Batam was being sent to the UK for examination by Rolls-Royce engineers, under the supervision of bureau investigators. Extra experts were being sent from Australia to Singapore to examine other debris.

“Qantas will not be considering seeking compensation from Rolls Royce for three failed Airbus engines until its A380s are back in the sky”, said Alan Joyce. “We believe we can work with Rolls and Airbus to fix this issue and that is the basis of our investigation.”The aircraft with the three engines removed are now standing in Sydney (one) and Los Angeles (two).

Qantas shares were down 3.5% just after midday, before closing 2.1% down at $2.80. This fall is likely to be more down to investors accepting that Qantas will act to protect its safety record above all else. In the process Qantas will lose ashes traffic.

Rolls Royce shares are currently standing at 591p from the close on Friday and are expected to fall sharply on the open today.

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By TESTCustomwebLP TESTCustomwebLP November 8, 2010 09:57
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