A380 engine fears push Rolls-Royce shares lower
The cause of the engine failure that led to the emergency landing is not yet known
Rolls-Royce shares have continued to fall, dropping 1.4% by mid-morning, as investors worry about the impact of engine problems on the Airbus A380.
Its shares have now fallen about 10% since one of its engines broke apart on a Qantas flight last Thursday.
On Monday, Qantas said it had found "slight anomalies" on three A380 engines and was keeping its fleet of six A380s grounded for further checks.
Tests have uncovered oil leaks in the engines of three of its grounded A380s.
Continue reading the main storyROLLS-ROYCE GROUP
Last Updated at 08 Nov 2010, 16:01 GMT| price | change | % |
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All of Qantas's six A380 planes have Rolls-Royce engines.
The concern is that the engine failure was a sign of one or more major problems, which could hit Rolls-Royce's reputation and future sales.
Rolls-Royce, which is working with Qantas on the investigation, has seen its market value fall more than £1.5bn since the incident.
However, after falling by as much as 3.4% in early trading on Monday, Rolls' shares clawed back some losses after it announced a £350m services contract from EgyptAir.
The Airbus A380 superjumbo uses one of two engines.
The Rolls-Royce Trent 900 engine has been installed in more than half of the A380s currently in service.
The remainder use an engine manufactured by General Electric and Pratt & Whitney. Their engines have not been implicated in this recent safety scare.
The two businesses are committed to engines for a further 197 planes on order.
If it turns out that the Rolls-Royce engine is not fit for purpose and the engine is withdrawn, Rolls would have to offer a refund for the engines sold to its Airbus A380 customers.
What is more, Rolls Royce would lose the income that would come from servicing these engines - typically over 40 years - which makes up a big chunk of the engine-makers' revenue.
Shares in both Rolls-Royce and EADS, the aerospace giant that owns Airbus, have been falling following last week's emergency landing by the Qantas A380.
On Monday, EADS shares were down 0.5%.
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