Posts Tagged ‘Pratt & Whitney’

Rolls Royce engine failure will eat up $80 million of Qantas profits

February 17, 2011

Qantas half-year profits have already been hit to the tune of $55 million by the failure of the Rolls Royce Trent 900 and the subsequent grounding of their A380 aircraft in November last year. They also stated that there would be a charge of $ 25 million for the second half-year which gives a total cost to Qantas – for this financial year – of at least $ 80 million.

BBC News:

Qantas Airways said its first half net profits had risen four-fold, but it added that last year’s explosion in one of its Rolls-Royce engines had wiped off $55m (£34.4m). The breakdown led to the grounding of its A380 aircraft last year.

The Australian airline predicted 2011 full year profits would be much higher than last year. But it warned that these would be held back by high fuel prices and the recent floods in Queensland.

Qantas said there would be another $25m charge in the second-half results from the A380 problems.

Rolls Royce has already announced  a hit on profits for direct costs of £56 million (about $89 million) for the engine explosion and related events for the year till December 2010. No doubt the losses suffered by Qantas will be part of their compensation claim against the engine maker.

With compensation claims due also from Airbus (EADS), Singapore Airlines and Lufthansa and with the additional costs spilling over into 2011, the total cost of the engine mishap will likely exceed my estimate of  $300 million.

Estimated costs for Rolls Royce:

  • Direct costs $130 million
  • Indirect (servicing) costs thru 2011 – $50 million
  • Qantas claim – $70 million
  • Airbus claims – $50 million
  • Singapore Airline claims – $25 million
  • Lufthansa claims – $10 million

What impact the loss of potential sales could have is anybody’s guess – but it would be interesting to see if Pratt & Whitney shows a better than expected order intake.

Internecine litigation: Pratt & Whitney counter-sue Rolls Royce

November 5, 2010

Bloomberg reports:

United Technologies Corp.’s Pratt & Whitney jet-engine unit filed patent-infringement complaints against Rolls-Royce Group Plc, a counterpunch in a dispute that may affect delivery of Boeing Co.’s Dreamliner airplanes.

Pratt & Whitney said it filed a complaint today at the U.S. International Trade Commission in Washington that claims the Trent 900 and Trent 1000 model engines made by London-based Rolls-Royce are infringing a patent for a swept-fan blade. A complaint making similar allegations was filed at the U.K. High Court in London, according to the company.

That the timing of the filing is unconnected and entirely coincidental with the current technical issues faced by Rolls Royce on their Trent 900 and 1000 engines is possible but unlikely. I am sure Pratt & Whitney’s lawyers are perfectly aware of the advantages of hitting an opponent when he is down.

 

File:Great Game cartoon from 1878.jpg

The Great Game: wikimedia

 

Bloomberg continues:

A ruling in favor of Pratt & Whitney by the ITC would mean Rolls-Royce would be blocked from shipping engines for Boeing’s 787 Dreamliner, now in the final stages of flight testing. The U.K. lawsuit may limit shipments for the Airbus SAS A380, now in use by international carriers including Qantas Airways Ltd., and the Airbus A350XWB model powered solely by another version of the Trent engine.

“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 East Hartford, Connecticut-based 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 complaints escalate 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 consider getting more efficient engines on the bestselling A320 and 737 planes.

Patent infringements must no doubt be fought but an internecine battle of this kind among the few engine manufacturers left may lead to some immediate competitive advantages to one or the other, but in the long-term could damage the entire industry to the ultimate detriment of the the consumers. The dispute has the potential of delaying engines to a variety of aircraft and to a number of airlines.


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