Introduction: Cathay Pacific cancels flights over RR engine problem
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
A problem with a Rolls-Royce engine has forced Hong Kong carrier Cathay Pacific to cancel at least 24 return flights.
Eight of Cathay’s nine flights from Hong Kong to Singapore have been cancelled today, along with other services across Asia, as the airline races to inspect its fleet of Airbus A350s, powered by Rolls-Royce engines.
Last night, Cathay said “a number of aircraft will be out of service for several days” while checks are carried out as a “precautionary measure”.
The only Cathay flight left from Hong Kong to Singapore today, at 15:15pm local time, uses a Boeing 777-300 jet.
Three flights to Bangkok, three to Tokyo and one to Taipei have also been scrapped.
Cathay acted after a part failed on one of its A350-1000 widebody planes shortly after take-off from Hong Kong, on a route to Zurich, on Monday. The plane dumped its fuel over the sea before returning safely to Hong Kong, where an engine component failure was identified.
Keith Brown, the Cathay Pacific engineering director, said yesterday:
“Each aircraft is undergoing a rigorous inspection. Upon completion, the aircraft cleared for operation will return to service, while those identified with technical issues will undergo further repair and maintenance work.
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.”
The A350-1000 uses Rolls-Royce’s XWB-97 engine.
The problem is suspected to be deformed or degraded fuel lines, Bloomberg reports.
Deformed or degraded fuel lines are suspected to be the reason Cathay Pacific Airways has canceled multiple Airbus SE A350 flights for fleet-wide precautionary checks, according to two people familiar with the matter https://t.co/XpS1ShkNy9
— Bloomberg (@business) September 3, 2024
Shares in Rolls-Royce fell by 6.5% on Monday, after news of Cathay’s problems emerged.
Other airlines, though, have not grounded their own A350s; data flight tracking service FlightRadar24 shows other major operators of the A350-1000 and A350-900 planes appear to be flying their aircraft normally on Tuesday, Reuters reports.
The agenda
-
8am BST: Switzerland’s Q2 2024 GDP report
-
9.30am BST: ONS data on mergers and acquisitions involving UK companies
-
10.30am BST: South Africa’s Q2 2024 GDP report
-
1pm BST: Brazil’s Q2 2024 GDP report
-
3pm BST: ISM survey of US manufacturing for August
Key events
BMW recalling Mini Cooper SE electric models
Rolls-Royce isn’t the only European manufacturer involved with a technical problem today.
BMW, the German carmaker, is recalling its electric Mini Cooper SE vehicles due to problems in their batteries, which could lead to a fire.
The recall could potentially affect more than 140,000 autos worldwide, a company spokesperson told Reuters last night.
In a statement, BMW epxlained that problems in the battery system can lead to overheating, adding:
“A vehicle fire, even when the vehicle is parked, cannot be ruled out.”
There have been claims that fires are more common in electric cars, and are more damaging when they break out. However, as our EV Mythbusters series explained last November, the evidence suggests there is no reason to think that EVs are more likely to go up in flames….Indeed, the opposite appeared to be true.
Some Hong Kong passengers affected by Cathay Pacific Airways’ flight cancellations have complained about “poor customer service and confusion”, reports the South China Morning Post.
The SCMP says:
Travellers told the Post they were informed of the cancellations at around 9:30pm on Monday, with many panicking to make last-minute travel arrangements.
Some of those who were supposed to travel on the cancelled flights to Singapore managed to rebook seats with the city state’s airline on the same day.
Hairstylist Shum Sai-cheong, who was travelling with six others to attend an expo event in the city state, said he had liaised with Cathay’s customer service until midnight.
“We were supposed to take the 8am flight to Singapore and were getting ready to sleep when we received notice of the cancellation,” he said.
“The email provided no alternatives and we were left waiting on the hotline for over an hour.”
Analysts at Morgan Stanley are optimistic that the problem with Rolls-Royce’s XWB-97 engine is not a repeat of the issues which hit its Trent 1000 and Trent 900 engines.
They told clients:
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 covering multiple parts or systems like we saw with the Trent 1000 (blades, etc). This should allay concerns of a Trent 1000 2.0.
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. Indeed, Cathay has noted that spare parts have been secured and repair work is underway.
In 2018, Rolls-Royce took a £554m charge to cover the cost of inspecting Trent 900 and 1000s, after cracks were discovered in turbine blades.
Reuters has pulled together a handy ‘what you need to know’ piece about the Cathay Pacific engine part failures.
It explains that there are 88 A350-1000 jets in operation worldwide, according to Swiss aviation intelligence provider ch-aviation.
The top six operators are Qatar Airways with 24 planes, British Airways with 18, Cathay Pacific with 18, Virgin Atlantic with 12 and Etihad Airways and Japan Airlines (JAL) with five each.
There are 520 A350-900s in operation worldwide, ch-aviation data shows.
It is not clear whether other airlines are inspecting their engines.
Airbus says:
“We are working closely with Rolls-Royce and Cathay Pacific. At this time it would be inappropriate for us to comment further, pending the ongoing investigation.”
Cathay Pacific’s cancellations in full
Here’s a full list of the flights cancelled by Cathay Pacific so far this week as it scrambes to inspect its fleet of A350s following the problem suffered by flight CX383 from Hong Kong to Zurich.
Monday 2 September
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Hong Kong to Sydney: CX 139
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Sydney to Hong Kong: CX 138
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Hong Kong to Singapore: CX 735 / CX 711
Tuesday 3 September
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Hong Kong to Bangkok: CX 705 / CX 717 / CX 755
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Bangkok to Hong Kong: CX 750 / CX 754 / CX 712
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Bangkok to Singapore: CX 717
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Singapore to Bangkok: CX 712
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Hong Kong to Singapore: CX 659 / CX 691 / CX 759 / CX 739 / CX 735 / CX 711 / CX 715
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Singapore to Hong Kong: CX 690 / CX 734 / CX 716 / CX 692 / CX 710 / CX 658
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Hong Kong to Tokyo (Narita): CX 524 / CX 526 / CX 500
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Tokyo (Narita) to Hong Kong: CX 527 / CX501 / CX 509
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Hong Kong to Osaka(Kansai): CX 596 / CX 502
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Osaka (Kansai) to Hong Kong: CX 595
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Hong Kong to Taipei: CX 464
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Taipei to Hong Kong: CX 469
Wednesday 4 September
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Hong Kong to Tokyo (Narita): CX 524
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Tokyo (Narita) to Hong Kong: CX 509
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Hong Kong to Osaka(Kansai): CX 566
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Osaka (Kansai) to Hong Kong: CX 597 / CX 503
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Hong Kong to Taipei: CX 464 / CX 466 / CX 494
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Taipei to Hong Kong: CX 469 / CX 461 / CX 495
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Hong Kong to Singapore: CX 659
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Singapore to Hong Kong: CX 714 / CX 710 / CX 658 / CX 692
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Hong Kong to Bangkok: CX 705
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Bangkok to Hong Kong: CX 750
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Hong Kong to Beijing: CX 332
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Beijing to Hong Kong: CX 331
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Hong Kong to Shanghai(Pudong): CX 368 / CX 360
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Shanghai (Pudong) to Hong Kong: CX 367 / CX 369
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Hong Kong to Kuala Lumpur: CX 723
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Kuala Lumpur to Hong Kong: CX 722
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Hong Kong to Kaohsiung: CX 432
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Kaohsiung to Hong Kong: CX 431
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Hong Kong to Manila: CX 919
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Manila to Hong Kong: CX 918
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Hong Kong to Seoul (Incheon): CX 416
Thursday 5 September
Deutsche Bank reckons Rolls-Royce’s shares are still worth buying, despite the problems at Cathay Pacific.
It told clients this morning that it has a target price of 555p for Rolls’s shares – they fell to 464p last night, but have now risen to 480p this morning.
Deutsche analyst Christophe Menard says:
Cathay Pacific announced that it was inspecting its Airbus A350 fleet as a precautionary measure after discovering an engine issue on a Rolls-Royce Trent XWB-97 engine on 2 September.
While the news raises some concerns, our preliminary analysis is that the financial liability could be contained. Hence, our positive view of the equity story is unchanged.
Rolls-Royce shares rise
London’s stock market is open…. and shares in Rolls-Royce are recovering some of yesterday’s losses.
Rolls-Royce has jumped by around 3% in early trading, having lost 6.5% on Monday as traders reacted to the news that Cathay Pacific flight CX383, powered by RR’s XWB-97 engines, had a problem.
Cathay to cancel 10 additional regional return flights tomorrow
Looking ahead to tomorrow (4 September), Cathay Pacific says it expect to cancel “10 additional regional return flights” on top of what’s already been announced. Long-haul services should not be affected, though.
For the remaining cancellations up to Saturday (7 September), further details will be provided tomorrow.
Cathay Pacific finds 15 A350s need engine parts replaced
We have fresh news from Cathay Pacific.
Cathay says the maintenance activity on its A350 fleet is “progressing well”, and that its engineers have thoroughly inspected the fleet.
It has found 15 aircraft with components that needed to be replaced.
Three of the planes have already been repaired, and they are all expected to resume operations by Saturday.
Rolls-Royce adds that as well as providing support and guidance to Cathay Pacific, it will keep other airlines that operate Trent XWB-97 engines “fully informed of any relevant developments as appropriate”.
Rolls-Royce has confirmed that the Cathay Pacific flight that encountered problems yesterday was powered by one of its Trent XWB-97 engines.
It says:
Rolls-Royce also notes that an investigation has been launched by the relevant authorities in Hong Kong under ICAO Annex 13, which restricts Rolls-Royce from commenting on the investigation.
Rolls adds that it is “committed to working closely” with the airline, aircraft manufacturer and the relevant authorities to support their efforts.
Rolls also notes that if any components need replacing, spare parts have been secured and the replacement can be completed “whilst the engine is on-wing”.
Other airlines who use A350-1000 jets are awaiting more information about the problem.
Reuters reports:
Tokyo-based Japan Airlines (JAL) , which has five A350-1000s that are all less than a year old, said it had asked Rolls-Royce for more information and had not stopped A350 flights in the meantime.
“If the engine manufacturer takes any further action, we will respond accordingly,” a JAL spokesperson said.
Introduction: Cathay Pacific cancels flights over RR engine problem
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
A problem with a Rolls-Royce engine has forced Hong Kong carrier Cathay Pacific to cancel at least 24 return flights.
Eight of Cathay’s nine flights from Hong Kong to Singapore have been cancelled today, along with other services across Asia, as the airline races to inspect its fleet of Airbus A350s, powered by Rolls-Royce engines.
Last night, Cathay said “a number of aircraft will be out of service for several days” while checks are carried out as a “precautionary measure”.
The only Cathay flight left from Hong Kong to Singapore today, at 15:15pm local time, uses a Boeing 777-300 jet.
Three flights to Bangkok, three to Tokyo and one to Taipei have also been scrapped.
Cathay acted after a part failed on one of its A350-1000 widebody planes shortly after take-off from Hong Kong, on a route to Zurich, on Monday. The plane dumped its fuel over the sea before returning safely to Hong Kong, where an engine component failure was identified.
Keith Brown, the Cathay Pacific engineering director, said yesterday:
“Each aircraft is undergoing a rigorous inspection. Upon completion, the aircraft cleared for operation will return to service, while those identified with technical issues will undergo further repair and maintenance work.
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.”
The A350-1000 uses Rolls-Royce’s XWB-97 engine.
The problem is suspected to be deformed or degraded fuel lines, Bloomberg reports.
Deformed or degraded fuel lines are suspected to be the reason Cathay Pacific Airways has canceled multiple Airbus SE A350 flights for fleet-wide precautionary checks, according to two people familiar with the matter https://t.co/XpS1ShkNy9
— Bloomberg (@business) September 3, 2024
Shares in Rolls-Royce fell by 6.5% on Monday, after news of Cathay’s problems emerged.
Other airlines, though, have not grounded their own A350s; data flight tracking service FlightRadar24 shows other major operators of the A350-1000 and A350-900 planes appear to be flying their aircraft normally on Tuesday, Reuters reports.
The agenda
-
8am BST: Switzerland’s Q2 2024 GDP report
-
9.30am BST: ONS data on mergers and acquisitions involving UK companies
-
10.30am BST: South Africa’s Q2 2024 GDP report
-
1pm BST: Brazil’s Q2 2024 GDP report
-
3pm BST: ISM survey of US manufacturing for August
