Qantas receives £62 million in payouts from Rolls-Royce

Posted on 24 Jun 2011 by The Manufacturer

After the mid-air explosion of one of the engines shortly after take-off in Singapore in November last year, an investigation has ruled that Rolls-Royce is liable to pay compensation.

The incident involved a Rolls-Royce Trent 900 engine, powering a Qantas A320 Airbus aircraft. No one was injured, and the plane landed safely with 466 passengers and crew onboard. The incident led to safety concerns about the Rolls-Royce engine and highlighted Qantas’s safety record, temporarily forced its entire fleet of A380s aircraft to be grounded.

After an investigation conducted by the Australian Transport Safety Bureau (ATSB), the cause of the incident was found to be a manufacturing defect in an oil pipe, which led to a leak and caused a fire and subsequently an explosion in one of the engines.

Qantas boss Alan Joyce said in a statement on Wednesday June 23: “Considering the challenges facing the aviation industry, this is a very good result – the Qantas Group’s best since the global financial crisis.”

However, Joyce said that Qantas International is forecast to generate a loss before interest and tax of approximately AU$200m, on invested capital of more than AU$5bn, with a worse result expected next year.

“Qantas International is the group’s weakest business – it has achieved required returns only three times in the past 15 years. Clearly the situation is not sustainable,” he admitted. “However, we are developing a long-term strategy aimed at restoring competitiveness and profitability.”

The announcement came as part of the airline’s disclosure of a forecast profit before tax of AU$500m-AU$550m for the year ending June 30th. Qantas reported a profit before tax of AU$417m for the half-year to December 31st, 2010.

George Archer