Proactive Investors - After Rolls-Royce Holdings PLC (LON:RR.) faced some tough talk about problems with its engines from major airline customer Emirates yesterday was likely to have been part of "commercial negotiation", analysts at Citigroup said.
Emirates boss Tim Clark was quoted as saying the Trent XWB-97 engine for the Airbus A350-1000 is "defective" and that Emirates will not be ordering the aircraft until the engines are fixed, upon which he would order 50 of the aircraft.
"This is clearly not a good headline for Rolls-Royce," Citi analysts said.
They flagged that with Clark having this week ordered 90 of Boeing (NYSE:BA)'s 777X jets, powered by GE engines, "he thinks the planes (and, by inference, the sole engine available) has its attractions, otherwise why add fleet complexity of another aircraft rather than ordering more 777X?"
Furthermore, the analysts noted that the criticised Trent XWB-97 engine is a higher thrust variant of the Trent XWB-84, and "higher thrust invariably means higher temperatures and faster wear on the engines, particularly in hot and sandy climates ... [although] nearby Qatar operates the Trent XWB-97 apparently without major issues".
So it is "not clear why the issue", the analysts added, suggesting they think "price/guarantees have to be involved".