Trent 1000 Package C Update

13 April 2018

TRENT 1000 PACKAGE C UPDATE

At our 2017 Full Year results on 7 March 2018 we outlined our management of certain Trent 1000 engine in-service issues and the estimated costs relating to our implementation of the solutions to address those issues.

As part of our ongoing inspection and testing of those engines we have decided to carry out additional engine inspections to those previously planned. The increased inspection frequency is driven by our further understanding of the durability of the Trent 1000 Package C compressor, a condition that we highlighted earlier this year. These inspections will be supported by service management and flight operations guidance to airlines to be issued by the airworthiness authorities.

This will unfortunately lead to additional disruption for our customers. There are 380 Package C engines currently in-service with airlines. This new regime does not impact Trent 1000 Package B engines or Trent 1000-TEN engines. 

While the compressor technical issue was known at the time of our results, the requirement for more regular inspections will lead to higher than previously guided cash costs being incurred during 2018. We are reprioritising various items of discretionary spend to mitigate these incremental cash costs and our guidance for 2018 FCF remains unchanged at Group FCF for 2018 of around £450m +/- £100m.

Warren East, CEO, Rolls-Royce, said: "Our focus is on supporting our customers and doing all we can to minimise any impact on their operations. We sincerely regret the disruption this will cause to our customers and our team of technical experts and service engineers is working around the clock to ensure we return them to full service as soon as possible. We will be working closely with Boeing and affected airlines to minimise disruption wherever possible."

Further information can be found at www.rolls-royce.com

About Rolls-Royce Holdings plc

1. Rolls-Royce pioneers cutting-edge technologies that deliver the cleanest, safest and most competitive solutions to meet our planet's vital power needs.

2. Rolls-Royce has customers in more than 150 countries, comprising more than 400 airlines and leasing customers, 160 armed forces, 4,000 marine customers including 70 navies, and more than 5,000 power and nuclear customers.

3. Annual underlying revenue was £15 billion in 2017, around half of which came from the provision of aftermarket services. The firm and announced order book stood at £78.5 billion at the end of December 2017.

4. In 2017, Rolls-Royce invested £1.4 billion on research and development. We also support a global network of 31 University Technology Centres, which position Rolls-Royce engineers at the forefront of scientific research.

5. Rolls-Royce employs almost 50,000 people in 50 countries. More than 16,500 of these are engineers.

6. The Group has a strong commitment to apprentice and graduate recruitment and to further developing employee skills. In 2016 we recruited 274 graduates and 327 apprentices through our worldwide training programmes.

For further information, please contact:

Investors:

Jennifer Ramsey +44 20 7227 9087

Ross Hawley +44 20 7227 9282

Media:

Richard Wray +44 20 7227 9163

www.Rolls-Royce.com