Rolls-Royce offers airlines credits for 787 groundings

Rolls-Royce plans to offer airlines maintenance credits, limiting direct compensation for grounding Boeing 787 planes in a bid to minimise the impact of unexpected wear issues on cash flow, according to people familiar with the matter. Under the offer, airlines would benefit from reduced engine-overhaul fees, as well as credits for future orders, after the problems with Rolls’s Trent 1000 turbines led to unscheduled shop visits, according to the people, who asked not to be named as the proposal is confidential. That would help Rolls meet a GBP450m cash-flow target that’s under pressure from the extra costs, pushing those outlays out to later years. CEO Warren East has already cut back on travel expenses, IT upgrades and spending on new programmes in an effort to meet the cash goal. While the offer of maintenance credits would help Rolls stay on target, the move risks eating into a critical source of revenue. Like other engine makers, Rolls sells its power plants at a loss and makes most of its money from long-term repair contracts.<br/>