Rolls-Royce Offers Airlines Credits for 787 Groundings
- U.K. manufacturer aims to limit payout over engine-wear issues
- Move would bolster cash flow but eat into repair revenue
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Engine maker Rolls-Royce Holdings Plc plans to offer airlines maintenance credits, limiting direct compensation for grounding Boeing Co. 787 planes in a bid to minimize 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 450 million-pound ($595 million) cash-flow target that’s under pressure from the extra costs, pushing those outlays out to later years.