When lack of information fans the flames of a drama

When a Qantas Airways Airbus A380 airliner experienced a partial power loss in one of its Rolls-Royce Trent 900 engines during a flight on February 15 this year, the world’s media was swift to report this relatively minor issue.

A second, similar incident happened the following week and the amount of coverage again increased, damaging the British company’s share price and causing additional anxiety to the travelling public.

As a general rule, in-flight engine anomalies and even shut-downs do not merit air time or column inches, other than in the specialist press. But last year’s grounding of the A380, following the much-publicised uncontained in-flight explosion of one of its R-R Trent 900s, was a game-changing incident, meaning that the slightest problem with airframe or engines on the ‘super-jumbo’ merited cries of ‘hold the front page’.

This was the case even though the February ‘incidents’ only concerned one of each aircraft’s four engines being reduced to ‘flight idle’ following indications of excessive oil usage within the high pressure/intermediate pressure (HP/IP) structure.

So why was this level of media interest maintained over such a long period? Partly because the A380 is the world’s largest airliner and entered service relatively recently; partly because the public has become ultra-sensitive to bad news and any hint of corporate culpability; and partly because the news media – and also the internet-driven social media – is nowadays so incredibly efficient at transmitting information around the globe in the blink of an eye.

But there may also be a fourth cause – and that’s a lack of information, especially from Rolls-Royce, about the incident and the engine manufacturer’s on-going investigations.

When Qantas Airbus A380 (named Spirit of Australia and registered VH-OQA) took off from Singapore en route to Sydney, Australia on November 4 2010, little did anyone, least of all those working in the corporate communications and public relations departments of Qantas, Airbus and Rolls-Royce, think that they were shortly to become embroiled in one of the most far-reaching aviation stories of the year.

While climbing out over the Indonesian island of Batam, a mere 20kms from Singapore, the super-jumbo’s number 2 engine (nearest the fuselage on the port wing) experienced a major failure and subsequent explosion that resulted in large pieces of the rear portion of the engine and its associated cowling, or nacelle, falling into farmland.

Fortunately, the flight deck crew quickly decided that they had a major problem and returned to Singapore, where the airliner made a safe emergency landing with, they initially thought, nothing more serious than an engine failure and a burst tyre.

That’s until Qantas and airport emergency crews discovered that there was considerable damage to the airliner’s port wing from what amounted to shrapnel being projected upwards when the rear end of the R-R Trent 900 detonated.

There was considerable collateral damage, both to the internal structure and ancillary hydraulics, proving just what a robust wing Airbus designed for its super-jumbo. The aircraft had been carrying 433 passengers and 26 flight deck and cabin crew and thankfully – providentially even – there were no injuries.

Following the incident, Qantas CEO Alan Joyce announced that all the airline’s A380 flights were suspended “until we are completely confident that all Qantas safety standards are met”. At the time, of course, nobody realised the enormity of the situation. And they certainly didn’t know that the grounding would last for many weeks rather than a few days or that, at the time of writing, the airframe involved wasn’t scheduled to re-enter service until well into 2011 after extensive repairs.

All major commercial companies around the globe should have ‘crisis management’ plans in their operation manuals.

In the summer of 2000, when an Air France-operated Concorde supersonic airliner crashed shortly after taking off from Paris Charles de Gaulle Airport, killing all the passengers and crew in a fiery disaster that was captured on amateur video cameras, the world’s aviation consumers absorbed the story in minute detail thanks to journalists reporting the incident and then subsequently updating the reports with the latest information. 

The corporate communications departments of Air France, Rolls-Royce and EADS, which had titular responsibility for the joint British/French airframe, swung into action.

The cause was proved to be a tyre failure probably following damage caused by a piece of metal on the runway. A totally freak accident.

But the Qantas/Airbus/Rolls-Royce incident late last year was different. This is at least partly because the British company chose not to communicate in the same way as it had a decade earlier, incidentally implementing a communications strategy that won it many plaudits – and awards – internationally.

Howard Wheeldon is the London-based senior strategist at US company BGC Partners, a leading global intermediary to the wholesale financial markets. He published his first commentary on the super-jumbo incident on the morning that it happened.

He said: “Ahead of an investigation that will include specialist engineers from Rolls-Royce and is likely to take many days, we should take care not to let speculation of what might have caused the incident suggest the possibility of a serious design problem in the engine. “Clearly, while there is some justification for concern, particularly for the engine maker, we do not believe that the event will cause damage to prospects for further A380 sales. However, we suspect that, given the fact that Rolls-Royce has recently suffered a separate well publicised incident on a test Boeing 787 engine (the Trent 1000 version), it is likely that sentiment will remain subdued on the shares until investors have sight of an initial report on the incident cause.”

A month after November’s Singapore incident, Wheeldon was quoting the Australian Air Transport Safety Board (ATSB) that ‘a misaligned oil pipe counter-boring that could lead to fatigue cracking, oil leakage and potential engine failure from an oil fire’ was the most likely reason for the Trent 900 failure.

Wheeldon continued: “This statement from ATSB is, in my view, deserving of a full response from Rolls-Royce to its shareholders to put their minds at ease. Will that happen? One seriously doubts that it will.

“Nevertheless, speaking in New York yesterday, the well-respected chief financial officer of Rolls-Royce was reported as saying that the process to fix the Trent 900 involves replacing ‘a small component inside the engine that is not costly [but] will take a year to have all the necessary components in place’.

“We assume that this latter remark refers to existing, as opposed to the replacement, new part. Such reported comments although very welcome are, I am afraid, hardly that reassuring to investors, particularly when they hear on virtually the same day that the largest of the three customer airlines involved has also turned up the heat a little further over the past 24 hours by formally readying itself with the Australian court system. This just in case there should there be no agreement with Rolls-Royce over cost and compensation for the huge damage caused.”

A week later, in mid-November, Wheeldon was praising Rolls-Royce for publishing some details of the incident  – but remember this was six weeks after the initial forced landing in Singapore and many commentators and journalists suspected that the engine OEM knew far more than it was admitting to.

Said Wheeldon: “While Rolls-Royce chose not to name the specific component responsible for the Qantas A380 Trent 900 engine oil fire that, in turn, led to release of intermediate pressure turbine disc causing significant damage to the plane, there is sufficient information provided by the company today to calm the jittery market and also the nerves of airlines flying Trent 900 powered aircraft.

“In my view, the Trent 900 update statement that accompanied a trading update provided sufficient detail of a plan for the on-going process of rectification across the Trent 900 customer base. In the meantime, further inspection of in-service aircraft that use the Trent 900 engine (comprising around 21 aircraft) will continue.”

By the first half of January this year, Wheeldon was welcoming the news that Rolls-Royce had won a massive order from British Airways to power the 12 Airbus A380s and no less than 24 Boeing 787 aircraft that had been on order for more two years. He said: “This should in reality have surprised only a very few. For a start Rolls-Royce has long been the traditional engine supplier of choice for newly acquired British Airways aircraft for which there was a choice of power plant.”

He continued: “Given the recent problem that occurred with a Qantas A380 Trent 900 powered aircraft…there is certainly reason enough for any airline to question whether there might just be a deeper and maybe longer-term problem with the engine.

“However, in our view by now most, if not all, Trent 900 and 1000 users and buyers will have been fully reassured that from a design and rectification point of view the specific problem that caused the Qantas incident has now been sufficiently resolved.

“While Rolls-Royce still has a little explaining to do it must get on with the job of building Trent plus the many other engines that the company has on order and also learn from the bad experience it suffered late last year. That specific learning curve should in future include how the company may better handle and serve fraught airline customers and very worried shareholders.” 

In the event, Rolls-Royce took a hit of £56m due to safety issues with the Trent 900 engine.

The fall-out also impacted the group’s annual net profit, which slumped 73 per cent, to £480m. Rolls-Royce was largely hit in 2010 by exceptional accounting charges, it added in an earnings statement.

Rolls-Royce said the 2010 profit figure compared with income after tax of £1.799bn in 2009 and added that the Trent 900 problem may result in “a modest level of additional costs” for the company in 2011.

In its earnings statement, R-R added: “Each time a serious incident happens, Rolls-Royce and the aviation industry learn lessons. These are embedded in the rigorous certification requirements, safety procedures and standards of regulation which make flying an extraordinarily safe form of transport.”

It could also have said that it would try to do better, in communication terms, in the future but then it may feel that it did all that it could this time, although this is not a view shared by many in the industry.