Boeing Deploys Executive to Rolls-Royce as 787 Engine Woes Mount

(Bloomberg) -- Boeing Co. has dispatched a prominent executive to help Rolls-Royce Holdings Plc work through escalating engine problems that have grounded dozens of 787 Dreamliners.

Keith Leverkuhn is serving as Boeing’s eyes and ears at Rolls factories in Singapore and Derby, England, where the Trent 1000 engine is manufactured and being repaired. Leverkuhn, an engineer with expertise in propulsion, is best-known for steering Boeing’s 737 Max through development to its commercial debut a year ago, months ahead of schedule.

Leverkuhn’s special assignment to Rolls signals the importance Boeing is placing on containing the disruption to its marquee jetliner -- and placating airline customers as the crucial summer travel season approaches. About 34 Dreamliners are parked and awaiting repaired engines, and the number is at risk of rising in the coming months, said people familiar with the matter, who asked not to be identified because the details are private.

“We’re managing our assets both on the production line and in field support to try and minimize impact to our global airline customers,” Boeing Chief Executive Officer Dennis Muilenburg said on the sidelines of the manufacturer’s April 30 annual meeting. “This is very important to us. While the new engines going into the production system are not affected, engines in the installed fleet around the world -- they need our attention.”

It’s not unusual for aerospace manufacturers to deploy teams of engineers or mechanics to help struggling suppliers to troubleshoot problems. Less common is Boeing Commercial Airplanes Chief Kevin McAllister’s decision to divert a vice president like Leverkuhn, 57, from an assignment to shepherd the upgraded version of the 737, the company’s biggest source of profit.

‘Partnership Working’

“We said we would work as closely as possible with Boeing and our airline customers, and this is a great example of that partnership working,” London-based Rolls said in an email.

Durability problems on engines that power about a quarter of the global 787 fleet first emerged in 2016, and intensified in December when Air New Zealand Dreamliners suffered in-flight turbine damage on successive days. The problems center on potential cracking of the Trent’s intermediate pressure compressor blades, and it could take Rolls four years to retrofit the 383 affected engines with redesigned components.

The number of parked planes mushroomed after U.S. regulators in April ordered stepped-up inspections of the engine variant, known as the Trent 1000 Package C.

Dreamliner operators that rely on the power plant for so-called ETOPS routes, typically over ocean routes with few diversionary airports, are now required to check for signs of cracking or unusual wear after every 80 flights. That means taking the planes out of service on a near-monthly basis -- far more onerous than the previous standard required by regulators of checks every 200 flights.

Blade Repairs

About 30 percent of inspected engines have been removed from the wing for repairs, the people familiar with the matter said. The failure rate could worsen as Dreamliners that have been re-routed to non-ETOPS flights come in for inspection.

“Now, if the blade fails the inspection, then the engines come off wing, go into the shop,” Aengus Kelly, CEO of AerCap Holdings NV, the world’s largest aircraft lessor, told investors earlier this month. “The problem at the moment is that there are not enough spare engines.”

That shortage is “what is driving most of the airplanes that are on the ground at the moment. A number of them are our airplanes,” Kelly added.

The bottlenecks are compounded by Rolls’s business model, which emphasizes handling engine maintenance in-house or through a limited number of vendors -- unlike the global repair networks favored by competitors such as General Electric Co.

‘Stressed Aftermarket’

“It’s going to stress what is already a very stressed aftermarket supply chain,” said Ken Herbert, an analyst with Canaccord Genuity.

For Boeing, the main risk is damaging a reputation for efficiency that the 787 has garnered since its initial stumbles that delayed the plane’s 2011 debut by three years, Herbert said in an interview. So far, the planemaker seems confident that Rolls’s engine woes won’t disrupt Boeing’s plans to speed output of the wide-body to a record 14-jet monthly pace in mid-2019, he said.

About 70 percent of Dreamliners due to be delivered through early 2019 will sport a GE engine that’s not affected by the cracking issues, easing the pressure on Rolls, said Uresh Sheth, a blogger whose posts on Dreamliner production are closely followed by Wall Street.

While Trent-powered 787s are rolling off Boeing’s final assembly lines without engines -- but with weights dangling off their engine pylons to ensure balance -- there’s been little disruption to production, Sheth said. Seven “gliders” are parked outside its factories, he said in an interview, using the industry nickname for assembled aircraft awaiting engines.

‘Significant Delays’

“Safety remains our top priority as we work through ongoing inspections with Rolls-Royce Trent 1000 Package C engines,” Paul Bergman, a Boeing spokesman, said in an email. “Teams are engaged with Rolls-Royce, and deployed worldwide with customers to mitigate service disruption.”

Latam Airlines Group has been working with Boeing and Rolls as it rushes to limit the damage since seven of its 24 Dreamliners are out of service. The Santiago, Chile-based carrier had ordered the carbon-fiber aircraft to serve as its workhorses on long-range flights, particularly across the Pacific to Australia and New Zealand.

Facing “significant delays in processing times,” Latam has taken several steps to maintain its flight schedule, including leasing five aircraft and reassigning jetliners in its existing fleet to new routes, a spokesman for the company said.

To contact the reporters on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net;Benjamin Katz in London at bkatz38@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Cecile Daurat

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