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11-11-2010, 06:24 PM
(This post was last modified: 23-10-2013, 03:25 PM by CityFarmer.)
Published November 11, 2010
Rough day at the office for Singapore Airlines
SIA grounds 3 planes after engine oil leaks; SIA Cargo fined for price-fixing in Europe
By VEN SREENIVASAN
(SINGAPORE) Despite reporting sterling second- quarter results on Tuesday, Singapore Airlines has run into stormy weather.
Days after saying the engines on its 11 Airbus A380 aircraft were safe - and different from those used by Qantas, which has grounded its fleet - SIA yesterday grounded three of its giant planes after oil leaks were found in their engine turbines.
Separately, it was announced yesterday that SIA Cargo has been slapped with a huge fine by the European Union for price-fixing with 10 other airlines.
But it is the engine issue that is causing the most heartburn. SIA said a few days ago that the Rolls-Royce Trent 900 power plants on its A380s are different from those operated by Qantas. Specifically, SIA's engines are tuned to provide 70,000 pounds of thrust, while the Qantas engines provide 72,000 pounds - a factor that could have caused oil leaks and an engine explosion on a Qantas A380 over Batam last week.
Slightly different they may be, but it now appears that at least some of SIA's engines have similar problems.
'Based on further analysis of inspection findings as the investigation into last week's incident involving another operator's Airbus A380 is progressing, Singapore Airlines will be carrying out precautionary engine changes on three A380s,' SIA spokesman Nicholas Ionides said in a statement.
Engines on the three planes are being changed on the recommendation of Rolls-Royce, as the British maker tries to find out the cause of the oil leaks, Mr Ionides added.
The affected aircraft were on their way back to Singapore from Melbourne, London and Sydney yesterday. Rolls-Royce will carry out detailed inspections and replace the engines here.
SIA said yesterday the eight other A380s in its fleet are unaffected - for now. 'Any further checks that may be recommended by the manufacturers will, of course, be done. In the meantime, we continue with our regular routine checks,' Mr Ionides said.
Meanwhile, all six A380s operated by Qantas remain grounded pending detailed inspections. And it remains to be seen whether Lufthansa - the only other A380 user with similar Trent 900 engines - will ground all or some of them.
Asked yesterday how the latest problems cropped up just days after declaring all was well with the engines, CEO Chew Choon Seng insisted that the previous checks had been conducted in full compliance with Rolls-Royce's requirements. He said SIA could not assure that there would be no new A380 engine issues after this.
'This is an ongoing process. But I am assured at the highest level that Rolls-Royce is doing all it takes to reach that point (where there are no more new issues).'
Mr Chew compared the grounding of the planes to a recall of cars by manufacturers.
'Just because a car is recalled doesn't mean it cannot be used,' he said, adding that the level of technical and regulatory oversight for aircraft safety was much higher. 'We won't fly planes unless they are absolutely airworthy.'
He added that under the 'power-by-the-hour' total- care package with Roll-Royce, the engine maintenance and replacement - and costs - would be the responsibility of the British engine maker.
SIA expects the three affected planes to be back in service within the next two days.
In a separate development, it was announced yesterday that SIA Cargo has been fined 74.8 million euros (S$133.5 million) by the European Union for collusive price-fixing. Another 10 airlines were also fined - some more, some less - for the same offence.
The European Commission said Air France-KLM, British Airways, Cathay Pacific, Qantas, Air Canada, Japan Airlines, SIA and others coordinated surcharges for fuel and security without discounts between late 1999 and early 2006.
In all, 11 airlines have been fined a total of almost 800 million euros.
SIA said yesterday it was disappointed with the decision and could appeal. 'Singapore Airlines Cargo will study the grounds of the decision carefully when details become available in full,' it said.
'Singapore Airlines Cargo strongly contests any suggestion that it has been involved in a global conspiracy to fix surcharges or rates. Singapore Airlines Cargo further contests any suggestion that the European Commission can apply EU law to conduct in markets outside the EU that was lawful in those countries and did not have direct or substantial effects in the EU.'
But Mr Chew said that even while the company would provide for the fine in its financial statements, it would still appeal against the ruling.
Analysts said that while the fine is painful, it will be manageable for SIA. But the airlines convicted also face the prospect of private suits.
'The ruling opens a big can of worms as it opens the way for private claims against the companies,' said brokerage Kim Eng. 'We cannot ascertain the impact of this at this point. Air France-KLM reportedly already faces claims for up to 500 million euros from a group of companies that include Ericsson and Philips. With the ruling, the number of claimants could increase substantially.'
This comes just a day after SIA surprised the market with a $312 million core net profit for its Q2 ended Sept 30, which boosted its first-half profit to $633 million. A year earlier, SIA posted a $159 million Q2 loss and was in the red to the tune of $466 million for the April-September 2009 half.
Rough day at the office for Singapore Airlines
SIA grounds 3 planes after engine oil leaks; SIA Cargo fined for price-fixing in Europe
By VEN SREENIVASAN
(SINGAPORE) Despite reporting sterling second- quarter results on Tuesday, Singapore Airlines has run into stormy weather.
Days after saying the engines on its 11 Airbus A380 aircraft were safe - and different from those used by Qantas, which has grounded its fleet - SIA yesterday grounded three of its giant planes after oil leaks were found in their engine turbines.
Separately, it was announced yesterday that SIA Cargo has been slapped with a huge fine by the European Union for price-fixing with 10 other airlines.
But it is the engine issue that is causing the most heartburn. SIA said a few days ago that the Rolls-Royce Trent 900 power plants on its A380s are different from those operated by Qantas. Specifically, SIA's engines are tuned to provide 70,000 pounds of thrust, while the Qantas engines provide 72,000 pounds - a factor that could have caused oil leaks and an engine explosion on a Qantas A380 over Batam last week.
Slightly different they may be, but it now appears that at least some of SIA's engines have similar problems.
'Based on further analysis of inspection findings as the investigation into last week's incident involving another operator's Airbus A380 is progressing, Singapore Airlines will be carrying out precautionary engine changes on three A380s,' SIA spokesman Nicholas Ionides said in a statement.
Engines on the three planes are being changed on the recommendation of Rolls-Royce, as the British maker tries to find out the cause of the oil leaks, Mr Ionides added.
The affected aircraft were on their way back to Singapore from Melbourne, London and Sydney yesterday. Rolls-Royce will carry out detailed inspections and replace the engines here.
SIA said yesterday the eight other A380s in its fleet are unaffected - for now. 'Any further checks that may be recommended by the manufacturers will, of course, be done. In the meantime, we continue with our regular routine checks,' Mr Ionides said.
Meanwhile, all six A380s operated by Qantas remain grounded pending detailed inspections. And it remains to be seen whether Lufthansa - the only other A380 user with similar Trent 900 engines - will ground all or some of them.
Asked yesterday how the latest problems cropped up just days after declaring all was well with the engines, CEO Chew Choon Seng insisted that the previous checks had been conducted in full compliance with Rolls-Royce's requirements. He said SIA could not assure that there would be no new A380 engine issues after this.
'This is an ongoing process. But I am assured at the highest level that Rolls-Royce is doing all it takes to reach that point (where there are no more new issues).'
Mr Chew compared the grounding of the planes to a recall of cars by manufacturers.
'Just because a car is recalled doesn't mean it cannot be used,' he said, adding that the level of technical and regulatory oversight for aircraft safety was much higher. 'We won't fly planes unless they are absolutely airworthy.'
He added that under the 'power-by-the-hour' total- care package with Roll-Royce, the engine maintenance and replacement - and costs - would be the responsibility of the British engine maker.
SIA expects the three affected planes to be back in service within the next two days.
In a separate development, it was announced yesterday that SIA Cargo has been fined 74.8 million euros (S$133.5 million) by the European Union for collusive price-fixing. Another 10 airlines were also fined - some more, some less - for the same offence.
The European Commission said Air France-KLM, British Airways, Cathay Pacific, Qantas, Air Canada, Japan Airlines, SIA and others coordinated surcharges for fuel and security without discounts between late 1999 and early 2006.
In all, 11 airlines have been fined a total of almost 800 million euros.
SIA said yesterday it was disappointed with the decision and could appeal. 'Singapore Airlines Cargo will study the grounds of the decision carefully when details become available in full,' it said.
'Singapore Airlines Cargo strongly contests any suggestion that it has been involved in a global conspiracy to fix surcharges or rates. Singapore Airlines Cargo further contests any suggestion that the European Commission can apply EU law to conduct in markets outside the EU that was lawful in those countries and did not have direct or substantial effects in the EU.'
But Mr Chew said that even while the company would provide for the fine in its financial statements, it would still appeal against the ruling.
Analysts said that while the fine is painful, it will be manageable for SIA. But the airlines convicted also face the prospect of private suits.
'The ruling opens a big can of worms as it opens the way for private claims against the companies,' said brokerage Kim Eng. 'We cannot ascertain the impact of this at this point. Air France-KLM reportedly already faces claims for up to 500 million euros from a group of companies that include Ericsson and Philips. With the ruling, the number of claimants could increase substantially.'
This comes just a day after SIA surprised the market with a $312 million core net profit for its Q2 ended Sept 30, which boosted its first-half profit to $633 million. A year earlier, SIA posted a $159 million Q2 loss and was in the red to the tune of $466 million for the April-September 2009 half.
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