Losing height

Rolls-Royce: The whole airline industry will be shaken by Rolls-Royce's turbulence. The aero engine maker's reputational fug is deepening as new details of the Qantas explosion emerge. Though the near-term financial damage to Rolls is unchanged, the industry-wide finger pointing serves only to beggar civil aviation neighbours.

The Australian Transport Safety Bureau's initial findings about the nature of the accident that forced the Airbus superjumbo to make an emergency landing on November 4, make interesting reading. The granular details will allow investors and engineers to make better and more rounded judgments about the nature of this worrying incident and its long-term implications.

As things stand, however, the broad picture for Rolls remains unchanged. We knew that the problems were caused by a small, crucial and faulty oil pipe.

We appreciated that Rolls, in conjunction with airlines, Airbus, and air industry regulators such as the ATSB, were undertaking thorough investigations. And we understood that legal claims for damages would probably ensue and that Qantas was likely to be at the front of the queue.

Investors have also already digested the fact that Rolls’ earnings will suffer - this year and, to a lesser extent, next. But there is no sign that the company’s financial guidance, given on November 12, will be changed.

As things stand, the Singapore accident is a one-off. Rolls’ larger size aero-engines have notched 142 million flying hours since 1994. Yet the margin for error when it comes to air travel is wafer thin. Passenger confidence in safety, though bolstered by the rarity of life-threatening incidents, is also delicate. Every last cough and spit - from the ATSB, Qantas litigation and elsewhere, will be repeatedly and publicly examined.

The fallout will not just affect Rolls. Attempts by manufacturers and airline operators to protect their own positions could ultimately be self defeating. Passengers do not want to have to worry about the airworthiness of different planes or engines. Nor do they want to have to worry about where blame for air safety issues should lie. Creating needless turbulence will shake Rolls, Airbus, Qantas - and the whole civil aviation industry.