As feared R-R's limited assessment of liabilities and external estimates are starting to veer apart as analysts finally start to look at the potential hit on future years and not just the November incident. Worry for me is that this is again speculative and lacking in the detail that R-R could provide. Up to now company statements have only referred to an impact to this years profits with no indication if provision needs to be made for the future or if a partial re-design of the problem area is underway and what the expected scope and timescale will be.
On the plus side amortised against future performance at least gives the opportunity for it to be absorbed and offset by improvements in other areas.
My view would be that R-R has the technical capability and resource to resolve the issue but that better communication of the problem and its resolution, whilst potentially slightly embarrassing, would protect the T900 / A380 program and the perception of the Rolls-Royce brand.
On the plus side amortised against future performance at least gives the opportunity for it to be absorbed and offset by improvements in other areas.
My view would be that R-R has the technical capability and resource to resolve the issue but that better communication of the problem and its resolution, whilst potentially slightly embarrassing, would protect the T900 / A380 program and the perception of the Rolls-Royce brand.
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