Qantas faces several weeks before A380s fly -source

SYDNEY Fri Nov 19, 2010 5:24am EST

The damaged number two engine of a Qantas Airbus A380 in Singapore is removed from the wing in this November 13, 2010 handout picture. (SINGAPORE - Tags: TRANSPORT BUSINESS)

The damaged number two engine of a Qantas Airbus A380 in Singapore is removed from the wing in this November 13, 2010 handout picture. (SINGAPORE - Tags: TRANSPORT BUSINESS)

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SYDNEY (Reuters) - Qantas Airways (QAN.AX) likely faces several more weeks before its fleet of six Airbus A380s can return to service, a source with direct knowledge said on Friday, threatening to squeeze its capacity as it heads into the busy Christmas and summer holiday season.

The delay also indicates Rolls-Royce (RR.L) will need more time than Qantas expected to resolve the engine issue, which led to a November 4 oil fire and explosion on a Qantas jet with 466 people on board shortly after it departed Singapore for Sydney.

Qantas immediately grounded its fleet of Airbus EAD.AX A380s -- the world's largest passenger plane with a list price of around $350 million each -- pending an investigation, but has no deadline on the process after several initial indicative deadlines by the airline passed.

"It's a very complex process and it's still in the early stages," said the source.

"I expect Rolls-Royce and Qantas are still several weeks away from putting together an action plan and its documentation," said the source, who asked not to be named because they were not authorised to discuss the issue.

Rolls-Royce and Qantas shares have suffered since the accident, both losing more than 7 percent since Nov 3.

Rolls-Royce, which has said little publicly about the investigation, last week announced that the failure was confined to a specific component in the turbine area and it would replace the relevant module according to an agreed programme.

A Qantas spokeswoman said the airline had no time schedule to put the A380 back in service and it remained engaged with Rolls-Royce to resolve the issue.

Analysts said the earnings impact on Qantas -- which lost about 4-5 percent of its seat capacity with the A380 grounding -- has been muted so far with a cost of around $1 million per day.

Disruption to flights caused by volcanic ash over Europe earlier this year cost A$46 million through lost revenue and extra costs, Qantas has said.

Still, analysts said costs will escalate quickly if Qantas cannot get the A380s back in the air for the busy southern hemisphere summer travel period which starts next month.

Australia's aviation safety authority ATSB also declined to discuss the investigation.

"The ATSB welcomes pro-active safety initiatives in response to the occurrence, but any decision on engine replacement is one for respective airline operators, manufacturers and airworthiness authorities," it said in a statement.

Australia's Civil Aviation Safety Authority will have to make a final approval before Qantas is able to resume flying the A380.

On Thursday, Qantas Chief Executive Alan Joyce said the world's fleet of Airbus A380 aircraft may need to replace around 40 Rolls-Royce engines or about half of the total in service, to ensure safety.

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