Qantas’s Airbus back in the Air, with its CEO

On Nov. 4th 2010, Qantas grounded its fleet of Airbus A330 airplanes due an engine failure.  On Nov. 27, 2010 the Qantas A330s returned to the air on a flight from Sydney to Singapore.  Oddly the problem plane was still in Singapore as part of the ongoing investigation into the event.  On board the plane was Qantas CEO Alan Joyce.  He was flying to prove Qantas had complete faith in the modifications to the Rolls Royce engines that were at the center of the problem and the reason the A330s were grounded by Qantas and few other airlines using the A330s.  In an email, Joyce had told frequent fliers (a key customer segment) that Qantas “will not fly any individual aircraft unless we are completely sure that it is safe to do so”  (http://www.businessweek.com/news/2010-11-26/qantas-ceo-s-a380-flight-caps-textbook-handling.html).  For this particular A330 that was Nov. 27th.  One other A330 was returned to service but four more will still being renovated.  Joyce announced, “We are 100 percent comfortable with it. If we weren’t, we wouldn’t be restarting the operations today.” http://news.yahoo.com/s/ap/20101127/ap_on_bi_ge/superjumbo_woes;_ylt=Aof8l3j1nubYCse3JNPPlpCROrgF;_ylu=X3oDMTJpbTZiYXRrBGFzc2V0A2FwLzIwMTAxMTI3L3N1cGVyanVtYm9fd29lcwRjcG9zAzYEcG9zAzYEc2VjA3luX3RvcF9zdG9yaWVzBHNsawNxYW50YXNhMzgwcmU-

Here is how Qantas explained the return:

“The decision to restore A380 services follows an intensive Trent 900 engine inspection program carried out in close consultation with Rolls-Royce and Airbus. Together with the engine and aircraft manufacturers and the Civil Aviation Safety Authority (CASA), Qantas is now satisfied that it can begin reintroducing A380s to its international network progressively.

Initially, Qantas will operate a single A380 on routes between Australia and the United Kingdom. As more A380s return to service, Qantas will assess when and how best to deploy them” (http://www.qantas.com.au/regions/dyn/au/publicaffairs/details?ArticleID=2010/nov10/5045).

Rolls Royce is managing a part of the crisis.  Stakeholders are concerned about the ability of Rolls Royce to deliver safe and effective airplane engines.  Here are sample crisis messages from Rolls Royce

Nov. 8:

“Rolls-Royce has made progress in understanding the cause of the engine failure on the Trent 900 powered A380 Qantas flight QF32 on 4 November 2010. It is now clear this incident is specific to the Trent 900 engine.

As a result, a series of checks and inspections has been agreed with Airbus, with operators of the Trent 900 powered A380 and with the airworthiness authorities. These are being progressively completed which is allowing a resumption of operation of aircraft in full compliance with all safety standards. We are working in close cooperation with Airbus, our customers and the authorities, and as always safety remains our highest priority.

We can be certain that the separate Trent 1000 event which occurred in August 2010 on a test bed in Derby is unconnected. This incident happened during a development programme with an engine operating outside normal parameters. We understand the cause and a solution has been implemented.

The Trent 900 incident is the first of its kind to occur on a large civil Rolls-Royce engine since 1994. Since then Rolls-Royce has accumulated 142 million hours of flight on Trent and RB211 engines.

We will provide a further update with our interim management statement on 12 November 2010” (http://www.rolls-royce.com/civil/news/2010/101108_trent_900_statement.jsp0.

Nov. 12: 

“Immediately following this incident a regime of engine checks was introduced on the Trent 900s to understand the cause and to ensure safe operation. These have been conducted in parallel with a rigorous examination of all available evidence, including data from the damaged engine and its monitoring system, analysis of recovered material and interrogation of the fleet history.

These investigations have led Rolls-Royce to draw two key conclusions. First, as previously announced, the issue is specific to the Trent 900. Second, the failure was confined to a specific component in the turbine area of the engine. This caused an oil fire, which led to the release of the intermediate pressure turbine disc.

Rolls-Royce continues to work closely with the investigating authorities.

Our process of inspection will continue and will be supplemented by the replacement of the relevant module according to an agreed programme.

These measures, undertaken in collaboration with Airbus, our Trent 900 customers and the regulators have regrettably led to some reduction in aircraft availability. This programme will enable our customers progressively to bring the whole fleet back into service.  

Safety continues to be Rolls-Royce’s highest priority” (http://www.rolls-royce.com/investors/news/2010/121110_interim_mgt_statement.jsp).

The Rolls Royce engine is at the center of the crisis.  Qantas has said it will seek compensation from Rolls Royce for the losses it suffered from grounding the six A330s.  In fact, Qantas has yet to say it will use the A330s on its longest flights, Los Angeles to Sydney.  Those flights require a large amount of fuel.  In turn, the heavy fuel load requires very strong take off thrust.  Qantas is worried that the extra stress from the higher thrust might pose a risk of engine problems. 

Questions to Consider

1.  What crisis response strategies did Rolls Royce use?  How would you rate their effectiveness and why?

2.  What stakeholder expectations did Rolls Royce violate and why was it a problem?

3.  Of the two companies, did either one seem more effective at crisis management than the other?  Justify your answer.

4.  Of what value was having the Qantas CEO on the first flight?  Would you have recommended the actions?  Why or why not. 

5.  To what degree does Qantas not using the A330s on Los Angeles flights cast continuing doubt on Rolls Royce?  What problem does that pose for Rolls Royce?

6.  What might Rolls Royce do to demonstrate confidence in their product?

7.  How does this situation create the need for risk communication by Qantas and Rolls Royce?

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