Investors in the aviation industry should be nervous with reports that Qantas has signalled that its flagship fleet of Airbus A380 aircraft could be out of service during the lucrative summer holidays, after preliminary investigations pinned the blame for last week's mid-air emergency on an ''oil fire''. Europe's Aviation Safety Agency has ordered all airlines using the Rolls-Royce Trent 900 engines to inspect them after every 20 flights until the incident is fully understood. Preliminary analysis of debris showed that an oil fire in the high and intermediate-pressure section of the failed second engine on the Qantas plane may have been to blame. European regulators are also set to issue airworthiness directives, forcing airlines – including Singapore Airlines and Lufthansa – to conduct more checks on the A380s which use Rolls-Royce Trent 900 engines.
This is a real worry for investors. Not surprisingly, the Qantas share price has taken a hammering.
As Rhys Jones and Tim Hepher at Reuters say, this case highlights why aerospace is such a risky industry to invest in. Companies are pushing into new territory of design, moving from metal to carbon composite, or strong plastic. A lot can go wrong and the Airbus A380 disaster shows that we can expect more of these breakdowns.
Investors should stay away from airlines. It's bad enough that the passengers are nervous.
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