Shares of Rolls-Royce Holdings PLC (GB:RR) fell nearly 2% as of writing after the European Union (EU) demanded an investigation into Airbus’ (DE:AIR) A350 engines powered by the company. This move follows an incident earlier this week, where Cathay Pacific’s (HK:0293) Zurich-bound flight returned to Hong Kong due to an alleged engine fire. Following the incident, RR stock went down by over 6% on Monday.
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Rolls-Royce Engines Under EU Scrutiny
Following the incident, Cathay Pacific subsequently grounded 48 A350 planes, with inspections revealing defective engine fuel lines in 15 of them. Consequently, the EU’s Aviation Safety Agency (EASA) ordered inspections of Rolls-Royce-powered A350s to prevent similar incidents in the future.
According to EASA, the inspection will be completed within the next 30 days and will apply to A350-1000 aircraft, which are powered by Rolls-Royce’s XWB-97 engines. A total of 86 such planes are currently in service worldwide.
Meanwhile, RR yesterday announced that it is initiating a “one-time precautionary engine inspection program,” which could affect a portion of the A350 fleet. It further stated that it was “working very closely” with the EU agency.
Is Rolls-Royce Stock a Good Buy?
Over the last five days, RR stock has lost nearly 5% in trading. In 2023, Rolls-Royce shares skyrocketed by over 190%, making them the best performer on the FTSE 100 index. The stock has continued its upward momentum in 2024, with a year-to-date increase of 57.4%.
Despite the short-term headwinds, analysts remain bullish on RR stock. The stock has received three Buy recommendations this week from Citi, Deutsche Bank, and Jefferies.
According to TipRanks, RR stock has received a Moderate Buy rating based on nine Buys, one Hold, and one Sell recommendation. The Rolls-Royce share price forecast is 541.95p, which is 15.4% higher than the current trading level.
