Rolls Royce has stunned the aviation world by pulling out of the race to power Boeing’s proposed 797 after it announced a £2.9 billion loss as the costs mount of rectifying durability faults on its Trent 1000 engines that power some 787s and Airbus’s decision to ditch its superjumbo.

The engine maker has so far taken a £790 million loss on the 787 engine wear issue and another £150 million write-off the A380 shutdown.

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But it wasn’t all bad news as Rolls Royce’s underlying operating profit of £616m was double that of the previous year.

However, it will be some time before there are blue skies for the famous aero engine maker with some estimates suggesting that the cost of fixing the 787 engines could double.

The decision to pull out of the 797 program has far-reaching implications for Rolls Royce for its reputation and long term future in the civil market.

In a statement to the stock market, Rolls Royce said that “we are unable to commit to the proposed timetable to ensure we have a sufficiently mature product which supports Boeing’s ambition for the aircraft and satisfies our own internal requirements for technical maturity at entry into service.”

According to Chris Cholerton, president of the civil aerospace division, “this is the right decision for Rolls-Royce and the best approach for Boeing.”

He added that “delivering on our promises to customers is vital to us and we do not want to promise to support Boeing’s new platform if we do not have every confidence that we can deliver to their schedule.”

It is that support for its customers that is causing major issues for a number of airlines whose 787s are powered by certain models of the Rolls Royce Trent 1000.

Airlines have been forced to ground 787s, cancel flights and lease in other planes to fill the void.

Leasing planes is rarely a good option as they are not fitted with the airline’s standard offering cabin, which for many is their big selling point.

Boeing is expected to announce a go-ahead to offer its 797 to airlines within months.

The 797 which will be a twin-aisle, all-composite aircraft seating 230-270 passengers and optimized for routes up to 10 hours.

The market size is put at over 5000 airframes.

Net profit at Air New Zealand fell 34 percent to $NZ152 million in the first half of the financial year as the airline wrestled with increased fuel prices.

Pre-tax earnings fell 35 percent to $NZ211 despite a 7.1 percent increase in operating revenue.

The airline said the revenue growth was more than offset by the 28 percent rise in fuel price that produced a net headwind of $NZ131m.

Operating cash flow remained flat at $NZ475m and the airline declared an NZ11-cent dividend.

Chief executive Christopher Luxon reiterated his previous warning that the rate of growth in the New Zealand market was slowing from previous years to be more in line with other developed markets.

READ Air New Zealand cuts profit guidance, capacity growth

The airline said this was most visible in forward bookings for domestic leisure and inbound tourism and predicted the growth rate in the second half would be half the 12-month average of 8 percent.

Air New Zealand is reviewing its network, fleet and cost base to reflect the new environment.

“While we continue to expect solid growth across our key markets including domestic New Zealand, we cannot ignore signals that the rate of growth has slowed somewhat from prior years,’’ Luxon said.

“We pride ourselves at Air New Zealand on being nimble and able to quickly adjust our business to reflect the changing macro environment and this time is no different.”

The airline confirmed a revised outlook issued on January 30 that its pre-tax earnings for the full year would be between $NZ340m and $NZ400m based on the slower revenue expectations for the second half.

The forecast assumes an average jet fuel price of $US75 per barrel.

It said its response to the slower revenue growth environment would include reduced capacity growth, changes to domestic pricing and market development.

This included the announcement this week that it was reducing its lowest fares across the domestic network, shrinking some by half.

“We are committed to ensuring that air travel is more affordable than ever for Kiwis, whether they are flying from the main centres or from regional airports,’’ Luxon said.

“With prices as low as $NZ39, and with our unmatched network of over 400 flights a day to 20 different destinations in New Zealand, there has never been a better time to get out and explore this amazing country.”

The forecast growth for group capacity was reduced to the lower end of the previous plan of 4 to 6 percent.

The airline also said it would maintain its Pacific Rim strategy by exploring profitable growth opportunities, increasing connection opportunities via Auckland and leveraging alliance partnerships.

Recent routes launched to Chicago and Taipei had performed ahead of expectations and Air New Zealand recently launched a third daily Singapore-Auckland service.

But it signaled in its investor presentation a rationalization of Pacific Islands capacity growth and reduced flying to San Francisco and Los Angeles.

The airline has forecast investment of $NZ1.2 billion on aircraft and associated assets through to 2022 but said it had made no assumptions on the cost of replacing its Boeing 777-200 aircraft.  An announcement on this is due in the fourth quarter of the current financial year.

Bamboo Airways has ordered 10 787-9 Dreamliners valued at $3 billion at list prices to launch long haul operations.

The order was unveiled during a signing ceremony in Hanoi, witnessed by U.S. President Donald Trump and General Secretary and President of Vietnam Nguyen Phu Trong.

“We are excited to be adding the new 787 Dreamliner to our growing fleet,” said Mr. Trinh Van Quyet, Chairman of FLC Group and owner of Bamboo Airways.

“Our long-term vision is to connect Vietnam with key markets in Asia, Europe and North America and the Dreamliner will enable us to launch these long-haul operations. The 787’s superior operating economics and efficiency, as well as the passenger-pleasing interior of the Dreamliner, will allow us to successfully grow our business while enabling us to better serve our customers.”

Bamboo Airways, a startup airline founded in 2017, began commercial operations in January, offering flights linking the capital of Hanoi and Ho Chi Minh City with cities in Vietnam. The airline plans on offering up to 40 domestic routes in 2019. Additionally, Bamboo is preparing to launch international service to Thailand, South Korea, Singapore, Japan, Taiwan and Australia, before broadening service to other destinations in Asia, Europe, and North America.

“The 787 Dreamliner’s unmatched efficiency, range and, flexibility make it the perfect airplane for Bamboo Airways to achieve its long-range ambitions. We are excited to advance the partnership between Boeing and Bamboo Airways and we look forward to helping them connect Asia with Europe, North America and beyond,” said Kevin McAllister, president and, CEO of Boeing Commercial Airplanes.

The 787 Dreamliner is the fastest-selling widebody airplane in history with more than 1,400 orders from 75 customers since its launch. Nearly 800 Dreamliners have entered service around the world, helping airlines save 33 billion pounds of fuel.

Bamboo Airways is wholly-owned by the FLC Group, a Vietnamese multi-industry company, focusing on aviation, real estate, resorts, farming, and golf.

Vietjet has purchased 100 additional 737 MAX airplanes, taking their MAX order book to 200 jets.

During a signing ceremony in Hanoi, United States President Donald Trump and Vietnamese Communist Party General Secretary and President Nguyen Phu Trong joined leaders of both companies to unveil the $12.7 billion order at list prices.

The deal includes 20 MAX 8s and 80 of the new, larger MAX 10 variant, which will have the lowest seat-mile costs for a single-aisle airplane.

READ: Vietjet wins Best Ultra Low-Cost Airline 2019

In ordering 80 MAX 10s, Vietjet becomes the largest Asian customer of the airplane type. The carrier plans to use the added capacity to meet growing demand across Vietnam, as well as to serve popular destinations throughout Asia.

“The deal for 200 Boeing 737 MAX airplanes today is an important move for us to keep up with our international flight network expansion plan with a higher capacity, thus offering our passengers with more exciting experiences when being able to fly to more new international destinations,” said Madam Nguyễn Thị Phương Thảo, President and CEO of Vietjet.

“I believe that our fleet will have breakthroughs thanks to new-generation technologies, which helps improve flight quality and enhance operational reliability while reducing operating costs in the future. Passengers will then have more opportunities to fly with reasonable fares.”

Vietjet placed its first order for 100 737 MAX airplanes in 2016, which set the mark for the largest commercial jet purchase in Vietnam’s aviation sector at the time.

“We are pleased to expand our partnership with Vietjet and to support their impressive growth with new, advanced airplanes such as the 737 MAX. We are confident the MAX will help Vietjet grow more efficiently and provide great travel experiences for their passengers,” said Boeing Commercial Airplanes President & CEO Kevin McAllister.

“The economic expansion in Hanoi and across Vietnam is impressive. Vietjet and the country’s burgeoning aviation sector are clearly enablers, helping to stimulate travel within Vietnam and connecting Vietnam with the rest of Asia. We are proud to support this economic development, which in turn supports engineering and manufacturing jobs in the United States.”

In addition to airplane purchases, Boeing will partner with Vietjet to enhance technical and engineering expertise, train pilots and technicians, and improve management capabilities at the airline and in Vietnam.