13 Dec 2010

Qantas shares going down

7:13 am on 13 December 2010

Shares in Qantas have fallen 7% since a run of engineering faults began.

The most serious was an explosion in the engine of an Airbus A380 on a flight from Singapore - Sydney on 4 November.

The plane returned safely to Singapore, but Qantas ended up grounding its entire fleet of A380s.

It is now suing engine maker Rolls Royce for unspecific compensation.

Radio New Zealand's Sydney correspondent says that while Qantas has an impeccable safety record, the run of faults is starting to raise doubts.

Analysts at Merrill Lynch reckon the whole episode could end up costing the airline more than $A200 million.

Aside from any compensation from Rolls Royce, Qantas is losing sales as the A380 carries 130 more passengers than its Boeing 747 fleet.

There's also the untold damage to its brand, which is why a new marketing campaign is said to be in the wings.