While the grounding of Qantas Airways Ltd.’s Airbus SAS A380 fleet after an engine explosion may cost as much as $204 million, the airline will likely recover financially even if it does take significantly more time to rebuild the brand. For the most part, Qantas has taken a traditional crisis communication approach, communicating to various publics through multiple channels. It was and still is highly engaged with the media after one of its flights suffered engine failure.
But what about Rolls-Royce? By most counts, Rolls-Royce was largely silent about the failure of its engine about a month ago. The intent seems to follow the forgetfulness of the public by remaining in the background of public discourse.
It's not an uncommon approach. It's the same approach Halliburton took during the BP oil spill crisis. For Halliburton, it seems to work.
Does Communicating Less Work?
For Rolls-Royce, it's not. While the company continues to perform with diversified products and services, it seems clear enough that the engine failure, repeatedly called a design flaw, is weighing heavily on the company. It's not enough to kill it, but it is enough to stall it for an indefinite amount of time.
While the public might be satisfied to hear from Qantas, shareholders and industry experts following Rolls-Royce were not. What did the company offer up to its publics?
“This event and the consequent actions will have an impact on the Group’s financial performance this year. However the scale of our order book, the breadth and mix of our portfolio, the global nature of our business and our strong balance sheet makes Rolls-Royce a resilient business, and we expect continued underlying profit growth in 2010,” Sir John Rose, chief executive officer said.
With that measure being pushed forward to investors, a different message is being put forth to potential customers. Since the interim report, Rolls-Royce has put out a steady stream of releases focusing on innovations and contract wins.
While it is no more or less than it did three months ago, what does seem different is a drop off in softer news. Rolls-Royce is communicating, much like it did to shareholders, that it is all business. And while it has expressed some regret over the incident, there isn't anything to account for in terms of an apology or empathy.
The most current pre-incident forecast by Rolls-Royce was that during the next 20 years, 141,000 engines, worth more than $820 billion, are predicted to be delivered, powering 65,000 commercial aircraft and business jets. Specific to the most popular engines, Rolls-Royce maintained a 50 percent market share. In the past, it contended that the market is pretty unforgiving.
To date, it seems more than the civil aviation market is unforgiving. Investors did not appreciate that the company considered the Trent incident to be "partially mitigated by better performance in the Marine and Defence businesses." Companies that fail to communicate to their publics' satisfaction take much longer to recover than those out front.
Companies Cannot Afford To Be Too Quiet During A Crisis.
The exception, Halliburton during the Gulf Coast oil spill, was only possible because BP public relations missteps had distracted the public. Sometimes that may help a behind-the-scenes company forego public scrutiny in the short term. However, once the bigger bungler is removed from the equation, the behind-the-scenes players step into the spotlight. Case in point, Halliburton no longer has someone in the foreground.
While this story is still developing, the early lesson is that even if a company can escape short-term consequences by not communicating, that does not absolve it from long-term consequences. But more specific to the original observation, Rolls-Royce might already be doing better had it communicated well to select publics (customers and investors) even if it chose to let Qantas handle the media. Case study in progress. (Hat tip: Recruiting Animal.)