Qantas has announced a settlement with Rolls-Royce following a mid-air engine explosion and subsequent grounding of its Airbus A380 fleet last year.

The Australian flag-carrier will receive AUS$95 million from the British manufacturer, following the incident in November last year.

An investigation following the blow-out – which saw a Qantas operated Airbus A380 make an emergency landing in Singapore – identified an uncontained IP disc failure on a Rolls-Royce Trent 900 engine as the cause.

The settlement reached includes the discontinuance of the legal proceedings initiated by Qantas in the Federal Court of Australia on December 2nd 2010.

While the terms of the agreement are confidential, the profit and loss impact of the settlement will be recognised in Qantas’ financial results for financial 2011.

In its interim report released on May 18th 2011, the Australian Transport Safety Bureau (ATSB) states that “the disc failure was initiated by a manufacturing defect in an oil feed pipe that resulted in a wall thickness reduction”.

The ATSB’s investigation is ongoing and a final report is expected in mid-2012.

Following the incident, Qantas immediately grounded its A380 fleet in order to carry out a comprehensive engine inspection and replacement program.

Qantas and Rolls-Royce worked closely together to address the concerns raised by the incident.

Qantas A380 services to London resumed on November 27th 2010.

The remainder of the airline’s A380 services (between Australia and Los Angeles) resumed on January 16th 2011.