Rolls-Royce says working quickly to fix Trent 1000 problems

* CEO sees grounded aircraft issue sorted well before 2022

* Company sticking with cash-flow, profit guidance

* Fixing the problems is the "absolute priority" - chairman (Adds CEO, chairman comments)

By Sarah Young

LONDON, May 3 (Reuters) - Britain's Rolls-Royce is working quickly to repair problems with some of its Trent (BSE: 500251.BO - news) 1000 engines that have left planes grounded, it said on Thursday, adding it remained confident the cost would not cause it to miss financial forecasts.

Rolls-Royce was questioned at its annual shareholder meeting about problems with the Trent 1000 package C, the engine used to power some Boeing Dreamliner 787 planes, in what is a new headache for a company in turnaround mode since 2015.

It has said the problems will be fully resolved by 2022.

But Chief Executive Warren East, tasked with improving profitability at one of the biggest names in British manufacturing, said on Thursday he expected the issue of grounded aircraft to be sorted out much sooner than that.

"Based on where we are at the moment, we would expect to remove the aircraft on the ground situation much, much faster than 2022," East told shareholders.

Despite the higher costs of additional inspections announced in April, Rolls has kept its 2018 free cash flow guidance at around 450 million pounds ($643 million), give or take 100 million pounds.

The company reassured investors again on Thursday it was on track to meet that target, as well as its profit forecast. Rolls shares were last down 0.8 percent at 829.8 pence.

The problem with the Trent 1000 package C engines is that turbine blades are not lasting as long as expected, requiring extra inspections and meaning airlines are having to ground some aircraft.

There are 380 package C engines currently in service with airlines such as Air New Zealand and Virgin Atlantic, and estimates put the number of grounded planes at any one time at about 30.

Rolls chairman Ian Davis told the meeting that fixing the problem was: "The absolute priority for the board, the absolute priority for the company."

It was not clear whether Rolls could face any legal action as a result of the problems. When asked that question, East replied: "Our priority right now is getting customers like Air New Zealand flying reliability."

Rolls has guided the cash hit from the Trent problems should hit a peak of 340 million pounds in 2018 before falling in 2019, with the cost of the additional inspections covered by the company removing discretionary spending elsewhere.

East said the cost guidance included possible compensation for airlines, without giving more details.

Asked about the potential sale of the company's commercial marine business, which supplies oil and gas customers and is under review, East said he hoped to be able to provide an update at a capital markets day on June 15.

"It's an ongoing process," he said. (Reporting by Sarah Young; Editing by Kate Holton and Mark Potter)