@kutyafal From the developer:
Yes, the Black Square failure system supports catastrophic failures. The engines in the KA can cease producing power catastrophically, and can catch fire. The fire can also be extinguished. I recommend checking out this video for an example. Note that the extinguisher annunciator lights have been improved since the initial release to better match the real equipment. A complete list of all 160+ failures in the KA is also available in the manual here. Search for "List of Possible Failures".
Hope that helps.