The probable cause of the engine failure and subsequent undercowl engine fire was due to the fatigue fracture of a high pressure turbine stage 2 disk blade retaining lug that released two blades which impacted the low pressure turbine case causing a fuel line to fracture spraying fuel on the hot engine cases where it ignited. During a machining operation of the disk lug, a tool mark was introduced that set up the area for fatigue cracks to initiate.