Rolls-Royce reportedly seeks UK support for engine project

The company is seeking £100 million to £200 million for its UltraFan 30 engine, part of a programme expected to cost around £3 billion in total, the report said

Rolls-Royce Holdings Plc is urging the British government to commit taxpayer support for the £3 billion development of a new aircraft engine as it seeks to re-enter the lucrative short-haul market, the Financial Times reported on Monday, citing people familiar with the talks.

The London-listed aerospace and defence group is seeking an initial £100 million to £200 million to help fund development and testing of a demonstrator for its UltraFan 30 engine, part of a programme expected to cost around £3 billion in total, the report said.

Chief Executive Tufan Erginbilgiç has discussed the matter in recent weeks with Business Secretary Peter Kyle, according to the newspaper. Rolls-Royce wants to secure a funding commitment in the first half of the year.

The company has been in discussions with officials since last year about potential subsidies to develop a fully certified engine ready for production.

Options under consideration include support via the Aerospace Technology Institute, the National Wealth Fund or so-called launch aid, the FT said. The government could also consider taking an equity stake in the project.

Citing people familiar with the talks, the FT said using Aerospace Technology Institute funding could prove “tricky” given competing demands from other aerospace groups with significant UK operations, including Airbus and Safran.

Rolls-Royce said it was engaged in “constructive discussions with the government about how we can work in partnership to realise this opportunity,” according to the newspaper. The UK’s Department for Business and Trade said it valued the company’s role in supporting high-skilled jobs.

Rolls-Royce, which currently supplies engines for long-haul wide-body jets, exited the narrow-body segment more than a decade ago.