Rolls-Royce has signaled it could make its next-generation UltraFan engine outside the UK unless the government provides financial support, raising new questions about the UK’s commitment to its aerospace industrial strategy.
The FTSE 100 engineering group, led by CEO Tufan Erginbilgic, is trying to re-enter the highly lucrative market for narrowbody, single-aisle aircraft engines, the fastest-growing segment of global civil aviation. However, it says that industrializing the UltraFan platform for this market will require public support, similar to the subsidies received by competitors in the United States and France.
UltraFan, a more fuel-efficient engine architecture developed over the last decade at a cost of around £1 billion, is central to Rolls-Royce’s long-term civil aerospace ambitions. However, according to Erginbilgic, the transition from research and development to serial production will depend on government support.
“This kind of industry support is not uncommon,” he said, pointing to the level of government support available to competitors such as GE Aerospace and Pratt & Whitney in the United States and Safran in France. “Our competitors get two or three times what we get. It’s a competitive world and that’s something to think about.”
Rolls-Royce has reportedly demanded up to £200 million from the British government and has held talks with Business Secretary Peter Kyle. While the company recently announced plans for share buybacks worth up to £9 billion over the next three years, Erginbilgic stressed that industry support for major aerospace programs was common practice worldwide.
The chief executive argued that the UltraFan program is directly aligned with the government’s own industrial strategy, which identifies narrowbody engines as a key growth opportunity.
“Narrowbody is the biggest opportunity in a generation,” he said. “It is natural for the British government to support this. It would be strange not to support it.”
Rolls-Royce is understood to be exploring alternative production locations, including Germany, where it builds engines for business jets, and the United States, where it makes military engines, if British support fails to materialize.
The economic impact could be significant. Erginbilgic claimed a domestic UltraFan narrowbody program would support up to 40,000 jobs, create a new UK supply chain and generate long-term economic value of at least £100 billion. He estimated that every pound invested could generate economic growth of £34.
“The amount we are demanding from the government is a fraction of what we invest ourselves,” he said, pointing out that Rolls-Royce has doubled its internal investments since 2022.
The company exited the narrowbody market in 2011 when it sold its stake in a joint venture with Pratt & Whitney, a move that was widely viewed as a major strategic misstep. Since then, Rolls-Royce’s commercial aerospace business has relied heavily on long-range engines such as the Trent XWB for the Airbus A350 and the Trent 1000 for the Boeing 787.
The re-entry into the short-haul market comes at a time when competitors are facing operational challenges. Pratt & Whitney has struggled with durability issues with its geared turbofan engines, leading to delivery delays and groundings for several airlines.
Erginbilgic said UltraFan would offer superior fuel efficiency and durability compared to current narrowbody engines and confirmed that Rolls-Royce is exploring industry partnerships to share risk.
“We are talking to several parties,” he said.
With global demand for single-aisle aircraft expected to dominate the next aviation cycle, the government’s decision on funding could determine whether the next phase of Rolls-Royce’s civil aerospace expansion is anchored in the UK or moved overseas.
