Rolls-Royce is close to finalizing an agreement that could secure up to 拢200 million in UK taxpayer funding to develop a new engine for short-haul passenger aircraft, with an announcement potentially coming as early as next week.
This investment would be one of the most significant financial commitments by UK Prime Minister Andy Burnham toward his pledge to reindustrialize the country, with the potential to create thousands of new jobs in high-value manufacturing.
Two people familiar with the matter said the subsidy ranges between 拢100 million and 拢200 million and will fund the development and testing of Rolls-Royce's next-generation UltraFan 30 engine demonstrator. One of the sources said negotiations are still ongoing and the timing of an official announcement remains uncertain.
The FTSE 100 company has spent more than a year lobbying the government for financial support to help it re-enter the lucrative narrowbody aircraft engine market, which includes short-haul workhorses such as the Airbus A320 and Boeing 737. Executives had originally hoped to secure an initial commitment for the flagship project in the first half of this year, but talks were put on hold after Keir Starmer stepped down as prime minister.
Since taking office in July, Burnham has made UK reindustrialization a central policy priority. Rolls-Royce CEO Tufan Erginbilgic has described the project as a once-in-decades opportunity that could create as many as 40,000 skilled jobs across the company and its supply chain, contributing up to 拢120 billion to the UK economy over the project's multi-decade lifespan.
A fully airworthiness-certified aero engine ready for mass production can cost up to 拢3 billion to develop, with additional capital required for scaled manufacturing. Funding for the demonstrator's development technology is expected to be allocated by the UK's Aerospace Technology Institute, which is responsible for distributing government funds for aviation industry innovation.
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