Rolls-Royce warns UltraFan production could shift overseas without UK backing

Rolls-Royce has signalled it could manufacture its next-generation UltraFan engine outside Britain unless the government provides financial support, raising fresh questions about the UK’s commitment to its aerospace industrial strategy.

The FTSE 100 engineering group, led by chief executive Tufan Erginbilgic, is seeking to re-enter the highly lucrative market for narrowbody, single-aisle aircraft engines, the fastest-growing segment of global civil aviation. However, it says industrialising the UltraFan platform for this market will require public backing, similar to the subsidies received by competitors in the United States and France.

UltraFan, a more fuel-efficient engine architecture developed over the past decade at a cost of around £1 billion, is central to Rolls-Royce’s long-term civil aerospace ambitions. But moving from research and development to full-scale production will hinge on government support, according to Erginbilgic.

“This kind of support of industry is not uncommon,” he said, pointing to the scale of state assistance available to rivals such as GE Aerospace and Pratt & Whitney in the US and Safran in France. “Our competitors get two or three times what we get. It is a competitive world and you need to think about that.”

Rolls-Royce has reportedly been seeking up to £200 million from the UK government and has held discussions with Business Secretary Peter Kyle. While the company recently announced plans for up to £9 billion in share buybacks over the next three years, Erginbilgic insisted industrial backing for major aerospace programmes is standard practice globally.

The chief executive argued that the UltraFan programme aligns directly with the government’s own industrial strategy, which identifies narrowbody engines as a critical growth opportunity.

“Narrowbody is the single biggest opportunity in a generation,” he said. “It is natural for the UK government to support it. Not supporting it would be a strange thing to do.”

Rolls-Royce is understood to be evaluating alternative manufacturing locations, including Germany, where it builds business jet engines, and the United States, where it produces military engines, if UK support does not materialise.

The economic implications could be significant. Erginbilgic claimed a domestic UltraFan narrowbody programme would support up to 40,000 jobs, create a new UK supply chain and generate at least £100 billion in long-term economic value. He estimated that every £1 invested could deliver £34 in economic growth.

“The amount we are asking from the government is a fraction of what we are investing ourselves,” he said, noting that Rolls-Royce has doubled its internal investment levels since 2022.

The company exited the narrowbody market in 2011 when it sold its stake in a joint venture with Pratt & Whitney, a move widely viewed as a major strategic misstep. Since then, Rolls-Royce’s civil aerospace business has been heavily reliant on long-haul engines such as the Trent XWB for the Airbus A350 and the Trent 1000 for the Boeing 787.

Re-entry into the short-haul market comes at a time when rivals are facing operational challenges. Pratt & Whitney has struggled with durability issues affecting its geared turbofan engines, leading to delivery delays and aircraft groundings across several airlines.

Erginbilgic said UltraFan would offer superior fuel efficiency and durability compared with current narrowbody engines and confirmed that Rolls-Royce is exploring industrial partnerships to share risk.

“We are talking to multiple 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 moves abroad.

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Rolls-Royce warns UltraFan production could shift overseas without UK backing