Rolls-Royce hails British support for next-generation jet engine

Times

10 hours ago

The UK is backing Rolls-Royce to become a global leader in the $1.6 trillion market for short-haul aircraft engines, by offering potential taxpayer support for its next generation of jet engines.
The Rolls chief executive Tufan Erginbilgic this weekend confirmed that the Derby-based FTSE 100 engineer will return to the larger 'narrow body' or 'single aisle' market as Labour puts the move at the heart of its industrial strategy.
'This is the single-biggest opportunity for economic growth for the UK in the next 50 years,' he said.
• Rolls-Royce has wowed the City — can it charm airlines too?
The government last week said that 'gas turbines are critical to UK national and economic security, and our role and capabilities in the UK with companies like Rolls-Royce can lead to significant growth'.
A priority would be to 'secure a UK engine position on next-generation single-aisle programmes', ministers outlined in the government's industrial strategy.
In a wide-ranging interview with The Sunday Times, Erginbilgic set out his strategy:
• Rolls is in talks with a number of industrial and engineering partners over its new UltraFan engine, which could lead to the British firm reviving its joint venture with US rival Pratt & Whitney.• He confirmed talks with the government over taxpayer support for the new engine.• He insisted that a deal was still to be done with Airbus on the UltraFan despite the Franco-German planemaker hinting at a preference for different technology manufactured abroad.• Erginbilgic revealed plans to expand Rolls's nuclear energy programme with the development of smaller 'advanced modular reactors' that could be rolled out to power the military on the front line.• He expressed confidence that the Trump administration will not backtrack on the Aukus defence partnership.• He said that Rolls could benefit from increased defence spending by expanding into autonomous vehicles and drones.
Erginbilgic has overseen a dramatic turnaround in the fortunes of Rolls-Royce since he took the helm at the start of January 2023.
Rolls's share price has risen by more than 800 per cent since, with the company now boasting a stock market valuation of £80 billion — making it the fifth-biggest company on the FTSE 100. The engineer's success stems in no small part from the building and maintenance of aircraft engines. Civil aerospace is Rolls-Royce's biggest single sector, accounting for about half of revenues and two-thirds of profits.
The engines it makes, however, are only for long-haul planes — also known as 'wide body' or 'twin aisle' aircraft. Rolls has an estimated 44 per cent of the wide-body market globally. Its rival General Electric has 54 per cent.
Development of the new £3 billion UltraFan engine has been in the works for a number of years.
'Given the technology we have, given the credibility we establish in the industry, and the financial strength we have and the engineering capability, we are actually saying we can play in the narrow-body [market],' Erginbilgic said.
Moving into this market would present a challenge in scaling up Rolls's operations, because there are many times the number of short-haul aircraft as long-haul ones.
To do so, Erginbilgic confirmed his preference to join forces with another engineering or industrial company. 'We are saying we have the engineering capability. But if you consider beyond engineering capability and so on, I believe … that [a partnership] may be the best outcome for the company,' he said.
The Turkish-born executive refused to be drawn further on the names of potential partners.
Industry sources pointed to the likes of Pratt & Whitney, with which Rolls had an ill-fated joint venture for short-haul engines before it collapsed more than a decade ago. Other potential parties include Mitsubishi and Kawasaki of Japan, Germany's MTU Aero Engines and South Korea's Hyundai.
Erginbilgic said that he was in talks with the UK government for financial support to accelerate the UltraFan programme.
'This [state help] is not actually a new phenomenon; our competitors get this four or five times as much as we do,' he said. 'This is such a new development, such a big opportunity. We are effectively saying that in the development of this, actually a little bit of support would be great.'
A major hurdle to entering the narrow-body market is striking a deal with one of the world's two main planemakers: Airbus and Boeing.
Airbus is working on the next generation of its A320 workhorse, with its wing being developed at its centre of excellence in Bristol. The Franco-German company earlier this year hinted at a preference for an 'open-fan' engine developed by rival CFM — a joint venture between America's GE and French firm Safran — that appears to look more like a propeller than a 'closed duct' gas turbine.
Asked whether Rolls had missed its opportunity to power the next generation of Airbus aircraft, Erginbilgic insisted: 'That's undecided … I talk to everybody.'
Although civil aerospace represents the majority of Rolls-Royce' bottom line, the company's prowess in nuclear energy is exciting investors.
Rolls manufactures power units for nuclear-powered submarines and has positioned itself to build a raft of small modular reactors — power stations the size of two football pitches — as part of the UK's push to decarbonise the electricity grid.
• Rolls-Royce to build UK's first small nuclear power stations
Erginbilgic said that nuclear power presented another big opportunity for Rolls. 'There is no other company on Earth — private company; I'm not including governments in this — with the nuclear skills that we have,' he said. 'What we do for nuclear submarines here, four companies do it in the US.'
The 65-year-old revealed that Rolls was now expanding into the development of advanced modular reactors (AMRs), a type of small nuclear reactor that uses different fuels and technology and can be transported if required.
'We are actually working on technology in both areas in the US as well as the UK,' he said. 'Early applications will be really in space and defence.'
One use of AMRs would be as a 'secure energy supply wherever your military is going', he said. Asked whether this would be a vital part of supporting military operations, he responded: 'Yes. That's my point. You cannot do it with SMR.' AMRs are considered novel technology and are likely to be many years away from practical usage.
Elsewhere in defence, the future of the nuclear submarine deal between the UK, US and Australia — called Aukus — has been thrown into doubt after Donald Trump ordered Elbridge Colby, his adviser, to review it. The Aukus deal is worth billions of pounds to Rolls.
Erginbilgic played down the prospect of the accord being scrapped. 'Yes, I am confident [in Aukus going ahead],' he said. 'The reality is that the UK government also reviewed; remember the whole defence review?
'So, they are doing a similar review. You cannot blame them for doing that. The UK government did the same thing. That is a normal review for a new government to do.'
He continued: 'Even without Aukus, there is a submarine step-up, frankly.'
Beyond submarines, Erginbilgic said that increased defence spending presented another opportunity for Rolls: 'Given what was published so far, and given what's going on in the world, autonomous [vehicles] and drones will be very important.'
Erginbilgic admitted this was an area that Rolls had 'not been talking about', but added: 'But we have been developing products.'