Rolls-Royce nears government subsidy deal to develop new engine in UK, FT reports

Rolls-Royce Set for UK Subsidy Deal on New UltraFan Engine for Short-haul Jets

Rolls-Royce Nears Subsidy Agreement for UltraFan Engine Development

(This story has been refiled to remove an incorrect image, with no changes to text.)

Oct 23 (Reuters) - Rolls-Royce is nearing a deal for British government subsidies of up to £200 million ($267.9 million) to help fund the development of a new engine for short-haul aircraft, with an announcement possible as early as next week, the Financial Times reported on Friday.

Key Details of the Subsidy Deal

Here are some details:

Funding and Development

• Funding of £100 million-£200 million would help Rolls-Royce develop and test a demonstrator version of its new UltraFan 30 engine, the report said, citing people familiar with the matter

Verification and Company Response

• Reuters couldn't immediately verify the report. Rolls-Royce did not respond to a request for comment outside regular business hours

Government Commitment Timeline

• The company had hoped to secure an initial government commitment for the project in the first half of the year

Potential Impact and Strategic Importance

Job Creation and Market Position

• In July, Chief Executive Tufan Erginbilgic said if the government backed the project and Rolls-Royce's new engine gained a position on a narrowbody airframe, that would create 40,000 British jobs

International Discussions

• Erginbilgic also confirmed Rolls-Royce held discussions with other governments, including Germany and the US, about support for the programme

Market Background

• For the last 15 years, Rolls-Royce has been absent from the narrowbody market, which is much bigger than the widebody market it is currently focused on

• The company has been developing the next-generation UltraFan with the aim of getting back in the narrowbody market

Additional Information

($1 = 0.7465 pounds)

(Reporting by Disha Mishra in Bengaluru; Editing by Sonia Cheema)