The chief executive of Rolls-Royce has pressed ministers for taxpayer support for a new jet engine, on a day the company also announced record profits and promised to give up to £9bn back to shareholders.
The £3bn engine project, designed to power smaller commercial planes, would allow Rolls-Royce to re-enter the lucrative short-haul flights market.
Tufan Erginbilgiç said on Thursday: “Not supporting it would be a sort of strange thing to do,” given Labour had named advanced manufacturing as a priority in its industrial strategy, released last summer.
Rolls-Royce has already spent more than £1bn on the project, while it has reportedly asked the UK government to initially provide between £100m and £200m to develop and test the UltraFan 30 engine.
Erginbilgiç said: “There are all sorts of numbers out there. Whatever they support, we will appreciate that, but it is going to be a fraction of what we are spending … in this programme.”
Pressed on whether the support was necessary amid vast profit and shareholder payouts, he claimed international rivals received “two or three times” the state support Rolls-Royce was asking for. “We are in a competitive world; therefore, you need to think about that,” he said.
The engine would mark Rolls-Royce’s return to the market for smaller jets that it abandoned in 2013. Narrow-body planes – the kind used on everyday short-haul routes – make up the vast majority of commercial aircraft flying today.
Rolls-Royce’s profits soared by 40% last year as the engineering company’s turnaround gathered pace, helped by booming demand for power from datacentres.
The company reported underlying profits of £3.5bn for 2025, up from £2.5bn the year before, as it also promised to give up to £9bn to shareholders over the next three years through share buybacks, its biggest return of cash to investors in a decade.
Erginbilgiç, a former BP executive, has transformed the engine maker’s fortunes since taking over in January 2023, when he told staff the company was standing on a “burning platform”.
Since then profit has soared as he cut costs, renegotiated lossmaking contracts and pushed through better commercial terms with airline customers.
The strong results posted on Thursday were driven in part by an increase in demand for power from datacentres, as technology companies race to build infrastructure to support artificial intelligence. Profits at Rolls-Royce’s power systems division, which makes generators for the sites, jumped 60% to £852m last year.
The bulk of the company’s profits still come from its civil aerospace business, however, where there was strong demand for its commercial jet engines. It also makes money every time one of its engines is in the air.
Rolls-Royce serviced more engines last year, it said, and benefited from better contract terms, with a 41% jump in profits from the division to £2.1bn.
It also had to navigate the turbulence caused by Donald Trump’s tariff war in 2025, although the company was eventually exempted for its engines, which power Boeing’s 787 passenger jet, as part of a US-UK trade deal struck in May.
Erginbilgiç said Rolls-Royce’s turnaround “continues with pace and intensity. We are consistently achieving outcomes that were not possible before our transformation.”
The company raised its forecast significantly, now expecting an operating profit of between £4.9bn and £5.2bn by 2028 – about a third more than it had previously targeted.
Rolls-Royce said it would return £2.5bn to shareholders this year alone, as part of the longer-term buyback plan. The company only completed its first buyback in a decade last year, returning £1bn to investors.
Last June, Rolls-Royce was chosen to build the UK’s first small nuclear reactors at Wylfa in north Wales, backed by £2.5bn of government funding. The company said it was confident the business would be making money within five years.
Rolls-Royce shares rose almost 7% on Thursday morning, helping to push the FTSE 100 to a record high of 10,825 points, up 18 points, or 0.15%.
