Rolls-Royce has renewed its request for up to £1 billion in government funding to support its entry into the short-haul aircraft engine market, as the company updated its financial outlook for 2026. The aerospace firm, known for producing engines for large Boeing and Airbus aircraft, forecast adjusted operating profit between £4.7 billion and £4.9 billion, and free cash flow of £3.8 billion to £4 billion, despite ongoing geopolitical tensions in the Middle East.
Chief Executive Tufan Erginbilgic attributed the positive performance to improved profitability in the company’s civil aviation engine maintenance contracts. The business is working to extend the average “time on wing” for its wide-body engines, a key metric for engine efficiency and cost-effectiveness. Rolls-Royce reported revenue of £11.4 billion in the first half of 2026, a 20 percent increase that exceeded City analysts’ expectations of £10.2 billion. Underlying operating profit rose by 46 percent to £2.5 billion.
Since Erginbilgic assumed leadership in early 2023, Rolls-Royce shares have surged over 1,360 percent, closing at £14.59 on the day of the latest announcement. The company has also returned £1.4 billion of a planned £2.5 billion share buyback for the year and proposed a broader plan to return between £7 billion and £9 billion to shareholders by 2028.
The financial guidance revisions accompany Erginbilgic’s reaffirmed ambition to enter the global short-haul aircraft engine market, valued at approximately $1 trillion and currently dominated by U.S. firms Pratt & Whitney and General Electric in partnership with France’s Safran. Rolls-Royce had previously focused predominantly on engines for long-haul wide-body jets such as the Airbus A350 and Boeing 787, but the short-haul segment is estimated to be eight to nine times larger.
Based in Derby, the company is seeking government support believed to be in the several hundred million pounds range, as part of a potential £40 billion to £50 billion investment programme. Erginbilgic defended the funding request by highlighting the scale of financial backing received by U.S. competitors and stressed the broader benefits the investment would bring to the UK economy, including advanced manufacturing growth, creation of up to 40,000 jobs, and supply chain development.
While Erginbilgic declined to confirm specific meetings with the prime minister or chancellor following their recent appointments, he emphasized ongoing communication with government officials, describing the response as “supportive.” At the Farnborough Airshow earlier this month, he warned that without public funding, Rolls-Royce might relocate engine production to Germany or the United States, risking tens of thousands of British jobs.
Looking ahead, the next three years will be pivotal for Rolls-Royce to challenge established incumbents by delivering a demonstrator engine to airlines as the short-haul fleet renews. “You are either in or out [in the] next three years,” Erginbilgic stated, underscoring the urgency of securing investment to compete effectively in this critical market segment.