Rolls-Royce is seeking £3 billion in taxpayer support from the UK government to develop a new aircraft engine aimed at re-entering the short-haul market. The aerospace giant is requesting an initial £100 million to £200 million to fund development and testing of its UltraFan 30 engine demonstrator, according to the Financial Times.

Chief Executive Tufan Erginbilgiç has held discussions with Business Secretary Peter Kyle about securing funding in the first half of the year. The company has been exploring various options including support through the Aerospace Technology Institute, the National Wealth Fund, or potential launch aid. Rolls-Royce is also considering whether the government might take an equity stake in the project.

The funding request comes as Rolls-Royce seeks to compete in the narrow-body segment dominated by Airbus A320 and Boeing 737 MAX aircraft. The company exited this market over a decade ago but sees the UltraFan project as crucial for future growth. Germany, where Rolls-Royce has substantial operations, is also reportedly interested in supporting the initiative.