UK backs Rolls-Royce return to jet market to fend off foreign rivals

By Sam Tabahriti

LONDON, Oct 30 (Reuters) - Britain must back Rolls-Royce's bid to return to the narrowbody jet market to fend off global competition and secure future aerospace jobs, even as the engine maker posts record profits, its industry minister said on Friday.

The government and Rolls-Royce this week announced plans for a 10-year, £2.5 billion ($3.35 billion) jointly funded programme aimed at helping the British company develop engines for future narrowbody aircraft, opening a path back into the world's largest civil aviation market.

Rolls-Royce has been shut out of the narrowbody market since selling its stake in the International Aero Engines consortium to Pratt & Whitney in 2012.

Asked why public money was needed for a company that expects up to £4.9 billion of annual profit, industry minister Blair McDougall said governments had long shared the risks of major aerospace programmes because of the scale of investment required.

"We want those engines to be designed, developed and serviced eventually here in the UK," he said in a phone interview, speaking from Rolls-Royce's facility in Inchinnan, near Glasgow.

"There are countries all over the world trying to eat our lunch when it comes to aerospace jobs and the aerospace supply chain."

COST SPLIT STILL TO BE DECIDED

McDougall said discussions were continuing over how the programme would be funded, declining to say how costs would be split between the government and Rolls-Royce.

"We are still in discussions," he said. "It's a commercial conversation from Rolls-Royce's end and a value-for-money conversation from our end."

The government has said the initial phase of the programme would support 3,300 jobs by the end of 2029. McDougall said the longer-term prize was securing work on future aircraft programmes that could support "tens of thousands of jobs" across Rolls-Royce and its supply chain.

He described the investment as "re-industrialisation in action".

"The government (is) putting money where its mouth is, backing jobs that give people not just productive high-skilled jobs but also that sense of pride, that sense of purpose for the communities around these workplaces," he said.

($1 = 0.7456 pounds)

(Reporting by Sam Tabahriti; Editing by Jan Harvey)