European Commission - Press release
State aid: Commission approves Spanish R&D aid for the development of an innovative aero engine component
Brussels, 20 September 2011 - The European Commission has authorized under EU State aid rules a repayable advance of €36.6 million that Spain intends to grant to the Spanish aeronautics company ITP for the development of a low pressure turbine (LPT) for the Trent XWB engine, which is being developed by Rolls-Royce. The Commission found that the aid complies with EU state aid rules, because the positive effects of the aid outweigh potential distortions of competition.
"This project will raise technological capacities in Europe, and contribute to increasing the efficiency and reducing the environmental impact of air transport. Considering ITP's limited market share, the aid will not unduly distort competition," said Commission Vice-President in charge of competition policy Joaquín Almunia.
The Spanish authorities submitted evidence showing that the financial sector was reluctant to provide sufficient finance to fund the project due to its capital-intensive nature, technical and commercial risks, and long pay-back period. The aid will therefore contribute to overcome a genuine market failure. The Commission also considers that the aid is limited to the amount necessary for enabling the implementation of the project. In case of success, the aid will be fully repaid, including a reasonable interest. For each sale over the success threshold, the Spanish authorities will receive an additional royalty-fee. Moreover, considering the characteristics of the aero engine's component market and the limited share of ITP, the impact on competition will be limited.
ITP is a risk and revenue sharing partner in the new Rolls Royce's Trent XWB engine, and is responsible for the development of the Low Pressure Turbine (LPT). The LPT will provide a major contribution in achieving the ambitious targets set for the Trent XWB engine, in particular with regard to reducing its environmental footprint.
The repayable advance shares the risk of the project and covers 47.5% of the costs of industrial research and experimental development activities undertaken by ITP.
In the last few years, the Commission has authorised under EU State aid rules similar R&D projects for the development of novel aero engine components, such as aid to Volvo Aero for GEnx aero engine component (IP/09/956) and for the development of the Intermediate Compressor Case for the Trent XWB engine (IP/11/212).
The non-confidential version of the decision will be made available under case number SA.31817 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.