Intercoolers have recently received a considerable attention as a means to improve aero engine efficiency. Intercoolers have the potential to improve engine SFC, ease the design of an efficient turbine cooling system by reducing compressor exit temperatures and hence cooling air temperatures, as well as reducing NOx emissions. Intercooling may also provide benefits by increasing the specific output of the engine core and therefore reduce total engine weight. The performance potential for a two-pass cross flow intercooler has been estimated through an analysis of a long range mission for a geared turbofan engine. The application of a set of CFD based correlations allows the simultaneous coupled optimization of the intercooler conceptual design parameters and the engine design. The coolant air for the intercooler is ejected through a separate variable exhaust nozzle which is used to optimize the engine performance in cruise. By comparing the optimized intercooled geared engine with an optimized advanced non-intercooled geared engine, a reduction of 4.8% fuel burn is observed.