MTU Aero Engines is seeing clearer skies ahead after a reasonablby strong repair business in the first half of 2021.
In the first half of this year, MTU’s commercial maintenance revenue rose to €1.35 billion (1.58 billion), 6% higher than the €1.27 billion posted in the first half of 2020. “In the core MRO business, revenue was below the prior-year level,” acknowledges MTU CEO Reiner Winkler.
“However, we were able to offset this thanks to sustained high demand for maintenance services for geared turbofan engines.”
The most important revenue generators in MTU’s commercial maintenance business were the PW1100G-JM, which powers the A320neo and the V2500 for the classic A320 aircraft family.
MTU is well-positioned for the future. In the first six months of 2021, the company won MRO contracts worth $3 billion, nearly double the value of 2020 first-half contracts, $1.7 billion.
Winkler says this big boost in contracts fuels his confidence that the engine MRO downturn has bottomed out, and a sustained recovery has started.
For all of fiscal 2021, MTU expects revenue in the commercial spare-parts business to increase from fiscal 2020 by low to mid-single-digit percentages. It expects revenue from commercial maintenance to increase by between 15% and 20% in 2021, compared with fiscal 2020. Previously, MTU had assumed growth of between 15% and 25%.
The upturn in engine MRO revenue stems from both industry-wide factors and factors specific to MTU.
According to IBA, global narrowbody aircraft utilization was nearing 70% of July 2019’s level in July 2021, second only to the recovery in regional jet utilization. The recovery in total flights has been strongest in North America, nearing 80% of pre-pandemic levels in July.
And the new orders keep coming in. In mid-July, MTU signed a new customer, Denmark’s Sunclass Airlines, for a five-year contract for MRO of CFM56-5Bs on eight Airbus A321s. Technical director Henrik Mørch Jensen says he expects MTU to provide used life-limited parts and individually-tailored technical support.
Also in mid-July, MTU signed a ten-year license agreement with Honeywell for MRO of accessories and line replaceable units for Honeywell’s LEAP parts. These include pneumatic valves, actuators, regulators and starters across all LEAP engine programs.
As part of the agreement, MTU will get full access to all relevant technical manuals and spare parts.
MTU maintenance will thus operate a licensed service center for Honeywell Aerospace and repair LEAP parts at its shop in Canada and provide part-pooling solutions for LEAP customers around the world.
MTU’s entire engine business, manufacturing and repair, civil and military, generated revenue of €2,004 million in the first half of 2021, down from €2,049 million in the first half of 2020. Net income was €135 million, compared with €161 million in the prior-year period.
MTU had 10,210 employees at the end of June 2021, almost as many as the 10,313 at the end of 2020.
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