MTU Aero Engines Ramps Up New Engine Production

by Richard Pettibone, Aerospace & Defense Companies Analyst, Forecast International.

MTU Aero Engine is well positioned for years of solid profitability, thanks to the healthy status of its commercial engine production operations and an increasing emphasis on MRO activities.  Business remains brisk in both these sectors.

MTU is ramping up production of the new Pratt & Whitney PW1100G-JM engine used to power the Airbus A320neo.  This program is a milestone for the company: MTU will be  manufacturing three out of every 10 of these new engines for Airbus.  (Pratt & Whitney’s operations in the USA will manufacture the rest.)  MTU is expected to ramp up production from about 16 engines this past year to 100 in 2017, reaching a peak of 250 a year by 2020.

The company’s other programs will continue moving steadily forward.  MTU  provides a variety of engine components for its partners around the world  – including such giants as GE, Rolls-Royce, and Safran Aircraft Engines.  Most recently, MTU was selected to produce the turbine center frame for General Electic’s GE9X, which will power Boeing’s upgraded 777X.

Perhaps most importantly, MTU’s various collaborations put the company in a strong position to introduce additional operations and services where it has established a foothold.  The company is expanding its reach, with new partnering arrangements in China and Saudi Arabia announced.  The effort in China looks to build upon the company’s success there as an MRO provider by transitioning into engine manufacturing.  The move into Saudi Arabia is aimed at strengthening the firm’s MRO operations in the Middle East.  Meanwhile, MTU has not neglected its traditional markets, achieving FAA certification for a facility in the U.S. and adding a new repair center in Canada to its roster.

MTU’s global MRO facilities can provide commercial operators with support on engines such as the V2500, CF6, and CFM56.  With thousands of these engines in service, MRO is expected to remain a lucrative focus for the firm in the years to come.

While commercial operations are enjoying a boom, defense is in the midst of what will likely be a long downturn.  For the most part, MTU’s military engine production focuses on the Eurojet EJ200 for the Eurofighter Typhoon.  Production of the EJ200 is slowing as government spending on Eurofighters declines.  Fortunately, the company has a counter to that program’s decline – the TP400-D6 engine that powers Airbus Defence and Space’s A400M, production of which is ramping up.  MTU will also see some MRO gains in supporting the Panavia Tornado’s RB199 engines.

All told, MTU Aero Engines appears to be well diversified across the spectrum of aviation engines.  This market presence, coupled with strong and growing worldwide MRO operations, will provide solid returns for the company in the years ahead.

The Defense & Aerospace Companies series focuses on worldwide aerospace and defense prime contractors and subcontractors. Concise reports provide data on individual corporations regarding recent mergers, restructurings, and joint ventures, along with a Strategic Outlook that examines the company’s strengths, weaknesses, and opportunities. Also included in each report are financial and industrial segment data, snapshot coverage of major programs, and recent U.S. Department of Defense contract awards.

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