NEWTOWN, Conn. -- Like a finely tuned machine, MTU Aero Engines continues to steadily motor on. While the order boom in civil aviation has subsided from its record run, MTU Aero Engines has increased production not only to meet current demand, but also to provide for future maintenance, repair, and overhaul (MRO) opportunities.

As has been the case for the past few years, commercial production and MRO continue to be brisk sectors for MTU. In terms of new production, MTU is ramping up production of the new PW1100G-JM engine used to power the new Airbus A320neo. While the new engine has had some teething troubles in early service, the problems are being addressed and the engine, which has been selected to power five new aircraft, is poised to be a major success. As a partner with Pratt & Whitney, MTU will be responsible for producing three out of every 10 engines, with Pratt's U.S. operations building the rest. As MTU works out issues with the engine in 2018, production is expected to ramp up beginning in 2019.

Meanwhile, the firm's other programs continue apace. The company works with partners around the world, including GE, Rolls-Royce, and Safran Aircraft Engines, providing a variety of components for their engine programs. Most recently, MTU was selected to produce the turbine center frame for General Electric's GE9X, which will power Boeing's upgraded 777X.

Perhaps most importantly, MTU's various collaborations put the company in a strong position to provide MRO services. Here, the company has expanded its reach, with teamings 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. More recently, the company has joined forces again with Lufthansa Technik and formed a new joint venture, EME Aero based in Poland, to provide maintenance, repair and overhaul of geared turbofan engines. The two companies have previously partnered on a joint-venture repair shop for compressor aerofoils - Airfoil Services Sdn Bhd - in Malaysia.

Meanwhile, the company's traditional markets have not been neglected, with a facility in the U.S. now FAA certified and a new repair center in Canada added to the roster. Through these global MRO facilities, MTU 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. More acquisitions and joint ventures in this sector are expected as MTU looks to consolidate its position in this market.

While commercial operations are enjoying a boom, defense is in the midst of a downturn. For the most part, military engine production at the firm 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: production of the TP400-D6 engine that powers Airbus Defence and Space's A400M is ramping up. MTU's defense sector will also see some MRO gains in supporting the Panavia Tornado's RB199 engines. In addition, MTU is a partner with GE on the T408 engine used on the U.S. Marines Corps' CH-53K heavy-lift helicopters. These new programs could lead to defense-related growth in the early 2020s.

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

Source: Forecast International Government & Industry Group
Associated URL: http://www.mtu.de/
Author: R. Pettibone, Gov't & Industry