MTU’s Q1 Maintenance Revenues Rally, Warns Of Q2, Q3 Drop Offs

V2500
The V2500, with the CFM56, will account for a significant proportion of engine MRO spending in 2020.
Credit: MTU Maintenance

The commercial maintenance division of MTU Aero Engines accounted for the company’s highest revenue growth in the first quarter, but the engine specialist expects sales to drop in the second and third quarters due to the slowdown of the novel coronavirus-hit industry.

For the first three months up to March 31, the MTU Maintenance division saw revenues rise by 21% to €794.9 million ($870.9 million). IAE’s V2500 engine powering the Airbus A320 classic aircraft was credited as being a key driver of this. 

In just solely commercial engine maintenance, business increased by 4% from €385.6 million to €399.3 million. The main revenue drivers were the V2500, the PW1100G-JM for the A320neo and the GEnx, found on Boeing 787 and 747-8 aircraft.

Overall, its parent company generated revenues of €1.2 billion, representing a year-on-year increase of 13%. Operating profit saw a 3% decline from €187.6 million to €181.8 million while its adjusted earnings before interest and taxes margin stood at 14.3%.

“Although the decline in demand as a result of the coronavirus pandemic is not yet reflected in the quarterly figures and capacity utilization remained high at our worldwide MRO locations, the first quarter was nevertheless affected by the coronavirus crisis,” said Reiner Winkler, CEO of MTU Aero Engines in an earnings call this week. 

Since the virus started to spread in March, the industry saw a string of fleet groundings and facility closures worldwide. MTU followed suit by shutting down facilities in Germany and Poland for a three-week period from early April. 

“Commercial maintenance will likely be affected by a drop in demand at least in the second and third quarters, especially in the passenger sector, while demand from freight companies could safeguard capacity utilization,” Winkler said.

MTU says that given developments in connection with COVID-19, it expects to set out its 2020 fiscal year in detail at a later date, however, Winkler remains bullish about the long-term. “Given its fundamentally successful business model, we consider that overall MTU is in a good position to weather the crisis,” he added.

James Pozzi

As Aviation Week's MRO Editor EMEA, James Pozzi covers the latest industry news from the European region and beyond. He also writes in-depth features on the commercial aftermarket for Inside MRO.