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Eurofighter on the east flank - and the engine manufacturer has a maintenance problem

At Germany's leading aircraft engine manufacturer MTU Aero Engines, business is booming with high double-digit growth rates in the civil business - but there are delivery problems in the military division.

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Eurofighter on the east flank - and the engine manufacturer has a maintenance problem

At Germany's leading aircraft engine manufacturer MTU Aero Engines, business is booming with high double-digit growth rates in the civil business - but there are delivery problems in the military division. Due to logistics problems with parts supplied by suppliers or partners, there are delivery delays, admitted CEO Reiner Winkler when presenting the new quarterly figures. "We're a bit behind in the military business," Winkler said. He hopes to solve the problems in a race to catch up by the end of the year.

To do this, however, there has to be a tremendous boost. In the third quarter, military sales were just 95 million euros, down 22 percent year-on-year, and in the first nine months, at 309 million euros, just about the same level as last year. Nevertheless, the military business, which contributes almost ten percent to total sales, is expected to grow by a high single-digit percentage for the year as a whole.

CEO Winkler did not give any details of what exactly is wrong. Individual components were missing. Both the business with new engines and maintenance and repairs are affected. The main sales driver in the military business is the Eurofighter engine. Tornado engines are also affected, it is said. It has not been published whether Eurofighters may not be operational due to the delivery problems or whether the delivery will be delayed.

In June, MTU Aero Engines reported on a special "Speedline for the Air Force" to service Eurofighter engines as quickly as possible. Finally, after the outbreak of the Ukraine war, some fighter jets were relocated to NATO's eastern flank and now have more flight hours.

The Eurofighter engine will not be built by MTU Aero Engines alone, but in the Eurojet consortium with GE Avio (Italy), ITP Aero (Spain) and Rolls-Royce (Great Britain). Customers for new engines include the Air Force, but also countries such as Kuwait and Qatar. Saudi Arabia, as a Eurofighter user, is also one of the consortium's customers, but no longer with new engines.

The supply chain problem also affects the commercial business of MTU Aero Engines and more specifically the maintenance business. Repairs from suppliers would be delayed in some cases, said Winkler.

Nevertheless, the group is now increasing its annual forecast. Sales are likely to be 100 million euros higher, at 5.4 to 5.5 billion euros. In the first nine months, sales increased by 27 percent to 3.82 billion euros, and profit after tax even climbed by 45 percent to 319 million euros. The development of the dollar versus the euro was also helpful, as MTU transactions are largely settled in the strengthened dollar.

CEO Winkler, who has been at the top of the board since 2014 and announced his retirement at the turn of the year, was pleased with the company's development at the end of his term. The ongoing recovery in aviation has contributed to the current upswing.

However, Winkler dampened Airbus' overly ambitious growth plans. A production expansion also needs advance notice. At the end of July, Airbus cut its delivery target for this year from 720 to 700 aircraft due to supply chain problems. Winkler defended himself against allegations that the somewhat slowed-down expansion was possibly due to MTU components.

"We are largely on schedule with our deliveries." There is no one to blame if Airbus cannot ramp up production as much as planned. "I would have some doubts as to whether it's always just the engine," says the MTU boss. "There are one or two issues throughout the supply chain and also internally at Airbus." It's relatively easy to blame engine manufacturers alone.

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