Specialist
Former VP at MTU Aero Engines AG
Agenda
- Commercial aerospace industry recovery pace and analysis of aircraft mix on MTU Aero Engines’ (ETR: MTX) revenue outlook
- MTU’s supply chain, strategy and bottlenecks
- Key engine manufacturers – positioning, alliance strategy and impact on MTU’s longer-term outlook
- Profit margin potential, capital investment needs and future market opportunities
Questions
1.
How would you assess MTU Aero Engines’ current supply chain challenges?
2.
Where does MTU stand in its current procurement of titanium? Is the company able to secure a good sourcing?
3.
Could you elaborate on the steps management has taken to mitigate the risks derived from supply chain disruption?
4.
What impact are labour skill shortages having on engine manufacturing?
5.
What steps can MTU take to ensure that it retains a strong proportion of its IT staff, instead of them going off to Google and other technology companies?
6.
What’s your short-to-medium-term outlook for IT staff employment at MTU?
7.
Could you provide an update on the GE9X engine issues, as it relates to the Boeing 777? Is this an isolated problem or an industry-wide issue facing OEMs?
8.
How significant are the delays in production to narrow- and wide-body aircraft?
9.
Might production challenges result in OEMs delaying deliveries or do you feel supply can meet today’s delivery targets from companies such as Airbus?
10.
Do you feel MTU is in a better position than its competitors to navigate the challenges facing the industry?
11.
There’s been a lot of demand for air travel during the post-pandemic recovery period. What impact has pent-up passenger demand had on narrow-body aircraft production? Has it led to an acceleration?
12.
A specialist in a previous Third Bridge Forum Interview predicted a negative forecast for commercial aircraft delivery in 2023. What’s your outlook for MTU’s commercial volume delivery heading into 2023?
13.
How would you assess OEMs’ pricing strategy as it relates to material cost inflations?
14.
Revenue in the OEM segment increased 17% in the first nine months of 2022 vs the first nine months of 2021. Will the segment continue to grow? What core organic growth opportunities are available within this division?
15.
What do you assess to be the core organic growth opportunities available within the OEM segment? What new programmes – ways to grow current assets or capital investment – are there?
16.
How would you assess the OEM segment’s EBIT-adjusted margin?
17.
As we spoke about, the Fx rate has been favourable for MTU. Can the 10% increase in US commercial revenue be maintained in H1 FY23?
18.
How is MTU exploiting the benefits offered by strong Fx tailwinds?
19.
MTU’s commercial 2022 MRO [maintenance, repair and overhaul] guidance for the GTF engine indicates slow growth. How would you assess the company’s relationship with Pratt & Whitney? Could the delivery of engine orders be improved in the short term?
20.
What is your 2023 commercial MRO growth outlook?
21.
How would you assess MTU’s competitive positioning across low-pressure turbines and high-pressure compressors?
22.
How would you assess the threat posed by ITP Aero? I know there are probably some close similarities in functionality there.
23.
Cash flow from operating activities increased 22% in the first nine months of 2022 over the same period in 2021. How much of this was this driven by a strong order book?
24.
Do you expect MTU’s EBIT to show significant growth into 2023?
25.
How would you assess MTU’s cargo business’s contribution to EBIT growth?
26.
What are your thoughts on the PW800 aftermarket participation expansion? How would you assess the opportunities available to MTU?
27.
When might you expect MRO’s aftermarket service to outstrip the OEM segment, in terms of profitability? Is that feasible?
28.
What are your thoughts on MTU’s contribution to the ultra-efficient propulsion systems project for the Clean Aviation programme?
29.
What are your thoughts on Neste supplying Air France and KLM with more than one million tonnes of sustainable aviation fuel?
30.
What opportunities are available within MTU’s military business unit?
31.
You mentioned the profitability of the Eurofighter. Which geographical region, referring to either Europe or US, is demonstrating the strongest customer demand for the Eurofighter and other key military equipment?
32.
How has the Russia-Ukraine conflict impacted MTU’s operational activity?
33.
What’s your short-to-medium-term profit margin growth outlook for MTU’s military business?
34.
How would you assess MTU management’s strategy moving forward, given a new CEO, Lars Wagner, comes in on 1 January 2023?
35.
Could you elaborate on which engine technologies might be a priority for MTU management?
36.
How would you assess MTU’s current technological capabilities?
37.
What questions should our clients ask MTU management in the coming months? Are any areas in the market being under-appreciated by investors?
38.
Are there any other points you would like to highlight before we conclude today’s Interview?
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