MTU Aero Engines has developed into a strategically important partner for each of the big three civil engine manufacturers. It has cemented its role as the German partner for Europe's multi-national military engine projects, and been aggressively expanding its civil maintenance business. Dr Klaus Steffens, president and chief executive, discusses how far MTU has come with Mark Pilling.
Q: Your work on developing major elements of the Pratt & Whitney PW6000 engine to power the Airbus A318 is a centrepiece of your activities at Paris this year - what does this role on this engine mean to MTU?
A: It was a milestone in the history of MTU to have the high-pressure compressor of that engine. Development is well under way and it is performing well. I think it is technology that will be discovered by more programmes - both in the civil and military worlds.
Q: In recent years, MTU has been gradually taking greater risk shares on programmes such as the PW6000 and Engine Alliance GP7000. Does MTU harbour ambitions to move into the first tier of engine manufacturers?
A: This is not our intention. We think we can play a more pronounced role by being an almost irreplaceable partner to the major manufacturers. To play that role there are two main prerequisites: technology and financial capability.
In the technology area we are covering more components of the engine. For instance, the high-pressure compressor (HPC) has more value than the low-pressure compressor (LPC).
By combining the two you can easily achieve a share of 25-30% in an engine programme, and MTU has the financial muscle to take such significant stakes.
Q: Overall, MTU's revenues fell by 11% in 2002, compared with 2001, to €2.2 billion. How have the individual business sectors fared?
A: Our military business, where revenues jumped by 13%, has certainly helped us, but with 80% of our revenues coming from the civil sector it by no means compensates for the 26% drop there. However, we have grown our civil maintenance, repair and overhaul activity, against the market trend, by 7%, including creating a joint venture with Lufthansa Technik in Malaysia.
Q: Although 2002 was a tough year for the aviation industry, MTU managed to more than hold its own. What were the highlights for you?
A: There were a lot of bright spots for MTU. The first was clearly the PW6000. For this we have been given a national technology award, which is quite an achievement for a moderately sized German company like us.
We have also closed the final contracts on the GP7000 [with GE and P&W] and I'm very confident that the A380 programme will continue to its old timescale of order development. On the military side, it is now the beginning of Eurofighter series production. This helps us fill our factory so the reduction of manufacturing capability is not as bad as it could have been.
Q: More recently, EADS has selected Europrop International, in which MTU has a 28% stake, to provide the turboprop engine for the Airbus Military A400M transport. Did the partners have to make major concessions for the TP 400-D6 offering to win?
A: We made dramatic price concessions for non-recurring revenues prices, reducing our development cost for Airbus substantially. We were pretty close competitors [with Pratt & Whitney Canada] on recurring costs, but were coming in higher on non-recurring, so we reduced our offer and won on commercial grounds.
Both offers were very close on technical performance. MTU is happy from an industrial standpoint that it is involved in this programme. There are not many military projects around in Europe so it was important to participate in this one.
Source: Flight Daily News
