Shop visit slots for engine maintenance at MTU Aero Engines are “more or less” booked out for the whole of 2022, the Germany company has told investors.
“Actually, all the shops are more or less fully utilized back again to the levels we have seen before,” said CEO Reiner Winkler on a full-year earnings call.
Commercial engine MRO sales were up 9% for the 2021 calendar year, as compared with 2020, and MTU is guiding for about 25-30% revenue growth in 2022, making commercial maintenance its fastest growing segment this year.
Chief Financial Officer Peter Kamertisch noted that while airlines sought to minimize the scope and number of shop visits during the crisis, strong demand predicted for the summer season means a return to normal service, possibly even with some backloaded MRO demand bleeding into 2022 from previous years.
“Now we see that the scope of the shop visit is also increasing and [customers] really do full heavy shop visits,” he said.
In fact, the challenge now for MTU is not a lack of demand, but how best to meet it given ongoing pandemic disruption within its own operations.
“We are still in the middle of the corona crisis. We see that we have in our German plants some infections ... and so that prolongs turnaround times a little bit in the shops,” observed Kameritsch.
Investors were also keen to hear how global supply chain and inflation trends are feeding into MTU’s OEM and maintenance production, pricing and margins.
On inflation, Kameritsch said that “we are quite well protected” as maintenance labor rates are subject to price adjustments based out consumer price indices.
And for materials, he noted that MTU was insulated from swings in the spot price of nickel and titanium due to long-term pricing agreements under which the company typically pays a “gliding average” price over two to three years.
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