MTU Aero Engines is suffering the effects of Russian sanctions

The German engine manufacturer continues its growth path. But the war in Ukraine is making its mark. And the pandemic is also causing continued uncertainty.

In the first quarter of 2022, MTU Aero Engines generated sales of 1.18 billion euros, 19% more than in the same period. Profit after tax increased by a whopping 60 percent to 93 million euros. The military engine sector recorded the highest increase in sales with 108 million euros (+ 25%): “This reflects the changes in EJ200 deliveries from the fourth quarter of 2021 to the first quarter of this year,” said Reiner Winkler, CEO of MTU Aero Motors presenting the quarterly data on Friday. The main selling engine was the Eurofighter EJ200 engine.

However, the new financial year is also characterized by many uncertainties. “We are continuously monitoring the effects of the crown pandemic and the war in Ukraine. If necessary, we will adjust our perspectives,” said Winkler. To date, MTU has written down approximately 52 million euros in relation to the sanctions against Russia. MTU has completely canceled the PW1400G-JM geared turbofan for the Irkut MS-21, which is worth around 40 million euros. Furthermore, according to the Munich company, the receivables would be written down to a lesser extent.

Pratt & Whitney

Pratt & Whitney’s PW1400G-JM was intended for the Irkut MS-21. Due to the sanctions against Russia, he will no longer be extradited.

No more titanium from Russia

Due to the war in Ukraine, MTU also wants to become independent of Russian raw materials by 2023. It is mainly titanium. According to Winkler, about ten percent of the titanium used in engine production currently comes from Russia. The amount needed by the end of the year has already been insured. In the future, alternative sources of supply will be used in the United States and Canada.

However, MTU sees a greater risk to air traffic development in China’s zero Covid strategy. The recurring blockades are negatively impacting domestic traffic within China, which is home to the largest narrow-body fleet in the world. For MTU, this means impairments in maintenance and in the sale of spare parts.

Winkler sees medium-term sales potential in the military sector, for example in the successor Tornado. The federal government has decided to partially replace the Tornado fleet with Lockheed Martin F-35. “Eurofighter has a good chance for the rest of the substitutes,” says Winkler. And when it came to the decision on a new heavy transport helicopter for the Bundeswehr, Winkler did not admit defeat, despite media reports of an award decision in favor of the Boeing CH-47F Chinook. “If it were the Sikorsky CH-53K, we would be involved in our engine.”

About the author


Leave a Comment