MTU Aero Engines (ETR:MTX) reported higher revenue, earnings and cash generation for the first half of 2026, while raising its full-year cash conversion outlook after free cash flow exceeded its initial expectations.
Group revenue rose 13% to nearly €4.7 billion in the first six months of the year, Chief Executive Officer Dr. Johannes Bussmann said. Adjusted EBIT increased 5% to €692 million, producing an adjusted EBIT margin of 14.8%. Adjusted net income rose in line with EBIT to €502 million.
Geopolitical volatility has not affected results
Bussmann said recent tensions in the Middle East had increased near-term volatility but had not had a material impact on MTU’s business, including its first-half financial performance. The company reported no cancellations or structural deferrals in either the original equipment manufacturer, or OEM, and maintenance, repair and overhaul, or MRO, markets.
“High demand continues to outpace aircraft deliveries,” Bussmann said, supporting new-engine shipments and aftermarket activity. He added that industry-wide MRO demand continued to exceed available capacity.
The company said its diversified portfolio across narrow-body and wide-body commercial aviation, military programs, freighters, industrial gas turbines and business jets supported its resilience. Bussmann highlighted the GTF engine family as a major future growth driver, alongside the GEnx and GE9X wide-body programs. He also described the V2500 as a continuing source of cash generation with substantial aftermarket visibility.
GTF fleet-management progress continues
MTU said the GTF fleet-management plan was progressing as expected. Aircraft-on-ground, or AOG, levels tied to the program declined about 25% year-to-date, while PW1100GTF MRO output increased 40% year over year across the network.
The company expects powder-metal-related AOGs to continue declining and to be resolved by the end of 2026. Engine-related groundings on the A220 and E-Jet platforms are also expected to be fully eliminated by year-end.
MTU’s share of AOG-related compensation totaled €110 million in the first half, compared with a €150 million impact in the first half of 2025. Chief Financial Officer Katja García Vila said direct powder-metal AOG compensation payments are expected to end by the close of 2026, although pre-financed shop-visit receivables will continue to affect cash flow in subsequent years.
The first GTF Advantage engine is expected to enter service later this year, followed by the Hot Section Plus upgrade. Bussmann said the upgrade is intended to improve durability and operating performance, particularly for operators in harsh environments, though he said it was too early to assess customer demand for the option.
MRO growth offsets OEM revenue decline
Commercial MRO was the company’s largest growth contributor. First-half commercial MRO revenue rose 24% to nearly €3.4 billion, or 29% in U.S. dollar terms. GTF MRO represented about 46% of total MRO revenue in the period.
Excluding GTF work, MTU’s core MRO business grew 9% in U.S. dollar terms, supported by leasing and asset management, industrial gas turbine, CF6 and PW2000 programs. Adjusted EBIT in commercial MRO increased 13% to €271 million, maintaining an 8% margin.
The segment’s profitability reflected higher GTF-related shop visits and continued ramp-up costs at MTU Fort Worth and MTU Maintenance Zhuhai, partly offset by stronger core MRO activity and contributions from the company’s leasing and asset-management business.
In the second quarter, commercial MRO revenue increased 37% to €1.5 billion, while adjusted EBIT rose 20% to €139 million.
OEM revenue, meanwhile, declined 4% in euros for the first half. Commercial OEM revenue fell 9%, while military revenue increased 15%, led primarily by the TP400 program and supported by the EJ200 and T408 programs. Organic commercial OE revenue was stable in U.S. dollar terms, while organic spare-parts revenue increased by a mid-teens percentage.
First-half OEM adjusted EBIT increased slightly in absolute terms, with a 31.2% margin. García Vila said aftermarket performance supported profitability. The company noted that reported commercial OEM revenue comparisons were affected by an especially strong second quarter of 2025, which included favorable U.S. dollar hedging effects and high-priced spare-engine sales.
Order book, military outlook and technology investments
MTU ended the first half with an order book of €30.4 billion. It secured €4.9 billion in MRO contract wins during the first six months, and said orders announced at the Farnborough Airshow added roughly €500 million, predominantly for GTF engines across all three platforms.
On military aviation, Bussmann said the company remained positive about its prospects for participation in a future European fighter aircraft program following the discontinuation of the FCAS program in its previous form. He said discussions with governments and military customers were continuing, but decisions on program structure and timing would rest with political leaders and customers.
MTU said it has high-double-digit euro revenue exposure from FCAS-related work in 2026 and that this funding is secured for the year. The company did not provide projections beyond its existing medium-term outlook.
The company also said it plans to establish a dedicated fuel-cell propulsion joint venture with Airbus, subject to regulatory approvals. Operations are expected to begin at the start of 2027. Bussmann said the venture would focus on hydrogen-based propulsion technology, while cautioning that commercial application would be well beyond 2030.
MTU said it was fully hedged for 2026 at an average hedge rate of 1.14 and continued to build future hedging positions at higher average rates amid a weaker U.S. dollar.
About MTU Aero Engines (ETR:MTX)
MTU Aero Engines AG, together with its subsidiaries, engages in the development, manufacture, marketing, and maintenance of commercial and military aircraft engines, and aero-derivative industrial gas turbines in Germany, other European countries, North America, Asia, and internationally. It operates through two segments: Original Equipment Manufacturing (OEM Business); and Maintenance, Repair, and Overhaul (MRO Business). The company offers commercial aircraft engines for wide body jets, narrow body and regional jets, business jets, and turboprops; military aircraft engines for fighter jets, helicopters, and transporters; and industrial gas turbines.
