MTU Aero Engines AG

For H1 2026, group revenue increased 13% to roughly EUR 4.7 billion, adjusted EBIT rose 5% to EUR 692 million, and adjusted EBIT margin was 14.8%. Adjusted net income was EUR 502 million and free cash flow was EUR 294 million, up 39% year over year; cash conversion reached 59%. In the second quarter, commercial MRO revenue increased 37% to EUR 1.5 billion, while commercial OEM euro revenue declined 11% and total OEM euro revenue declined 8%; commercial MRO EBIT rose 20% to EUR 139 million and commercial OEM EBIT declined 2% to EUR 233 million. MTU raised full-year cash conversion guidance to 50% to 60% from 45% to 55%, while keeping all other guidance parameters unchanged. Management also said it expects powder metal-related GTF AOGs to be resolved by the end of 2026, A220 and E-Jet engine-related groundings to be eliminated by year-end, and noted no material impact from Middle East conflict so far.

Johannes Bussmann framed the quarter as an excellent first-half performance and repeatedly emphasized resilience, saying geopolitical tensions had not materially affected the business. He highlighted MTU’s diversified portfolio, strong installed-base aftermarket exposure, and the GTF fleet management plan’s progress, while pointing to the upcoming GTF Advantage and Hot Section+ as further platform improvements. He also stressed MTU’s positioning in military engines and hydrogen propulsion, including the Airbus fuel-cell joint venture, but made clear these are long-term strategic moves rather than near-term earnings drivers.

Katja Garcia Vila focused on the financial beat and the quality of cash generation, citing H1 revenue of nearly EUR 4.7 billion, adjusted EBIT of EUR 692 million, adjusted net income of EUR 502 million, and free cash flow of EUR 294 million. She said commercial MRO grew 21% in H1 to almost EUR 3.4 billion and OEM remained strong with a 31.2% margin, while cash conversion of 59% exceeded the original full-year expectation. She also noted GTF AOG compensation of about USD 110 million in H1 versus USD 150 million in H1 2025, and said full-year cash conversion guidance was raised to 50% to 60%; she added that the GTF AOG cash compensation ends by year-end, though prefinance receivables will still rise through about end-2028/beginning-2029.

Analysts pressed on the next European fighter program, asking about timing, funding, and whether Germany could join GCAP; management said funding is in place until the end of September, discussions are ongoing, and the decision is ultimately political rather than technical. Questions also focused on the GTF AOG trajectory, V2500 cycles, spare-engine mix, OEM margin sustainability, LeaseCo/MLS economics, and whether cash generation should be adjusted for GTF compensation. Management answered that GTF AOGs are down 25% year to date, MRO output is up 40% year over year across the network, V2500 demand remains strong with heavier shop scopes, OEM margins should still be supported by installed-engine growth and aftermarket mix, and the H1 dividend/associate income strength is not a simple run-rate item because of timing and mix effects.