Mtu Aero Engines Hldgs Ag

Welcome to the conference call on MTU Aeroengine's first quarter results 2023. For your information the management presentation including the Q&A session will be audio taped and streamed live or made available on demand on the internet. By attending in the conference call you grant permission for audio recordings intended for publication on the internet to be taken. The speakers of today's conference call are Mr. Lars Wagner, Chief Executive Officer, and Mr. Peter Kammerich, Chief Financial Officer. Firstly, I will hand over to Mr. Thomas Franz, Vice President, Investor Relations, for some introductory words.

Yes, thank you. Good morning, ladies and gentlemen. Welcome to our conference call for MTU's Q1 2023 results. We will start with a review and some key messages presented by Lars. Peter will start with the financial overview and a more detailed look into our OEM and MRO segment. After that, Lars will share our view on the current challenges and opportunities in light of our 2023 guidance. After that, we will open the call for questions. Let me now hand over to Lars for the review.

Thank you, Thomas, and also welcome from my side. Good to have you guys with us. Let me start with the market environment. Passenger traffic is further improving strongly, supported by travel policy relaxation, mainly also in China. In February 23, global passenger traffic reached 85% of 2019 levels. Domestic traffic was almost back on 2019 levels and international traffic has recovered to roughly 80%, 78% in general. and cargo traffic remains roughly 3% above pre-COVID levels, showing a slight slowdown to recent tailwinds. This development supports the strong demand environment we are currently in, while additional MRO shop visits are still limited by supply chain and labor shortages. Industry-wide supply chain pressure is expected to ease later this year, which will support increased output of new and overhauled engines. While there are signs of improvements with some key suppliers, we see new difficulties rising. As one example, one of our key suppliers had a fire in one of its facilities with the potential to further tighten the availability of certain parts. Good progress on our new military engine program, the next European fighter engine. In March, just recently, we formally kicked off the program within MTU and have already allocated more than 100 engineers working on this game-changing platform. We continue to hire people for the program and are targeting a speedy progress on the technology for this engine. Regarding our capacity expansion, good news from two international sites in the MRO segment. MTS Serbia, our new parts repair shop with a planned maximum capacity of 400,000 repair hours annually, has started its operations at year end 2022. In the meantime, it has already received more than 54 repair process certifications. And in the coming years, we will increase the workforce to 400 at this site. Additionally, we achieved a major milestone with our capacity expansion in China. The new test cell is ready to start operations with an initial certification for test runs for the PW1100. These investments in our capacity are important pillars to further strengthen the flexibility within our MRO network and MTU's global competitiveness. On another topic, we are further preparing ourselves to expand our technological expertise to different fields. Last week, MTU announced the acquisition of eMoses GmbH, a high-tech company for electric motors. The company, with around 30 employees, is specialized in innovative electric drives. This technology is part of our strategy and R&D efforts on our flying fuel cell. And lastly, a few words on the Guidance 23. The encouraging market environment that I just mentioned and our strong results in the first quarter 2023, which Peter will present to you in a few minutes, make us very confident that we are on the expected growth track. But Despite all the good signs, we remain cautious and stick to our full year outlook for today. I'll share our view on that in a few minutes. Before we go into the financial details, let me take the opportunity to comment on recent news about the GTF. The engine entered service in 2016 and the engine was able to deliver the best in class efficiency from day one onwards. We are very confident that the architecture itself forms the future of aircraft propulsion. Nonetheless, we faced and we have overcome technological challenges in the early years of the program. While the engine performance and reliability of GTF engines have significantly improved since the entry into service in 2016, not all engines in the field are on the latest standards and the development of improvement is not over. The next step Next big step will be the introduction of the GTF advantage. Amid struggles in the global supply chain and labor shortages in conjunction with an overwhelming demand, the ability to maintain and upgrade the GTF fleet remains below our targets. In certain cases, this leads to aircraft on ground and resulting in disruptions at airlines. The entire GTF MRO network is doing its best in supporting the MRO customers in every way they can in the current situation. And as previously mentioned, further technological upgrades, technical upgrades and improvements are on their way to improve the on-wing time in the near future. Now let me hand over to Peter for some financials.