Mtu Aero Engines Hldgs Ag

Welcome to the conference call on MTU Aero Engines AG Q3 2025 results. 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. Johannes Bußmann, Chief Executive Officer, and Mrs. Katja Garcia-Villa, Chief Financial Officer. Firstly, I will hand over to Mr. Thomas Franz, Vice President, Investor Relations, for some introductory words.

Thank you, Sarah. Good morning, and welcome to MTU's nine-month 2025 results call. We'll begin today's session with our new CEO, Dr. Johannes Buschmann, who would like to introduce himself and share his first impressions. Following that, Katja will highlight the most important developments of the quarter and walk you through the financials, providing a detailed overview of our segment performance and underlying drivers. To close the presentation, Katja will summarize the key takeaways before we open the floor for your questions in the Q&A session. With that, it's my pleasure to hand over to Johannes.

Thank you, Thomas. Good morning to everyone and welcome to our earnings call. I have been on the board now since the middle of July, so quite over two months already, and it was a great pleasure to meet already some of you in person. For those who don't know me yet, let me introduce myself briefly. I've spent nearly my entire career in aviation and hold a degree in aerospace engineering. And furthermore, I was part of Lufthansa Technik for over 20 years. During my first weeks at MTU, I was working closely and intensely with my predecessor, Lars Wagner, to ensure smooth and collaborative handover and transition. Having been in my role as a new CEO of MTU, it has been really great to dive deeper into the company, our programs, and find an inspiring set of people that is well positioned to capitalize on market opportunities. It actually feels like much more than two months. I guess the reason is that I worked with MTU for many years as a business partner already and was previously a supervisory board member of MTU. My priority is now to get to know MTU really in depth. That is my current visit and journey from the production side and, of course, the shops and different products and people. And I'm truly inspired by the passion the entire MTU team shows on these visits. And you can feel that everyone is really innovative driving and has a great passion for shaping the future of this company. I will be happy to share my insights and key priorities moving forward with you at the full year's release. But today, I also have the pleasure to welcome Dr. Ottmar Pfender in the team, who will replace Michael Schreier on January 1, 2026. And I would like to thank Michael for his great contribution for over 35 years with MTU, and he did a great piece of work here. Ottmar will take over his responsibilities as Chief Program Officer, and has also more than 25 years of experience in the industry and with MTU. As the new executive board team, we will continue MPU's growth and transformation course, and I look forward to shaping MPU's future with my team from Katja, Silke, and Ottmar. And how we are progressing for the first nine months of this year, Katja will explain to you now. Thanks.

Thank you very much, Johannes, and a warm welcome also from my side. Let's briefly review our key financials before I move on to the business highlights of the quarter. Group revenues increased strongly by 19%, reaching nearly 6.3 billion euro in line with our full year 2025 target. Adjusted EBIT rose over proportionally by 34% to 995 million euro, resulting in a strong EBIT margin of 15.9%. This performance was driven by a continued favorable mix in the commercial OEM segment and robust profitability in MRO. Free cash flow came in at 279 million euros, representing a better-than-expected cash conversion rate of 39%, a strong development despite ongoing headwinds from the GTF fleet management program. Additionally, we saw strong cash contribution in the MRO segment and effects from conscious cash flow management. Based on the strong nine-month performance, we expect to achieve 2025 sales guidance in all subsegments and raise our EBIT and free cash flow guidance. I'll walk you through the details in a few minutes. Let us now move on to page 5. The positive market trends remain intact. We see significant opportunities outweighing existing challenges. Passenger traffic rose by 5% year-to-date in August, reflecting sustained demand across global markets. Cargo traffic also showed a robust performance with a growth of 3.3% year-to-date. For the full year, IATA projects a 5.8% increase in passenger volume, a return to more normalized growth levels following the post-pandemic recovery surge. Over the mid-to-long term, global passenger traffic is expected to grow steadily by 3-4%, driving sustained demand for new aircraft and aftermarket services. While the supply chain continues to recover, it still remains below pre-COVID stability. That is why the production ramp-up is slower than needed to meet rising market demand. Consequently, airlines are extending the service life of mature aircraft and engines, which in turn drives strong MRO demand and results in more extensive shop visits. This also keeps demand for fare and lease engines at elevated levels, with prices remaining very attractive. Global defense budgets are rising. For MTU, momentum in the Eurofighter program remains strong, with new orders from core nations and international customers. Germany confirmed the procurement of 20 Eurofighters, 52 engines, for deliveries between 2031 and 2034. In the US, demand for the CH-53K helicopters rising, The Marines have ordered 99 units for delivery between 2029 and 2034. MTU contributes the power turbine to the T-408 engine and holds an 18% program share. Recent news flows around ESCA has been somewhat sobering. Nevertheless, we remain optimistic that governments will find a solution to ensure the program continues. given its strategic importance for future European sovereignty. Additionally, the weaker US dollar-euro exchange rate poses a challenge, particularly for European aerospace and defense companies. We are mitigating this effect through our active hedging activities. In this dynamic environment, MTU remains well positioned to capture growth opportunities across both commercial and military segments. Our diversified portfolio, strong customer relationships, and continued investments in technology and capacity enable us to navigate current challenges while driving long-term value creation. Let's now move on to another topic, an update on the current carrier situation. Since our last update on the topic, there has been progress between effective countries and an agreement has been reached. This agreement follows the spirit of previous arrangements in our industry and reinstates a general exception from tariffs for aviation products. This exception does not include other products, such as industrial gas turbines. Furthermore, detailed rules for the application of the agreements are still in alignment between the EU and the United States. Beyond that, we are still waiting for tariffs clarification for machinery, engine stands and other items. To sum that up, significant progress has been made on the topic. To mitigate these challenges, we are continuously adapting our internal processes to meet all requirements. We analyze on an ongoing basis on how to optimize our path streams to reduce any impact. In addition to that, we are also working on contractual agreements to further reduce our exposure. With that, I will now move on to our key milestones of the third quarter. Moving on to page 7, let me now share the key milestones of the quarter. To start with, as mentioned earlier, Germany has now confirmed the procurement of 20 additional Eurofighter aircraft, including existing orders from the core partner nations. This brings the total firm order book to 160 new Eurofighter engines, which are scheduled for delivery over the coming years. Let's continue with the GTS fleet management plan. We make great progress in the ongoing execution of this program. Essential aspects include the improvement of parts availability, expanded MRO capacity, and better turnaround times, all of which are progressing. Additionally, we support customers and airlines by providing spare and lease engines. To summarize, we are on track. Further good news for the GTF program came just last week. In October 2025, the GTF Advantage received the EASA certification. This success is the next step in the process to allow deliveries to airline customers and an entry into service next year. Recent customer orders reflect continued strength in our commercial OEM business. LATAM Airlines and Avelo Airlines have placed orders for a total of 174 Embraer E195E2 jets, including options. These aircraft are exclusively powered by the GTF engine, underscoring continued market confidence in our advanced propulsion technology. In our partnership with GE, we also see new opportunities. We are strengthening our industrial gas turbine portfolio with focus on naval propulsion, especially the LM2500 and LM6000. The LM2500 is set to play a central role in powering German Navy's next-generation F-127 frigates, with growing interest also from other European nations. Maintenance will be carried out at our MTU facility in Berlin, where we are currently investing in a new production center. Over the coming years, we aim to grow our MRO services for industrial gas turbines by around 30%. A key milestone for MTU maintenance in Brandenburg was receiving the AASA certification for full MRO services on PW800 engines, which power premium business jets such as the Gulfstream G500, G600 and Dassault Falcon 6X. This makes the site in Berlin the second certified MRO provider for PW800 engines worldwide. As part of Pratt & Whitney Canada's global service network, we are strengthening our position in the fast-growing business jet segment. MTU Maintenance Lease Services has opened a new parts supply warehouse in Zhuhai, China, complementing existing facilities in the Netherlands and the US. This expansion strengthens our global logistics footprint and ensures rapid access to serviceable material for CF6-80, CFM56, G90, and V2500 engines across the Asia-Pacific region. Now, let's move on to the financial overview. Let's take a closer look at our financial performance for the first nine months of the year. As expected, Q3 could not fully keep up with the extraordinary strong performance from the first half of the year. NTU reports record results for the first nine months ahead of expectations. Group revenues rose by 19% to $6.3 billion, driven by strong growth in both commercial OEM and commercial MRO segments. In U.S. dollar, total group revenues were up 22%. Commercial OEM was supported by strong spare lease engine sales. Adjusted group EBIT rose over-proportionately by 34% to €995 million, delivering a strong 15.9% margin above guidance and above our own expectations. Growth was driven by a higher share of spare and lease engines in commercial OEM and solid spare part sales. Commercial MRO also contributed significantly, despite higher GTF MRO share and wrap-up costs at MTU Fort Worth. Net income adjusted grew in line with adjusted EBIT and reached €720 million. Free cash flow came in at €279 million, an improvement of 31% compared to 2024. This figure was impacted by compensation payments related to the GTF fleet management plan. These were partially offset by our cash contribution from our MRO business and effects from conscious cash flow management. All in all, a great set of results. Let's now take a closer look at our business segments, starting with the OEM business on page 9. Total OEM revenues rose by 15% to €2 billion, impacted by a weaker US dollar. While commercial OEM revenues grew 20% to €1.6 billion, military revenues declined by 2%, mainly due to delayed deliveries in new engines, as well as back-end loader repair activities. However, Q3 2025 saw a 3% increase. We expect a strong fourth quarter in revenues to achieve our full-year guidance on growth in our military business. Adjusted EBIT increased over-proportionally by 44% to 640 million, with a strong margin of 31.1%. This is higher than initially anticipated, driven by a favorable product mix in new engines and robust spare parts growth. Let me now share with you the organic commercial growth rates. Organic commercial OE revenues in U.S. dollars increased by a high single-digit percentage, driven by GTF and GenX engines, with a strong share of spare NGs engines. Q3 2025 showed similar growth compared to the first quarters of the year, but with a higher share of installed engines. In Q4 2025, we expect a higher output of new engines, supporting our full-year guidance. Organic spare parts revenues rose by low teens, supported by narrow-body engines and mature platforms. In Q3 2025, growth was up mid to high teens, in line with expectations and our full-year guidance. Let's move on to the commercial MRO segment. Reported MRO revenues increased by 20% year-over-year to 4.3 billion euro, while US dollar revenues were up 24%. Major revenue drivers were narrow-body engine programs, mature wide-body platforms, and our MLS leasing and asset management business. The DTF MRO share reached 40% in line with our full-year expectations. In Q3 2025, we observed an increase in shop visits and higher material content, resulting in a GTS MRO share of 48% for the quarter. Adjusted EBIT increased by 18% to $355 million, with a stable margin of 8.3%. The margin was supported by a favorable independent business mix and strong contribution from equity-accounted joint ventures, and impacted by the higher GTF MRO share and ramp-up costs by MTU maintenance forward. So before heading to the guidance, let me share an update on our current hatchbook. As you can see, we were quite active in the past quarter, further expanding our currency protection for the coming year. For 2025, we are now basically fully hatched, protecting our results from currency impact. Also, looking at the following years, we have made progress in managing our exposure in line with our hedging policy. Looking ahead, we are following the targeted hedge coverage rate as set in our hedge policy. In addition to that, we are currently updating our exposure assumptions to have the latest developments incorporated into our hedging strategy. After that, we are now coming to the outlook for the year 2025. We are upgrading our outlook based on the strong performance of the first nine months. The Q3 results and the strong outlook for the current quarter allow us to lift our EBIT adjusted guidance. Coming from an estimate for EBIT adjusted growth in the low to mid-20 percentage range, we are now able to lift that to a mid-20s percentage number. Adjusted net income is expected to grow in line with EBIT. This substantial upgrade in EBIT also translate into a stronger cash flow. We now expect the free cash flow to reach a range between 350 million euro and 400 million euro, up from the previous range of 300 to 350 million euro. We can reaffirm our revenue outlook with expected group sales between 8.6 and 8.8 billion euro, based on an average US dollar exchange rate of 113 US dollar per euro. Within this, we anticipate growth in our military business in the mid to high single-digit percentage range. Commercial OE is projected to grow in the mid-teens, within that the share of spare and lease engines is higher than initially anticipated. Aftermarket demand remains in line with our latest expectations, resulting in a revenue growth outlook of up low to mid-teens. Lastly, We also reaffirm commercial MRO revenue growth outlook to mid to high teens, supported by heavier shop visits and rising demand for GE90 engines. The GTF MRO share should remain at around 40% of the segment revenue. This upgrade again highlights the strong underlying business and our ability to generate highly attractive margins, as well as our progress in generating free cash flow. Let me summarize our achievements in the third quarter 2025. The excellent first nine months performance leads us to upgrade our guidance again. Revenues are expected to reach the previously communicated levels even in a weaker US dollar environment. At the same time, we see profits and free cash flow generation well ahead of our previous expectations. The market environment for our industry and MTU remains very supportive and underpins our positive outlook. The impact of the tariff environment has been limited as described earlier, and we continue to adapt to the remaining challenges. Great business in a great industry. And finally, already as a heads up for next year, we are planning to release our first guidance for 2026 with our preliminary full year results in February 2026. With a couple of market decisions happening towards the end of the year, like the political discussions on FCAS as one example, it would take slightly longer than in previous years before sharing our view on the year in line with most of our competitors. Now, this concludes our presentation. We are now happy to take your questions.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A queue. Thank you. We will go ahead with our first question. This is from Chloe Le Marie from Jefferies. Please go ahead.

Yes, good morning. Thank you for taking my questions. The first one would be on the OEM performance in N233. So Katia, you mentioned that the OEM mix has started to normalize in the quarter, but could you add further color on this? Like how much of the way are we towards a normalized OEM mix in Q3? Second part of that question is, we've obviously seen record margin in the division this quarter. So could you help us understand the key moving part driving that? And in particular, because it looks like spare parts accelerated, but probably not enough to explain the 450 bits of sequential increase in margin. Second, sorry, last question for me would be on the GCF compensation payment. Could you quantify how much was paid in the quarter?

Thank you, Chloe, for your questions. I will try to answer them exactly as you've posed them. First of all, as elaborated in the Q3, we saw an elevated level of install engines coming in. We don't quantify exactly the numbers, how much spare and how much installed. Anyway, what I can also state is that we have still seen a reasonable share of spare and lease engines also in the quarter, and we expect that also to move on further. What we have in addition seen definitely during the course of this quarter is a strong increase in our spare parts business, and this has also helped and supported the guidance expansion. Not the guidance, the revenue expansion and the returns expansion. On the GTF, I can share the figure that we have paid this quarter. It was around 100 million US dollars for MTU, which have posed, so to say, the headwind to our free cash flow generation. but which is in line with expectations. If you remember, we expect for this year in total a compensation payment quite similar to what we have paid in 2024. That was around $390 million. In the first two quarters of the year in total, we have paid $150 million. So overall, we spend $250 million right now expecting further payments to take place in the fourth quarter.

Can I actually follow up on this? Because on the payment last year, it was all in Q4. So you have a very easy comparison based on Q4 free cash flow. So how should we think of the conservatism based in the upgraded free cash flow guidance? Because on my math, you should be having a pretty significant year on your tailwind in that free cash flow performance.

So we also had some payments during the course of the third quarter last year. I would not consider that to be now a conservative approach. As I said, we still expect around $140 million, more or less, U.S. dollars to be paid in the fourth quarter, and this is what we have also baked in when we provided the upgrade of the guidance. Perfect. Thank you so much.

Thank you. We will now take the next question. This is from David Perry from JP Morgan. Please go ahead.

Yes. Hi, Katia, and Janice as well. I guess my question was the same as Chloe's, so I haven't thought of another one, but I think it is worth just repeating it. As Chloe said, the margin is just exceptional in OEM in Q3, and you seem to have said Unlike in Q2, it's not because of the spare engines, but it's because of the spare parts, which is great. But just maybe a bit of color about why the margin on the spare parts is just so strong in Q3. Or is there anything else at all that would explain the really good performance? Thank you.

Thank you very much, David. And as you have stated correctly, the big driver of the margin in the third quarter are not overproportional spare and lease engines, but rather the strong performance on the spare part. And driving the spare part compared also to the first half of the year. In the first half of the year, we were at a high single-digit rate. growth rate now, that rate has definitely significantly expanded to a mid to high double-digit range, which also means then strong impact on the margin. And in addition to that, we also saw pricing effects kicking into place now also in the third quarter.

I guess if I can just have one follow-up. The obvious question is, do we or don't we extrapolate this forward? I mean, is there some kind of Is it about maturity of the mix? Is it you're taking more margin on GTF or something? Because clearly we've never had a margin this high. I don't think you've ever had one that high in a quarter.

If you're referring to the overall margin of the OEM segment, I would still not say that this is exactly the new normal that you should anticipate. You remember what we gave as guidance at the Paris Airshow, which which is a little below what you've experienced now in the third quarter of this year. So the maturity definitely plays a role with regards to the mix on the spare parts. And what we will also see in the fourth quarter then on the OEM margin overall is that we will continue to see strong new deliveries.

All right. Well, great start. Thanks a lot. Speak soon.

Thank you. Next question is from Ian Douglas Pennant, UBS. Please go ahead.

Thank you very much. I've got a few, but let me prioritize. So about your OEM EBIT guidance, by my math, it implies something like a mid-single-digit growth rate implied for Q4. Can you help us understand any kind of seasonality patterns that we should be looking for in Q4 to explain? why the growth rate is going to slow down. Secondly, Pratt & Whitney on Tuesday gave a comment on the call that they revised down their expectation for how many GTF deliveries they're going to make this year. Can you help us understand why then your series growth guidance for this year is unchanged? I've got a few more, but I'll respect the two-question rule. Thank you.

So far, looking at the sales guidance that we have out, I cannot 100% record how you come to a limited growth guidance now on the OEM program. I think our expectation is that we will have on the OEM segment also a strong sales performance in the fourth quarter, supporting us in our full year's guidance expectations. Looking at the GTF, I think for the GTF itself, we do see better supply chain now helping us also to ramp up further new output on new engines. And I think there we are also making progress supporting also the ramp down of the situation in the market with regards to the GTF. And also keep in mind, we do provide more than just the GTF engines in the OEM segment. We also have wide-body engines where we do see good business moving forward.

Thank you. I'll jump back in the queue and follow up with IR on the first question. Maybe I've made a mistake somehow. Thank you.

Thank you. We'll take the next question. Next question is from Robert Stallard, Vertical Research. Please go ahead.

Thanks so much. Good morning. Morning, Rob. I've got a couple for you. First of all, on engine leasing, this is clearly doing very well at the moment, but these are particularly unusual circumstances. The market is very tight, very strong. How are you looking to manage this risk going forward when we do see conditions returning to normal, particularly with regard to residual values? And then secondly, on the defense side of the business, you mentioned the strength in Eurofighter orders and backlog. How do you expect Eurofighter sales to progress and ramp from here? Thank you.

Hey, Rob. It's Thomas. I'm taking this too. So engine leasing on the one hand side, yes, the market is very strong at the moment. But as you know, we have not a remarketing risk like other companies in the place that we are having a direct correlation between our leasing business and our MRO business where we can always move things back and forth supporting the one to the other. So we feel pretty good. with the outlook we gave at the Paris Airshow, as well as the current situation we're in. On the Eurofighter, that's a little bit of a difficult question. Yes, the order momentum is accelerating. We see a high level of interest, and we also hear and discuss with our partners and also with the OEMs the ramp-up of manufacturing. But at the end of the day, there are some lead times in the program, and we need to see how we can We can develop there further. So this is nothing that accelerates significantly in the next one, two years on a revenue perspective. So we need to see how that plays out in the years thereafter.

Thanks, Thomas.

Thank you. We'll take the next question. This is from Ross Law, Morgan Stanley. Please go ahead.

Hi, everyone. Thanks for taking my questions. So first, just coming back on the OEM margin, the implied Q4 step-down is quite material. On my math, it's something around the high teens, which would probably be the lowest Q4 margin in OEM for about five years. So assuming spare parts don't fall off a cliff in the fourth quarter, is this implied sequential change all driven by the spare engine mix? That's the first question. And then secondly, Just on FCAS, if this does get canceled, what would be the potential impact to your 2030 guidance?

Thank you. Okay, let me first take the margin question on Q4. As we have said also already during our H1 call, we do expect not an F-Strong there in these engines business moving forward in the second half of the year. And if you do the pure math there, we do expect some impacts also due to the fact that the installed engines are increasing. So that is the reason for the lower expectation on the margin for the Q4. With regards to FCAS, I think we are very confident that there will be a solution found to move on with the program. The politicians at the moment are in talks. Maybe, Johannes, you've been to Berlin a couple of times. Maybe you want to say something about FCAS?

Yeah, I think we are in phase 1B, which is still lasting until September, so third quarter next year. And that's what we still need to work on and deliver. And that's what we also will do together with our partners in the engine segment. And the decision timeline that we hear from the political side in Berlin right now is still the end of the year. And that's, of course, something we're looking forward. And we as MTU and also with our partners, SAFORM and ITP, are fully committed to extend and continue the program. And if the timeline by the end of the year is met, we are in fine shape. And we are concentrating at the moment on delivering on the first parts that we are still working on.

Okay, thanks. Just a very quick follow-up. Can I just check, in your 2030 guidance, is there a contribution from FCAS included in that?

Yes, there is a contribution of FCAS included in our 2030 guidance.

Okay, thank you.

Thank you. We'll now take the next question. This is from Sam Burgess of Goldman Sachs. Please go ahead.

Great, thank you. Good morning, Johannes and Katja. Firstly, just on the stable margin in commercial MRO, there's clearly been a shift to more GPS MRO, but can you just help us disaggregate the drivers there of that stable margin? What was work scope versus pricing versus the MLS contribution? Any colour there would be really helpful. And The second one, just on the OEM side, you mentioned the pricing effects impacting in Q3 cash flow. Can you just remind us in terms of in 2024 whether those pricing effects impacted at the same point? Thank you.

Okay, let's start with your question on the MRO. on the MRO business and the MRO margins. So as we have deliberated already, in the third quarter, we had really a significantly higher share of GTF MRO works compared to the first half of the year. We were short, so to say, with regards to MRO throughput in the first half of the year, also due to missing parts. The supply chain has now stabilized on the GTF materials, And this is why we were able to ramp up the share of work in our shops, which then also will help to drive down the AOG situation during the course of the next coming month. With regards to pricing effect, pricing effect kicked in a little later last year in 2024. So some of the pricing was a little pre-pulled this year into the third quarter.

Thank you. My question actually on commercial MRO was more about how you've maintained a stable margin given GTS is a significantly bigger share. Can you just help us think through what's been really strong there? Is it just more material intensity on wide body? Any color there would be very helpful.

Okay, yes. Sorry, I didn't get the point with my first answer. Yes. So overall, what we do see is that the work scopes on the Matura engines are increasing. That is one definite driver for margin expansion. In our MRO shops, you know that the airplanes are flown longer, so we have more shop visits and with higher contents in the time. And on the MLS side, you know that we've provided the guidance moving forward to achieve €1 billion in sales until 2030. And this business is continuously expanding, also supporting our margin expansion on the MRO segment.

Great. Thank you very much.

Thank you. Next question is from Christophe Menard from Deutsche Bank. Please go ahead.

Yes, good morning. Thank you for taking my question. So I have Trying to understand the very strong OE margin in Q3 as well. The question is, is IGT also part of the strong performance? I mean, you highlighted this in your presentation, so I was wondering whether that was a contributor to this. And the second question is on GTF advantage. I mean, you will start delivering by the end of this year, if my memory is right. Has it any impact on the OE margin business first? And the side question is, there is also an upgrade program around GTF Advantage. Are you seeing some customer acceptance of this or interest? And when could it have an impact on your MRO revenues and profitability? Thank you.

Okay, let me take the first part. Let me take the IGT topic. IGT is part of the spare part. So there we also do see a good business moving forward, and as I said, we will expand the business going forward in our facility, the MRO work going forward in our facility in Berlin-Brandenburg. With regards to the GTF advantage, do you want to take it, Johannes?

No problem. Entry to services next year, so 2026. We're, of course, happy that we have all the approvals now under our belt, and the production is now expanded and entry to service I mentioned next year, and then ramping up over time to the full. And of course, there is interest from a customer side for a better performance and longer on-wing time for the engines. So we are quite confident that we achieve the targets and the entrance to service level then is increasing, of course, over the time.

Thank you very much. Thank you. Next question is from George McWhirter from Berenberg. Please go ahead.

Good morning. Thank you very much for the questions. I've got two, please. The first one is just following up from Sam's question on pricing. How do you expect pricing of spare and lease engines to trend in 2026? And the second question is on the industrial gas turbines business. You mentioned that you plan to grow this business in the coming years. Can you just remind us of how big this business is in revenue terms?

Thank you, George, for your question. So the first question on the pricing, I'm sorry to say that we don't give guidance on these detailed levels and also not for 2026 now. So far, we've seen supportive pricing in the market, which has also helped us this year on the margin expansions. depending on how the market overall will develop, pricing will be determined. With regards to the IGT, I'm not fully aware of a share that was ever communicated, so this is a business that we find very attractive, and this is also the reason why we are investing in our Berlin-Brandenburg facility to expand our IGT business now going forward.

Thank you.

Thank you. We'll now take the next question. This is from Rory Smith from Oxcap Analytics. Please go ahead.

Good morning. It's Rory from Oxcap. Thank you for taking my questions. I wanted to follow up on Sam's question on MRO profitability as well, please, but maybe asking it in a slightly different way. Given that you've talked about $10 billion to $11 billion in MRO revenues to 2030, do and then that doubling of the MLS to about 1 billion euros to 2030. Maybe if you could help point us in the direction of the split in commercial MRO profits in 2030 or thereabouts between those buckets that you've called out today, the narrow bodies, the mature wide bodies, and the MLS, just to give a sense of direction of travel, stepping back from the particulars of the quarterly movements. That would be really helpful. Thank you very much.

Yes, Rory, thank you very much for the question. So I'm sorry to say that we don't break down individual profitabilities of sub-segments like this. What I can say is that we do expect a positive development in all areas of our business. So with the GE90 and also the contracts that we have moving forward, also the GenX, I think on the white-body side that we do see continuous demand for MRO services, The same accounts for the narrow-body fleet, which still continues to grow and will continue to grow during the course of the next couple of years. And we have provided you at least with an outlook on the revenue side for the MLS business, saying that it doubles its contribution to our 2030 sales figures.

Thank you. And just a follow-up on near-term, the ramp-up impact of NTU Fort Worth. Apologies if you've given this already, but have you given a sort of guidance on the dollar impact of that and when that rolls off?

What we have provided you with was an outlook on the expected investments in PPE that we do see connected to this ramp-up, which was 120 million US dollars over the course of the next coming years. MPU Fort Worth will have a post-induction of an engine by the end of next year. This will be the LEAP engine where we've invested into the license. There will be another program starting by the end of of the decade, but you need to take into consideration that this will not be a material impact, for example, in the near term for 2026 with regards to sales.

Thank you for taking my questions.

Thank you. Next question is a follow-up from Ian Douglas Pennant from UBS. Please go ahead.

Thank you very much. I have a couple of follow-ons, please. So we saw some headlines in the press, I think, from a call that you may have done earlier in the day saying that tariff costs are ahead of your initial expectations. Could you update us on what you think the number is that tariffs will cost you and whether that number has changed since earlier in the year? And my second question is, so this year so far we've seen 13 A320 NEOs at least with GTF engines, and at least one A220 being retired, and obviously they're being retired very young. How do we explain that it's A320s with GTF engines and not with LEAPs that are being retired? And secondly, how do we explain that those aircraft are being retired quite so young at this point? Does this put a ceiling on your ability to increase price at some point? Thank you.

Okay, let me start with the tariff question first. I think this must be a misunderstanding. When we started to talk about tariffs, our original assessment was that we expected a gross impact of tariffs in the high double-digit million range. That was prior to any mitigation measures which we said we would elaborate on. When we had our H1 call, we spoke about tariffs a high single to low double-digit impact that we do expect on our EBIT after mitigations. And this is also the figure that we still confirm. So the low double-digit million impact on tariffs this year is what we have currently foreseen. So there is no change in our assumptions with regards to tariff implications. With regards to the retirement rates in general, I would say that we still see very low retirement rates overall in the market. And what we also have is that we do have a very strong order book on the GTF still moving forward, which was also pointed out with the order wins that we had at the Paris Airshow. So I cannot give you a detailed explanation on specific aircraft, I have to admit, but overall our order book on the GTF remains very healthy. also due to the fact that this engine really performs well with regards to, for example, fuel consumption, which is a significant improvement compared to prior generations.

Thank you. We will now take the next question. This is from Olivier Brochet from Rothschild. Please go ahead.

Yes, good morning, Yanis and Katia. I have a couple of questions, please, for you. RTX indicates that on the GTF, the shop visits are heavier as we get closer to the year end. Am I right in thinking that with the 18% share that you have on the A320 engine, it helps sales but also profit rate in OE? The second question is on FCAS. Do you have any assets that are at risk if the program is dropped? And then a follow-up on the comment you made, Katia, on the new program in Texas by the end of the decade. Do you expect the material fee to be paid at some point between now and then on that, please? Thank you.

Okay, let me start with the RTX shop visits or heavier shop visits. You're totally right. Our share in the program is 18%. So, there might be some impact coming from more heavy shop visits, but that is also what was expected in general during the course of the program, that after a certain time, shop visits will become more heavy. As we've also moved away now with better material availability from quick turns, which we have to do for a certain period of time now, moving to more heavy shop visits with respective impact. Assets with regards to the FCAS program. So what we have done so far in the FCAS program, and we are still doing, is we deliver on the Phase 1B, which was ordered by the government. And this is what we're currently following on until late Q3 next year, waiting for clarification on the program to move on in the next phase by the end of this year. And with regards to fee, Ian, what we have paid, it was, so to say, the entry fee into the program that was around 100 million US dollars. That was late last year, so that has already been paid. What we have also done is we have put additional payments when the program runs that we have to do. into our NAPDAP figure in the second quarter of this year. This was 100 million, but these payments are not due in the near term. They will come when the program will ramp up to certain levels. There will be some more payments.

Thank you for that. If I may follow up on the EFGAS topic. You don't have any assets that are on the balance sheet, and that would be at risk if the program is dropped?

No, there is no relevant asset on the balance sheet.

Okay, perfect. Thank you very much.

Thank you. We have no further questions at this time, so I will now hand back to the speakers for any closing remarks.

Yes. Thank you, Johannes. Thank you, Katja. Thank you all for the participation in this call. As usual, the IR team is online for further clarifications or questions for the coming days and weeks. Thank you. Have a great day, and hear you next time.

Thank you. We want to thank Mr. Johannes Busman and Mrs. Katia Garcia-Villa and all the participants of this conference. Goodbye.