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Welcome to the conference call on MTU AeroEngine's first quarter 2026 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. Dr. Johannes Busmann, 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. Please go ahead.

Thank you, Nadia, and good morning. Welcome to our conference call for MTO's Q1 2026 results. We'll begin today's session with Johannes sharing some thoughts on the current environment and recent developments. Following that, Katja will walk you through the financials. Johannes will walk you through the guidance and will summarize the key takeaways before we open the floor for your questions. With that, it's my pleasure to hand over to Johannes.

Thank you, Thomas, and welcome to our earnings call for the first quarter 2026. We had a very successful start into the year. Group revenues increased by 7% to more than 2.2 billion euros. Adjusted EBIT rose by 6 percent to 320 million, translating into a margin of 14.2 percent free cash flow, improved by 18 percent to 177 million euros, residing in a cash conversion rate of 77 percent. Despite the current situation in the Middle East, which I will touch a bit later, we confirm our full year guidance today strongly. We fully support our customers and their operations And the safety of our employees in the region is, of course, our top priority. Before Katja takes you through the financials, let us first take a look at the market environment and our key highlights on the first quarter. I start with the view on the current macroeconomics and geopolitical environment and how MPU is positioned. Geopolitical tensions have driven a sharp increase in jet fuel prices and possible physical supply chain constraints putting pressure on airlines as we see. As a result, several airlines have announced moderate capacity reductions. Any traffic impact is expected to be absorbed mainly by the older, less fuel-efficient fleets, which demand for modern and fuel-efficient aircraft and engine remains largely unaffected. Against that backdrop, we also maintain our MTU positions very well positioned with our resilient product portfolio, especially in fuel-efficient engine types and, of course, our active and decisive management of supply chains and cost management. The ongoing capacity constraints in our end markets, in particular in the MRO segment, provides protection from any significant impact on our business as we see today. Our product portfolio is resilient with a strong focus on next generation fuel efficient engines driven by airline structural needs to reduce fuel burn and emissions. Just to name two, the GTF and the V2500 platforms continue to see solid demand The GTF backlog across OEM and MRO provides us with a high visibility of the market scenarios. The B2500 remains a key asset in our customers' fleet. Supply chain resilience remains our top priority. We rely on multiple sourcing and long-term supplier contracts to manage these dependencies. Our approach results, as of now, in a stable, reliable supply chain. And for possible cost increases, we are in the comfortable situation of being able to pass price increases on rather easily. For the limited number of MTU suppliers located in the Middle East, appropriate measures have been implemented to ensure continued availability. Staying on the cost topic, MTU continues to apply a highly disciplined cost management approach. Just two examples for that. We continuously validate our work distribution and are increasing workload volumes and repair activities at our best cost facilities as we speak. Other topics like energy cost are put under review very regularly. Even though energy costs have only a limited impact on our products, we manage our cost exposure here very diligently. One of these examples is our geothermal plant here in Munich, which covers 80% of the heating demand of our Munich production site, which makes us independent from these effects. I would like to share some reasons to remain highly confident while navigating through this definitely dynamic environment. Our portfolio is resilient by design. Growth in the military business remains strong as guided for 2026, In the new engine business, demand continues to be driven by fleet renewals and the need for more efficient engine technologies is ongoing. Airframe order books are basically sold out through the end of the decade. For the aftermarket, spare parts and MRO demand for shop visits remains strong and there are no signs of weakness. In our shops, we have not received a single cancellation or meaningful deferral as of now. From a regional perspective, our MRO exposure in the Middle East is low. While certain platforms such as the GP7000 and GENX show higher regional concentration, this does not affect the overall robustness of our portfolio. With the highly efficient GTF engines and the still very young V2500 fleets, we are certain to have the right products for almost any scenario. This confidence is further underpinned by our strong group order book of around 32 billion, providing high, medium to long-term visibility. As you see, we are well protected by our resilient portfolio mix and our strong MRO positioning. At the same time, proactive risk analysis is firmly embedded and is part of our daily management in the business. Looking beyond these near-term, the long-term growth fundamentals of the aviation industry remain unchanged. Fleet renewal and structural growing demand for more fuel-efficient aircraft continue to support our business. Coming to a real highlight in the first quarter of 2026, we took an important strategic step to further expand our military business. Unmanned aerial systems are becoming a key capability in modern defense, and Propulsion is a critical enabler of their performance, reliability, and mission effectiveness. And this is where we seized an opportunity to enter into another area of a rapidly evolving UAV market. With the acquisition of AerodesignWorks, we gained immediate and substantial access to this fast-growing and attractive market, creating long-term value for MTU. Aerodesign Works already develops and produces propulsion solutions for lower-thrust drones. The demand for military drones is clearly visible. The global market for military drones is expected to grow by around 12.5% per year for the next five years, and that has been significant. What is missing so far is a European-made propulsion system that meets military requirements in terms of quality, reliability, and especially industrial scalability. This is where we as NTU come into play. Combining AerodesignWorks' capability with our long-standing experience in the military segment, our technology, proven engine expertise and global market access for production positions us very well and to be a powerful and scalable propulsion platform for the European drones market over the coming years. In addition to that, we also stepped into a so-called conventional light market We see clear opportunities to further scale the business through organic growth, selective acquisitions, and strategic partnerships with leading players across the defense ecosystem. With Immosis, we are already in a position to offer electric propulsion solutions for drones, while on the upper end of the range, drones can be served with more conventional engines. This empowers us to power drones with our entire spectrum. Given the strong market dynamics, the rapidly increasing relevance of drones, this step will support MTU's sustainable and profitable growth. Our clear ambition is to establish MTU as a core European supplier for ULV propulsion systems. Let me conclude the business review with a brief update on the GEAR turbofan program. The GTF fleet management plan remains on track. MRO outputs increased by 23% in the first quarter. Turnaround times continue to benefit from improved supply chain. Airlines confirm easing aircraft on ground numbers, and based on this progress, we expect ongoing improvement on the AOG situation throughout 2026, with remaining compensation payments to be settled within the year. With the GTF-A certification, an important milestone has been achieved this month. Entry into service is planned for the second half of this year, so this is the most efficient narrowbody engine offering higher thrust, improved durability, and full interchangeability with the base GTF engine. A great next step in the GTF evolution. GTF continues to ramp up across all three platforms, supporting airlines around the globe. The GTF is already in service for more than 10 years, which was celebrated recently, and it has accumulated over 50 million flight hours and currently has a remaining order book of 8,000 engines. With that, let me hand on to Katja for the details on the financials.

Thank you very much, Johannes, and also a very warm welcome from my side. Let me begin with an overview of our key financial highlights. The Iran conflict had no impact on our first quarter results. Group revenues increased by 7% to 2.244 billion euros. In US dollar terms, revenues grow 18%. The main drivers were the military business and our commercial MRO activities. Within the commercial OEM segment, the business mix remained favorable, supported by spare engine volume and strong spare parts business. Commercial MRO revenues were primarily driven by GTF MRO increases. Adjusted EBIT rose by 6% to €320 million, resulting in an adjusted EBIT margin of 14.2%. Both segments, OEM and MRO, contributed to the EBIT expansion. Adjusted net income increased by 3% to €229 million, Free cash flow had a very strong start into the year and grew by 18% to 177 million euros, resulting in a cash conversion rate of 77%. This performance was fueled by dividend income and a seasonally lower cash flow from investing activities in the first quarter. GTS AOG payments of around 60 million US dollars are reflected in the numbers, a slightly lower impact than in the first quarter 2025. Let's now dive more into the OEM segment. Total OEM revenues were stable at 621 million euros. Within this, commercial OEM revenues declined 5% to 479 million euros. On an organic US dollar basis, commercial revenues increased by 5%. Military revenues increased 25% year-on-year to 142 million euros. Organic new engine sales in U.S. dollar terms remain stable, reflecting lower new engine deliveries with a higher total number of spare engines. We expect a sequential delivery ramp-up in the following quarters in line with full-year expectations of mid- to high-teens percentage growth. Organic spare parts revenues in U.S. dollar grew by 10 percent, driven primarily by narrow-body platforms, notably the B2500 and the GTS. Pratt & Whitney Canada engines also contributed, while mature white-body and industrial gas turbine programs were broadly stable as expected. The military opened the year very strong with robust performance. Revenue growth was driven by higher EG-200 and TP-400 volumes. Additional support came from the new generation fighter engine, which remains fully contracted through September 2026. Results also benefited from catch-up effects following delivery delays in 2025, which pushed volumes into early 2026. Overall, the favorable business mix translated into EBIT growth of 7% to €188 million, resulting in a strong EBIT margin of 30.2%. Also, the commercial MRO business entered the year with strong momentum. In Europe, commercial MRO revenues were up 8%, whereas U.S. dollar revenues increased 20% year-over-year in Q1 2026, clearly exceeding the full-year guidance of low- to mid-teens growth. This was mainly driven by GTF MRO revenues, which accounted for 44% of total commercial MRO revenues, up from 34% in Q1 2025. In absolute U.S. dollar terms, GTS engines delivered the strongest revenue growth. In addition, our Leasing and Asset Management business, MLS in Amsterdam, contributed nicely to US dollar revenue growth as well as our IGT business. On profitability, adjusted EBIT increased by 5% to €132 million, resulting in a margin of 8%. from higher GTF MRO share and ramp-up costs at MTU maintenance Fort Worth were partly offset by a strong EBIT contribution from MLS and our independent MRO business. Let me provide you with a brief overview about the drivers in our free cash flow. Q1 2026 free cash flow was up 18% year-over-year. We benefited from lower PPE spending and received dividends. Additionally, GTFAOG compensation payments at $60 million were slightly lower than in Q1 2021. A headwind came from higher working capital. As Q1 2026 cash conversion rates being clearly above our full year expectations, let me bridge this to our free cash flow guidance for 2026. Key tailwinds supporting the achievement of a cash conversion rate of 45% to 55% in 2026 are improved net income and lower GTF AOG payments compared to the previous year. The main headwind arises from the build-up of the facility in Fort Worth, as well as the continued increase in receivables for pre-financed GTF MRO work. Our 2026 free cash flow target underpins our midterm financial ambition towards 2030 with a cash conversion rate targeted in the high double-digit percentage range. Let's take a brief look at our U.S. dollar hedging position, for which we have made again continuous progress. As shown on the chart, we have further worked on our hedge coverage over recent months following the release of our full year 2025 results. For 2026, benefiting also from improved natural hedging, we are now fully hedged at an average hedge rate of 1.30. Looking further ahead, a comprehensive exposure review led to adjustments in our next U.S. dollar exposure, and we've continued to systematically build our hedge position. As a result of the currently weaker U.S. dollar, the average hedge rates for the subsequent years are higher than those secured for 2026. Before we switch to the guidance, let's have a look at our strong financial position. Net debt of approximately 1.41 billion euro and the net debt to it at the A ratio clearly below one provides us with substantial financial success. In January 2026, the company proactively strengthened its capital structure through the successful issuance of a 600 million euro convertible bond. The proceeds were used to early repurchase the 500 million bond due in July 2027, effectively eliminating near-term refinancing needs. Together with the 500 million revolving credit facility maturing in 2029, this provides the company with a robust liquidity position and flexibility across market cycles. As already announced at the release of our full year results in February, we propose a dividend of €3.60 per share. This is an increase of €1.40 or 64% compared to last year, corresponding to a payout ratio of 20%. This will result in an expected cash outflow of around €193 million in Q2. To round this up, our strong balance sheet and financial flexibility positions as well to support on our long-term growth strategy and to deliver sustainable value for our shareholders. With that, I hand back over to you, Jan.

Thanks, Katja. Let me now turn to our outlook for 2026, which we confirmed today. Based on our careful and proactive assessment, we do not expect any major adverse impact on our business at this point in time. Operation remains stable, our supply chain is resilient, and demand across OEM and MRO market continues to be robust. On that basis, we expect growth revenues to reach 9.2 billion to 9.7 billion euros, adjusted EBIT at 1.35 to 1.45 billion, net income to grow broadly in line with EBIT, and a cash conversion rate of 45 to 55%. In a dynamic and uncertain environment, we very closely monitor developments, anticipate potential impacts, and act. We proactively manage risks, seize opportunities, and continuously strengthen the company's strategic and financial positioning, as you just heard. Supported by a strong balance sheet, a resilient business model, and a clear long-term vision, we are well equipped to navigate market cycles and to create sustainable values for our shareholders. Let me now summarize the key takeaways from our Q1 2026 results. We started the year with a very strong performance, which underpins our confidence in the 2026 guidance, which we reaffirmed today. The acquisition of AerodesignWorks enables us to expand in the highly attractive and fast-growing drone market. The GTF management plan is well on track operationally and financially, and AOGs are trending down. We are strongly positioned with a growing order book and a very resilient business portfolio. Our management approach allows us to actively manage volatility and maintain stability in a dynamic environment. In a nutshell, we are very well prepared for the challenges ahead and have full confidence in our structurally growing market, our product lineup, and in our ability to continuously generate long-term value for our customers and our shareholders. With this, we close our presentation and are happy to take your questions.

Thank you very much. We will now begin the question and answer session. If you would like to ask a question, please press star 1 1 on your touch phone telephone. The operator will announce your name and when it's your turn to ask the question. In case you wish to cancel the request, please press star 1 1 again. And now we're going to take our first question. and comes from the land of Robert Stallard from Vertical Research. Your line is open. Please ask your question.

Thanks so much. Good morning.

Good morning, Rob. Good morning.

A couple of questions for me. First of all, in your commentary, you mentioned old aircraft and how they could be vulnerable given their fuel efficiency to retirement. I was wondering if you could clarify what MTU's exposure is to these older planes in the active fleet and whether you've seen any sign of this negatively impacting your numbers. And then secondly, following the acquisition of Aero Design Work, I was wondering if you could clarify what your estimate is for MTU's revenue exposure to drones or UAVs going forward. Thank you. OK.

First one, we have no cancellations of any slots so far from none of our customers. And we still have a backlog, of course, in front of our shops. So that means even if something comes up, we are able to compensate the work with other engines awaiting. So, in the long run, how the airlines behave if the fuel price stays high in the mid and long term, it is very likely that they, of course, want to optimize their direct operating costs, which would result in favoring lower fuel burn engines and aircrafts, and that is the basis of our appointment. And we have a very, very low retirement rate that we see today, almost none. That's why there is no move that we see so far from the airline reacting that is affecting us. On AerodesignWorks, we are in a couple of discussions with players in the market that are coming or that are waiting for the decisions of politicians. of course, because we need to see what the FCAS discussion comes out with and how the structures of the systems look like. So that's why we are very confident that this is a growing market, concrete numbers. We are not ready to share so far.

And you should also leave us some room, Robert, to provide you with some interesting news when we have our Capital Markets Day in November 30th this year.

Okay, yeah, that makes sense. Okay, thank you very much.

Thank you. Now we're going to take our next question. And the question comes from Chloë de Marie. May we have your question?

Yes. Good morning, Johannes and Katia. I'd have two if I may. The first one is actually building on the point of question on legacy engine exposure. Could you maybe share how much of the PW2000 and CS6 spare parts in revenue generation from military versus cargo versus passenger, please. And the second one is on the Q1 cash conversion comments. So you mentioned it's ahead of your expectation for the four-year, but was it ahead of your expectation for Q1 as well, or is it just part of the phasing that you expected as part of the guidance? Thank you.

Okay. Yes, Chloe. So I'll start with the cash conversion question first. You know that we don't guide for cash conversion rates on a quarterly basis, for sure. Something like the dividend payment happens at the beginning of the year, as it also did last year at the same period of time. Due to the development of the pricing, for example, on the lease business, we expected also a higher dividend in 2026 than what we had in Q1 2025. So that was also part of that. part of the story when we provided the guidance. I think it's also clear when you look at normal cycles that on the PPE that there are stronger spendings in the second half of the year. So overall, all that brings us entirely into the guidance that we have put for this year. So you should not take the 77% now already as the basis going forward. The PW2000 CF6 revenues, I cannot definitely provide you with a detailed breakdown, but what I can say on the PW2000 is that the largest part of the revenues is rather for the military business, and the CF6 is rather largely for the freighter's business.

If I can just follow up on the cash conversion, can you tell us how much of the year-on-year increase in the dividend impacted Q1, please?

I cannot recall the figure entirely from my mind, but there is a significant contribution coming from the dividend payment. I think it's in the lower double-digit million number. Thank you so much.

Now we're having a question from Benjamin Healan from Bank of America. May we have your question?

Yes. Morning, guys. Thank you for the question. I had a couple on MRO just to follow on from some of the comments you made there about not seeing any changes with regards to shop visit volumes. have you seen anything in terms of lower scope? Have there been any requests for lower scope? And if there's any comments you can give that, um, and then in, in the quarter, uh, the, uh, kind of independent MRO business, you say, uh, was broadly stable. Do you have a breakdown of, of the independent MRO and then the MLS business so we can understand what was going on a little bit? Um, Within the two and then a follow on on spare engines, clearly a big contributor in the first quarter. Should we assume that this is the high for the year in terms of absolute spare engines and mix? Given, you know, you've talked about an improving quarterly trajectory in terms of deliveries. And then a quick follow on from your comments on FCAS. You mentioned in your prepared remarks it was funded up until 2026, September. Obviously, you know, we see in the press the program's not exactly going too well on the airframe side. So, you know, what happens to the engine program if the airframers decide not to move ahead with the airframe side of it in its current form? Thank you.

Okay, that's a lot of stuff. Let me start with the MRO side. No, we don't see any work scope requests so far in having lower work scopes, lower volumes there. So we didn't lose any shop load event so far. And I would turn that around even if customers would come up. We are with our independent MRO customer base and also experience customers very well positioned to find very good solutions for our customers to help them out if that would come on the table, which would bring us in a favorable position in the competitive environment between MRO providers. So from that perspective, even if that comes, we see that as a strong side and an upside and not as a threat. On the spare engine side, that is an ongoing demand, which we think will continue also because that's mainly driven, of course, by the new fleets and the growing fleets there, and that are the aircraft and engines that are very likely to be operated even more due to the high fuel prices. On the FCAS side, of course, we are waiting for a decision. Everything we hear is also that the politicians are knowing that the industry requires an answer. And you're right, of course, on the Airframe side, there are discussions, or that is the main point of disagreement. Our collaboration with our French colleagues is working very well, and we continue. We still need to provide until the end of Q3 of this year results on the development phase, which we are performing well and we are optimistic that by then we have a solution and we are also confident that the european governments come to the conclusion that they need a european defense system so um that then is the question whether we none we need one engine or maybe even two for two different aircraft types, which is the likely scenario right now as we see it. There are others as well, but that's the likely one as we see it. And then, of course, we are part of this development in the European landscape. Third one was on the, what was that, independent?

If we do share a breakdown of independent and the MLS business. No, we don't. And what we can say is, just for you, Ben, maybe to clarify a little bit, the MLS business has grown in line with our growth expectations for the full year on the MRO business.

Very clear. Thank you both. Appreciate it.

Thank you. Now we're going to take our next question. And it comes from Judge Mark Wilson. May you ask your question?

Good morning. Thank you for the question. It's on MRO margin. You cited the Fort Worth capacity expansion as a reason for a slight drop in MRO margin. Can you just talk a little bit about the size of the cost of the expansion in Q1 and what you expect for the full year? Thank you.

Thank you very much for the question, George. What we said is that also on the cash flow side, we will see continuous headwinds also for the year coming from the ramp-up. You know that in July, we expect to inject the first-leap engine into the plant, which means we are currently in full ramp-up. When you look at the cost position, so there are a couple of positions to consider. For example, we need to train people. At the moment, we need to hire, we need to ramp up, we need to certify, et cetera, et cetera. And we also do have PPE spending. Overall, we expect to invest around 120 million in capex into the plant, not this year, but as an investment overall during the ramp-up phase. And we do expect a headwind of around 100 million on our free cash flow. And this headwind will also continue to stay over the next coming years.

Thank you.

Thank you.

Now we're going to take our next question. It comes from Edwin Rabier from Bernstein. May I have your question now?

Morning. Thank you for taking my questions. Could I ask a follow-up on the retirement rates, please? You mentioned that the retirement rates are still very low for V25, but could you share a ballpark number of where you expect them to go in 2027 and after that? And would it be fair to assume that they will be somewhat accelerated by the improvement on the GTF? And then second question, could you talk about the pace that you expect for the rollout of the GTF advantage? How fast that will go, please?

Well, the retirement rate on a mid and long-term perspective, I think that's too early to look through. That really depends on how long the conflict stays on and what the mid-term effect on the fuel prices is. We analyze our portfolio, of course, that we are providing services for, and as I mentioned, it's very, very strongly dominated by the modern aircraft types, and we also consider the V-20 500 as being a very strong and also young fleet. You know that more than half of the fleet has not even received more than the first job visits. So our portfolio is on the upper side on almost every scenario that we think of in our simulations, and that's what we see right now. As I mentioned, there are no increasing retirements confirmed so far, and that's how we plan for it. The deliveries on the advantage, that's a very hard to judge picture because there is, of course, the advantage going to be delivered new, but we also have the option with the Hot Section Plus where customers decide on what part of the new hardware they want to have built in in their shop visits or not. And that is the basis of the assumptions that we still need to see what the customers decide. And so there is a rollout over the next two years, of course, planned. But concrete numbers is very hard to tell. Thank you very much.

Thank you. Now we're going to take our next question, and it comes from Ian Douglas Pennant from UBS. May we have your question?

Thank you for taking my question. Yes, Ian Douglas Pennant at UBS. The first question, could you help me understand, what was the increase in the imbalance payments within receivables that you saw year over year, please? It looks total receivables I see increased about 650, but I don't know what imbalance payments was within that, please. Second question, within spare engines, what proportion of those engines are sold at the current market value versus sold in advance? Maybe if you give us some kind of qualitative idea there. What I'm really trying to get at is what is your sensitivity to GTF fair values if they start to decline, which some lessors and appraisers are telling me may possibly be starting to happen already.

Thank you. Let me first start with the receivables. You've seen quite some increase in the receivables now in the first quarter of the year. And if you look also at the growth in our sales or revenue side, that follows more or less the normal business course going forward. There is no significant impact from the imbalance payments now in the first quarter to be seen. I think when you look at the pricing level of spare engines going forward, so far we have not seen any weakening in demand, and you also have to keep in mind that there is not the one spare engine pricing that we have. There are two ways to have spare engines entering into the market. The one is contractually agreed with the airline customers, and the other ones are then the, let's say, open available spare engines that you can sell at a more flexible market pricing. So there's no significant overweight in that area at the moment. So overall, we do not expect or we do not see any weakening in those prices at the moment in the mix.

Thank you. What roughly is the split between sales that are contractually agreed versus openly available?

Sorry, that's a figure we don't disclose. I'm sorry.

Understandable. Thank you so much.

Thank you. Now we're going to take our next question. And it comes from David Perry from JP Morgan. May we have your question?

Yes. Hi, Johannes, Katja. Hope you are both well. Two questions, please. One, just on your spares, the up about 10%. It's quite a bit lower than we've seen from Safran and GE. Just wonder if you want to comment on that, if you think there's anything particular in your mix that would make you have slower growth or whether it's just a temporary issue for the quarter. The second one is a bit more philosophical, probably for Katia. Just on your, obviously we're in an uncertain geopolitical situation, so we get a lot more questions from investors about cash flow. And if I take your guidance for cash conversion i add back the gtf and i add back the uh the number you just helpfully gave on fort worth i think you get to if my math is correct you've got about 70 free cash flow to net income it's still quite a lot lower than some of the peers so just you've been in the business for a while catchy if you can just maybe give two or three reasons why that is the case what is it that has your free cash flow at the current level, and what are the specific things that will lead to an improvement going forward? Thank you.

Okay, so let's first start with the spares mix. So just to frame that clearly, so there's no specific issue that we have compared to others, and it also always is a question of what's comprised in the spare parts growth in the respective references. Overall for this year, David, we have guided a growth rate in the low to mid-teens area, and with 10% growth in the first quarter, we are fully in the ballpark of our guidance. You know that for the second half of the year, there are price movements to be expected, which will then support a further expansion of the growth rate throughout the year. So no structural reason why that is of any greater concern for us. Regarding the cash conversion rate, I think if you look at the history of MTU, the cash conversion rate has always been a topic that people have discussed about a lot. And I think if you look at what we are doing at the moment so that we are continuously expanding our portfolio, that we are continuously also investing into the profitable growth of our business moving forward, these are the parts that currently have an impact on our cash flow plus We still have in the first place for this year the GTF payments directly for the AOG compensations, but also moving forward further until 2028, late or beginning of 2029, we still expect a buildup of the receivables for the pre-finance shop visits, which still provides a headwind to our cash conversion rate. which will then turn into over-proportional cash conversion contribution in the years to come. So from a structural perspective, David, let me reassure you that there is no reason why MTU should at any place be less able to create attractive cash conversions than anyone else in this business.

Okay, thank you. And just very quickly, you have said it before, can you just remind me, the Fort Worth 100 million a year, how many years is that for? Weighing on free cash flow?

Sorry, until the end of the decade. Yes, that was also part of our guidance that we have laid out at the Paris Airshow. So there is no structural difference to that, which means that this is also included in our high double-digit cash conversion rate guidance for 2030.

Okay, thank you.

Thank you.

Now we're going to take our next question, and it comes from Milena Kersner from Barclays. Please ask your question.

Yes, hello, Joannes, Katja, and Thomas. I have two questions, please. The first one is a follow-up on Chloe's. We see demand accelerating for the 777-200ER freight conversion. How do you see aftermarket demand evolving for your 757 and 767-powered fleet, especially at today's fuel price? And could you also remind us what's the share of the commercial spares that today CF6 and PW2000 represents? And then my second question, on back of what you just replied to David, could you help us framing the scale of the GTF-related receivable headwind till 2028? Thank you.

Maybe let me first talk about the receivable side in the first place. I think we have not provided a specific guidance on how this continues to ramp up, but what you can say is from today's perspective that there is still some quite significant increase over the next couple of years to come. There is currently no specific timeline that I can give you for individual impacts, but we will always include that into the guidance that we provide for the next year. And as I said, it's also part of the guidance that we've provided for the midterm. And I have to say, I didn't get exactly the first part of your question. Was it about the freighter's conversion?

Yes, so we see now a lot of 777-300ER being converted. I just wanted to see what could be the impact on the 757s and 767 power fleets on which you actually power these two planes. especially given the fuel price today, and if you can also share how much the CF6 and the PW2000 commercial fleet represents today as a share of your commercial spare parts revenue.

Okay, so thank you very much. I'm sorry I didn't get it in the first place. So in principle to say freight conversions do take time, so that's nothing that is going to happen overnight. I think that's the first important message I would like to send with regards to this portfolio. The second one is that the demand for freight is continuously growing, which also means that the flights are continuously growing, which will then again fuel demand going forward. So our expectation... the moment is that there is very limited impact for the coming years to be expected. And we don't disclose specific shares of individual spare parts on the overall portfolio. What we set as overall the expectation for this year is that we will have a strong growth in the commercial spare parts business between 10 and 15 percent. And when you look at the outlook for 2026, also there we do guide with a continued strong increase in our portfolio.

If I may add, we don't see any structural moves in these kinds of business, whether freighter conversion or fleet compositions due to the conflict so far. And that's the picture that we can see right now. And as Katja mentioned, The contracts behind it are long-term contracts and also long-term work. So that does not react on these more short-term events that we see right now.

Thank you. And just maybe following up just on your guidance for spare parts for this year, can you just remind us what's the outlook for the CF6 and PW2000 in terms of growth? Thank you.

It's more or less flat. Thanks. Thank you. Sorry, I just wanted to add the big drivers for this year, commercial spare parts are definitely B20 per 100 and the A320. Also, the GTF spare part is going to be increasing for the mature engine programs. We expect that to remain broadly stable.

Thank you for your clarification.

Thank you. Dear participants, as a reminder, if you would like to ask a question, please press star, one, one. And now we're going to take our next question. And the question comes from Rory Smith from Oxcap. May we have your question?

Good morning, it's Rory from Oxcap. Thank you for taking my question. I just wanted to talk a little bit more about this idea of it's a very strong order book, 32 billion euros, you say technically sold out for three years. I guess technically is doing a lot of heavy lifting here. Maybe if you could just help us understand how that backlog falls between the four business areas. And then really just how, what kind of visibility do you actually have, particularly within commercial spare parts and within commercial MRO, any kind of Differentiating dynamics you can call out there anything qualitative that can help us think about as we travel from this year into next year Modeling this out would be really helpful.

Thank you So, I think I take the order book and then you head up So, of course, we're going to end site Just traditional production set up where you have capacity and a fairly linear and Production rate on the MRO side, of course, we have everything from single events to 10 and even more years contracts, and that's why I mentioned technically. And this is something, of course, that is a wide composition of MRO contracts. If you add it up, it comes to the number we shared, and that's why the term technically was used from my side.

And I think if you look at the order book development overall, you see that we have, or what I can state to more details is that we've seen growth in both segments, so we don't break it down into multiple segments. So we do see growth in both segments. You see the order intake in the first quarter for the MRO business, but we also do see continuous strong increase in the order, for example, for the GE9X or for the PW1100 business. So overall, that is a strong order book, and it's also quite some strong visibility with regards to our shop loads, for example, on the MRO side.

Okay, great. Thank you. If I could just follow up there. Let's assume that the current trend of RPK growth sort of turning negative continues for another quarter or two quarters or whatever the outcome is. Would you expect to see that first in commercial spare parts or commercial MRO or roughly analogous?

Well, I mean, we still have a backlog of work there. The situation of capacity available on the MO side capacity available for shop load events is still below the market demand. So even if these developments come, we swap one engine type with the other one, which we are able to do with the shop setup that we are running. So that's why our target is not to lose any slot. That has been also a very positive impact on the second part, on the spare parts of your questions. and this is something where the visibility that we are having in the system and the close customer contact, which allow us to, say, juggling around is maybe a little bit too dynamic, but we are able to mitigate these topics in order not to lose any slot. We were very successful with that for the last six months, and we are also very optimistic that that is going to continue for the rest of the year.

Maybe let me clarify or let me add maybe to it a little bit. We would not expect to see any material impact on us during the course of this year. So there is no, and this is also why we're so confident to be able to achieve our guidance for the full year on the MRO side. And if you look at timing, if you look at where we are at the moment, so people are still very actively searching for slots, and we don't have a lot of open slots to offer at all to the industry. So there is no reason to believe that this should have any material impact on us in the upcoming quarters.

That's very, very clear. Thank you very much.

Thank you. Now we're going to take our next question. And it comes from from agency partners. May we have your question?

Thank you very much. Two questions. First of all, on aero design works, the numbers that you give there are terribly big. I recognize you'd like to talk about this more at the Capital Markets Day, but November feels a terribly long way away at the moment. Of that market size and growth, how much of that is in Europe as opposed to the rest of the world is the first question. And then you talk about the the business being optimized for military performance, but an awful lot of drones, clearly drone covers a huge number of things, are one-shot throwaway systems effectively now. So does the market actually really need military specifications as opposed to turbojets that are cheap enough for a single mission? That's my first question, then a different one on MRO. When do you think that customers have to specify or have to finalize the scope of a shop visit with you? How early is it in the process? Thank you.

Okay. The market size, that's a very good question, of course, because that depends on the government. And you pointed out that, yes, of course, it's one cycle or two cycles, once you test it, once you use it. And that's exactly the market where we want to enter and why we made the deal with AeroDesignWorks. And that is something where we are 100% sure that there will be growth. The concrete numbers, of course, depend on the orders of governments in Europe. And that's hard to judge, but that it is a good potential and good business for us. We are very confident. On the work scope... The design for the engine shop is that's a normal routine process that runs with every customer and the shop that is performing them the engines. A couple of weeks, maybe two months, depends a little bit on what the engine type is. um that is designed the decided then between the customer and us and of course the requirements from the worthiness um perspective and so that's a routine process there is So far, nobody that is doing this earlier or later. That's a very normal process. And there are also, of course, strong guidelines from the aviation authorities, what is possible and what not. But within these frames, we are discussing with our customers what is suiting best in their fleet. As most of them operate a couple of engines and aircraft, we have all the flexibility to have good solutions for them together. Thank you very much.

Thank you. There are speakers that have further questions for today. I would like the conference over to Thomas Franz for any closing remarks.

Yeah, thank you, Nadia, and thank you to all participants and to MTU's management. This marks the end of today's Q1 call. Thank you for joining, and, yeah, have a great rest of the day. Bye-bye.

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