MTU Working With Pratt on Next Engine Boost for Airbus’s A320Neo

Feb 18, 2014 8:04 am ET

Feb. 18 (Bloomberg) -- MTU Aero Engines AG said it’s helping to develop an improved turbine for the Airbus Group NV A320neo that should yield fuel efficiencies beyond the 15 percent touted for initial examples of the upgraded narrow-body.

MTU is working with Pratt & Whitney on enhancements to the U.S. company’s PW1100 engine, technology chief Rainer Martens said at a briefing in Munich. The tweaked powerplant would be available in 2019 and offer a 3 percent fuel-burn gain over the first Neo due to be delivered to Qatar Airways Ltd. in 2015.

“We are now working on getting the technology ready for the improved version,” Martens said today. The German company will graduate from component studies to engine-level work and testing starting next year, he added in an interview.

The enhancement is being developed specifically for the twin-engine Neo, which has 2,500 orders, though the technology could be applied to other models should manufacturers seek similar upgrades, Martens said. Pratt, a unit of United Technologies Corp., is supplying its geared turbofan turbines to Bombardier Inc. and Embraer SA, as well as Airbus.

Boeing Co. said in October that development work on the 737 Max, which competes with the Neo, had achieved a further 1 percent fuel-burn improvement beyond the 13 percent promised. The plane’s first delivery is due in the third quarter of 2017.

GE Talks

MTU is in talks with General Electric Co. about becoming a partner on the GE9X engine Boeing selected to exclusively power the 777X long-range jet, program chief Michael Schreyoegg said.

The company is seeking 5 to 7 percent of work on the model, on par with its involvement on other GE turbines, he added.

Schreyoegg said the market for a new engine on the A380 superjumbo, which Airbus is considering, would be “limited,” with an upgrade of the A330 powerplant more of a possibility.

Demand for more fuel-efficient jets will see MTU double turbine output through the end of the decade, though cuts in airline spending mean the outlook is more muted for parts and repairs, which tends to be more profitable as engines are sold at a discount to boost the size of the installed base.

MTU is therefore paying “particular attention” to its cost structure in order to maintain margins, said Reiner Winkler, who became chief executive officer in January. The company is already moving to cut some non-production jobs.

Fourth-quarter earnings before interest and tax rose 10 percent on a comparable basis to 106.8 million euros ($147 million), the manufacturer said in a statement. The stock rose as much as 2.2 percent and was trading 1.2 percent higher at 63.75 euros as of 12:48 p.m. in Frankfurt.

MTU predicts new engine revenue will increase about 10 percent this year in dollar terms, versus a “mid-teens” projection in November, as delays to the Bombardier CSeries jet lead to the deferral of some powerplant deliveries.

Total sales should advance about 5 percent on a comparable basis to 3.75 billion euros, with adjusted Ebit close to the 2013 figure of 373.1 million euros, the company said.

U.K.-based Rolls-Royce Holdings Plc, the No. 2 commercial jet engine maker after GE, said last week that sales and profit would fail to grow this year for the first time in a decade.

--Editors: Christopher Jasper, Robert Valpuesta