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MTU Aero Engines trades strongly on Chinese cooperation and share news – Suppliers Share Wrap


Aviation suppliers continue to suffer from market nervousness regarding the Dubai World debt situation, with most companies losing ground at the end of last week.

UK-based aircraft lessor Aircastle dropped 3.9%, while Babcock & Brown Air was down 2.9% and regional aircraft lessor, Aerocentury, dropped 2.1%. Aercap and Genesis Lease were less affected, down 0.9% and 0.2% respectively.

Engine manufacturers traded more strongly. Roll-Royce gained 0.2% on Friday, while MTU Aero Engines was up 2.9%.

The German company announced on Friday that it would be expanding its presence in China, with a cooperation agreement with Chinese engine manufacturer AVIC Commercial Aircraft Engine Co. Ltd, the first step (ACAE). ACAE and MTU will conduct a joint study to explore options of building a domestic aircraft engine industry in China. The study aims to evaluate what structure a local engine company should adopt to be viable and what technologies will be needed for emerging engines to be successful in the Chinese market.

ACAE was formed in 2009 and has been tasked with developing a domestic turbofan engine for COMAC’s new C919. The engine, known as the SF-A, is expected to be ready by 2016, but foreign engines will initially power the aircraft. 

Meanwhile, MTU CEO, Egon Behle, stated the carrier expects to have an “anchor shareholder” within the next two years. 94% of the company’s stock is publically traded, with MTU holding the remaining 4%.

MTU expects sales of EUR2.6 billion this year. The CEO also stated the company could invest EUR500 million to EUR1 billion to make acquisitions to increase its share of major engine projects.

Selected Aviation suppliers’ daily share price movements (% change): 27-Nov-09

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