After Safran, I’ve now taken a look at MTU Aero Engines. It made sense—same industry—and the stock price has fallen significantly since its February high. What I found particularly interesting was how differently the two companies operate despite being in the same sector. Anyone who understands Safran $MTX (+1.11%) in the same direction at first and then gets it wrong at crucial points.
First, the basics: MTU doesn’t build its own complete engines and doesn’t operate a 50/50 joint venture like Safran does with GE at CFM. MTU is a risk-and-revenue-sharing partner. This means they buy into another manufacturer’s engine program with a fixed percentage, share the development costs and risk proportionally, and in return receive exactly that share of revenue and profit over the program’s entire lifespan. Forty, sometimes fifty years.
Here’s what that looks like in practice. By far the most important share is the Pratt & Whitney geared turbofan, the PW1100G, which powers the A320neo. MTU holds an 18 percent stake in that. This is the world’s largest single-aisle platform—the bread-and-butter business par excellence. In addition, there are smaller stakes in the predecessor V2500 for the older A320ceo, the PW1500G for the Airbus A220, and the PW1900G for the Embraer E2. At GE, MTU manufactures components for the wide-body engines GEnx (Boeing 787) and GE9X (777X). And in the military sector, it holds about 30 percent of the EJ200 for the Eurofighter. The comparison with Safran is instructive here: Safran owns half of its CFM program and consolidates its share of the profits. MTU does not hold a majority stake in any of its large civil engines, but is instead the smaller partner in every case, with a double-digit percentage share. In return, MTU is more broadly diversified and not dependent on a single program.
The second major difference lies in maintenance. Safran operates in the aftermarket primarily as the OEM for its own engines. MTU is also the world’s largest independent engine maintenance provider and services engines in which it holds no program stake whatsoever. For the GTF, MTU handles an estimated 40 percent of all overhauls worldwide. This is the second source of revenue alongside program shares, and it is the actual growth driver.
Now, what both companies have in common and what makes the business model so strong: With every new engine sold, MTU initially takes a loss. This is not an operational mishap, but a deliberate calculation. Profits are generated over the next 25 years through spare parts and maintenance. Just like with Safran, the engine is the razor and the aftermarket is the blade. Anyone who looks only at delivery figures or the initially depressed new business margin is looking at the wrong part.
The figures for 2025 were a record. Revenue up 16 percent to 8.7 billion euros, adjusted EBIT up 29 percent to 1.4 billion, the group margin up from 14.0 to 15.5 percent. Profit after taxes 968 million, up 27 percent. The order backlog stands at €29.5 billion, representing three years of capacity utilization. The largest segment is civil maintenance with €6 billion in revenue, up 18 percent.
Things get interesting when you look beneath the group margin. MTU reports on two separate divisions. The OEM business—that is, program shares and spare parts—achieved an adjusted EBIT margin of 30.2 percent in Q1 2026, up from 28.4 percent in the prior year. The MRO business—that is, maintenance—has significantly lower margins because it involves a high volume of material costs. In other words: the high-margin segment is the OEM spare parts business, while the high-growth segment is maintenance. By comparison, Safran Propulsion: there, the operating margin in the first half of 2025 was around 23 percent. The MTU OEM margin is higher on paper, but applies only to part of the group, while maintenance drags the average down.
Why I find the timing interesting: The GTF fleet is still young; the major maintenance cycles and the actual spare parts business are just getting started. Over 80 percent of the GTF fleet is under long-term service contracts. At the same time, the older V2500 is in the midst of its peak shop visit cycle and is effectively financing the transition. The average age of this fleet is around 12.5 years, and about 65 percent of the engines have yet to undergo their second shop visit. Even the powder-metal issue with the GTF, which caused very bad press and a burden of around one billion dollars in 2023, ultimately filled the shops. Mandatory inspections are, after all, revenue too.
By 2030, MTU aims to reach revenue of 13 to 14 billion euros, with an EBIT margin of 14.5 to 15.5 percent. The MRO business alone is expected to double to around 10 to 11 billion euros by 2030. The forecast for 2026 was confirmed in Q1: 9.2 to 9.7 billion in revenue, 1.35 to 1.45 billion in EBIT.
Regarding valuation: The stock is trading around 300 euros; in February, it was still over 400. The pullback came after a weak final quarter and the cancellation of the FCAS fighter jet project. Analysts, on average, see the stock much higher, but everyone has to make their own assessment. The market is currently pricing in the weak Q4 rather than the 2030 targets.
What I’m keeping an eye on: The dollar is the biggest variable. A five-cent movement in the EUR/USD exchange rate accounts for around 300 million euros in revenue, and the guidance already factors in a weak dollar at 1.20. The situation is similar at Safran; both companies operate with massive USD exposure and rely on hedging. In addition, the GTF in its new Advantage variant must first prove that the durability issues have truly been resolved. And as long as a large volume is being delivered, the loss-making new business will weigh on the group margin in the short term.
Bottom line: a similar underlying story to Safran, but packaged differently. Safran is the majority owner of a dominant single-aisle program; MTU is the broadly diversified minority partner with the added strength of being the world’s largest independent maintenance provider. Neither is a classic cyclical business, but rather a maintenance and spare parts business, where a large portion of future revenue is already installed and flying in the air today. You just need the patience to wait until it shows up on the income statement.
