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Operator: Welcome to the conference call on MTU Aero Engines Preliminary Full Year 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 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. Dr. Johannes Bussmann, Chief Executive Officer; and Mrs. Katja Vila, Chief Financial Officer. Firstly, I will hand over to Mr. Thomas Franz, Vice President, Investor Relations, for some introductory words.
Thomas Franz: Thank you, Heidi. Good morning, and welcome to our conference call for MTU's Preliminary Full Year Results 2025. We'll begin today's session with Johannes sharing some thoughts on strategic priorities and the business review. Following that, Katja will walk you through the financials of the year 2025 as well as the guidance for 2026. To close the presentation, Johannes 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.
Johannes Bussmann: Thank you, Thomas, and a warm welcome to everybody. As already announced during the course of the Q3 call, I would like to share some key priorities of MTU's way forward with you. First of all, MTU has a communicative growth agenda, and I am completely committed to execute on that one. This means we will expand our footprint internationally and invest in even more technological capabilities. Through our expansion in Hannover, Berlin, China and especially our new LEAP facility in Fort Worth, Texas, we are leveraging our global presence. With this, we support the growth of our MRO business and increase efficiency to serve our customers even better. With the latest development of the GTF, we have the most efficient engine in the narrow-body market. We developed this technology together with our partners and we will continue to enhance this technology even further to be perfectly prepared for the NGFE. My ambition is to provide an even larger share in the upcoming program. As in addition to the conventional engine, we have entered into an agreement with Airbus to develop the Flying Fuel Cell. Due to this, we will be enabler for our client to emission-free flying in the future. Given the significant improved free cash flow generation in 2025 and our planning for the next years, we are committed to focus on shareholder value by increasing the dividend by 64% from EUR 2.20 to EUR 3.60 in 2025, representing a payout ratio of 20%. We are on our way to reach our 40% payout ratio target. Let's have a look on the next slide. Let me walk you through our major achievements in 2025, starting with an overview of our key financial results. In 2025, we delivered on our financial guidance and are pleased to report that the strongest performance in MTU's history has been reached. Revenue reached EUR 8.7 billion. EBIT increased to EUR 1.35 billion, resulting in a very strong margin of 15.5%. Free cash flow rose to EUR 378 million, also a new all-time high despite the financial impact of the GTF fleet management plan. Based on this performance, we will propose a dividend of EUR 3.60 per share to the AGM, representing an increase of 64% year-on-year. In addition, we will present our 2026 guidance today and an important next step on our way to achieve our 2030 ambition. Let's take a look at the market environment in general. In 2025, our industry continued to gain momentum. Demand again exceeded available capacity. And despite persistent supply chain challenges and a more uncertain macro environment, airlines were highly resilient. Passenger traffic grew by 5.2% and cargo volumes by 3.1%, reaffirming the sector's strong fundamentals. This performance came despite headwinds from U.S. tariffs and a weaker U.S. dollar factor we managed very successfully. The outlook remains positive. For 2026, IATA expects RPK growth of 4.9% and the cargo traffic to rise by 2.6%, both consistent with long-term structural trends. Robust passenger demand, high-value cargo flows and expanding global e-commerce continue to support the industry, while limited aircraft availability keeps utilization and load factors at an elevated level. This environment plays directly to MTU's strength. Our supply chain is built to support customers on both OEM deliveries and the aftermarket, positioning us well to capture ongoing demand. Overall, the market indicators are fully in line with our plan 2030. Our current order book stands at USD 29.5 billion (sic) [ EUR 29.5 billion ] which technically means we are sold out for the next 3 years. To sum this up, MTU is exceptionally well positioned to benefit from market dynamics in 2026 and beyond. Let's have a look at the commercial OEM side of our business. In 2025, demand from new commercial engine remained exceptionally strong. We recorded more than USD 2 billion in new orders, driven by the GTF, GENX and GE9X program. For the GTF alone, customers placed orders and committed for more than 1,500 engines. And 2026 also started on a solid note for the GTF. Vietjet selected the PW1100 to power 44 A320neo family aircraft. Customer confidence in the GTF remains high. With commitments for more than 13,000 GTF engines, the order book is now roughly twice the size of the active V2500 fleet. The strong position of the GTF is visible for the program after just 10 years in service. Since 2016, the GTF family has accumulated over 50 million flight hours on more than 2,600 aircraft, safely carrying more than 1.7 billion passengers. Its fuel efficiency has enabled airlines to save more than 2.8 billion gallon of fuel. And the journey continues with the next major milestone, the entry into service of the GTF Advantage later this year, an engine that provides even better performance metrics and will carry the success even further. On the customer side of the GTF program, the fleet management plan continues to make solid progress in line with our expectations. Turnaround times are improving. Material availability is stabilizing. With RTX reporting significantly higher MRO output and airlines confirming an easing of the AOG cases, we expect the situation to continue to improve throughout 2026. Compensation payments remain on track. We contributed by roughly USD 360 million in 2025 and expect the remainder of the payments to be settled in the current year. Looking ahead, we continue to invest in the future of propulsion. In November, we reaffirmed our commitment with our partners, Pratt & Whitney and JAEC to evolve the technologies for engines for the next generation of commercial aircraft. This partnership, which is now in place for more than 4 decades, will allow us to deliver even higher efficiency, lower emissions and long-term competitiveness in the future. In short, MTU is taking advantage of the strong demand and is ready to deliver on our customer needs and is set for a strong and successful future. Let's have a look at the MRO of -- sorry, at the military OEM business. Over the past 2 years, we have seen strong order momentum for the Eurofighter engine program. The core nations, Spain, Italy and Germany, together with export customer, Turkey, placed engine orders for more than 80 Eurofighter aircraft. This clearly demonstrates the continued relevance of the program for Europe's defense capabilities. In the United States, demand for the heavy-lift helicopter remains high. The U.S. Marine Corps has ordered an additional 99 units. MTU holds an 18% share of the T408 engine program powering this platform, and we continue to benefit from the program's production ramp-up. At the same time, our OEM business for the TP400 is secured until 2029, with additional export opportunities offering meaningful upside as the A400M continues to attract international interest. Looking ahead at the future of military propulsion in Europe, we have joined forces with Safran and Avio Aero to develop a potential next-generation helicopter engine. This partnership positions us well to support future European defense platforms with advanced propulsion technologies. And while recent headlines around the FCAS program have been mixed, we remain confident that the partner nations will find a constructive way forward. It is essential for Europe's long-term defense sovereignty to develop their own military products, and MTU is fully committed to do this. In short, through our programs, partnerships and long-standing expertise, MTU contributes meaningfully to Europe's long-term defense readiness. Now we come to the commercial MRO side on the next page. And here, we are continuing to invest in both capacity and the scope of our product portfolio, strengthening our global footprint and supporting the ramp-up across all major engine programs. In Poland, EME Aero has added a second test cell, enabling the site to execute 500 GTF shop visits per year from 2028 onwards, an important expansion of our European GTF capabilities. In China, we opened our second MRO shop, initially focused purely on GTF engines, and we delivered the first overhaul engines just a month after the inauguration. Together with this, our first shop in MTU maintenance Zhuhai, the site has now capacity for more than 700 shop visits annually, creating a major capacity hub in one of the world's fastest-growing aviation markets. In North America, we enlarged our Fort Worth portfolio to include the LEAP and the GEnx later on and we will invest further to transform the site from an on-site service center into a full disassembly, assembly and testing facility, significantly strengthening our market position in North America. At MTU Maintenance in Berlin, we introduced full MRO capability for the PW800 and are about to increase our industrial gas turbine capacity by around 30%, supported by targeted investments, including the new IGT hall already under construction. In the broader IGT segment, we have deepened our collaboration with GE Aerospace to expand activities in the marine sector, opening even additional market opportunities. Taken together, these initiatives significantly enhance MTU's global MRO network and technical capabilities. As we execute this expansion, our focus remains clear, supporting the ramp-up and enabling sustainable profitable growth. On the technology side, we reached important milestones in developing further propulsion concepts. First of all, we are proud that the GTF Advantage has received both FAA and EASA certification, positioning it for the market entry in 2026. Aircraft certification is expected soon. With higher thrust, improved fuel efficiency and enhanced durability, the engine is particularly well suited for the larger aircraft of the A320neo family. In addition, RTX announced the introduction of a Hot Section plus retrofit package, enabling to benefit from 90% to 95% of the durability improvements on the GTF advantage. As announced earlier, our IAE consortium publicly reaffirmed its commitment to advancing the GTF architecture as a foundation for the next-generation engines. We are incorporating all learnings from the first generation of GTF engines design execution as well as fleet experience. From today's point of view, the design of future engines will definitely be geared. Building on these advancements in our current product portfolio, we are simultaneously accelerating in the development of next-generation propulsion technologies. In June, we signed a memorandum of understanding with Airbus to jointly advance hydrogen fuel cell propulsion. Within our own technology program, the Flying Fuel Cell, we have made significant progress. The design has been finalized, early tests have been successfully passed, and we have commissioned a dedicated Flying Fuel Cell test bed in our Munich site. This marks a major step towards an extensive test campaign for this technology. All of this demonstrates one thing very clearly, we are not only advancing propulsion technology, we are actively shaping what comes next. MTU is preparing the future of aviation step-by-step and with a very clear long-term vision. Over the past year, we have made strong progress in reducing CO2 emissions across our production sites. Here in Munich, for example, our new geothermal plant has been operating since December 2025 and will cover around 80% of our heating needs, entirely CO2-free. The 71-degree Celsius thermal water is sourced from a depth of more than 2,100 meters and will provide clean, reliable heat well into the future. Looking ahead, our ambition is clear: reduce CO2 emissions across all MTU sites by 63% by 2035 compared with 2024. Each location contributes through its own targeted measures. We are driving this ambition through 3 main levers: improving energy efficiency, expanding on-site renewable energy generation and, of course, purchasing renewable energy such as green gas and green electricity. Together, these actions ensure that we are progressing credibly towards sustainable decarbonization. In addition to our operational success and progress, our sustainability performance is also externally recognized. MTU has once again received the silver medal in the EcoVadis sustainability rating. Taken together, these developments demonstrate that we are on a strong and credible path towards significantly decarbonization. With that one, I will hand over to Katja, and she will walk you through the numbers.
Katja Garcia Vila: Thank you, Johannes, and welcome from my side as well. Let me begin my part by briefly putting our results into perspective. For 2025, we achieved our several times upgraded guidance in all financial KPIs. These results are new record highs for MTU and marks the next milestone on our ongoing growth path. Revenues of EUR 8.7 billion were in line with our updated guidance, clearly exceeding our initial guidance despite a weaker U.S. dollar, a headwind we were able to offset through strong operational performance. Adjusted EBIT increased 29% to EUR 1.35 billion, showing a strong margin of 15.5%. This represents a significant step-up compared to our expectations. Adjusted net income roughly followed the EBIT growth as expected and grew 27% to EUR 968 million. Free cash flow of EUR 378 million came in significantly better than originally anticipated and in line with the guidance from October 2025. This marks another record level in recent years, even while carrying the burden of the GTF fleet management program and it proves our progress in improving our cash conversion. Let's now take a closer look at some details behind this outstanding performance. Group revenues increased by 16% to EUR 8.7 billion. In U.S. dollar terms, revenues were up 21%. This strong performance was driven by our commercial OEM business, which benefited from a favorable mix in engine deliveries, including a higher share of spare and lease engines as well as the expected growth in spare parts revenues. We also achieved strong sales growth in the MRO segment, supported by continued momentum across our activities there. Adjusted EBIT rose over proportionally by 29% and to EUR 1.3 billion, resulting in a margin of 15.5%. The excellent result was driven by the above mentioned business mix effect. Adjusted net income grew by 27% to EUR 968 million. Growth was influenced by higher interest expenses associated with new financial instruments. The higher earnings translated into a strong free cash flow of EUR 378 million, an all-time high for MTU. This level exceeds the previous peaks of 2019 and 2023, even though the expected impact from the GTF fleet management plan were fully reflected. Airline compensation payments amounted to roughly USD 360 million. Let's now move on to the business segment. Let me begin with the OEM segment. In Q4 2025, total OEM revenues increased by 11% to EUR 817 million. Therein, commercial OEM revenues were up 13%, reaching EUR 621 million. In Q4, organic growth in commercial OE and U.S. dollar sales increased by a low to mid-teens percentage. As anticipated, Q4 OE sales included a higher share of installed engines. Organic spare part sales in Q4 in U.S. dollars grew in the low to mid-teens range. Drivers were both narrow-body and wide-body engine platforms. Military revenues increased by 6% in Q4, marking the strongest quarter of the year. However, delays in the supply of parts and modules required for the plant delivery, limited the level of growth we anticipated, resulting in a stable revenue versus 2025. Adjusted EBIT for the quarter improved by 39% to EUR 234 million, resulting in a margin of 28.6%. The margin development was as expected, reflecting the higher share of installed engines as well as lower-than-expected military revenues. For the full year, total OEM revenues increased by 14% to EUR 2.9 billion. Commercial OEM revenues grew by 18%, reaching EUR 2.3 billion. Organic commercial OE sales in U.S. dollars were up around 10% for the full year 2025, a bit below our mid-teens guidance as the delivery plans within our various partnerships does not materialize as expected. Organic spare parts U.S. dollar sales for full year 2025 increased in the low teens range, drivers for both narrow-body and mature wide-body platforms. Overall, this performance drove adjusted EBIT up by 43% for the full year to EUR 873 million, delivering an excellent margin of 30.4%, clearly exceeding our expectations for the year. Let us now move on to the commercial MRO business. Commercial MRO revenues in the fourth quarter of 2025 increased by 11% to EUR 1.7 billion, making it the strongest quarter of the year. In U.S. dollars, Q4 revenues were up 22%. Key revenue drivers in the fourth quarter were the GTF, the CF6 and the MLS leasing and asset management business. Revenues from CFM56, CF34 and CF6 platforms also increased compared to Q3 2025. The GTF MRO revenue share in the quarter was around 41%. In Q4, adjusted EBIT decreased by 11% to EUR 123 million, resulting in a margin of 7.4%. The margin reflected the higher share of GTF MRO revenues as well as ramp-up costs at MTU Fort Worth. For the full year 2025, commercial revenues rose by 18% to EUR 5.96 billion. In U.S. dollar terms, revenues increased 23%, significantly exceeding our full year guidance of mid- to high-teens growth. Revenue growth in 2025 was broadly spread. The GTF delivered strong performance, while the CF6-80, GE90, V2500 and our IGT business also recorded solid growth. In addition, MLS leasing and asset management delivered the expected operational performance, further supporting overall results. GTF MRO accounted for 40% of total MRO revenues in line with our full year expectations. Revenue recognition accelerated in the second half of the year, driven by broader work scopes, improved material availability and shorter turnaround time. Adjusted MRO EBIT increased by 9% to EUR 478 million, resulting in a margin of 8%. Margin development was mainly influenced by the GTF MRO mix, ramp-up costs for the LEAP MRO at MTU Fort Worth, partly compensated from an equity contribution, particularly from MTU Zhuhai. Overall, the MRO business delivered a strong performance in 2025. Let me now give you an update on our hedge book. As you can see, we have further increased our hedge coverage over the past months since the release of our 9-month results. For 2026, we have now hedged around 80% of our net U.S. dollar exposure at an average hedge rate of 1.13. Looking further ahead, we continue to build our hedge position at higher average hedge rates, reflecting the currently weaker U.S. dollar. Please keep in mind that the purpose of our hedging strategy is to reduce the impact of U.S. dollar exchange rate fluctuations on our EBIT. EUR 0.05 movement in the U.S. dollar exchange rate would translate into an EBIT effect of roughly EUR 20 million. Overall, our hedge book secures a high degree of visibility and stability for 2026, giving us a solid foundation for the year ahead. Before moving to the guidance, let us have a look on our progress on the finance side. Our net debt currently stands at around EUR 1.1 billion, resulting in a net debt-to-EBITDA ratio of below 1. That is a very solid level, fully in line with our midterm guidance of a leverage ratio of 0.5 to 1.5, and gives us the financial headroom we need to execute on our priorities. Our strong balance sheet is also reflected in the credit ratings from Moody's and Fitch, both of which assigned an investment-grade rating to MTU. Moody's upgraded its rating from Baa3 to Baa2 with a stable outlook in August 2025, while Fitch confirmed its BBB rating with a stable outlook in September last year. At the beginning of January, we issued a new convertible bond with a volume of EUR 600 million. We used the proceeds to repurchase our outstanding EUR 500 million convertible bond that would have been due in July 2027. This transaction allowed us to reduce the potential dilution for our shareholders by around 300,000 shares, a clear and tangible benefit. As already stated by Johannes earlier, we intend to propose a dividend of EUR 3.60 per share at our Annual General Meeting in May 2026. This represents an increase of EUR 1.40 or by 64% compared with last year and corresponds to a dividend payout ratio of 20%. This is a clear signal of our gradual return to our targeted long-term dividend payout ratio of 40%, a ratio we temporarily suspended due to the GTF fleet management plan. All in all, these measures strengthen the financial flexibility and solid balance sheet that underpin MTU's long-term growth strategy. So let's now come to the key drivers for our guidance 2026. As Johannes already mentioned, the market environment remains highly favorable for the aviation industry, and MTU is well positioned to benefit from this momentum. Overall, we expect engine deliveries to increase in 2026 with a higher share of installed engines. For the GTF, we will support these deliveries in line with our market share, contributing to the production ramp-up while ensuring sufficient spare engine availability for our airline customers. Following RTX announcement, demand for spare and lease engines remains strong. And on the GTF, we expect this to stay broadly flat in absolute terms compared with 2025. For the GEnx, we expect higher volumes driven by Boeing's plans to increase 787 production from currently 8 aircrafts per month to around 10 in 2026. Deliveries of the first GE9X are targeted for this year, although the official entry into service of the first B777X has been delayed to 2027. Putting this together, we expect organic U.S. dollar OE revenues to grow in the mid- to high teens range in 2026. This reflects the current expectations with respect to mix and pricing. Commercial spare parts are expected to remain a strong revenue contributor. The V2500 should be up, supported by higher utilization of the A320ceo fleet and increased material demand in work scopes and shop visits. We expect continued growth in GTF spare parts, driven by the GTF fleet management plan as well as ongoing durability improvements. Mature engine programs are expected to remain broadly stable or show a slight decline. Overall, this points to low to mid-teens organic spare parts revenues growth in 2026. The military business will benefit from the strong order momentum for the EJ200, leading to higher deliveries. In addition, we expect a continued ramp-up in T408 production, which powers the CH-53K heavy-lift helicopter used by the U.S. Marines. The development contract for the next-generation fighter engine runs until September this year, and we remain optimistic that the government will find a solution for the FCAS program. The phaseout of the German Tornado fleet will result in a gradual decline in RB199 revenue over the coming years. Due to some supply chain disruptions in 2025, we expect certain spillover effects into 2026. Altogether, this should result in an accelerated revenue growth in the mid-teens range. Commercial MRO will continue to benefit from strong air traffic, which drives high demand for mature engine programs in our independent MRO business. We also expect rising GE90 MRO volumes from our freighter customers. Our MLS leasing and asset management business will continue its growth trajectory. In 2026 -- 2025, we generated roughly EUR 600 million in revenues, marking steady progress towards our EUR 1 billion revenue target for 2030. For GTF MRO, we expect a revenue share of 40% to 45% in 2026. Key drivers will be the growing fleet and service, ongoing execution of the GTF fleet management plan and further durability improvements. Together, these factors should translate into low to mid-teens U.S. dollar revenue growth in MRO. Across all business segments, we expect continued growth in 2026, another important step towards achieving our midterm revenue target of EUR 13 million to EUR 14 billion. The business drivers I've just outlined with growth across all our segments translate into expected total group revenues in the range of EUR 9.2 billion to EUR 9.7 billion based on a U.S. dollar exchange rate of 1.20. Adjusted EBIT is expected to come in between EUR 1.35 billion and EUR 1.45 billion above the 2025 level. Positive contributions will come from continued strong spare engine sales, partially offset by a higher share of installed engines. The spare parts business and the military segment will also contribute and support absolute EBIT expansion. The 40% to 45% GTF MRO share will have some impact as will our investments in Fort Worth and the ramp-up of MTU maintenance Zhuhai. At the same time, the ongoing strength of our independent MRO business and further growth in our MLS leasing and asset management activities will drive the margin. Overall, the group margin guidance for 2026 remains well within the corridor of our midterm guidance. For net income adjusted, we expect growth broadly in line with adjusted EBIT. With regards to our cash conversion rate, we expect further improvement to 45% to 55%, mainly driven by lower GTF AOG compensation payments and stronger earnings. As you can see, we are well on track to deliver our 2030 ambition across all key performance indicators. Our 2026 revenue outlook of EUR 9.2 billion to EUR 9.7 billion is broadly in line with the revenue CAGR implied by our 2030 ambition. Our 2026 adjusted EBIT target of EUR 1.35 billion to EUR 1.45 billion also implies the margin within our guided 2030 corridor of 14.5% to 15.5%. Our cash conversion rate is set to improve significantly from 39% in 2025 to 45% to 55% in 2026, representing another step towards our 2030 ambition of reaching a high double-digit level. As you know, our midterm 2030 ambition remains unchanged. Since the future development of the U.S. dollar exchange rate cannot be predicted, we have included our well-known U.S. dollar sensitivity, noting that our 2030 ambition is based on an exchange rate assumption of 1.10. This concludes my presentation. And I would now like to hand over to Johannes for the closing remarks.
Johannes Bussmann: Thank you, Katja. Let me close our presentation with some key takeaways for you. MTU has delivered an excellent performance in 2025, despite all the headwinds that we were facing and have been reaching new record highs. The GTF fleet management plan is on track financially and technically, and the financial burden will start to ease. We continue to execute on our technology road map to support our customers worldwide on their ambitions. The market environment remains positive for the entire industry, and MTU is extremely well positioned to benefit from this growth all around the world. We have provided a strong guidance for 2026, fully aligned with our growth plan towards our midterm target for 2030. This will translate also into improved free cash flow, allowing us to even further strengthen shareholder value. MTU continues to represent a highly attractive investment with exposure to long-term profitable growth. So thank you for your attention so far. And now we are happy to take your questions.
Operator: [Operator Instructions] Mr. David Perry from JPMorgan, may we have your question.
David Perry: Johannes and Katja, can I ask one question on each of you, please? Johannes, I think you've been in the role now maybe 6 to 8 months, I think. So I'm just curious whether you see any real scope for operational improvement? I know MTU is a well-run company already. But in particular, I'm thinking about the FX headwind that the company could face and whether there's anything operationally you could do to offset that? And then Katja, for you, thanks for the comments on the free cash flow bridge to '26, and you talked about lower GTF compensation payments. Just -- can you talk about some of the other moving parts, please? I think some of the feedback I've hoped from investors was they thought it could be a little bit better than your guidance in 2026. So maybe just some of the puts and takes on the cash flow would be helpful.
Johannes Bussmann: Yes, improvements of operations are, of course, a topic that we are dealing with every time. And I think the expansions that we talked about, especially in 2025 also showed already that we have a really steep learning curve on the existing facilities and building up new facilities with even better processes, combining what we have learned in other parts. And that our operational performance is in, at least some areas, second to none proves with the GTF, the moment we are best-in-class in the network with short turnaround times. And that's, of course, what we also want to provide as a service level for our customers in the other side. And that is what we are working on. It's a lot of work, of course that is done in the different facilities. But I see progress there and strong willingness of our colleagues to improve that even further. And with the inductions coming in, of course, that also helps because if you have volume, the repetitiveness is increasing. And by that, the learning curve is even posted further.
Katja Garcia Vila: Okay, David. And then I would take over here to talk about the cash flow topic. So overall, despite the fact that we do see less impact from the GTF fleet management plan on the AOG side with approximately expected [ USD 250 billion ] still impacting our free cash flow for 2026, we're also facing still an increase in the GTF receivables for the prefinance shop visits. As you remember, we also elaborated on that path during our 9-month call stating that we will see further increase in those prefinance shop visit receivables over the next couple of years before we start to see that turning rather later in the end of this decade. Another topic that is a headwind, so to say, for our free cash flow is the ramp-up of our facility in Fort Worth in Texas, where we expect to see a high double digit impact on our free cash flow building up the inventory to operate the facility.
Operator: We will take our next question. Mr. Christophe Menard from Deutsche Bank.
Christophe Menard: Yes. I had actually two. The first one is on the OE commercial guidance in 2026. Your guidance, could you detail the -- in terms of volumes, what you intend to -- the growth in GEnx and in GTF because it seems to be a higher number than what Airbus has been guiding us to. And I would have been keen to -- I mean, you mentioned several times, IGT on this call. Could you tell us what is the conclusion both to OE and MRO at this point in time and where you see this going forward in terms of contributing to earnings and sales?
Katja Garcia Vila: Yes, Christophe. So first of all, with regards to the OE commercial guidance, there are a couple of moving parts, so to say, in this OE commercial guidance, and it's not just the GTF. So we have the GTF. We have the GEnx that is growing. We do see first deliveries in the GE9X that is moving. So these are figures, but also some other smaller Pratt & Whitney Canada engines will contribute to the growth. And that's why our figure is more a blend and the mix of the different programs that we are in compared to what Pratt has communicated. The IGT part is part of our MRO segment. So this is where you can find that. The expectation is that this is a very profitable business that is continuing to grow. We are investing in the Berlin plant to be able to support the growth and also the customer demand that is out there, which is partially driven by a law in Germany, for example. There, we do see more business coming around the corner, but also internationally due to the peaks in power supply, the increase in the -- how is that called, in the artificial intelligence area, there's more need for short-term peak power supply, and therefore, this is a business expansion that we do expect.
Operator: We will take our next question. Mr. Robert Stallard from Vertical Research, may we have your question.
Robert Stallard: I just wanted to follow up on the last question on your guidance versus Airbus. And in particular, those comments that Airbus made on the GTF. I was wondering if you could elaborate on this situation? And what is causing this disagreement between you and your customer here or at least Pratt & Whitney's customer? And then secondly, on the V2500, I was wondering if you could give us your latest thoughts on the trajectory for shop visits on this engine and also work scope as you work through 2026.
Johannes Bussmann: Okay, thanks. Yes. I mean the discussions on the deliveries between Pratt & Whitney and Airbus are still ongoing. And all of you read that Guillaume commented on it. So obviously, we have not come to a conclusion so far, but the 2 partners are negotiating. And so that's what I think we will have to wait for, and I'm pretty sure that they will find a solution. So the orders, of course, have been placed. And we, in the consortium, have discussed what we can deliver as a total, and now Pratt is discussing with Airbus, how we deal with this in the relationship with Airbus and our other customers. That's from our side, all we can comment on that one. On the V2500, I think the numbers speak for itself. We have around 15%, roughly 15% that have not even seen the first shop visit. We have another 35% in operation that has not seen the second shop visit. So that means half of the installed fleet is well into the lifespan of the engine itself. So from that perspective, we still planned with the induction of the MRO sites for the V2500 to be ongoing for quite a while. And this is something with the growth of the overall aviation market that we discussed earlier on. I think something that is shared by a lot of our colleagues and market participants. And that's why we are also in the MRO shops still preparing for further inductions of the V2500 for the coming years. Did that answer the question?
Robert Stallard: Yes. Just on the work scope, sorry.
Johannes Bussmann: The work scope, of course, is -- that's with the -- the further you go down the road, the work scopes get heavier, of course. So that means the second work scope is normally heavier than the first one and so on. And that's, of course, something that is helpful for the MRO business, and that will drive our numbers and also the work scopes inside the shops. And that is, I think, the normal behavior that we have seen on engines also for many years.
Operator: We will take our next question. Mr. Ian Douglas-Pennant from UBS, may we have your question.
Ian Douglas-Pennant: Ian Douglas-Pennant at UBS. So the first is on cash flow, please. So you mentioned prefinance shop visits, which I think is the balance payments line item on your balance sheet. Could you just help us size how you see that effect? I mean, first, just remind us for 2025 impact on cash flow from that? And then also, if you could you just help us think about sizing that in 2026, 2027 as well, please, either qualitatively or quantitatively is useful. My second question is on the aero derivative or the IGT business. Are you worried or thinking about here the possibility of increased competition from aircraft engines being converted to be used as aero derivatives as we've seen one of your peers talking about. And have you looked at doing that yourself, given that you have, I mean, almost unrivaled expertise here?
Katja Garcia Vila: One thing that -- I'll take the first part, Ian. So we don't specifically provide numbers on the growth of our aftermarket compensation payments. What I can say is that we expect that to continue to grow year-over-year and therefore, still have an impact on our cash flow development over the next couple of years. We expect that to turn rather later in the -- not in the century, farther late in the decade. And you can see the position itself under other financial assets in our balance sheet. And these are receivables and no compensation payments. So currently, we are still building up those receivables for the prefinance shop visits. But sorry, I cannot share any details on the coming year. Maybe, you take...
Johannes Bussmann: Yes, I'll take the second part. I'm pretty sure you relate to the FTAI Power announcement some time back. And of course, the conversion of aviation engines into power generation units could be an attractive adjacent business for MTU. So it's -- for the LM2500, the CF6 and the 6000 and the 6-80. That's a business we are in for already a long time and have deepened our collaboration with GE Aerospace. So that's something that we are, of course, seeing good market opportunities into. That said, the attractiveness of the conversion into power generation ultimately also depends on the scale of the addressable market and availability of feedstock for these engines, of course. And we certainly have the potential that we are observing. And we have -- as we are active on both sides, I think we have also a good visibility of what is more attractive for us. And that part, we will then follow with the customer demand being on the side.
Operator: We will take our next question. Ms. Chloe Lemarie from Jefferies, may we have your question.
Chloe Lemarie: Yes. Johannes and Katja, if I could start with -- actually a follow-up on your comments on inventories. First, could you comment on the driver for the growth in 2025 and in particular, in Q4, where typically you actually unload a little bit of those inventories? And where should we assume this stabilizes going forward in terms of days of sales, please? The second question is on OE sales. Could you share maybe what was the impact of mix on top of the 10% organic growth that you report? And on your 2026 guide, did I understand well that your current guide for mid to high teen actually also includes the impact of a mix? Or does that come on top?
Katja Garcia Vila: Okay. So let me start with the inventory question first. You remember that I said, for example, in the military business, we were not able fulfill all the deliveries that we originally anticipated for the quarter despite the fact that it was the strongest quarter in deliveries. So that also had a stay with more inventories than originally anticipated, let me say it like this. And I'm sorry, I didn't get the second question entirely about the mix in the guidance, Chloe. I'm sorry.
Chloe Lemarie: Yes. So in 2025, you talked about 10% organic growth in OE. But obviously, the spares and the -- yes, the spares mix and the overall pricing mix, I guess, is additive to that. So if you could maybe share just what kind of roughly -- if you could scale this and how it impacts 2026 as well?
Katja Garcia Vila: So as you know, our organic growth rates does not account for any changes on pricing or on share between spare and installed engines overall. So what we've done now for 2026 is that 2026 reflects the current expectation with regards to mix and pricing, and this is what we've laid out.
Chloe Lemarie: Okay. If you can just follow up on the inventory question. So you said that in 2026, you expect a high double-digit headwind from working capital from the Fort Worth rent, I guess. But overall, for inventory, is that the total amount that we should assume? Or is it going to be like a higher headwind year-on-year?
Katja Garcia Vila: That was a specific headwind that I would like to point out because we never quantified the amount that specifically before. So that was why I mentioned the MTU Fort Worth inventory step-up. Overall, as you know that with the growth of the business, we will also face some increase on the inventory side despite the fact that we do our very best to manage our inventories as efficiently as we can.
Operator: We will take our next question. Mr. Rory Smith from Oxcap Analytics, may we have your question?
Rory Smith: It's Rory from Oxcap. I just wanted to come back to that point on spares. I was hoping you'd be able to give a number for spare engines actually shipped in Q4 and what that was in the first 9 months of 2025. And then the second question in terms of the MRO segment and the guide for the GTF share there, 40% to 45% in 2026. Is it possible to get any sort of sensitivity on margins, whether it comes in at 40% versus 45%, what we can kind of get some guide rails around that? And then my third and final question is just on the GE9X, you've obviously called that out, its delayed entry into service is 2027 now. How does that actually impact your financial statements? If you could just frame that for us financially, that would be really helpful.
Katja Garcia Vila: Okay. So with regard to the split between spare and installed engines, you know that as those information are also not disclosed by our partners in the network, there is also no way that we will disclose those details. I think what is clear when you look at the fourth quarter of last year, we said that there was a higher share of installed engines and that, that has, for sure, an impact on the margin of the OEM segment. The MRO guide for 2026, so there is no way we break down the 40% to 45%. But what you need to see is that the GTF, just from a pure construction of the contract is rather dilutive to the margin, the higher the share rate. So if we have a higher share on the GTF in our revenues, there is an impact on the margin side. And for the GE9X, I think there are 2 important topics to keep in mind. The GE9X delivery was already postponed a couple of times and we had built up inventory in our facilities to support the original ramp-up, and that still is with us to the largest extent, yes.
Operator: We will take our next question. Mr. Samuel Burgess from Goldman Sachs, please, may we have your question?
Samuel Burgess: Just a couple of questions for me, please. Just a follow-up on the Fort Worth point. I mean you talked about the impact of working capital from the inventory ramp up. I think the first induction of LEAP at Fort Worth is expected at the end of this year. As we go beyond that to '27, should we expect that to unwind to become a bit of a tailwind to cash rather than a headwind? So just thinking through how Fort Worth starts to contribute would be really helpful. And then just secondly, on R&D, how do you see that evolving next year and beyond, that would be really helpful?
Katja Garcia Vila: Okay. So with regards to Fort Worth, first of all, let me correct one assumption for the first induction of an engine is foreseen already for July of this year. And the induction -- like to ramp up the facility itself for the first induction already comes with the headwind, so with the buildup in inventory. As we will continue to ramp up that facility over the next couple of years until 2030, you can expect further impact coming from this ramp-up on the inventory side. So we expect a similar impact year-over-year, more or less. So that's a big topic. And on the R&D side for 2026, that is a bit of a 2-answer question. So there is the R&D -- the capitalized R&D, we rather expect to decrease during the course of the next year compared to the 2025 level. And the self-financed R&D, we expect to maybe increase a little bit compared to prior year's level. But that is more or less what we do see. And I think it's clear as we continue to follow our technology agenda, there are small development works to be done in that area. Overall, I would say -- and if you look at the midterm ambition that we have, it's rather a decrease in R&D expected until 2030 overall.
Operator: We will take our next question Mr. Sash Tusa from Agency Partners, may we have your question?
Sash Tusa: Yes. You stated in the section on military OEM that a constructive way forward on the FCAS project is expected. I wonder if you could just elaborate a bit on that. What do you see as being a constructive way forward? And presumably, you are thinking about contingencies for -- if the program currently configured does not continue past the end of Q3. What would you do with all these engineers?
Johannes Bussmann: Okay. I'll take that one. As you mentioned, the Phase Ib is ongoing until end of September this year. And we are delivering together with our partners, Safran and ITP, there are according to the time plan and according to what the deliverables are. So that means in our Pillar, Pillar 2 in the entire FCAS program, we have a very stable and good working relationship that we are also willing to continue whatever the solution the politicians in Europe might take. So that's something where we have aligned. And the question is now, what do the politicians decide? And that's not in our hands. I think we need guidance from politics, which direction they want to go, how the system should look like. And then we, as an industry, and then in our share with the engine, of course, can join forces. And depending on these decisions, the consortium stays as it is for Pillar 2 or it might need to be adjusted, but that's something for us only now to guess. So that's nothing that we can elaborate on in detail as we don't know these facts. And we are waiting for a decision. What I'm really confident on that the -- at least the German politicians where I'm in contact with, they have understood that the decision has to be taken soon. And there is a strong will to do so. But of course, it's a European program, and that's why several governments need to come together and make a decision, and that's what we are waiting for.
Operator: We will take our next question. Benjamin Heelan from Bank of America, please, may we have your question?
Benjamin Heelan: Yes. So first question for me. So you've guided for EUR 1.35 billion to EUR 1.45 billion from an EBIT perspective. My interpretation of your comments is that the spare engine ratio, which is somewhat of the swing factor as to why you would be towards the bottom end or the upper end. Is that a fair assessment? Or is there something else going on that could move through the year, if there's any color of kind of what drives you to the top or the bottom of that range? Secondly, obviously, spare engine ratio, I appreciate you're not going to give any numbers, but qualitatively, how should we be thinking about that into 2027 and potentially beyond? Is there any color that you can provide around that because I think in my view, in particular, it is clearly elevated right now. So understanding how long it's going to remain at an elevated level. And then third question, obviously, Airbus are very unhappy based on the comments that they made on their conference call. Is there any -- can you talk a little bit through like what are the bottlenecks, like what has driven this shift over the past couple of months. Are there new bottlenecks in production that we need to be thinking of? Is it a stickier AOG situation? Just can you help frame a little bit what has driven the need to shift the deliveries from Airbus over the last couple of months?
Katja Garcia Vila: Maybe I'll start with the financial questions, and then I hand over to Johannes for the Airbus comment. So overall, what we have pointed out on Page 20 of our presentation is that there are a couple of drivers that will influence our margin also on the commercial OE side. So the -- and we will an increase in new engine deliveries overall and the growing spares and installed engines. Just to really remind you once again, it's not only all about the GTF. So there are also a lot of other engines that we supply. And also in there, we do have spare and installed engines that we do supply. The GTF definitely is a driver, but also the B787. So the GEnx engine or also the B777 that will start will happen in 2027. So it's not only the topic of the GTF spare engine ratio or total number that lifts that. When you look at the overall development, I think it's clear that we are currently operating at an elevated level with regards to the spare and lease engines in the GTF program. But also there, I would like to make one comment. In the newer engine programs, we will -- we do expect to see an elevated level for a much longer time moving forward because of the fact that those engines overall are being operated under much harsher conditions than engines have been operated in the past. And that's not only true for the PW11 or for the GTF, but it's also true for other engine programs. So overall, we do not expect to move back to a historic level of maybe 10% of spare and lease engines in the market. We rather expect that to remain elevated. Nevertheless, the current levels will not be sustainable for the longer future. For this year, and this is also a comment that we have made in absolute terms, we expect the delivery of spare and lease engines to be pretty much in line with what we've seen in 2025. But due to the increase in installed, there will be a reduction in the overall ratio. Maybe, Johannes, with that, I hand over to the Airbus part of the question.
Johannes Bussmann: Yes. Okay, of course. Yes. Of course, Guillaume, obviously, is not happy with the actual status of the negotiations. As a matter of fact, there is no new [indiscernible], nothing at all. We have, I think, proven that in the -- especially Q4 last year that we have made progress in the -- on the MRO side and the throughput turnaround times. So in order to decrease the situation for the airlines, and then all things come together, there is a mixture of requests from Airbus, what they want to get delivered. As you know, the GTF is for A220, the sole engine. And for the A320, it's a mixture between LEAP and the GTF. And in that overall setup, of course, there needs to be a solution that Pratt is negotiating with Airbus. But we can't further comment on that one. We're also not familiar with all the details that are on the table there, but I'm very confident that they will find a solution, and think that Guillaume is not happy was clear message that he sent and we're aware of that one.
Operator: We will take our next question. Mr. Aymeric Poulain from Kepler Cheuvreux, please, may we have your question?
Aymeric Poulain: My questions must have been answered, but maybe a few more color, please, on the turnaround, the time you said there was some improvement in 2025 and you're now best in class. So what was what is the turnaround time now? And how much more room for improvement do you see in the years to come? And then your competitor mentioned that given the low retirement rate, the number of shop visits should stay pretty flat up to 2028 before starting the descent. Do you see the same phenomenon for the V2500? Or do you see a higher retirement rate coming now?
Johannes Bussmann: So, okay. On the turnaround times, that's always a mixture of different numbers, of course. The work scopes are different depending on how long the engines have been run, in which environment they have been operated. So the average turn time has come down. Material availability, supply chain issues have been reduced or at least came down. And that's, of course, helpful for the turnaround time in the shops. And within the network, so the partners that are performing MRO, we are sharing this information. So that's nothing that we keep for us. Of course, we want to support our customers to the best possible. And MTU Hannover especially has contributed last year, a lot there because turnaround times and developments have developed in a very nice way to reduce that. On the V2500, we still see quite a big portion of engines coming in, 15% are still waiting first shop visit, 35% second, and then, of course, the remaining 50% third or even further. And that's something, of course, that will go on for quite a while. So we have quite heavy workload in our shops with that. And with the increased work scopes/limited parts coming out of the engine, of course, due to the later shop visits, that's something that is positive for the development of our business, an engine that we know very well and where we have great capabilities also on the repair side. And that's why this will remain for the foreseeable time quite good and stable business for us.
Operator: We will take our final question. Mr. George Mcwhirter from Berenberg, please, may we have your questions?
George Mcwhirter: In the military business, can you just provide a bit more detail around the supply chain issues that you are experiencing? And are you confident that this will be less of an issue this year? And the second question is on your expectations for when the first in-service GTF engines will receive the GTF Hot Section Plus retrofit package? And when do you think you will be able to complete the retrofit of the whole fleet?
Johannes Bussmann: Okay. As you know, all military programs run into consortiums. And of course, that also has seen the difficulties that we are facing on the commercial side. Volumes are much smaller. So that means the impact of single disturbances is a bit bigger. And so that's something that is calming down as the overall supply chain is coming down, and we have seen a slight drag that led to the slightly reduced numbers, but we are also confident that we can compensate on that one this year and the years after. So we don't see any real problems that are remaining and are hindering us from increasing the military side now for the time to come. The Hot Section Plus from Pratt & Whitney, of course, interesting for the installment in the already delivered engines on the GTF side. And it covers for around 90%, 95% of the durability issues for the existing fleet. And that is, of course, something that we will install during the course of the normal shop visits. So an assumption on how long that takes, it's a bit difficult, but all customers that opt for this Hot Section Plus thing, we can install it in the normal shop event. And then this comes in. It's not mandatory, so the customer has a choice. And that's why any guess on any time line is difficult, but we are confident that customers will make use of it, to what extent remains to be seen. And maybe when we have a little more time down the road, then we can elaborate on these numbers.
Operator: This concludes today's question-and-answer session. I'll now hand the call back to Mr. Thomas Franz for closing remarks.
Thomas Franz: Yes. Thank you. This indeed marks the end of today's call. Thank you, Johannes, and thank you, Katja, for your presentation, and thank you all participants for the interest in the questions. As usual, for further information and details, reach out to the IR team. Beyond that, have a great day. And yes, see you soon.
Operator: We want to thank Dr. Johannes Bussmann and Mrs. Katja Garcia Vila, and all the participants of this conference. Goodbye.