MTU Maintenance, one of the few engine MRO companies to survive Covid-19 with relatively minor bruises, is buzzing with activity again and expects to return to pre-Covid-19 levels by 2022/23, earlier than the market.

As business picks up steam, the company is going ahead with expansion projects – in September, MTU Maintenance Zhuhai, its joint venture with China Southern Airlines, broke ground on a second MRO facility, in Jinwan. The facility will have an initial annual capacity of 260 shop visits and expects to be operational in 2024.

Martin Friis-Petersen, Senior Vice President MRO Programs at MTU Aero Engines, attributes the company’s faster recovery to a combination of factors that include its broad portfolio, the partnership approach it adopted during the pandemic to support the engine fleet of its customer base in a serviceable condition, and high operational flexibility to shifting market trends. In an interview, Friis-Petersen expresses confidence in overall market recovery and holds forth on a variety of topics, including the impact on the pandemic on the general engine MRO market and the company’s increasing use of artificial intelligence throughout its maintenance processes.

With commercial aviation not expected to make a full recovery until 2023, carriers are operating with a smaller fleet. How significantly impacted is the engine MRO sector by the reduction in aircraft and engine operating hours?

At MTU, we are performing above average in terms of workload, thanks to our broad portfolio. For instance, narrowbody engines are tending to be reactivated earlier than widebodies, and we serve the popular V2500 and CFM56 engine families. Newer generation engines are also being reactivated first, and we are well set up here with our participation in the PW1100G-JM OEM networks as well as serving LEAP engines at our facility MTU Maintenance Zhuhai. Furthermore, cargo operations have been strong throughout and we’ve seen great demand for services on engines such as PW2000 and CF6-80C2. We should return to pre-Covid levels by 2022/23 earlier than the market – thanks to our product mix and ability to offer alternatives, including used serviceable material (USM) and green-time engines.

The introduction of new generation engines will result in a reduction in shop visits, at least in the short term. Is this a cause for concern for MTU Maintenance and other engine MRO companies?

It is a well-known fact that next generation engines are expected to have fewer shop visits over the lifecycle. For instance, only three to five visits during service life are expected for next generation narrow-body engines such as the PW1100G-JM or the LEAP – depending on operating environment – whereas current generation engines such as the V2500-A5 or CFM56-7 tend to see four to six visits across the lifecycle. Newer generation engines are also designed to accommodate more on or near-wing fixes, so MROs will also have to adapt and offer such services. For instance, we are already able to boroscope LEAP engines on-wing.
When taking a longer-term view, for instance into the 2030s, we expect the engine MRO demand to increase due to overall growth of the in-service aircraft fleet and utilization. Next generation engines will not make up a large part of the shop visit volume for a number of years.

Regional air travel markets are recovering faster than international post-COVID. How big of an impact do you expect it to have on the engine MRO market?

Regional air markets such as in USA, Russia, China, India and Europe are currently recovering well. This means we are seeing a strong focus on narrowbody aircraft and resulting MRO needs. Currently, we are seeing a variety of MRO strategies. Some airlines are focusing on cash and looking to smaller workscopes and on or near wing services to extend time on-wing, while others are preparing for recovery and ramp up and sending engines for full shop visits. Such decisions are extremely individual, and it is our job as an MRO provider to adapt to our customers’ needs by being flexible and supportive.

MTU Maintenance is one of the few companies in the engine MRO sector to get through relatively unhurt by the pandemic. Apart from your broad engine portfolio, is there any other factor that helped mitigate the impact of the crisis? What kind of tweaks did you have to make in your business model in view of the situation?

We place a lot of importance on customer proximity and relationships. We have offices around the world and have been able to communicate with customers in their time zones and specific to their regional needs. We have also been working on our digital touchpoints to ensure the best possible service and transparency, despite the large reliance on online meetings and difficulties in seeing each other face-to-face. We however hope to be able to travel more to our customers soon!

During the crisis, we have taken a partnership approach to support our customer base and keep their engine fleet in a serviceable condition at all times. In essence, our broad engine portfolio with more than 30 engine types, large existing customer base with +1400 customers with predominantly long-term contracts, less exposure to the widebody market and high operational flexibility to shifting market trends in term of engine- and workscope mix have all been factors supporting MTU’s MRO position during the pandemic. If you see this in combination with being part of a financially strong parent – MTU Aero Engines – and strong Q1 2020 workload situation, we look to the future with confidence and firmly believe in the recovery of our industry.

In 2019, MTU Maintenance Zhuhai added LEAP engine MRO to its capabilities. In view of the fact that the vast majority of new engine deliveries in the current decade is projected to be for narrowbodies, do you plan on enhancing the company’s narrowbody engine overhaul capacity?

As mentioned above, we are already well set up for the next generation of narrowbody engines. The LEAP family is being introduced at MTU Maintenance Zhuhai, where we are currently focusing on the ramp-up of the program. And we have added PW1100G-JM capabilities there too, which will make this the third disassembly, assembly and test facility in our network for this engine type. We also carry out PW1100G-JM repairs at two further facilities.

Together with our joint venture partner China Southern Airlines we are establishing a second engine MRO facility in China in nearby Jinwan. The facility will have an initial capacity of up to 260 shop visits.

What has been the impact of 737 MAX grounding on MRO for LEAP engines?

In Zhuhai, we have focused on gaining experience since the program was introduced in 2019. For instance, focusing on quick turns for the LEAP engine family. We are still optimistic with the mid-to-long term market outlook for LEAP engine types and are very pleased to be part of the CFMI repair network.

The Asia Pacific region is driving both fleet and MRO growth. Does the company have expansion plans specific to the region?

Yes, as mentioned earlier, we are in the process of planning a second facility at MTU Maintenance Zhuhai. MTU Maintenance Zhuhai’s Jinwan Branch will focus on Pratt & Whitney narrowbody engines, have its own 65,000 lbf test cell and, according to current estimates, a workforce of around 600 qualified employees. The new facility will operate under MTU Maintenance Zhuhai and its licenses and approvals.

How far along is MTU Maintenance in incorporating digital technologies such as predictive maintenance in operations? Do you concur with the view that companies that do better in its digitization efforts will be able to come out of the pandemic stronger?

Digital innovation does not mean success is guaranteed, but it is definitely better to be exploring this field than not participating. As alluded to earlier, we have been investing heavily in our digital customer touchpoints to improve the overall customer experience. In particular, we are exploring the use of artificial intelligence throughout our maintenance processes. The combination of data from 20,000+ shop visits, our web-based Engine Trend Monitoring system and machine learning tools will be very powerful going forward. Our agile approach will definitely unlock several benefits of digitalization.

The biggest development, however, has been the creation of our engine fleet management planning tool.Oour engine trend monitoring tool was introduced in 2006 and is continually developed. We are now taking it to the next level and integrating it into engine fleet management software to support our customers. Using this software, an intelligent maintenance costing and planning tool, we generate engine fleet management scenarios and workscopes. Smart predictions by use of artificial intelligence enable customized, immediate and proactive MRO planning options that are not currently available elsewhere on the market. Fleet planning scenarios can be immediately and endlessly adapted as the financial, technical, operational, environmental, and market considerations continually change – as we are experiencing on a daily basis at this time.

We strongly believe that digital services will support an effective post COVID-19 industry restart.

If there is a lesson to be learned from the pandemic for the MRO sector, what is it?

We have learned that portfolio diversity, network scale and flexibility within your operational organization is key in an unpredictable market environment. At MTU, we have remained confident in overall market recovery and have been focusing on keeping our capacities on-board throughout the crisis. This will help us manage the ramp-up going forward.