VIP InterviewEgon W. Behle
FLUG REVUE: What are the challenges that currently face an engine manufacturer?
Egon W. Behle: The main challenge is how to maintain the profit level in an environment characterised by a strong euro and weak dollar, in which the price of aviation fuel is rising on a daily basis. In the area of civil maintenance, MTU has a significant share with a turnover of a billion euros, and it is the fourth biggest MRO provider in the world. The question here is how the business will develop if fuel prices gallop away and passenger growth falters. We are already seeing the effects: over the last few months growth has been around four to five percent, whereas the average over the last three years has been six or seven percent. But all in all we remain optimistic about the aviation industry, given our high order backlog.
FR: Bearing in mind this background, what are your goals and how do you plan to achieve them?
Behle: Our goal for 2008 is to at least meet our forecast financial and business figures. Right now it looks as if we will accomplish this, that is, MTU will achieve sales of around 2.6 billion euros this year and operating profit will be at the same high level of last year. We plan firstly to make up for the burdens created by the dollar exchange rate. At the same time we will be spending 30 million euros more on research and development this year to develop the new programmes for lighter, more fuel-efficient and emission-reduced engines. Altogether we will be making up for extra costs of 70 to 80 million euros in 2008.
FR: Are there any plans for any further relocation of production or job cuts?
Behle: We are not planning to shed any staff since, as things currently stand, there is no need for it. We have a new plant in Poland which is currently under construction and will contribute towards production from the second quarter of 2009. We are also relocating some work in the maintenance area from Munich, Hanover and Berlin to Poland, that is, work in which labour costs play a major role. In the production area we are relocating the simpler products which have already attained a certain technological maturity. But that does not mean we will be making anyone redundant in Germany. Because MTU is growing, we are in a position to deploy the capacity freed up on new tasks.
FR: How confident are you that the Geared Turbofan will sell more widely than just on the present application?
Behle: I am very confident. Quite simply because the rising price of fuel intensifies the pressure to employ more economic and significantly more fuel-efficient engines. At the same time, engines have to get steadily quieter. The Geared Turbofan can make a quite significant contribution towards meeting the challenges.
FR: How important is the partnership with Pratt & Whitney?
Behle: The new programmes that we signed with Pratt & Whitney at the Berlin Air Show underline just how important this partnership is. On the other hand this does not prevent us from cooperating with the other major engine manufacturers. We already work closely with GE and Rolls-Royce. We will step up our business with both companies and, compared with the past where the focus was virtually exclusively on risk-sharing partnerships, position ourselves more as a technology supplier. We are also actively engaged in discussions in this area.
FR: How do you plan to step up relations with GE?
Behle: Firstly we have already been working closely with GE in the area of military propulsion since last year. As there is no prospect of any new fighter aircraft programme in Europe following the end of EJ200 production for the Eurofighter, it makes a lot of sense for us to get into the biggest market for military engines early on, and that is now in North America. We have a six percent share of the work on the F414 and we are also negotiating over other possible involvements. I am pretty confident that we will be able to report further successes in the course of this year, whether for other fighter aircraft engines or for helicopter powerplants.
FR: What role could MTU play in any consolidation of the European engine industry?
Behle: The big manufacturers Snecma and Rolls-Royce will still be there in the future. At the next level down there are four sub-system manufacturers in Europe, and MTU is the biggest of these. We are convinced that there will have to be some consolidation at this level. And as we are the biggest player, we plan to play an active role here. But I cannot make any short-term predictions. We will wait for a suitable opportunity.
FR: In which areas would you like to extend your competencies?
Behle: Our third pillar of strength after the low-pressure turbine and the high-pressure compressor is the engine control, yet we are not yet contributing an MTU engine control unit in any civil engine programme. But we are working on it. We also have full systems competence, as we provide full assembly for a whole range of engines such as the EJ200 and the TP400. This makes MTU attractive as a systems partner.
FR: Can Europe keep up with the USA in research?
Behle: I think we can definitely keep up. But we would be well advised and this is also an appeal to the German government to hold on to the competence in engines that we have in Germany in the future as well, for example, in the leading-edge EJ200 engine. This requires that Tranche 3 of the Eurofighter materialises as planned. It is also necessary to start thinking early on about what will happen after the Eurofighter and how the technologies can be kept in Germany. We have a lot of ideas in this area and would be happy to talk about it.