1400 1440 Mtu Serviceable Parts vs New Parts

Serviceable parts vs. new parts

Juergen Kuhn

Vice President Business Development MRO

IATA 8th Maintenance Cost Conference

Atlanta, October 17th 2012

MTU Aero Engines 17 October 2012 IATA 8th Maintenance Cost Conference - Serviceable parts vs. new parts 2

Agenda

Introduction to MTU Maintenance

Engine MRO as key cost driver

Cost improvement opportunities

Outlook

Summary


Agenda




Outlook

Summary


MTU Aero Engines business segments

Commercial MRO

World's largest independent

engine MRO provider

Global network

Integrated repair solutions

Key programs: V2500,

PW2000, CFM56, CF34,

CF6, GE90, PW&C engines

and IGTs

1,117 M (38%)1 1,401 M (47%)1

Commercial OEM

RRSP with all major OEMs

Complete thrust range;

30% of active fleet with MTU

participation

Focus on LPT and HPC

Key programs: V2500, CF6,

PW2000, PW1000G, GEnx,

GP7000

445 M (15%)1

Military OEM/MRO

Participation in key European

programs with systems

design responsibility

Partner to the German Armed

Forces for almost all engines

Participation in US market

Key programs: EJ200,

RB199, TP400, F414, GE38

MTU Group: Sales 2,932 M2

1 Unconsolidated; 2 Consolidated


PW500

PT6A

PW300

PW200

CF34-1/-3/-8/-10E

MTU Maintenance engine portfolio

IGT & marine Small gas turbines

LM2500 (+)

LM6000

LM5000

Large commercial engines

CFM56-3/-5B/-7

V2500-A1/-D5/-A5 PW2000/PW6000

CF6-50/-80C2

GE90-110B/-115B

1 LPT MRO

GP70001


Agenda




Outlook

Summary


Engine MRO is largest maintenance cost driver and material

accounts for about two-thirds of engine MRO

Sources: AeroStrategy CAMRO 2009 / Aeroengine Parts Repair & Material Forecast (2009 values)

Total MRO

Fees

2%

In-

house

repairs

11%

DAT**

11%

OV*

13%

Material

63%

Engine MRO

LLP

27%

New

60%

Used/

serviceable

11%

PMA

2%

Material costs

Line

20%

Components

22%

Modifications

7% Airframe

15%

Engine

36%

* Outside vendor (outsourced repairs);

** Disassembly, Assembly & Test (other labor)


0%

10%

20%

30%

40%

FAN

LPC

INTE

RM

EDIA

TE C

ASE

HPC

CO

MBUSTO

RHPT

LPT

TURBIN

E M

ID F

RAME

BEARIN

GS

GEARBOX

TEC

EXT

ERNALS

CO

NTR

OLS

HPC and HPT account for the largest share of shop visit

costs

Material cost distribution for a wide-body engine heavy shop visit

Source: MTU analysis


Agenda




Outlook

Summary


New repair techniques MTUPlus repairs examples

1 Field results on heavy sand ops

Extended parts life

OWT

Efficiency 0.2% better SFC

Hot section

25% less scrap

+500 cycles

5% less scrap

MTUPlus ERCoatnt 1

Extended parts life

OWT


Hot section

50% less scrap

+1,000 cycles

5% less scrap

MTUPlus multiply plasma coating1

MTUPlus HPT blade tip protection

Extended parts life

OWT


20% less scrap

+500 cycles

V2500 MTUPlus HPC drum 3-8 repair

60-100% scrap reduction

Tremendous cost savings

First MTUPlus non-OEM approved for an LLP repair

MTUPlus UP sulfidation protection

Extended parts life

OWT

Improved safety

25% less scrap

n/a

Extended parts life

OWT

Longer hot section life

25% less scrap

n/a

MTUPlus combustor thermal barrier coating


Scenario analysis: HPT hardware repair

Source: MTU analysis based on real-life invoices for typical narrowbody engine performance restoration workscope

HPT blade repair addresses major cost driver with application of

state-of-the-art technology

0%

20%

40%

60%

80%

100%

Cost breakdown

Engine MRO

Material

65%

Labor

35%

Situation Solution

Benefit

Material Costs: -$35k

Handling charge equivalent

50% of handling

charge

Potential material savings via repair capabilities exceed any realistic savings on handling charge portion of invoice


Scenario analysis: HPC airfoil coatings

0%

20%

40%

60%

80%

100%

Cost breakdown

Engine MRO

Material

65%

Labor

35%

Source: Aerostrategy (see page 14); labor

includes all repairs, fees included in material

Eroded HPC blade

Benefit

Material cost: -20-40%

Labor equivalent

20% of routine

work cost

Situation MTUPlus solution

MTUPlus ERCoatnt

Serviceable

Erosion damage

Cycles SV2 SV3

Scrap

Repairable

Full

uncoated

Full Full

Full + ERCoatnt HS only Full + ERCoatnt

MTUPlus

ERCoatnt

Source: MTU analysis based on real-life invoices for typical narrowbody engine performance restoration workscope

Substantial savings with MTUPlus ERCoatnt via improved airfoil durability

HPC airfoil coatings can deliver increased durability and sustain

reparability for key cost drivers

SV1


DER repairs offer the best alternative to new material, but strongly

depends on technology generation and surplus availability


50-7

0%

*

0%

20%

40%

60%

80%

100%

New parts Used

parts

DER

repairs


10-7

0%

1

60

-80%

Cost (in % of price list)

1 Varying on engine part and type

DER repairs: Strong additional advantages

Availability and TAT gain

Lower fees

Potentially better performance and reliability

improved process

lower/no scrap rates

extended durability/on-wing times

Surplus material: Potential drawbacks

Repair restrictions

Durability

Unknown origin

Availability

- depending on engine type, mod status, etc.

- LLPs: the less cycles, the better


Engine salvation represents a low-cost option for sunset engines

Engine #1 Engine #2 Engine #3

Fan Core LPT

Teardown engines and

utilize spare parts

Swap modules from various

engines to build one engine

Target 3 into 1

Reduced material costs

Assets off balance sheet &

out of storage area

Less LLP history issues*

* if from own / known fleet


Agenda




Outlook

Summary


Aftermarket choice is key to maintain alternative material and

repair sources

Independent

GOALS:

Customer satisfaction /

retention

Cost effective solutions

ADVANTAGES:

Flexibility

Parts repair dev.

(DER usage)

Customer focus;

diversified base

MRO as service

Airline/Service Expander

GOALS:

Supporting parent airline/

main shareholder

3rd party business as

cost reduction means

ADVANTAGES:

Operational knowledge

Spare engine availability

from own fleet

PMA usage

MRO to support parent

OEM

GOALS:

Payback on investments

Operational performance

(product liability)

ADVANTAGES:

Technical know-how

Reliability data

Spare parts availability

Product warranty

Product upgrades

MRO to control material/

spare parts flow

Incentive to utilize repairs & alternative material sources


Agenda




Outlook

Summary


Summary

Engine MRO costs play critical role in cost-savings

efforts as they account for largest share of MRO

Material is key driver especially in HPC and HPT

modules

Used material and repair technology offer valuable

alternatives

Aftermarket choice is key to lowering MRO costs

which become a key driver of residual values as

engines age

Future engine programs will see even greater OEM

control industry challenge will be to maintain

material options and alternatives

Thank you for your attention!

1400 1440 Mtu Serviceable Parts vs New Parts

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