Welcome to the conference call on MTU Aero Engines' first quarter 2026 results. For your information, the management presentation, including the Q&A session, will be audiotaped and streamed live or made available on demand on the internet. By attending in 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 Mr. Dr. Johannes Bussmann, Chief Executive Officer, and Mrs. Katja Garcia Vila, Chief Financial Officer. Firstly, I will hand over to Mr. Thomas Franz, Vice President, Investor Relations, for some introductory words. Please go ahead.
Thank you, Nadia. Good morning. Welcome to our conference call for MTU's Q1 2026 results. We'll begin today's session with Johannes sharing some thoughts on the current environment and recent developments. Following that, Katja will walk you through the financials. Johannes will walk you through the guidance and will summarize the key takeaways before we open the floor for your questions. With that, it's my pleasure to hand over to Johannes.
Thank you, Thomas, welcome to our earnings call for the first quarter 2026. We had a very successful start into the year. Group revenues increased by 7% to more than EUR 2.2 billion. Adjusted EBIT rose by 6% to EUR 320 million, translating into a margin of 14.2%. Free cash flow improved by 18% to EUR 177 million, resulting in a cash conversion rate of 77%. Despite the current situation in the Middle East, which I will touch a bit later, we confirm our full-year guidance today strongly. We fully support our customers and their operations, and the safety of our employees in the region is of course, our top priority.
Before Katja takes you through the financials, let us first take a look at the market environment and our key highlights on the 1st quarter. I start with the view on the current macroeconomics and geopolitical environment and how MTU is positioned. Geopolitical tension have driven a sharp increase in jet fuel prices and possible physical supply chain constraints, putting pressure on airlines as we see. As a result, several airlines have announced moderate capacity reductions. Any traffic impact is expected to be absorbed, mainly by the older, less fuel-efficient fleets, which demand for modern and fuel-efficient aircraft and engine remains largely unaffected. Against that backdrop, we also maintain our MTU positions, very well-positioned with our resilient product portfolio, especially in fuel-efficient engine types and of course, our active and decisive management of supply chains and cost management.
The ongoing capacity constraints in our end markets, in particular in the MRO segment, provides protection from any significant impact on our business as we see today. Our product portfolio is resilient with a strong focus on next generation fuel-efficient engines driven by airline structural needs to reduce fuel burn and emissions. Just to name two, the GTF and the V2500 platforms continue to see solid demand. The GTF backlog across OEM and MRO provides us with a high visibility of the market scenarios. V2500 remains a key asset in our customer's fleet. Supply chain resilience remains our top priority. We rely on multiple sourcing and long-term supplier contracts to manage these dependencies. Our approach results, as of now, in a stable, reliable supply chain.
For possible cost increases, we are in the comfortable situation of being able to pass price increases on rather easily. For the limited number of MTU suppliers located in the Middle East, appropriate measures have been implemented to ensure continued availability. Staying on the cost topic, MTU continues to apply a highly disciplined cost management approach. Just two examples for that, we continuously validate our work distribution and are increasing workload volumes and repair activities at our best cost facilities as we speak. Other topics like energy cost are put under review very regularly. Even though energy costs have only a limited impact on our products, we manage our cost exposure here very diligently. One of these examples is our geothermal plant here in Munich, which covers 80% of the heating demand of our Munich production site, which makes us independent from these effects.
I would like to share some reasons to remain highly confident while navigating through this definitely dynamic environment. Our portfolio is resilient by design. Growth in the military business remains strong as guided for 2026. In the new engine business, demand continues to be driven by fleet renewals, and the need for more efficient engine technologies is ongoing. Airframe order books are basically sold out through the end of the decade. For the aftermarket, spare parts and MRO demand for shop visits remains strong, and there are no signs of weakness. In our shops, we have not received a single cancellation or meaningful deferral as of now. From a regional perspective, our MRO exposure in the Middle East is low.
While certain platforms such as the GP7000 and GEnx show higher regional concentration, this does not affect the overall robustness of our portfolio. With the highly efficient GTF engines and the still very young V2500 fleets, we are certain to have the right products for almost any scenario. This confidence is further underpinned by our strong group order book of around EUR 32 billion, providing high medium to long-term visibility. As you see, we are well-protected by our resilient portfolio mix and our strong MRO positioning. At the same time, proactive risk analysis is firmly embedded and is part of our daily management in the business. Looking beyond these near term, the long-term growth fundamentals of the aviation industry remain unchanged. Fleet renewal and structural growing demand for more fuel-efficient aircraft continue to support our business.
Coming to a real highlight in the first quarter of 2026, we took an important strategic step to further expand our military business. Unmanned aerial systems are becoming a key capability in modern defense, propulsion is a critical enabler of their performance, reliability, and mission effectiveness. This is where we seized an opportunity to enter into another area of a rapidly evolving UAV market. With the acquisition of AeroDesignWorks, we gain immediate and substantial access to this fast-growing and attractive market, creating long-term value for MTU. AeroDesignWorks already develops and produces propulsion solutions for lower thrust drones. The demand for military drones is clearly visible. The global market for military drones is expected to grow by around 12.5% per year for the next five years.
What has missing so far is a European-made propulsion system that meets military requirements in terms of quality, reliability, and especially industrial scalability. This is where we, as MTU, come into play. Combining AeroDesignWorks capability with our long-standing experience in the military segment, our technology, proven engine expertise, and global market access for production positions us very well and to be a powerful and scalable propulsion platform for the European drones market over the coming years. In addition to that, we also stepped into a so-called conventional light market. We see clear opportunities to further scale the business through organic growth, selective acquisitions, and strategic partnerships with leading players across the defense ecosystem.
With eMoSys, we are already in a position to offer electric propulsion solutions for drones, while on the upper end of the range, drones can be served with more conventional engines. This empowers us to power drones with our entire spectrum. Given the strong market dynamics, the rapidly increasing relevance of drones, this step will support MTU's sustainable and profitable growth. Our clear ambition is to establish MTU as a core European supplier for UAV propulsion systems. Let me conclude the business review with a brief update on the Geared Turbofan program. The GTF fleet management plan remains on track. MRO outputs increased by 23% in the first quarter. Turnaround times continue to benefit from improved supply chain.
Airlines confirm easing Aircraft on Ground numbers. Based on this progress, we expect ongoing improvement on the AOG situation throughout 2026, with remaining compensation payments to be settled within the year. With the GTFA certification, an important milestone has been achieved this month. Entry into service is planned for the second half of this year. This is the most efficient narrow-body engine offering higher thrust, improved durability, and full interchangeability with the base GTF engine. A great next step in the GTF evolution. GTF continues to ramp-up across all three platforms supporting airlines around the globe. The GTF is already in service for more than 10 years, which we celebrated recently. It has accumulated over 50 million flight hours and currently has a remaining order book of 8,000 engines.
With that, let me hand on to Katja for the details on the financials.
Thank you very much, Johannes, and also a very warm welcome from my side. Let me begin with an overview of our key financial highlights. The Iran conflict had no impact on our first quarter results. Group revenues increased by 7% to EUR 2.244 billion. In U.S. dollar terms, revenues grow 18%. The main drivers were the military business and our commercial MRO activities. Within the commercial OEM segment, the business mix remained favorable, supported by spare engine volume and strong spare parts business. Commercial MRO revenues were primarily driven by GTF MRO increases. Adjusted EBIT rose by 6% to EUR 320 million, resulting in an adjusted EBIT margin of 14.2%. Both segments, OEM and MRO, contributed to the EBIT expansion. Adjusted net income increased by 3% to EUR 229 million.
Free cash flow had a very strong start into the year and grew by 18% to EUR 177 million, resulting in a cash conversion rate of 77%. This performance was fueled by dividend income and a seasonally lower cash flow from investing activities in the first quarter. GTF AOG payments of around $60 million are reflected in the numbers, a slightly lower impact than in the first quarter 2025. Let's now dive more into the OEM segment. Total OEM revenues were stable at EUR 621 million. Within this, commercial OEM revenues declined 5% to EUR 479 million. On an organic U.S. dollar basis, commercial revenues increased by 5%. Military revenues increased 25% year-on-year to EUR 142 million.
Organic new engine sales in U.S. dollar terms remained stable, reflecting lower new engine deliveries with a higher total number of spare engines. We expect a sequential delivery ramp-up in the following quarters, in line with full-year expectations of mid to high teens percentage growth. Organic spare parts revenues in U.S. dollars grew by 10%, driven primarily by narrow body platforms, notably the V2500 and the GTF. Pratt & Whitney Canada engines also contributed, while mature wide body and industrial gas turbine programs were broadly stable as expected. The military opened the year very strong with robust performance. Revenue growth was driven by higher EJ200 and TP400 volumes. Additional support came from the New Generation Fighter Engine, which remains fully contracted through September 2026. Results also benefited from catch-up effects following delivery delays in 2025, which pushed volumes into early 2026.
Overall, the favorable business mix translated into EBIT growth of 7% to EUR 188 million, resulting in a strong EBIT margin of 30.2%. The commercial MRO business entered the year with strong momentum. In euro, commercial MRO revenues were up 8%, whereas U.S. dollar revenues increased 20% year-over-year in Q1 2026, clearly exceeding the full-year guidance of low to mid-teens growth. This was mainly driven by GTF MRO revenues, which accounted for 44% of total commercial MRO revenues, up from 34% in Q1 2025. In absolute U.S. dollar terms, GTF engines delivered the strongest revenue growth. In addition, our leasing and asset management business, MLS in Amsterdam, contributed nicely to U.S. dollar revenue growth as well as our IGT business.
On profitability, adjusted EBIT increased by 5% to EUR 132 million, resulting in a margin of 8%. Headwind from higher GTF MRO share and ramp-up costs at MTU Maintenance Fort Worth were partly offset by a strong EBIT contribution from MLS and our independent MRO business. Let me provide you with a brief overview about the drivers in our free cash flow. Q1 2026 free cash flow was up 18% year-over-year. We benefited from lower PPE spending and received dividends. Additionally, GTF AOG compensation payments at $60 million were slightly lower than in Q1 2025. A headwind came from higher working capital. As Q1 2026 cash conversion rates being clearly above our full-year expectations, let me bridge this to our free cash flow guidance for 2026.
Key tailwinds supporting the achievement of a cash conversion rate of 45%-55% in 2026 are improved net income and lower GTF AOG payments compared to the previous year. The main headwind arises from the buildup of the facility in Fort Worth, as well as the continued increase in receivables for pre-financed GTF MRO work. Our 2026 free cash flow target underpins our midterm financial ambition towards 2030, with a cash conversion rate targeted in the high double-digit percentage range. Let's take a brief look at our U.S. dollar hedging position, for which we have made again continuous progress. As shown on the chart, we have further worked on our hedge coverage over recent months following the release of our full-year 2025 results.
For 2026, benefiting also from improved natural hedging, we are now fully hedged at a leverage hedge rate of 1.30. Looking further ahead, a comprehensive exposure review led to adjustments in our net U.S. dollar exposure and we've continued to systematically build our hedge position. As a result of the currently weaker U.S. dollar, the average hedge rates for the subsequent years are higher than those secured for 2026. Before we switch to the guidance, let's have a look at our strong financial position. Net debt of approximately EUR 1.1 billion and a net debt to EBITDA ratio clearly below one provides us with substantial financial headroom. In January 2026, the company proactively strengthened its capital structure through the successful issuance of a EUR 600 million convertible bond.
The proceeds were used to early repurchase the EUR 500 million bond due in July 2027, effectively eliminating near-term refinancing needs. Together with the EUR 500 million revolving credit facility maturing in 2029, this provides the company with a robust liquidity position and flexibility across market cycles. As already announced at the release of our full-year results in February, we propose a dividend of EUR 3.60 per share. This is an increase of EUR 1.40 or 64% compared to last year, corresponding to a payout ratio of 20%. This will result in an expected cash outflow of around EUR 193 million in Q2. To round this up, our strong balance sheet and financial flexibility positions us well to support on our long-term growth strategy and to deliver sustainable value for our shareholders. With that, I hand back over to you, Johannes.
Thanks, Katja. Let me now turn to our outlook for 2026, which we confirm today. Based on our careful and proactive assessment, we do not expect any major adverse impact on our business at this point in time. Operation remains stable, our supply chain is resilient, and demand across OEM and MRO market continues to be robust. On that basis, we expect group revenues to reach EUR 9.2 billion-EUR 9.7 billion, adjusted EBIT at EUR 1.35 billion-EUR 1.45 billion, net income to grow broadly in line with EBIT, and a cash conversion rate of 45%-55%. In a dynamic and uncertain environment, we very closely monitor developments, anticipate potential impacts, and act. We proactively manage risks, seize opportunities, and continuously strengthen the company's strategic and financial positioning, as you just heard.
Supported by a strong balance sheet, a resilient business model, and a clear long-term vision, we are well equipped to navigate market cycles and to create sustainable values for our shareholders. Let me now summarize the key takeaways from our Q1 2026 results. We started the year with a very strong performance, which underpins our confidence in the 2026 guidance, which we reaffirm today. The acquisition of AeroDesignWorks enables us to expand in the highly attractive and fast-growing drone market. The GTF management plan is well on track operationally and financially, and AOGs are trending down. We are strongly positioned with a growing order book and a very resilient business portfolio. Our management approach allows us to actively manage volatility and maintain stability in a dynamic environment.
In a nutshell, we are very well prepared for the challenges ahead and have full confidence in our structurally growing market, our product lineup, and in our ability to continuously generate long-term value for our customers and our shareholders. With this, we close our presentation and are happy to take your questions.
Thank you very much. We will now begin the question-and-answer session. If you would like to ask a question, please press star one one on your touch-tone telephone. The operator will announce your name and when it's your turn to ask a question. In case you wish to cancel a request, please press star one one again. Now we're going to take our first question, and it comes to the line of Robert Stallard from Vertical Research. Your line is open. Please ask your question.
Thanks so much. Good morning.
Morning, Rob.
Morning.
Couple of questions from me. First of all, in your commentary, you mentioned old aircraft and how they could be vulnerable given their fuel efficiency to retirement. I was wondering if you could clarify what MTU's exposure is to these older planes in the active fleet and whether you've seen any sign of this negatively impacting your numbers. Secondly, following the acquisition of AeroDesignWorks, I was wondering if you could clarify what your estimate is for MTU's revenue exposure to drones or UAVs going forward. Thank you.
Okay. First one, we have no, no cancellations of any slots so far from none of our customers, and we still have a backlog, of course, in front of our shops. That means even if something comes up, we are able to compensate the work with other engines waiting. In the long run, how the airlines behave if the fuel price stays high, in the mid- and long- term, it is very likely that they of course, want to optimize their direct operating costs, which would result in favoring lower fuel burn engines and aircraft, and that is the basis of our appointment. We have a very, very low retirement rate that we see today, almost none. That's why there is no move that we see so far from the airline reacting that is affecting us.
On AeroDesignWorks, we are in a couple of discussions with players in the market that are coming or that are waiting for the decisions of politicians, of course, because we need to see what the FCAS discussion comes out with and how the structures of the systems looks like. That's why we are very confident that this is a growing market. Concrete numbers we are not ready to share so far.
You should also leave us some room, Robert, to provide you with some interesting news when we have our capital markets day in November 30th this year.
Yeah, that makes sense. Okay. Thank you very much.
Thank you. Now we're going to take our next question. The question comes line of Chloe Lemarie. May we have your question?
Good morning, Johannes and Katja. I'd have two if I may. The first one is actually building on the point question on legacy engine exposure. Just could you maybe share how much of the PW2000 and CF6 spare parts revenue generation is from military versus cargo versus passenger, please? The second one is on the Q1 cash conversion comment. You mentioned obviously it's ahead of your expectation for the full-year, but was it ahead of your expectation for Q1 as well, or it's just part of the phasing that you expected as part of the guidance? Thank you.
Okay. Yes, Chloe. I'll start with the cash conversion question first. You know that we don't guide for cash conversion rates on a quarterly basis for sure. Something like the dividend payment happens at the beginning of the year as it also did last year at the same period of time. Due to the development of the pricing, for example, on the lease business, we expected also a higher dividend in 2026 than what we had in Q1 2025. That was also part of the story when we provided the guidance.
I think it's also clear when you look at normal cycles that on the PPE that there are stronger spendings in the second half of the year. Overall, all that brings us entirely into the guidance that we have put for this year. You should not take the 77% now already as the basis going forward. On the PW2000 CF6 revenues, I cannot definitely provide you with the detailed breakdown. What I can say on the PW2000 is that the largest part of the revenues is rather for the military business. The CF6 is rather largely for the freighters business.
If I can just follow up on the cash conversion. Can you tell us how much of a year-on-year increase in the dividend impacted Q1, please?
I cannot recall the figure entirely from my mind, but there is a significant contribution coming from the dividend payment. I think it's in the lower double-digit million number. An absolute tone.
Thank you so much.
Now we're having a question from Benjamin Heelan from Bank of America. May we have your question?
Yes. Morning, guys. Thank you for the question. I had a couple on MRO just to follow on from some of the comments you made there about not seeing any changes with regards to shop visit volumes. Have you seen anything in terms of lower scope? Have there been any requests for lower scope? If there's any comments you can give there. Then in the quarter, the kind of independent MRO business, you say, was broadly stable. Do you have a breakdown of the independent MRO and then the MLS business so we can understand what was going on a little bit within the two? Then a follow on on spare engines. Clearly a big contributor in the first quarter.
Should we assume that this is the high for the year in terms of absolute spare engines and mix, given, you know, you've talked about an improving kind of quarterly trajectory in terms of deliveries? A quick follow on from your comments on FCAS. You mentioned in your prepared remarks it was funded up until 2026 September. Obviously, you know, we see in the press the program's not exactly going too well on the airframe side. If there, you know, what happens to the engine program if the airframers decide not to move ahead with the airframe side of it in its current form? Thank you.
Okay. That's a lot of stuff. Let me start with the MRO side. No, we don't see any work scope, requests so far in having lower work scopes, lower volumes there. We didn't lose any shop load event so far. I would turn that around. Even if customers would come up, we are with our independent MRO customer base and also experience, very well positioned to find very good solutions for our customers to help them out if that would come on the table, which would bring us in a favorable position in the competitive environment between MRO providers. From that perspective, even if that comes, we see that as a strong side and an upside and not as a threat.
On the spare engine side, that is an ongoing demand which we think will continue also because that's mainly driven of course by the new fleets and the growing fleets there. That are the aircraft and engines that are very likely to be operated even more due to the high fuel prices. On the FCAS side, of course, we are waiting for a decision. Everything we hear is also that the politicians are knowing that the industry requires an answer. You're right, of course, on the Airframe side, there are discussions, so that is the main point of disagreement. Our collaboration with our French colleagues is working very well and we continue.
We still need to provide until the end of Q3 of this year, results on the development phase, which we are performing well, and we are optimistic that by then we have a solution. We are also confident that the European governments come to the conclusion that they need a European defense system. That then is the question whether we need one engine or maybe even two for two different aircraft types, which is the likely scenario right now as we see it. There are others as well, but that's the likely one as we see it. Of course, we are part of this development in the European landscape. Third one was on the. What was that? Independent?
If we do share a breakdown of independent.
Okay.
A nd the MLS business.
No, we don't.
Yeah. What we can say is, just for you, Benjamin, maybe to clarify a little bit, the MLS business has grown in line with our, with our growth expectations for the full-year on the MRO business.
Very clear. Thank you both. Appreciate it.
Thank you. Now we're going to take our next question. It comes to line of George McWhirter. May you go ask your question?
Good morning. Thank you for the question. It is on MRO margin. You cited the Fort Worth capacity expansion as a reason for a slight drop in MRO margin. Can you just talk a little bit about the size of the cost of the expansion in Q1 and what you expect for the full-year? Thank you.
Thank you very much for the question, George. What we said is that also on the cash flow side, you will see continuous headwinds also for the year coming from the ramp- up. You know that in July we expect to induct the first LEAP engine into the plant, which means we are currently in full ramp- up. When you look at the cost position, there are a couple of positions to consider. For example, we need to train people at the moment. We need to hire, we need to ramp-up, we need to certify, et cetera, et cetera. We also do have PPE spendings. Overall, we expect to invest around EUR 120 million in CapEx into the plant, not this year, but as an investment overall during the ramp-up phase.
We do expect a headwind of around EUR 100 million on our free cash flow. This headwind will also continue to stay over the next coming years.
Thank you.
Thank you. We're going to take our next question, and it comes to the line of Adrien Rabier from Bernstein. May we have your question now?
Morning. Thank you for taking my questions. Could I ask a follow-up on the retirement rates, please? You mentioned that the retirement rates are still very low for V2500, but could you share a ballpark number of where you expect them to go in 2027 and after that? Would it be fair to assume that they will be somewhat accelerated by the improvement on the GTF? Second question, could you talk about the pace that you expect for the rollout of the GTF Advantage? How fast that will go, please?
The retirement rate on a mid and long-term perspective, I think that's too early to look through. That really depends on how long the conflict stays on and what the midterm effect on the fuel prices is. We analyze our portfolio, of course, that we are providing services for, as I mentioned, it's very, very strongly dominated by the modern aircraft types. We also consider the V2500 as being a very strong and also young fleet. You know that more than half of the fleet has not even received more than the first shop visit. Our portfolio is on the upper side on almost every scenario that we think of in our simulations. That's what we see right now.
As I mentioned, there are no increasing retirements confirmed so far, and that's how we plan for it. The deliveries on the, on the Advantage, that's a very hard to judge picture because there is of course the Advantage going to be delivered new, but we also have the option with the Hot Section Plus, where customers decide on what part of the new hardware they want to have built in in their shop visits or not. That is the basis of the assumptions that we still need to see what the customers decide. There is a rollout over the next three years, of course planned, but concrete numbers is very hard to tell.
Thank you very much.
Thank you. Now we're going to take our next question, and it comes to line of Ian Douglas-Pennant from UBS. May we have your question?
Thank you for taking my question. Yes, Ian Douglas-Pennant at UBS. The first question, could you help me understand what was the increase in the imbalance payments within receivables that you saw year-over-year, please? It looks total receivables I see increased about EUR 650, but I don't know what imbalance payments was within that, please. Second question. Within spare engines, what proportion of those engines are sold at the current market value versus sold in advance? Maybe if you give us some kind of qualitative idea there. What I'm really trying to get at is what is your sensitivity to GTF fair values if they start to decline, which some lessors and appraisers are telling me may possibly be starting to happen already? Thank you.
Okay. Let me first start with the receivables. You've seen quite some increase in the receivables now in the first quarter of the year. If you look also at the growth in our sales or our revenue side, that follows more or less the normal business course going forward. There is no significant impact from the imbalance payments now in the first quarter to be seen. I think when you look at the pricing level of spare engines going forward, so far, we have not seen any weakening in demand. You also have to keep in mind that there is not the one spare engine pricing that we have.
There are two ways to have spare engines entering into the market. One is contractually agreed with the airline customers, and the other ones are then the, let's say, open, available, spare engines that you can sell at a more flexible market pricing. Yeah, there's no significant overweight in that area at the moment. Overall, we do not expect or we do not see any weakening in those prices at the moment in the mix.
Thank you. What roughly is the split between sales that are contractually agreed versus openly available?
Sorry. That's a figure we don't disclose. I'm sorry.
Understandable. Thank you so much.
Thank you. We're going to take our next question, and it comes to the line of David Perry from JPMorgan. May we have your question?
Yes. Hi, Johannes, Katja. Hope you are both well. Two questions, please. One, just on your spares, the up about 10%. It's quite a bit lower than we've seen from Pratt, Safran, and GE. Just wonder if you'd want to comment on that, if you think there's anything particular in your mix that would make you have slower growth or whether it's just a temporary issue for the quarter. The second one is a bit more philosophical, probably for Katja. Obviously, we're in an uncertain geopolitical situation, so we get a lot more questions from investors about cash flow.
If I take your guidance for cash conversion, I add back the GTF and I add back the number you just helpfully gave on Fort Worth, I think you get to, if my math is correct, you've got about 70% free cash flow to net income. It's still quite a lot lower than some of the peers. Just, you've been in the business for a while, Katja, if you can just maybe give two or three reasons why that is the case. What is it that has your free cash flow at the current level, and what are the specific things that will lead to an improvement going forward? Thank you.
Let's first start with the spares mix. Just to frame that clearly. There's no specific issue that we have compared to others, and it also always is a question of what is comprised in the spare parts growth in the respective references. Overall, for this year, David, we have guided a growth rate in the low to mid-teens area. With 10% growth in the first quarter, we are fully in the ballpark of our guidance. You know that, for the second half of the year, there are price movements to be expected, which will then support a further expansion of the growth rate throughout the year. No structural reason why that is of any greater concern for us.
Regarding the cash conversion rate, I think, if you look at the history of MTU, the cash conversion rate has always been a topic that people have discussed about a lot. I think if you look at what we are doing at the moment, so that we are continuously expanding our portfolio, that we are continuously also investing into the profitable growth of our business moving forward. These are the parts that currently have an impact on our cash flow.
We still have, in the first place for this year, the GTF payments directly for the AOG compensations, but also moving forward further until 2028, late or beginning of 2029, we still expect a buildup of the receivables for the pre-financed shop visits, which still provides a headwind to our cash conversion rate, but which will then turn into over-proportional cash conversion contribution in the years to come. From a structural perspective, David, let me reassure you that there is no reason why MTU should at any place be less able to create attractive cash conversions than anyone else in this business.
Okay. Thank you. Just very quickly, you have said it before, can you just remind me the Fort Worth EUR 100 million a year, how many years is that for? Weighing on free cash flow?
Until the end of the,
Sorry.
End of the decade.
The decade.
Yeah. Yes.
Thank you.
That was also part of our guidance that we have laid out, at the Paris Air Show. There's no structural difference to that, which means that this is also included in our high double-digit cash conversion rate, guidance for 2030.
Okay. Thank you.
Thank you. Now we're going to take our next question, and it comes line of Milene Kerner from Barclays. Please ask your question.
Yes. Hello, Johannes, Katja and Thomas. I have two questions, please. The first one is a follow-up on Chloe's. We see demand accelerating for the 777-300ER freight conversion. How do you see aftermarket demand evolving for your 757 and 767 powered fleet, especially at today's fuel price? Could you also remind us what's the share of the commercial spares that today CF6 and PW2000 represents? Then my second question, on back of what you just replied to David, could you help us framing the scale of the GTF-related receivable headwind till 2028? Thank you.
Okay, maybe let me first talk about the receivables side in the first place. I think, we have not provided a specific guidance on how this continues to ramp-up, but what you can say is from today's perspective, that there is still some quite significant increase over the next couple of years to come. Yeah. There is currently no specific timeline that I can give you for individual impacts, but we will always include that into the guidance that we provide for the next year. As said, it's also part of the guidance that we've provided for the midterm. I have to say, I didn't get exactly the first part of your question. Was it about the freighters conversion?
Yes. We see now a lot of 777-300ER being converted. I just wanted to see what could be the impact on the 757 and 767 powered fleet on which you actually power these two planes, especially given the fuel price today. If you can also share how much the CF6 and the PW2000 commercial fleet represents today as a share of your commercial spare parts revenue.
Okay. Thank you very much. I'm sorry, I didn't get it in the first place. In principle to say, freight conversions do take time, so that's nothing that is going to happen overnight. I think that's the first important message I would like to send with regards to this portfolio. The second one is that the demand for freight is continuously growing, which also means that the freights, that the flights are continuously growing, which will then again fuel demand going forward. Yeah. Our expectation at the moment is that there's very limited impact for the coming years to be expected. We don't disclose specific shares of individual spare parts on the overall portfolio.
What we said is overall the expectation for this year is that we will have a strong growth in the commercial spare parts business between 10% and 15%. When you look at the outlook for 2026, also there we do guide with a continued strong increase in our portfolio.
Thank you.
If I may add, we don't see any structural moves in these kinds of business, whether freighter conversion or fleet compositions, due to the conflict so far. That's the picture that we can see right now. As Katja mentioned, the conversion time, the contracts behind it, are long-term contracts and also long-term work. That does not react on these more short-term events that we see right now.
Thank you. Just maybe following up, just on your, on your guidance for spare parts for this year, can you just remind us what's the outlook for the CF6 and PW2000 in terms of growth? Thank you.
It's more or less flat.
Thanks.
Thank you.
Sorry, I just wanted to add the big drivers for this year commercial spare parts are definitely the V2500 and the A320. Also the GTF spare part is going to be increasing. For the mature engine programs, we expect that to remain broadly stable.
Thank you for your clarification.
Thank you. Dear participants, as a reminder, if you would like to ask a question, please press star one one. Now we're going to take our next question. The question comes line of Rory Smith from Oxcap. May we have your question?
Good morning. It's Rory from Oxcap. Thank you for taking my question. I just wanted to talk a little bit more about this idea of, you know, its very strong order book, EUR 32 billion. You say technically sold out for three years. I guess technically is doing a lot of heavy lifting here. Maybe if you could just help us understand how that backlog falls between the four business areas. Really just what kind of visibility do you actually have, particularly within commercial spare parts and within commercial MRO? Any kind of differentiating dynamics you can call out there? Anything qualitative that can help us think about as we travel from this year into next year, modeling this out would be really helpful. Thank you.
I think I take the order book and then you add up, Katja. Of course, working on the M side, just traditional production set up where you have capacity and a fairly linear production rate. On the MRO side, of course, we have everything from single events to 10 and even more years contracts, and that's why I mentioned technically. This is something of course, that is in a wide composition of MRO contracts. If you add it up, it comes to the number we shared. That's why the term technically was used from my side.
I think if you look at the order book development overall, you see that we have, or what I can state to more details is that we've seen growth in both segments, so we don't break it down into multiple segments. Yeah, we do see growth in both segments. You see the order intake in the first quarter for the MRO business, but we also do see continuous strong increase in the order, for example, for the GE9X or for the PW 1100 business. Overall, that is a strong order book, and it's also quite some strong visibility with regards to our shop loads, for example, on the MRO side.
Okay, great. Thank you. If I could just follow- up there. You know, let's assume that the current trend of RPK growth sort of turning negative continues for another quarter or two quarters or whatever the outcome is. Would you expect to see that first in commercial spare parts or commercial MRO or roughly analogous?
Well, I mean, we still have a backlog of work there. The situation of capacity available on the MRO side capacity available for shop load events is still below the market demand. Even if these developments come, we have then we swap one engine type with the other one, which we are able to do with the shop setup that we are running. That's why our target is not to lose any slot. That has been also a very positive impact of on the second part, on the spare parts, of your questions.
This is something where the visibility that we're having in the system and the close customer contact, which allow us to, say, juggle around, is maybe a little bit too dynamic, but we are able to mitigate these topics in order not to lose any slot. We were very successful with that for the last six months, and we are also very optimistic that that is going to continue for the rest of the year.
Maybe let me clarify or let me add maybe to it a little bit. We would not expect to see any material impact on us during the course of this year. There is no, and this is also why we're so confident to be able to achieve our guidance for the full-year on the MRO side. If you look at timing, if you look at where we are at the moment, people are still very actively searching for slots, we don't have a lot of open slots to offer at all to the industry. There is no reason to believe that this should have any material impact on us in the upcoming quarters.
That's very, very clear. Thank you very much.
Thank you. Now we're going to take our next question. It comes line of, Sash Tusa from Agency Partners. May we have your question?
Yeah. Thank you very much. Two questions. First of all, on AeroDesignWorks, the numbers that you give there are terribly big. I recognize you like to talk about this more at the Capital Markets Day, but November feels a terribly long way away at the moment. Of that market size and growth, how much of that is in Europe as opposed to the rest of the world? Is the first question. Then you talk about the business being optimized for military performance, but an awful lot of drones, clearly drone covers a huge number of things, are one-shot, throwaway systems effectively now. Does the market actually really need military specifications as opposed to turbojets that are cheap enough for a single mission? That's my first question.
A different one on MRO. When do you think that customers have to specify or have to finalize the scope of a shop visit with you? How early is it in the process? Thank you.
Okay. The market size, that's a very good question, of course, because that depends on the government. And you pointed out that yes, of course, it's one cycle or two cycles. Once you test it, once you use it. And that's exactly the market where we want to enter and why we made the deal with AeroDesignWorks. And that is something where we are 100% sure that there will be growth. The concrete numbers, of course, depend on the orders of governments in Europe, and that's hard to judge, but that it is a good potential and good business for us, we are very confident.
On the, on the work scope designed for the for the engine shop is, that's a normal routine process that runs with every every customer and the shop that is performing then the engines. Couple of weeks, maybe two months, depends a little bit on what the what the engine type is, that is designed, decided then between the customer and us, and of course, the requirements from the worthiness perspective. That's a routine process. There is so far nobody that is doing this earlier or later. That's a very normal process. There are also, of course, strong guidelines from the aviation authorities what is possible and what not.
Within these frames, we are discussing with our customers what is suiting best in their fleet, as most of them operate couple of engines and aircraft. We have all the flexibility to have good solutions for them together.
Thank you very much.
Thank you. Dear speakers, there are no further questions for today. I would now like the conference over to Thomas Franz for any closing remarks.
Yeah. Thank you, Nadia, and thank you to all participants and to MTU's management. This marks the end of today's Q1 call. Thank you for joining. Yeah, have a great rest of the day. Bye-bye.
We want to thank you, Mr. Dr. Johannes Bussmann and Mrs. Katja Garcia Vila, and all the participants of this conference. Goodbye.