Streamlining lease transition requirements Les Cronin, Director Sales – Americas MRO Europe Conference London, 15th October 2015

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. MTU Aero Engines’ business model Group sales: 3,946 M€ (5,327 M$) COMMERCIAL ENGINE BUSINESS Share in sales: ~ 53% Partnerships with OEMs going back decades Focus on LPT, HPC and TCF Main products: CF6, GEnx, GE9X, GP7000, PW2000, PW1000G, V2500 MILITARY ENGINE BUSINESS Share in sales: ~ 14% European and U.S. engine programs Lead industrial partner to the German Armed Forces and US Air Force COMMERCIAL MAINTENANCE Share in sales: ~ 33% Leading provider of engine MRO service solutions Global network Main products: CF34, CF6, CFM56, GE90, V2500, P&W C engines

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. MRO market positioning What does MTU Maintenance stand for? Large MRO and service portfolio – from leasing, MRO services to asset management Innovative service solutions and tailored offerings for maximum value Global network Over 15,000 engine shop visits Customer dedication and service

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. As air travel grows so does the … demand for new aircraft … demand for aircraft leasing and financing Close to 50% of all aircraft will be financed via leasing companies by 2020 The growing influence of aircraft leasing companies …

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. Top 10 lessors account for … 56% of the leased fleet (~ 5,245 aircraft) … 66% by value (~ $156b) Growth over recent years has been due to availability of cheap liquidity Leasing companies are a combination of…. The importance of aircraft leasing companies …

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. The cost of aircraft lease transition… Example: 8-year old aircraft at EOL Additional aircraft maintenance costs …  Narrow-body = Ø $1.65m  Wide-body = Ø $3,0m Operating leases adds costs as EOL conditions supersedes airworthiness condition to provide suitable re-use for the next lessee… Additional engineering resources required at EOL by lessee and lessor averages $150K for each party per aircraft… The cost of a EOL transition is not visible until it is too late Source: IBA Highlights 2015

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. Typical end of lease conditions & engine related issues Same condition at redelivery as at delivery - less wear and tear Minimum hours & cycles remaining since last shop visit AD & SB compliance Engine condition Engine performance General Material & parts EGT margin in line with the lessee’s or world fleet deterioration Full serviceability (PR vs. OH) Full documentation incl. back to birth* No carry over items like re-inspections etc. No/limited DER content (uncritical parts) Residual value concerns Re-marketability issues * Wherever applicable

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. Cost of ownership As received engine condition vs. redelivery condition Access to maintenance reserves for pre-consumed life Transfer of warranties and maintenance coverage Technical support Lessee What are the interests of the players with leased engine assets Lessor Residual value preservation Smooth transition between lessees Management & optimization of maintenance reserves Influence on shop visit and timing Asset end of life exit strategy MRO cost optimization Residual value preservation (technical/quality standards) Asset value optimization throughout engine life cycle Comprehensive support for continued operations MRO provider Vertical integration of interests via life asset management programs

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. MTU-tailored solution: Lease Enhancement Program (LEP) How does it work? Today’s landscape LEP Landscape MTU All parties benefit from LEP as a fully integrated product Lessor MTU (MRO) Operator (Lessee) LEP contract/ payment & MRO oversight Full maintenance coverage and service Lease fee & MRO reserves Lessor MTU (MRO) Operator (Lessee) MRO reserves Lease fee & MRO reserves MRO services & payment

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. Acquisition (new/used assets) MRO & operations Operator transition Phase-out LEP – One-stop solution for asset owners and operators Optimized cost of ownership over the entire life cycle Carefree operations High-quality standards Guaranteed thrust Lessee EoL inspections Logistical services Lessor Flexible phase-in/-out of engines Spare engine financing Minimized inventory (GSE, QEC, rotables…) Ease of portability throughout the life Risk mitigation End-of-life value maximization Alignment of airframe/ engine life MRO cost predictability Proactive management Residual value retention / maximization

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. MTU LEP benefits Enhanced MRO predictability ● MRO cost predictability ● Full asset control ● Cost-optimized build standards over life ● Engine records consistency ● Retention of asset value ● Workload predictability ● Tailored solutions ● Standard pre-defined workscopes (e.g. DERs) ● Predictability of engine DOC ● Ease of EOL return ● Continued operation ● Better buying power of lessors Lessee MRO Lessor Maximized predictability and minimized cost for all parties involved

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. LEP benefits Ease of portability throughout the life MTU LEP provides complete portability and mobility of assets throughout their life and ensures the required maintenance reserves are applied Complete portability of LEP over the entire service life Ease of transfer from between lessees Severity adjustments applied if >5% of operations in challenging environment (erosion and pollution) No restrictions and limitations

MRO Europe - Streamling lease transition requirements15 October © MTU Aero Engines AG. The information contained herein is proprietary to the MTU Aero Engines group companies. Summary Leased fleets grow and so does the transition demands of lessors to protect their assets at all times Know your EOL requirements at SOL including lessor definitions – not when it is too late….. Ensure you cover yourself with a well respected and trusted maintenance provider Good fleet management and forward planning will reduce – if not eliminate – transition maintenance cost exposure MTU’s LEP provides a fully integrated engine maintenance coverage through all phases of life including transitions

Thank you and looking forward to your questions! Les Cronin Director of Marketing & Sales Americas MTU Maintenance Hannover GmbH Muenchner Strasse Langenhagen - Germany Tel Cell: