Fitch Ratings has revised German-based aerospace and defence group MTU Aero Engines AG’s (MTU) Outlook to Stable from Negative, while affirming the group’s Long-Term Issuer Default Rating (IDR) at ‘BBB’. The revision of the Outlook reflects Fitch’s view that MTU’s core funds from operations (FFO) margin will recover in 2021 and gradually increase in subsequent years as demand for aerospace equipment and maintenance, repair and overhaul (MRO) services recovers to pre-pandemic levels. This should lead to consistent free cash flow (FCF) generation and the increased likelihood of deleveraging in the short term to levels that are commensurate with the rating.

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