MRO Memo: Tariffs Sour Strong Demand For LHT

Lufthansa Technik has blamed “punitive tariffs” from the U.S. as well as a weaker dollar for a fall in its third-quarter earnings.

The company will pass on the impact of tariffs in the “medium term,” it said Oct. 30.

Adjusted pre-tax profit at the German MRO provider, which has facilities around the world, was €130 million ($150 million)—down 15% from the year-ago period, while margin fell 2.4 percentage points to 6.7%.

Nonetheless, LHT continued to benefit from strong MRO demand, with third-party sales rising 28% year-on-year to €1.5 billion for the three months ending Sept. 30.

Much of its external business was from engine services. LHT highlighted overhaul work on CFM Leap engines as an increasingly important revenue driver, having already inducted 100 units for overhaul across 30 customer contracts.

“This volume is set to undergo a further significant increase over the next few years, and the CFM Leap engine is thus increasingly the new backbone of Lufthansa Technik’s engine services,” it stated.

Aviation Week Network’s Commercial Fleet & MRO Forecast 2026 puts the size of the Leap MRO market at roughly $3 billion in 2026, rising to $22 billion in 2035.

LHT was also busy on other fronts, signing a six-year component support deal with Cathay for the group’s Boeing 747 and 777 fleets. The MRO also extended a base maintenance contract with European low-cost giant easyJet for another seven years.

To meet such demand, LHT has been adding staff, with its headcount up 4% year-on-year, although the costs of training new technicians as well as longstanding supply chain issues also weighed on earnings.

“The shortage of materials on the global market continues to constitute a burden, triggered by delays in deliveries by the manufacturers and suppliers of aircraft, engines and aircraft components,” LHT stated.