MTU Aero Engines AG (MTX) Earnings Call Transcript & Summary

Ladies and gentlemen, I hereby open this annual AGM, the regular Annual General Meeting of MTU Aero Engines AG. It will be held again as a virtual general meeting. When we had to decide on the format of the event -- of this event a few months ago, the pandemic situation proved to be as difficult as ever. We therefore decided on a virtual event, to protect the health of shareholders, employees and service providers. However, we also believe that this modern format has proven very well over the past 2 years. It also offers shareholders living far away, for example, abroad, an opportunity to exercise their shareholder rights digitally instead of attending in person and to follow the Annual General Meeting live via video and audio transmission. On behalf of the Supervisory Board and the Executive Board, I would like to welcome you cordially. We are pleased that you have accepted our invitation in large numbers and thus demonstrated your interest and attachment to our company. For shareholders in the non-German speaking countries, we offer a simultaneous translation into English, which you can access via the language settings on the website or the AGM portal. Ladies and gentlemen, before I come to the announcement of the formalities of this Annual General Meeting, I would like to refer to the termination of Mr. Winkler's mandate by neutral consent as of 31st December 2022 by the end of this year, which was announced yesterday. So for more than 2 decades, Mr. Winkler has played a decisive role in making MTU an outstandingly well-positioned company with excellent prospects for the future. Under his leadership, MTU's role in the global engine business has been significantly strengthened and expanded. Under Mr. Winkler's committed and strong leadership, MTU has risen to become a global corporation. Mr. Winkler is a man who has left his mark on the company and will leave a strong foundation for future generations. For this, the Supervisory Board expresses its utmost respect and thanks to him. We can very well understand the timing of his termination of his mandate with regard to its further life planning and the new phase of the company. Lars Wagner is an excellent successor at the helm of MTU and has been potential internal candidate for some time. With an extensive industry that he has in the MTU experience and his convincing personality, he will lead the company into the future, which will be characterized by far-reaching technological innovations. The Supervisory Board is certain at this generational change at the top of MTU will go very well. And like I said, per year-end. My successor, Gordon Riske, has already been involved in this election process for the CEO position. In the coming months, Mr. Riske will work with the other members of the Supervisory Board to shape the search for female Executive Board member to fill the vacant Executive Board mandate and the precise division of departmental responsibilities on the MTU Executive Board. Based on legal regulations, a woman is to be appointed as the fourth member of the MTU Board Management. I now come to the announcement of the formalities of this AGM. The Executive Board with the consent of the Supervisory Board decided on the basis of the so-called COVID-19 laws to hold the AGM again as a virtual meeting, as I said, without the physical presence of the shareholders or their proxies and to allow their participation and voting by means of electronic communication with the exception of the proxy appointed by the company as well as the participation of members of the Supervisory Board by means of video and audio transmission and to allow the video and audio transmission of the AGM. It further resolved, with the consent of the Supervisory Board, to grant the shareholders an opportunity to ask questions by means of electronic communication. Questions were to be submitted at latest 1 day before the meeting, so by the end of the 3rd of May 2022, by way of electronic communication. In addition to the legal requirements, we have decided to allow an appropriate number of follow-up questions on questions submitted in due time during the AGM and to give shareholders the opportunity to submit video messages and comments in text form. For details, please refer to the invitation notice and our website. But I will come back to this later. Due to yesterday's announcement of the upcoming change in the chairmanship of the Executive Board, at the end of the year, all shareholders will also have the opportunity to ask questions on this topic. In order to give a large number of shareholders these opportunities, we have limited the number of these questions to 3 per shareholder. I repeat, 3 per shareholder. The company has set up an AGM portal for the exercise of the shareholder's rights in electronic form, the excess data for which you received with your invitation documents. Until the end of the speech of the Chairman of the Executive Board, the AGM will be broadcasted by the company's website for everyone to access it and will be available as a video at the same location after the end of the event. The entire AGM is only accessible for duly registered shareholders or their proxies via the company's AGM portal. In view of the protective measures in the context of the COVID-19 pandemic, we have limited the number of participants present on the site at the AGM. I believe -- you may note that from the Executive Board, the Chairman, Mr. Reiner Winkler, to my right; and the Chief Financial Officer, Mr. Peter Kameritsch, next to him. And from the Supervisory Board, I myself am present as its Chairman and Chairman of the meeting. The other members of the Executive Board and the Supervisory Board are following the transmission on meeting electronically. And if necessary, we can get in touch with them. The minutes of today's Annual Meeting are being taken by Dr. Joachim Schervier, the notary public based in Munich, whom I would like to welcome as well, and he sits to my left. The Annual General Meeting was convened in due time by publication of the agenda in the Federal Gazette of 24th March 2022. A specimen copy of the publication has been submitted to the notary - Mr. [ Notary ], yes. The information about the invitation on the AGM as well as the notification pursuant to Section 125 of the Stock Corporation Law was also sent to all shareholders who were registered at the company's share, registered at the beginning of the 21st day prior to the Annual General Meeting. The list of participants has already been prepared. Due to the virtual nature of the AGM, only the proxy and the votes the AGM list only represents recorded in the list of participants. I have pleasure to announce the presence as follows: so the share capital of EUR 53,436,048 and is now being represented on today's AGM as the follows. By the proxies deemed a total of 53,436, 048 par value shares that makes up to the share capital, [ 39,661,694 ] non-par value shares are being represented with the same number of votes. This corresponds to a share of 74.22% of all non-par value shares and the share capital. In addition, the votes were made by letter for 142,607 non-par value shares. In total, this amounts into a total share of 74.49% of all non-par value shares or the share capital. You will find the current status of the votes represented by the proxy as well as the postal votes in summarized form on the AGM portal and the accessible document section for viewing. In the run-up of today's AGM, the company received no motions for additions to the agenda and no election proposals from shareholders. A counter motion from the [indiscernible] and shareholders AV, that is the critical shareholders association on agenda Item 3, which is subject to disclosure was received in due time and has been published on the MTU AGM website, together with the statement from the company. So we will come back to this motion later in the context of the vote. The place of assembly of this AGM in the sense of the Stock Corporation law is the ICM, the International Congress Center Munich, Messe Muenchen GmbH, Messegelände, 81823 Munich. So you had and you have the possibility to cast your votes via the password-protected AGM portal by means of absentee voting or to authorize and instruct the company's proxy to exercise your voting right. Provided that you have practiced that in due time, you can still exercise or if applicable, change your voting right in the AGM portal until immediately before the beginning of the voting in today's virtual AGM. The questions submitted by you will be answered by the Executive Board following the speech by Reiner Winkler, the Chairman of the Executive Board. The company published Mr. Winkler's speech on the AGM portal 1 week before today's meeting in order to give shareholders the opportunity to ask questions about it. Shareholders who have exercised their voting rights have the opportunity to object on the resolutions on the AGM electronically via the company's AGM portal until the closing of today's AGM made today. I can thus conclude my introductory remarks on formalities now. Ladies and gentlemen, we now come to the agenda, the full text of which has been made available to you all. And I now call Item 1 of the agenda. Presentation of the approved annual financial statement, the approved consolidated financial statement, the combined management report for the company and the Group as well as the report of the Supervisory Board and the explanatory report of the Executive Board on the disclosures pursuant to sections 289a and 315a HGB in case -- in each case for the financial year 2021. So in this regard, I note the following. The aforementioned documents have been available for the inspection on the community -- company's website since the AGM meeting was convened. Now let me present the report of the Supervisory Board. I refer to the report published in the published part on the annual report on Page 9 and the following pages and the report of the Supervisory Board. Ladies and gentlemen, in the year 2021, the corona pandemic continued to have a significant impact on the aviation industry and repeatedly caused upheaval and uncertainty. In this volatile environment, the MTU Aero Engines has once again demonstrated its resilience to the crisis and can look back on a successful financial year. The company is back on track for growth and has fully achieved its earnings and cash flow targets in full. On behalf of the entire Supervisory Board, I would like to express my thanks to the Executive Board and to all employees for their work and for their commitment in this challenging year 2021. Thanks also due -- to the Works Council for its constructive cooperation and in particular, to the shareholders for the trust they have placed in the companies -- in the company over the past year. Now the activities of the Supervisory Board in detail. The Supervisory Board regularly advised the Executive Board on the management of this company monitored its work and continuously dealt with the course of business and the situation of MTU. It was directly involved at an early stage in all decisions of fundamental importance to the company and was regularly and comprehensively informed about the company's situation. The Supervisory Board received monthly written reports on important business transactions and the development of the earnings, financial and asset situation. New plans were explained to the Supervisory Board in detail. Together with the Executive Board, the Supervisory Board discussed the strategy and all important projects, which Mr. Winkler will report in a moment and approve the strategic orientation of the company after careful consideration and examination. Also in 2021, the Supervisory Board continued to pay attention to the MTU's internal control mechanisms in particular, the risk management system, the audit and legally compliant corporate governance and the system for monitoring certain related parties' transactions. In the year under review, there were no such transactions requiring approval or disclosure. The Supervisory Board has examined the aforementioned areas on the basis of the documents submitted and in dialogue with the Executive Board and has come to the conclusion that the company has effective, I'm repeating it, effective systems in place for this purpose. In addition to the Supervisory Board, the Audit Committee is primarily responsible for monitoring the company's compliance system. The Internal Audit Department reports regularly to the Audit Committee on the results of its audits and the Compliance Officer provides information on findings and new developments in the area of compliance. Now the meetings of the Supervisory Board. In the financial year 2021, there were 5 ordinary Supervisory Board meetings, some of which were held in person, some of which were held purely as telephone or video conferences due to the pandemic and also as hybrid meetings. Attendance was always 100%. In addition to the strategic planning, the Supervisory Board also discussed the company's technological development in particular, MTU's concepts for further reducing CO2 emissions and the other effects of air traffic on the environment. Among other things, the committee dealt with a project to use fuel cells for emission-free flying. The ecoRoadmap and MTU's climate strategy for the continuous reduction of greenhouse gas emissions, particularly in the manufacture and maintenance of its products and sustainability targets within the Board of Management's remuneration, the so-called ESG targets. Other focal points of the Supervisory Board meetings were long-term succession planning at MTU, the establishment of 2 MTU maintenance companies, the sale of an American subsidiary and the company's cybersecurity measures and the use of artificial intelligence in the MTU group. Finally, the Supervisory Board dealt with the remuneration report and with the involvement of an external independent remuneration consultant with the adjustment of its remuneration system and decided to propose the corresponding amendment to the articles of association to today's AGM. The topic of each meeting was the consequences of the corona pandemic on the aviation industry in general and on MTU in particular. The main topics discussed were the company's likely economic development in the current year and in the following year. Supervisory Board discussed in detail the operational planning and the budget for 2022. The annual performance related remuneration of the Executive Board for 2020 and the setting of targets and ranges for the annual performance-related remuneration of the Executive Board for 2021. The Supervisory Board also discussed the appointment of the auditor. Based on the recommendation of the Audit Committee it proposed to the AGM that Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Munich, be appointed as auditor of the annual financial statements and auditor of the consolidated financial statements as well as auditor for the audit review of half year reports for the financial year 2021. The general meeting approved the proposal with 98.82%. The Supervisory Board again dealt extensively with the application and implementation of the German Corporate Governance Code and reviewed the efficiency of its activities. A joint declaration with the Board of Management of 14th of December last year, it is stated that MTU complies with all recommendations of the German Corporate Governance Code. This declaration of conformity can be found in the annual report, which you can find on the MTU website on Page 109. Now the meetings of the committees. In addition to the Nomination Committee, the Supervisory Board has 3 committees with equal representation: the Personnel Committee, the Audit Committee and the Mediation Committee. The Supervisory Board receives regular reports on its work from the plenary session. The Mediation Committee did not have to be convened in 2021. The Personnel Committee held 3 meetings in the past year. Attendance was also 100% and dealt with the following issues, among other things, with the annual performance-related remuneration of the Executive Board for 2020, the determination of the targets for the annual performance related remuneration of the Executive Board for 2021, including the target values and ranges of the ESG criteria. The efficiency review of the Supervisory Board as well as recommendation to the Supervisory Board regarding the remuneration of the Executive Board members. The Audit Committee met 6 times last year. Attendance was also 100%. It dealt specifically with the annual financial statements, the consolidated financial statements and the combined management report, including the nonfinancial statement of the Group at the AGM as well as with the net assets, financial position and results of operations and the annual or half yearly reports and quarterly reports. The Audit Committee also dealt with the additional services provided by the auditor and the awarding of the audit contract to the auditor. It determined the focal points of the audit for 2021 and for the consolidated and annual financial statements and concluded the construct with the audit company, Ernst & Young. Furthermore, the audit committee obtained the auditor's declaration of independence and monitored its independence. It also reviewed and confirmed the procedure for engaging the auditor to provide nonaudit-related services and approved the engagement of the auditor to provide such services in the reporting year. In 2021, the Audit Committee received reports on the auditor's audit strategy, audit approach and audit process at 4 of its meetings and in direct discussions with the auditor outside the meetings. Furthermore, the Audit Committee dealt with the qualification of the persons mandated to audit the financial statements as well as with the general quality assurance concept of the auditor, including its control mechanisms and its practical implementation. No impediments to the appointment of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Munich which would actually be against the appointment of the auditors for the financial year 2022. As a result of its review, the committee recommended that the Supervisory Board adopt the annual financial statements, approve the consolidated financial statements, approve the combined management report and the nonfinancial statement and approve the Executive Board's proposal for the appropriation of earnings. The audit committee monitored the accounting process and the related internal control and risk management system as well as the internal and compliance management system. The audit committee also dealt with aircraft financing. The company's investment policy, the reports on risk management, the result of the so-called EMIR audit and with the organization of MTUs accounting system. These were the tasks of the Audit Committee. The Supervisory Board made its decision after reviewing the annual financial statement, which received an unqualified audit opinion from the auditor. So I'm repeating the various statements, which also include the nonfinancial declarations and they didn't make any objections to the reports. The submitted annual financial statement and the consolidated financial statements for 2021 were approved at the Supervisory Board meeting on the 8th of March 2022. The annual financial statements are thus adopted. The Board approved the Executive Board's proposal for the appropriation of the balance sheet profit taking into account the interests of the shareholders and of the company. Change in the various bodies. On the shareholder representatives aside, Professor, Dr. Steffens resigned from office with effect from the end of 31st of December 2020. As Professor Dr. Steffens' successor, Dr. Rainer Martins was initially appointed by court and elected to the Supervisory Board by the Annual General Meeting on 21st of April 2021. I resigned as a member of the Audit Committee at the end of last year's Annual General Meeting. And Dr. Bortenlanger was elected as my successor to the committee with effect from 22nd of April 2021. As already announced in 2020, I have resigned as a member and Chairman of the Supervisory Board at the end of today's Annual General Meeting, as planned. The Supervisory Board has unanimously decided to propose Mr. Gordon Riske as a new member to the Supervisory Board at today's Annual General Meeting. If the Annual General Meeting follows this proposal, Mr. Riske will subsequently be elected Chairman of the Supervisory Board. The objective in nominating Gordon Riske is to point to the Supervisory Board in accordance with the Supervisory Board's competence profile, a person who combines corporate experience in an international environment with experience in managing and supervising the company comparable to MTU, and an understanding of the company strategy and its future strategic development. Mr. Riske fulfills these requirements in an outstanding manner, thanks to his international management experience and his management activities at Deutz AG, KUKA Roboter GmbH and KION Group AG as well as his many years of supervisory experience in various international supervisory bodies. Mr. Riske has no conflicts of interest. He is considered to be independent and he has sufficient time in addition to his other management or Supervisory Board positions to assume the duties of a member and Chairman of the Supervisory Board of MTU Aero Engines AG. At this point, Mr. Riske would like to introduce himself briefly with a video.

Dear shareholders, I would have loved to introduce you myself personally, but also that it's being done virtually. I'm Gordon Riske. I'm a German-American. I'm married with a Franconian and I live in the beautiful city of Wiesbaden. So during the past 14 years, I was KION's CEO, which is a worldwide provider for forklift trucks and warehouse technologies and supply chain solutions. Ladies and gentlemen, I have had the honor and pleasure of chairing the Supervisory Board of MTU since 2008 -- I mean, since the 1st of January 2008 concretely. Since then, the company has developed rapidly, not only in terms of revenues, earnings and cash flow, but also in terms of share price, and has finally risen to the highest German stock market segment in the DAX. There were always exciting, but also complex issues to be dealt with in the Supervisory Board, which led to detailed discussions in the supervisory body. However, such discussions were always fact oriented and without confrontation. The cooperation between the 2 benches of the Supervisory Board as well as with the Executive Board was characterized by mutual respect and trust. I can assure you, ladies and gentlemen, that MTU is an outstanding company with a very impressive technology and with a workforce that is committed to MTU and an hands-on staff with a dedicated Works Council and a competent Executive Board. I reached my success at the same climate of trust, Mr. Gordon Riske and cooperation with his colleagues on the Supervisory Board and also with the Board of Management, continued for tune for the Board of Management and in management of the company a continuation of its very successful path into the future. Ladies and gentlemen, now I'd like to inform you about the proposed new remuneration of the members of Supervisory Board in top 6. The basic features of the remuneration system remain unchanged. The Supervisory Board remuneration has remained unchanged since 2013, I repeat since 2013. In contrast, all of MTU's key corporate figures have improved significantly. Total assets have almost doubled. Market capitalization and the share price are 2.5x higher than in 2013. And MTU has been promoted to the DAX in 2019, as I said before. The Supervisory Board believes it is important to continue to recruit high-caliber candidates for the MTU Supervisory Board in the future. To do this, we need to keep an eye on the market environment. An independent remuneration consultant has been commissioned to review the remuneration of the Supervisory Board to date and has come to the conclusion that in almost all areas, it is below or in some cases, significantly below the corresponding remuneration of comparable companies in the DAX and MDAX. It is proposed that the members of the Supervisory Board receive a fixed annual basic remuneration of EUR 80,000. The Chairman of the Supervisory Board and his Deputy shall receive an increased fixed annual basic remuneration for the higher organizational and administrative expenses associated with their activities as well as there's a special responsibility. This amounts to 3x the fixed annual basic remuneration for the Chairman and 1.5x the fixed annual basic remuneration for the Deputy Chairman in view of the importance of the committee work and their increased preparation and workload, members of the Supervisory Board committees shall receive an additional EUR 20,000 in addition to the annual fixed basic remuneration. And if they chair the committee, an additional EUR DUR EUR 40,000. Members of the Supervisory Board who are members of the Nomination Committee shall receive an additional EUR 10,000 on top and the annual fixed basic remuneration. And if they hold the Chair of this committee, an additional EUR 20,000. So much now from my side, and I'll give the floor to the Chairman of the Executive Board, Mr. Reiner Winkler for the report of the Executive Board.

Thank you very much, Mr. [ Eberhardt ]. Dear shareholders and representatives. Ladies and gentlemen, welcome to our 2022 AGM. This is the third time that the AGM MTU Aero Engines AG has been held virtually. As in the previous years, we will provide you with extensive information in this format like in the years before. Thank you very much for taking part and thanks for the enormous interest in MTU. That is shown in the large number of questions submitted already before the meeting. We look forward to answering them. And you can also ask subsequent questions later on. Ladies and gentlemen, 2022 has already been well underway. Alongside the coronavirus pandemic, we are confronted with war in the Ukraine. Both are having an impact on our sector and the industry, quite apart from the humanitarian catastrophe brought about by the war. Today, I will show what this means for our future prospects. But first, let us review 2021 because an AGM includes always looking back to over the year. Economically, 2021 was again overshadowed by the coronavirus pandemic. New mutations of the virus and the resulting travel restrictions caused recurrent turbulences. Nevertheless, we've remained on track. Even more importantly, we've returned to a growth trajectory. I don't think we need to go through all the figures shown in the background in detail. You are familiar with them from our publications. Here are the essentials in a nutshell. All key financial indicators were far better than in the previous year. We therefore showed that we can grow profitably even in tough times. And our figures show that we fully achieved our earnings targets. We have, therefore, proven that even in times of crisis, we are reliable partners for our shareholders. And we have demonstrated once again that our business model is resistant to crisis. We have a broad customer base in commercial business. Many of our airline customers served our markets with a high volume of domestic traffic. This sector is recovering fast at an international passenger traffic. In addition, we have customers in cargo sector. Cargo solidly is above the previous crisis level and is also supporting the long wide-board -- wide-body segment. In 2021, we aligned production rates in the commercial series business to market demand. In other words, we scaled back production. At the same time, we prepared to company to -- the company to ramp up production again. And we have kept an eye on our supply chains. Capacity utilization at our maintenance shops was high last year. We managed to secure many new orders with a total value of $4.6 billion. We drove forward expansion of our sites. In 2021, construction work started on our second maintenance facility in China. There, we plan to concentrate on the Geared Turbofan engines for the A320neo and engines for the classic A320. The facility is scheduled to come into service in 2024. We also started to build a new repair shop in Serbia, where we will be repairing commercial engine parts. So MTU maintenance survey will start operation at the end of 2022. The military business provided stability in 2021. We achieved key milestones with the engine for the next-generation of European Fighter aircraft. Together with Safran, we established EUMET. This joint venture coordinates development, production and the support of the new engine. We secured the Spanish company, ITP, as the main [ resell ] partner. Consequently, we are ready to ramp up our development work for the Next European Fighter Engine. In addition, we had also success with EJ200 engine for the Eurofighter 2021. Spain has ordered 20 Eurofighters. Here's my bottom line for the 2021. MTU once again proved resilient. Despite the pandemic-related turbulence, we performed well in 2021. As we would like you, you're our shareholders to share in that business and success because investing in MTU should be worthwhile, especially given the fact that you have remained loyal to MTU in these times of crisis. We are, therefore, proposing to you today that MTU should pay a dividend of EUR [ 2.10 ] per share 2021, that equates to a payout ratio of 33%. MTU's dividend should also remain attractive in the future. In keeping with our dividend policy, if we want to raise the payout ratio successfully -- successively in the coming years. Let us take an opportunity to review the share price performance. Unfortunately, the stock market has hardly rewarded our operational and financial success. MTU shares fell by 15.9% in 2021. They, therefore, significantly underperformed our competitors' shares and the shares listed in the DAX index. Naturally, neither you nor we can be satisfied with that. However, we well know the stock market trades in the future. And MTU has excellent prospects. I will outline them shortly. In view for that, has the upside potential for share price. Incidentally, most analysts agree with that view. The consensus price target is currently EUR 223. There's no doubt, ladies and gentlemen, aviation is one of the sectors that has been hit hardest and the longest by the corona virus pandemic. On top of that, the war in Ukraine is affecting flight paths, good consumer -- customer relationships and supply chains. Nevertheless, the basis for the recovery of our sector is . During the pandemic, many of us have become away of the mobilities, the basic human need. Aviation links people and cultures. And it also connects economic areas that's making contribution to economic prosperity. That makes it irreplaceably even in the future. So the IATA forecast that the aviation sector will continue its recovery in 2022. Passenger traffic should rebound to 83% of the prepandemic levels. And by 2024, it should significantly be above the precrisis level. Last year, cargo traffic was slightly higher than the previously we've expanded to rise. IATA is predicting a rise in 5%. We have positioned ourselves so that we can benefit disproportionately from the renewed upswing in air traffic. All business areas at MTU should post organic growth again in 2022. We expect the strongest upward trend to come from commercial maintenance. Here, we are benefiting from our wide-ranging market access. Because we operate as an independent maintenance provider, a member of the service networks of engine system producers and in partnership with airlines. In addition, we benefit from our broad portfolio of engines in all thrust and performance classes. Moreover, we offer numerous engines for short- and medium-haul aircraft. Given the age of the fleet, their maintenance requirements will increase in the future. That would also have a positive impact on our spare parts business. Commercial series business should also grow in 2022. Here, the highest growth rates are in the short- and medium-haul and regional sectors. The recovery is only proving a little bit sluggish in the long-haul market. The military business should also grow in 2022, especially as a result of the Next European Fighter Engine for new generation of European fighter aircraft. Overall, we expect revenues to be between EUR 5.2 billion and EUR 5.4 billion this year. Adjusted EBIT should increase to the mid-20 percentage range. Net income should grow in line with operating profit. The cash conversion rate, the ratio of free cash flow to adjusted net income, should be in the mid- to high double-digit percentage range in 2022. Let's sum it up. We want to remain strong operationally, and we want to continue to grow profitably. Our good first quarter results show that we are on the right track. We published our results last week. We, therefore, have a solid basis for the current year. By 2024, we aim to exceed the precrisis level of 2019. How? That is what I would like to talk about now. We have a clear plan of how to translate our expertise into growth. To achieve this, we are utilizing our traditional strength and our technology leadership. We are focusing on the right content and setting new product priorities. Setting the right priorities for content also means digitalization because linking competence in technology and digitalization is increasingly becoming the key to future success. MTU already has much to offer in this respect. We are networking production machinery of all generations, creating digitalized interfaces to our customers and digitalizing processes. In this way, we are optimizing material flows. In addition, we are increasing efficiency which reduces our cost. We are streamlining our structures. We are continuing to raise quality, and we are encouraging new and more effective forms of collaboration. Another key to profitable growth at MTU is sustainability. We support the United Nations' Sustainable Development Goals and the Paris climate protection targets. We take these objectives into account in our business activities. And we are pursuing them just as systematically as our financial targets. In short, we want to achieve more yet use fewer resources that benefits us all, including you, our shareholders. We started early on to offer customers products and solutions to help them reduce emissions and save resources. A prime example is the Geared Turbofan. It has been on the market since 2016, known as GTF, it is used, for example, in the A320neo, the A220 and in Embraer's new E-Jet. Compared with the previous generation, the GTF engine family reduces both fuel consumption and carbon dioxide emissions by 16%. Noise is 75% lower. Our partner, Pratt & Whitney, has calculated that the Geared Turbofan engines have saved 2 billion liters of kerosene since the market launch. Moreover, more than 6 million metric tons of carbon dioxide emissions have been avoided. Those are impressive successes. The success of our sustainability activities is also evidenced by good to very good ratings. For example, MTU has prime status in the ISS rating, giving it a leading position in the aerospace and defense sector. However, we are not satisfied with that. We aim to reduce engine emissions and fuel consumption still further. We are working on this through our clear technology agenda, which focuses on evolutionary and revolutionary engine concept. The heart of the revolutionary concepts are the GTF programs and their ongoing development. Our goal is to reduce fuel consumption by another 10%. On this way, we achieved a further important milestone together with Pratt & Whitney in 2021 with the GTF advantage. It should be available from 2024 from January and we reduce both fuel consumption and CO2 emissions by a further 1%. It also offers airlines a higher range and a higher payload. Moreover, when it is launched, this improved GTF engine will be designed for operation with 100% sustainable aviation fuels. Today's aircraft powered by GTF are licensed for operations with a 50% admixture of SAF. Well, now talking about SAF. We support the use of these alternative sustainable fuels. The key benefit is that they can be actually used as drop-in fuel without technical modifications to the engine or the airport infrastructure. The major challenge here is scaling up production. Therefore, we call on politicians to subsidize projects to support the industrialization of SAFs. Against the backdrop of the coronavirus pandemic and the Ukraine war, our sector cannot fund such multibillion projects on its own. SAFs are important because they are a transitional technology on the way to emission-free flying. Emission-free flying is the second focal area of our technology agenda, clear. Our goal is to develop the evolutionary engine concepts for completely emission-free engines. To achieve that, we are working on electrification of the powerchain. Here, MTU is focusing on flying fuel cells. This system does not generate CO2, NOx or particulates. The only emission is water. Flying fuel cells are, therefore, virtually emission-free. The aim to realize this concept until 2035. In this field, we are working closely with the German Aerospace Center. Together with the European Union Aviation Safety Agency, the EASA, we are already working on the licensing requirements for fuel cell technology. Our sustainability endeavors go beyond our products. They also include direct emissions released by MTU in its production. Operations at our Munich site have been climate neutral since the end of 2021. This year, we will be implementing climate protection strategies for our facilities in Hanover and Ludwigsfelde. Rollout to all other MTU sites will follow successively. Dear shareholders, you can see sustainability involves all areas of MTU. Sustainability and innovation are in separately connected for us. Our evolutionary and revolutionary approaches position us well to obtain stakes in engine programs for new short-, medium-haul and wide-body aircraft in order to fuel sustained growth of MTU. It is good to know that we are acting in concert with our employees. Last year, we conducted regular service. The results show that our employees remain firmly behind MTU even in difficult times. They believe in the future of the company, and we find that particularly pleasing because the motivation and skills of our employees are key factors in our ability to look ahead to the future with confidence. And on behalf of everyone on the Executive Board, I would like to thank them for this and for their commitment in 2021. Dear employees, you have done a great job. Many thanks for your exceptional dedication, your tremendous flexibility and your great team spirit. Thank you, too, for your discipline and your responsibility, particularly your responsible attitude to precautions made necessary by COVID. We would also like to thank everyone who has been working full time, taking up our offer for early retirement or a phased retirement program. And all those who have reduced their working hours, you have all played an important contribution by supporting MTU as a going concern, and ultimately safeguarding as many jobs as possible. I would also like to take this opportunity to thank our customers and business partners who accompanied us through the past COVID-dominated year. Many thanks for your good collaboration and your trust. The Executive Board would also like to thank the Supervisory Board for its constructive support. On behalf of the Executive Board, I would like to say a special thank our Supervisory Board Chairman, Klaus Eberhardt. Today, he's sharing our AGM for the 15th time. He's stepping down at the end of today's meeting. Mr. Eberhardt, thank you for your prudent leadership. Our intensive exchanges and your trustful collaboration. With your knowledge and experience, you have often given us important impetus and advice. Many thanks for everything you have done for MTU over the years. I'm certain that if today's AGM had been an in-person meeting, there would have been a round of applause for you now. I would like to add to our thanks, the request that you remain closely associated with us also in the future. And we have an excellent successor with Gordon Riske. Dear Mr. Riske, my colleagues and myself, we are really looking forward to working with you, especially in view of the sincere discussions we have already had with you. I call on you, our shareholders, to vote for Mr. Riske. The intention is that after the election, the Supervisory Board will elect him as Chairman. Please allow me to say a few words on my own behalf. As published yesterday evening, agreement has been reached with the Supervisory Board on the termination of my mandate days of 31st of December 2022. After more than 20 years in the management and on the Board of Management of MTU and shortly before I will turn 61, I now feel that it is time, or let me say, that time has come to pass on my responsibilities, the expected new growth phase of the company and a very good succession plan at the top of the Supervisory Board and the Board of Management, make the time for my decision seem appropriate. I am extremely grateful for having been able to help shape MTU's successful development over such a long period of time. Lars Wagner is an excellent successor as CEO of MTU. And the Executive Board will continue its successful work with great energy. My concluding votes are naturally addressed to our shareholders. Many thanks for your loyalty to MTU. We greatly appreciate it. And I promise you, we will do everything we can to justify your trust in the future. Thank you very much for your attention, and please stay healthy and safe.

Mr. Winkler, thank you very much for your statements. Really very impressive. And at this point, we will actually stop the public broadcast of the Annual General Meeting. We bid farewell to all who have watched us via the public link. And we also thank you for your interest. The broadcast will only be accessible to shareholders who are locked in via the AGM portal from now on. Ladies and gentlemen, the agenda of the Annual General Meeting has been made known to all shareholders by publication in the Federal Gazette and also on the website at www.mtu.de/hv. Shareholders and shareholder representatives have the opportunity to ask questions on all agenda items in the run-up to today's Annual General Meeting. Before we answer the questions submitted in due time, we will now play the video messages submitted in due time, which you could already view via the AGM portal in the run-up to the AGM. And we have a video message of Mrs. Daniela [ Berthold ], the Vice President of the German [indiscernible] ownership. [Statements in English on this transcript were spoken by an interpreter present on the live call.]