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(Adds CEO quote from analyst call in paragraph 6)
By Christina Amann
MUNICH, July 26 (Reuters) - MTU Aero Engines' confirmed its 2023 guidance for free cash flow on Wednesday despite facing challenges from recently announced inspections affecting some 1,200 engines.
The German aircraft engine maker is a partner on the geared turbofan (GTF) engines made by U.S.-based engine maker Pratt & Whitney that power the A320neo.
Pratt & Whitney's parent RTX Corp on Tuesday announced that a "rare condition" in powdered metal meant 1,200 of more than 3,000 engines, built for the twin-engined Airbus A320neo between 2015 and 2021, have to be taken off and inspected for micro cracks that would point to fatigue.
Of the 1,200 engines, 200 must be checked by mid-September because of their time in service. The remainder will need inspection over the next year.
"The Geared Turbofan inspection programme will cause headwinds for our free cash flow," said MTU Chief Financial Officer Peter Kameritsch. "We will resolutely enhance our strict cash management to limit the impact as far as possible."
MTU Chief Executive Lars Wagner said it would take about six weeks to determine how much the engine problems would cost, and the recall would have a moderate impact on medium-term earnings expectations.
The engines' problems are not due to their design, he added.
"This is not an engine design problem. It does not affect the production of new engines and spare parts," Wagner said.
MTU still expects this year's free cash flow to be slightly higher than last year's 326 million euros ($360.39 million).
Free cash flow stood at 135 million euros in the first six months of 2023, down 19% compared with the prior-year period, the firm said.
MTU's revenue grew by a quarter in the first half to 3.1 billion euros, with the commercial engine business being the largest growth driver, up 40% compared with last year's period. ($1 = 0.9038 euros)
(Reporting by Miranda Murray and Christina Amann, Editing by Friederike Heine and Louise Heavens)