MTU enters drone propulsion market with German startup deal

By Maria Rugamer and Alexander Hübner

April 8 (Reuters) - Munich-based engine manufacturer MTU Aero Engines MTXGn.DE is entering the drone propulsion market with an acquisition of a Cologne-based startup.

MTU is buying AeroDesignWorks GmbH, which develops turbojet engines for smaller unmanned aerial vehicles and guided missiles, the company said on Wednesday.

"This will help us grow our military business more quickly," MTU's CEO Johannes Bussmann told Reuters.

Military engines and their maintenance account for less than 10% of MTU's turnover. AeroDesignWorks meanwhile has turnover of around 10 million euros ($11.7 million).

"That could grow many times over," Bussmann said.

Bussmann declined to comment on the specific purchase price for the company, which was spun off from the German Aerospace Centre in 2011. "We paid a fair price," he said.

AeroDesignWorks already supplies customers such as MBDA, Airbus AIR.PA and Boeing BA.N. The startup's priority is to ramp up production to supply larger volumes and to develop drone engines with greater thrust. MTU can assist in both areas, Bussmann said.

In the defence sector, MTU supplies engines for Tornado and Eurofighter combat aircraft, Tiger and CH-53K helicopters, and the Airbus A400M transport aircraft.

Future generations of fighter aircraft are set to be accompanied by drones. This requires platform solutions, Bussmann said.

Rival engine makers including France's Safran SAF.PA have also increased their exposure to unmanned systems as defence spending in Europe rises.

For drones, MTU currently only offers electric motors from its subsidiary eMoSys.

($1 = 0.8543 euros)