affixed to or driven by turbine drive shaft 22 the suction or inlet of the first compressor stage 29 is connected through the preheater cooled section 28 to the outlet of turbine 12 and the outlet of first stage 29 is connected through a cooled coil 33 of an interstage cooling unit 34 to the inlet of compressor second stage 30 whose outlet in turn is connected through cooled coil 36 of cooling unit 34 to the inlet of the compressor third stage 32 whose outlet is exhausted to the ambient atmosphere a coolant carrying cooling coil 37 of the compressor interstage cooler 34 is in heat transfer relationship with cooled coils 33 and 36 and has a coolant circulated therethrough in the operation of the improved compound engine 10 described above the fueled positive displacement engine 11 employing as an oxidizer ambient air heated in preheater 26 by the exhaust gas of turbine 12 rotates the output drive shaft 21 the exhaust combustion gases of cylinder 14 drives turbine 12 which in turn additionally drives drive shaft 21 by way of gear reduction transmission unit 23 24 the gas outlet of turbine 12 is drawn through preheater section 28 by the multistage interstage cooled rotary compressor suction device 13 which discharges into the ambient atmosphere the gas volume rate of suction of compressor 13 is greater than the volume of gas exhaust.