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SIA Engineering Keeps Faith in OEM Partnerships

SIA Engineering has suffered a 13% drop in third-quarter operating profit as sales fell for its fleet management and airframe and component overhaul services.

For the quarter ending 31 December, 2016, the Singaporean MRO posted a S$25 million ($18 million) operating profit, thanks in part to increasing demand for line maintenance services.

Despite selling stakes in engine shops SAESL and HAESL earlier in 2016, SIA Engineering remains an enthusiastic forger of strategic partnerships and joint ventures. Its latest deal is to establish a Singapore-based joint venture to overhaul Moog’s products, which include components on flight control systems for aircraft such as the Boeing 787 and Airbus A350.

There was also the October incorporation of Heavy Maintenance Singapore Services (HMS Singapore), a 65-35 joint venture between SIA Engineering and Airbus. Designed to become Airbus’ Asian centre of excellence for heavy maintenance on the A350 and A380, the new company will provide airframe maintenance, cabin upgrade and modification services for A380, A350 and A330 aircraft.

However, SIA Engineering still faces a “challenging” operating environment “in the face of persisting global economic uncertainties”, and the company acknowledges that new business lines such as HMS Singapore are no silver bullet.

“While these and other recently formed joint ventures position the company well for the future, they are not expected to be accretive in the near term,” SIA Engineering informed investors in a statement.

The company wasn’t so patient with its engine overhauls shops HAESL and SAESL: SIA Engineering sold its minority stakes to Rolls-Royce earlier in Q1 2016 following several years of falling profits.

These were down to improved reliability for the Trent 700 and the retirement of aircraft flying RB211-524 and Trent 500 engines.

TAGS: Airframes
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