The technical arm Singapore Airlines, SIA Engineering, has described a “challenging” operating environment for MRO providers after its annual profit fell 28%.
Operating profit was S$57 million (US$41 million) in the 2018/19 financial year, due in part to falling sales from fleet management and airframe activities.
SIA Engineering also has concerns about sales in the coming year due to “the unforeseen grounding of customers’ aircraft.”
In April 2018, the company signed a S$484 million services agreement covering the Boeing 737 Max aircraft of fellow Singapore Airlines subsidiary SilkAir.
At the time of Max’s grounding, the airline had six Max 8s in its fleet. SilkAir has since put on hold plans to transfer four 737-800s to Scoot, another Singapore Airlines unit, as it needs them for cover.
However, the MRO also registered S$5.5 million higher profits from its component and engine activities and is positioning itself for future growth in the latter segment. Associate company Eagle Services Asia performed its first maintenance on PW1100G engines during the year.
Also commencing operations in 2018-19 were three joint ventures: Heavy Maintenance Singapore Services, Moog Aircraft Services Asia and Additive Flight Solutions, although none of these are expected to boost profits in the near term.
“We will leverage our portfolio of JVs with strategic partners, diversified service offerings and strong balance sheet to pursue suitable opportunities for sustainable growth,” commented SIA Engineering.
Heavy Maintenance Singapore Services, a 65-35 joint venture between SIA Engineering and Airbus, is one of the most interesting of the former’s partnerships.
Designed to be Airbus’s Asian center of excellence for heavy maintenance on the A350 and A380, the new company will offer airframe maintenance, cabin upgrade and modification services for A380 and A350 aircraft.