Revenue worries at SIA Engineering appeared unfounded in the first quarter as the Singapore-based MRO provider boosted its operating profit by 74% to S$18 million ($13 million).
The profit was achieved on a marginal increase in revenues and an almost 3% fall in expenses, which the SIA Engineering attributed mainly to lower material costs.
Earlier in the year the company had stated concerns about future sales due “the unforeseen grounding of customers’ aircraft”, having in 2018 signed a support deal for the 737 Max aircraft of fellow Singapore Airlines subsidiary SilkAir.
Revenues from line maintenance and airframe MRO work rose 2.7% at SIA Engineering during the first quarter of the 2019-20 financial year.
The Singapore-based MRO provider posted revenues of S$258.1 million (188.1 million) for the period up to June 30, 2019, with airframe and line maintenance upping their contributions. The two segments generated S$2.3 million higher than the same period last year.
This was partially offset by an S$1.9-million year-on-year decrease in revenue from the engine and component segment. However, both segments contributed a profit of S$26.7 million in Q1, while airframe and line maintenance services posted a slight loss in its profit margins of S$0.7 million.
Profit contributions from SIA Engineering’s joint venture businesses, which now number 24 entities, stood at S$26.0 million - around 19.8% lower year-on-year. Last year saw the start of three SIA joint ventures – Heavy Maintenance Singapore Services, Moog Aircraft Services Asia and Additive Flight Solutions – none of which are expected to boost profits in the near term.
Overall, the group posted a profit of S$41.6 million.