ST Engineering Aerospace is branching into Vietnam for the first time with a new joint venture (JV) devoted to component MRO solutions. Vietnam Singapore Technologies Engineering Aerospace Co. Ltd. (JVCo), a JV between ST Engineering Aerospace and Vietnam Airlines subsidiary Vietnam Airlines Engineering Co. (VAECO), is expected to begin operations by the end of this month.
According to ST Engineering Aerospace president Lim Serh Ghee, the JV is aimed at catering to the growing need for aircraft component MRO services in the region. JVCo will provide services to both Vietnam Airlines and other operators in Indochina.
“Asia is a key region driving the growth of the global commercial aerospace sector,” says Lim. “A presence in Vietnam, which enjoys double-digit growth in the air travel sector, will enable us to better capture that growth with an expanded MRO network in the region.
Formation of the JV follows a memorandum of understanding announced by ST Engineering Aerospace and VAECO in April 2018. At the time, the companies also entered into a 14-year component maintenance-by-the-hour contract to support 58 Airbus A321ceos and 20 A321neos.
JVCo will invest in new infrastructure to carry out component MRO work at Vietnam Airlines’ existing maintenance facilities at Noi Bai International Airport (HAN) in Hanoi and Tan Son Nhat International Airport (SGN) in Ho Chi Minh City. According to Lim, leveraging Vietnam Airlines’ existing maintenance facilities will enable JVCo to set up capabilities quickly and begin operating with a “ready base-load.”
The facilities will be equipped to carry out MRO work on pneumatics, hydraulics, electrical components, safety equipment and wheels and brakes for aircraft types such as the A320 family, A350, ATR72 and Boeing 787.
ST Engineering holds a 49% stake in JVCo and VAECO holds the remaining 51%. The JV was set up with paid-up capital of $3.9 million. According to ST Engineering, the setup of JVCo is not expected to materially impact its consolidated net tangible assets per share and earnings per share for the current financial year.