SIA Engineering Company

[shanrui_91]

correct me if i am wrong then, but what i mean is that dividend from SIA EC will be counted as a profit item under SIA profit, since SIA is entitled to 80% of the total amount of dividend from its 80% share

SIA EC is a subsidiary of SIA. SIA will recognize its part of its profit in its statement already. dividend from SIA EC does not form part of the profit for SIA Group, as its earning already being recognized.

Thanks for your correction since i am still pretty new to this. So does this means that SIA EC will not be paying dividend to SIA or simply that it will not have an impact on SIA given that 100 m out from SIA EC and 100m into SIA cancel out each other?

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thanks for the correction since i am still pretty new to this. so does this means that SIA EC needs not pay out the dividend to SIA or that 100m out from SIA Ec and 100m into SIA will cancel out each other and will thus not have an impact on SIA?

[csl123]

I reckon that the yield will be comparable to last year, especially when SIA is not as profitable when compared to 2010.

Even if SIA isn't as profitable as last yr, the planes held by SIA still needs to be maintained every single day. Now with Scoot coming on board, SIAEC will have more work to do which means higher revenue. It will turn into a cause for concern only when SIA decommissions many of its aircrafts to cut costs. If not, I don't think SIAEC will be affected that much.

SIA will require cashflow from SIAEC, especially when it is not profitable.

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> Correct me if I'm not wrong, ST Eng provides some upgrades and refurbishment for military aricrafts such
> as the F5 Tigershark as well as the A4 Super Skyhawk to various 3rd world countries airforces

SIA engineering does not want to go into a space it cannot compete so hard against ST or other military aircraft service companies. Enough biz for it to fight... Very hard to make $ against SAF...

It is not true that it is difficult to make money from SAF, especially when SAF being a civil service entity, recognize that fiscal injection to the economy is vital to the social and economical defence (2 pillars of the TOTAL Defence Strategy).

Remember that SIAEC and ST Engg are both owned by Temasek Holdings. It is irrational to allow the two entity to compete with each other...

[Contrarian]

> SIA will require cashflow from SIAEC, especially when it is not profitable

Yes this I agree with u.

> Remember that SIAEC and ST Engg are both owned by Temasek Holdings. It is irrational to allow
> the two entity to compete with each other...

There is no such thing as irrational or not. Temasek will ride on both and get the best deal for its military aircraft needs. But ST Engineering has been especially successful with low cost carriers and this to me, indicates they are targetting lower end of the market. SIA Engineering on the other hand has leadership on latest engine technology because of SIA's new purchases and it's JV structure. So when the market is so huge on the A380s, it will focus on this part first...

Now that SCOOT is officially SIA's business, SIA Eng will want to see how to grow this piece... you bet they will do it well

[csl123]

> SIA will require cashflow from SIAEC, especially when it is not profitable

Yes this I agree with u.

> Remember that SIAEC and ST Engg are both owned by Temasek Holdings. It is irrational to allow
> the two entity to compete with each other...

There is no such thing as irrational or not. Temasek will ride on both and get the best deal for its military aircraft needs. But ST Engineering has been especially successful with low cost carriers and this to me, indicates they are targetting lower end of the market. SIA Engineering on the other hand has leadership on latest engine technology because of SIA's new purchases and it's JV structure. So when the market is so huge on the A380s, it will focus on this part first...

Now that SCOOT is officially SIA's business, SIA Eng will want to see how to grow this piece... you bet they will do it well

ST Engineering started out with Military Businesses (80% millitary and 20% commerical) and ST Aero slowly branch out to passenger to freighter conversion, and in the recent years, heavy maintenance for LLC.

SIAEC on the other hand started with commercial businesses, focusing on line, heavy, engines and components overhaul. PTF is not what they are focusing on from the start, and doesn't seem to be the business area they are venturing into in the near future.

Above evidences show that Temasek's strategic intent is to avoid competition between the two big MRO company, as this will erode profit margin in an oligopoly industry.

Don't really understand what do you mean by "leadership of the latest technology". FYI, SIAEC does not have latest engine technology. The parent company (pratt or RR) of the JV keeps the proprietary technology. Focus of the JV's are still on engine overhaul services. The parent company (or commonly known as OEM) provides the final recommendations when there are technical issues found during line and heavy maintenance, engine and component overhaul.

[Musicwhiz]

In just two days alone, SIA Engineering has released four announcements on business developments which reflect positively on Managment's efforts to grow the business. (see attached files)

1) SIAEC has formally opened the Panasonic Avionics Services Singapore (PACSS); of which SIAEC owns 42.5% and Panasonic Avionics Corporation owns the other 57.5%. This is to provide airlines with faster turnaround IFEC checks during aircraft transits in Singapore.

2) SIAEC has been appointed by Messier-Bugatti-Dowty (a unit of Safran Group) as its authorized repair centre for MRO services for brakes and wheels.

3) SIAEC has opened its Line Maintenance Unit in San Francisco, and its network will cover 28 airports in 7 countries. Operations started on February 1, 2012 and further extends the Group's global network.

4) SIAEC has today signed an aircraft MRO Services Agreement (for two years, with option to extend for one more year) with Scoot, the new low-cost carrier from SIA (100%-owned by SIA).

The above announcements are expected to be positive for SIAEC in the longer-term, as it serves to cement relationships with long-time customers and adds breadth to their services. It would be safe to say that even if 4Q FY 2012 turns out to be weak, the medium-term outlook would still be positive as SIAEC slowly but surely increases its stable of associated companies and JVs.

[FFNow]

I was at the airshow today and saw most of the planes that have to be functioning (i.e. people could go on board to view) have ground power units (GPUs) are supplied by SIAEC. SATS have provision to provide GPUs too but simply seeing SIAEC GPUs all around says something big about the company.

[Musicwhiz]

Yet another announcement from SIAEC today, this time it has sealed a deal with VietJet Air to provide a wide spectrum of Inventory Technical Management (ITM) services for their fleet of six A320 aircraft. This is under SIAEC's Fleet Management programme for which SIAEC now services 13 airlines with a fleet coverage of >160 aircraft. This is a five-year contract (see attached).

[Jon-san]

It is not true that it is difficult to make money from SAF, especially when SAF being a civil service entity, recognize that fiscal injection to the economy is vital to the social and economical defence (2 pillars of the TOTAL Defence Strategy).

Remember that SIAEC and ST Engg are both owned by Temasek Holdings. It is irrational to allow the two entity to compete with each other...

Just wanted to add something to this. Look at it this way, what CSL stated in his post is correct. SIAEC started out as an Engineering Division in SIA, their specialty lies in servicing Commercial Aircraft. To venture into Military Hardware is something entirely different from its core business. Think of the start up costs involved in setting up a military aircraft arm. Cost of training, equipment, logistics, parts storage and availability, credibility, reputation, not to mention closely-guarded and controlled military technology. The costs could run into mind-boggling figures, and what would be the anticipated returns? Just about the only contract you can get is from RSAF, because very few countries will award maintenance tenders out to foreign-held MROs, especially ones that have such close links with the State Govt. The Aviation industry pie is huge, it is not necessarily segregated into Commercial and Military aviation. There are support services to provide, fleet management services to provide, so many avenues to look into to grow the company, why would they look into the one segment (Military Aviation) which would prob crash spectacularly, since SIAEC has no background whatsoever to be challenging the gazetted Military Hardware MRO of The State?

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I was at the airshow today and saw most of the planes that have to be functioning (i.e. people could go on board to view) have ground power units (GPUs) are supplied by SIAEC. SATS have provision to provide GPUs too but simply seeing SIAEC GPUs all around says something big about the company.

Do understand that in Line Maintenance, SIAEC is still the main player in Singapore. No other company comes on a close par with them. Hence, in such an event as the Singapore Airshow, no other company (locally) has the resources (equipment-wise) to compete with the incumbent maintenance services provider, since GPUs are mainly only used during ground maintenance. SATS forte lies mainly in terminal services, baggage handling etc, with ramp handling as an offshoot of its terminal services. Now, if you happen to see SIAEC GPUs powering display aircraft at say, Asian Aerospace in Hong Kong, or the Lima Airshow in Langkawi, or any of the other major airshows that are held offshore (relatively to SIAEC's location), now that, would say something big about the company.

[FFNow]

Do understand that in Line Maintenance, SIAEC is still the main player in Singapore. No other company comes on a close par with them. Hence, in such an event as the Singapore Airshow, no other company (locally) has the resources (equipment-wise) to compete with the incumbent maintenance services provider, since GPUs are mainly only used during ground maintenance. SATS forte lies mainly in terminal services, baggage handling etc, with ramp handling as an offshoot of its terminal services. Now, if you happen to see SIAEC GPUs powering display aircraft at say, Asian Aerospace in Hong Kong, or the Lima Airshow in Langkawi, or any of the other major airshows that are held offshore (relatively to SIAEC's location), now that, would say something big about the company.

Yeah true that. But I was just excited to see SIAEC GPUs there even though SATS forte doesn't lie in there but still can provide GPU service. I have seen SATS GPU in Changi Airport though so they still can be reckoned with. Not surprisingly, Dreamliner's air-stairs was provided by SATS. Jon-san, are u working in the aircraft industry?

[Jon-san]

Do understand that in Line Maintenance, SIAEC is still the main player in Singapore. No other company comes on a close par with them. Hence, in such an event as the Singapore Airshow, no other company (locally) has the resources (equipment-wise) to compete with the incumbent maintenance services provider, since GPUs are mainly only used during ground maintenance. SATS forte lies mainly in terminal services, baggage handling etc, with ramp handling as an offshoot of its terminal services. Now, if you happen to see SIAEC GPUs powering display aircraft at say, Asian Aerospace in Hong Kong, or the Lima Airshow in Langkawi, or any of the other major airshows that are held offshore (relatively to SIAEC's location), now that, would say something big about the company.

Yeah true that. But I was just excited to see SIAEC GPUs there even though SATS forte doesn't lie in there but still can provide GPU service. I have seen SATS GPU in Changi Airport though so they still can be reckoned with. Not surprisingly, Dreamliner's air-stairs was provided by SATS. Jon-san, are u working in the aircraft industry?

Yes, I am. In this very company, in fact.