SIA Engineering Company

[Musicwhiz]

Note: I am vested.

Business Times - 26 Jan 2011

SIA Engg Q3 earnings up 7.7% at $60.3m

By VEN SREENIVASAN

HIGHER operating costs, flat contribution from associates and start-up expenses have weighed down on SIA Engineering's third-quarter earnings, which rose by a mere 7.7 per cent to $60.3 million.

But topline revenue grew 11.6 per cent to $269.5 million due to higher contribution from maintenance, repair and overhaul work and fleet management programme.

Fleet management revenue increased with a larger fleet size of existing customers and the addition of new customers. Line maintenance revenue also increased with more flights handled and an increase in aircraft support work.

For the nine months to end-December 2010, SIAEC made a net profit of $197.6 million, a 21.8 per cent rise from $162.2 million a year earlier. Revenue for the nine months was up 13.8 per cent at $834.9 million.

In the third quarter, share of profit from associates and joint ventures remained almost unchanged at $33.9 million. Profit contribution from associate companies, in particular, dipped to $16.2 million for the quarter, from $21.6 million for the corresponding period a year earlier.

Meanwhile, Q3 expenditure rose 7 per cent to $235 million. The largest components of these rises were in labour and subcontract costs.

As at Dec 31, equity attributable to shareholders dipped marginally by 1.5 per cent to $1.25 billion. Net asset value (NAV) per share declined 2.3 per cent to 114.3 cents, from 117 cents as at March 31, 2010.

But the company had no gearing, and a cash cache of some $458.6 million, an increase of $32.8 million or 7.7 per cent compared to March 31, 2010.

The results translated into a basic earnings per share for the first nine months of the year to 18.18 cents, a 21 per cent year-on-year increase. No dividends were announced.

The company said that it will continue to benefit from the recovery in the aviation industry.

'Demand for maintenance, repair and overhaul services is expected to remain firm. In addition, the group's network of joint ventures places it in a good position to capitalise on opportunities,' it said in a statement.

SIAEC is one of three bidders for the third ground handling licence at Changi Airport. It is competing with Malaysia's AirAsia and global player Aircraft Service International Group.

The winner will compete with incumbents SATS Ltd and Emirates-controlled Changi International Airport Services at an airport which handles 40 million passengers and some 1.7 million tonnes of cargo.

The award of a third ground services licence comes almost two years after European ground handling giant Swissport shut down operations at Changi in April last year after four years of operations, incurring losses of more than $50 million.

The third player would compete for the business of the nearly 100 airlines operating at the world's seventh busiest airport.

[Musicwhiz]

Hopefully, more business for SIAEC in time to come?

(Vested)

Feb 27, 2011
Fast growth of Gulf carriers worries rivals
Big expansion of fleets, close ties to govt draw European calls for levelling the playing field
By Karamjit Kaur, Aviation Correspondent

The numbers are eyebrow-raising. More than 420 twin-aisle aircraft will be delivered in the next five years to Emirates, Etihad and Qatar Airways.

Together, the three Middle Eastern airlines have more wide-body seats on order than the total current long-haul capacity of major US carriers - Delta, United, American, Continental and US Airways.

Does growth of this magnitude really make sense?

Not to Mr Ulrich Schulte-Strathaus, secretary-general of the Association of European Airlines, who posed the question at an industry gathering in Washington, DC last month.

There are some points to note, he said.

All three carriers - Emirates, Etihad and Qatar Airways - are government- owned and operate as an instrument of national strategy.

Dubai, where Emirates is based, has just 2.3 million people, Qatar has 1.4 million and Abu Dhabi, which is home to Etihad, has a population of under 900,000.

Mr Schulte-Strathaus said: 'In a market of double-digit growth, airlines that have long-haul aircraft fleets which dwarf those of their international competitors are being driven by a policy which is not compatible with that of the US and Europe, or, I suspect, Australia, China, Japan, Canada, Mexico, Brazil, Chile, Korea and so on. You get the picture.'

For those who do not, this is what he really wanted to say: Middle Eastern carriers enjoy special perks and benefits that distort the competitive landscape, and without a level playing field, the industry must step in to curtail their expansion.

And who best to do this than the International Civil Aviation Organisation (Icao) - a UN arm that regulates the industry - Mr Schulte-Strathaus said, adding that Icao should devise a system to deal with 'capacity dumping in the field of aviation'.

It is not the first time Middle Eastern carriers have been targeted by rivals. They have over the years been accused of benefiting unfairly from subsidised fuel and other government incentives.

Take Emirates for instance. Its chairman Sheik Ahmed bin Saeed Al Maktoum is also chairman of Dnata, the airport's ground handling company, and president of the Dubai Civil Aviation Authority. He is also the uncle of Dubai's ruler, Sheik Mohammed bin Rashid Al Maktoum.

With such close ties between airline, regulator, airport authority and government, it is hard to believe that Emirates does not benefit from the relationship, critics say.

The airline has flatly denied the allegation and said repeatedly that its financial results are freely available and audited by international accounting firm PricewaterhouseCoopers. Etihad and Qatar do not publish their numbers.

The remarks by Mr Schulte-Strathaus prompted Mr Akbar Al Baker, chief executive officer of Qatar Airways, to hit back.

In a three-page statement released to the media, he said: 'Can he tell me of any country... which does not consider its air transport industry... as part of national interests? Was it not the case that the US government provided its airlines with cash outlays and tax breaks as well as insurance subsidies after Sept 11, in order to ensure the continuity of the US air transport industry?'

Yes, we operate out of small countries but with networks that stretch across the globe, a limited domestic market is no hindrance to expansion, he said.

A conscious effort to maintain a young efficient fleet of aircraft also explains why 'our order book is higher than elsewhere', he added..

Instead of trying to clip the wings of the Gulf carriers, European airlines should accept competition and focus on their own operations, Mr Al Baker said.

While the current political turmoil in the Arab world is keeping some travellers away, analysts do not expect it to adversely affect the key carriers in the region over the long term.

Aviation pundits The Sunday Times spoke to pointed out that while the growth of Middle Eastern carriers in the last five to 10 years has been phenomenal, it should be measured against that of larger markets in India and China.

Mr Shane Batt, vice-president, global sales at Sabre Airline Solutions, cited the example of Air China, which has 381 aircraft and is expanding its fleet to 700 in the next five years.

By contrast, Emirates has 151 aircraft in its fleet and 200 on order.

He said: 'The actual capacity and traffic growth in China and India far exceed the growth of the Gulf-based carriers.'

So what is it about the Gulf carriers that worries rivals?

For one thing, unlike China and India which have not been able to expand their infrastructure fast enough to support the boom in the air travel industry, Dubai is way ahead.

Even as Dubai International Airport was being expanded, planning had already started for a new airport 40km away.

Al Maktoum International Airport will be able to handle up to 120 million passengers a year. That is huge, considering that the world's busiest airport today, Atlanta International Airport in the US, handles about 90 million passengers annually.

Middle Eastern carriers are also a threat because of their strong focus on premium service and products, as well as strategic location as the gateway between the East and the West, that have put them on the list of preferred airlines for many travellers.

But competition is not new to the industry and the rise of Middle Eastern carriers will not affect all airlines adversely, analysts say.

Mr Batt said: 'Carriers that do not innovate are the ones that will be vulnerable... In my opinion, Gulf carriers are not a threat to anyone except to those who deliver poor service.'

And certainly not to strong premium players such as Singapore Airlines (SIA) and Cathay Pacific, experts say.

Mr Paul Sheridan from aerospace consultancy firm Ascend said: 'Yes, SIA should keep a close eye on the expansion of the Gulf carriers. But if there are carriers that are well positioned to deal with the challenge, SIA is definitely one of them.'

Ms Reshma Bhandary, an analyst with Frost & Sullivan, said: 'On a competitive front, SIA is very well placed to deal with this challenge.'

Its base in the commercial heart of Asia will continue to work to its benefit as the region's economies continue to grow strongly, she said.

The key is to keep innovating, improving and growing connectivity to maintain its international stature, she added.

An extensive network is critical if SIA is to cushion itself from the impact of strong competition in selected markets.

The airline knows this well. Next month it begins flying to the Brazilian city of Sao Paulo, via Barcelona in Spain - adding a sixth continent to its route network.

Mr Jonathan Galaviz, chief economist at Galaviz & Company, has a different view. He believes that the Gulf carriers 'represent the biggest threat to the strategic position of SIA'. The best way to deal with this is for the Singapore carrier to create a secondary hub in a Gulf state, he said.

SIA spokesman Nicholas Ionides did not comment directly on the challenge posed by the Middle Eastern carriers, but he said the airline takes all its competitors seriously and will continue to improve on its product and service offerings to stay ahead of the competition.

As Emirates, Etihad, Qatar and their home airports continue to expand, Changi Airport too will face increased competition, especially from Dubai International Airport.

To stay ahead, the Singapore airport must ensure that it creates the most efficient, effective and dynamic operational environment for airlines, Mr Galaviz said.

Despite the expansion of other airports in the region, Changi has managed to grow its traffic over the years and benefit from the proliferation of low-cost carriers in the region.

Regional travellers, including those from China, India and South-east Asia, now make up more than 75 per cent of the airport's total traffic, up from 67 per cent in 2003.

The airport can also benefit from the rise of the Middle Eastern carriers, Mr Galaviz said.

'Since Gulf airlines are not going away any time soon, Changi Airport must also learn to embrace and encourage increased flights from Gulf countries into Singapore.'

[freedom]

Changi Airport Group invited 4 bidders including SIA Engineering for the license of 3rd ground handling operation in June 2010.

Is there any further news about the tender? I thought CAG mentioned the 3rd ground handling operator would commerce operation in Q1 2011 at that time. Today is the end of Q1 2011, still no tener results? how to commerce operation...

[Musicwhiz]

Changi Airport Group invited 4 bidders including SIA Engineering for the license of 3rd ground handling operation in June 2010.

Is there any further news about the tender? I thought CAG mentioned the 3rd ground handling operator would commerce operation in Q1 2011 at that time. Today is the end of Q1 2011, still no tener results? how to commerce operation...

Hmm, perhaps the tender was delayed? No news from SIAEC so far....

(Vested)

[Musicwhiz]

Business Times
April 7, 2011
SIAEC, Sagem launch avionics facility

SIA Engineering Company Ltd (SIAEC), in partnership with Sagem (SAFRAN Group), has launched a state-of-the-art avionics facility at Changi North Rise, Singapore. The new facility is under a joint venture owned 49 per cent by SIAEC and 51 per cent by Sagem.

(Vested)

[valuestalker]

i suppose this is the one designed and built by Boustead

[Musicwhiz]

i suppose this is the one designed and built by Boustead

Yes that's right. Below is the link for the announcement made on March 31, 2010.

http://info.sgx.com/webcoranncatth.nsf/V...700331E31/$file/Boustead_Announcement-Boustead_Subsidiary_Awarded_Second_Contract_from_Safran_Group_31.3.2010.pdf?openelement

[Musicwhiz]

Note that SIA Engineering has informed that it will be releasing FY 2011 (ending March 31, 2011) results on May 10, 2011 (Tuesday).

[Jon-san]

Looking forward to it too, as I have a personal interest in it. Too bad I am on shift. Can't attend the Business Meeting. MW will be going?

[Musicwhiz]

Looking forward to it too, as I have a personal interest in it. Too bad I am on shift. Can't attend the Business Meeting. MW will be going?

Business Meeting? Do you mean the analyst briefing? Retail investors are not invited to such events usually and you'll need special permission to attend.

Even then, I don't think I will attend if they declare a decent dividend.