SIA Engineering Company has two dominant business divisions – namely repairs and overhaul (forming the bulk of their MRO business), and line maintenance, which includes inspections for aircraft for major airlines. This section shall attempt to chart out the business history of each division and to give an overview of the progress of each division over time, highlighting its notable achievements in particular. Note that I have lumped together Fleet Management under repairs and overhaul, as it is basically part of the division which provides comprehensive technical assistance to the airlines for their aircraft.
Repair and Overhaul
Brief Description of Business Activities
Airframe Maintenance and overhaul sub-division facilities comprise of 5 hangars with a combined total of 8 bays and total floor area of approximately 43,200m2. With these facilities, we are able to provide total support solutions to our growing portfolio of third party customers.
Component maintenance and overhaul sub-division has 22 workshops which test, repair and overhaul components including those removed from the aircraft in the hangars.
Engine overhaul sub-division is able to provide engine parts repairs and overhaul services to high-performance engines such as Rolls-Royce Trent 500, 700 and 800 series as well as Pratt & Whitney, just to name a few.
Historical Development of Division
April 2000 > Launch of “Skysuite” workshop dedicated to the maintenance and overhaul of “Skysuite” seats used in SIA’s Boeing 747-400 fleet.
October 2000 > SIAEC signed a ’Total Support’ maintenance contract with Region Air for three Airbus 310 and one Airbus 300-600. The contract covers airframe maintenance, component overhaul and component exchange for a period of five years. Contract value is about S$40 million.
January 2001 > SIAEC broke ground for the Company’s third hangar. Located adjacent to the two existing hangars and costing S$25 million, Hangar 3 is targeted for completion in the 2nd quarter of FY2001/02. The new hangar will be specially equipped to handle Boeing 777 heavy maintenance checks.
FY 2001 > Contract signed with Atlas Air for the heavy maintenance of its Boeing 747-200/300 fleet.
October 2001 > First heavy maintenance on an SIA B777-200 aircraft in brand new third hangar at Changi Airport. Reduction of “D” check duration from 31 to 20 days.
October 2001 > Standard Work Implementation introduction; resulted in improved productivity as cycle times are reduced through the use of improved processes.
March to July 2002 > Modification programme to improve the reliability of video and audio in-seat entertainment systems (System 2000E) on board SIA’s B777, B747-400 and A340 aircraft.
FY 2003 > Several new customers, including Air Asia, Pegasus Aviation, Air France and Iberia L.A.E., were added to customer base, which includes Atlas Air, Air Canada, Asiana Airlines, Biman Bangladesh Airlines, Polar Air, Air India, Federal Express and China Northwest.
FY 2003 > Signed a 7-year airframe maintenance contract with Air Asia, covering its fleet of five B737-300 planes. Completed “C” checks, modification and painting on two of Air Asia’s B737 airplanes.
May 2002 > The first two SIA B747-400 aircraft were retrofitted with SpaceBeds, while the first two B777-200ER aircraft were retrofitted in July 2002. The in-flight entertainment system was also upgraded to the new-generation Matsushita S3000 system.
August 2002 > NDT laboratory received a certificate of accreditation from the Singapore Accreditation Council (SAC). This is in recognition of our achieving the SAC-Singapore Laboratory Accreditation Scheme (SAC-SINGLAS) accreditation ISO/IEC 17025. The SAC-SINGLAS accords formal recognition to laboratories that have demonstrated technical competence and capabilities in performing specific services in calibration and testing.
FY 2004 > Clinching of new contracts from airline operators, such as Air Europe, Air Pacific, Air Plus Comet, China Eastern Airlines, China Northern Airlines, Debis Air Finance, Dubai Air Wing, Global Supply Systems, Iberia, Islandsflug and Northwest Airlines.
July 2003 > Training for the handling and maintenance of the airframes and engines of SIA’s new Airbus 340-500 aircraft.
February 2004 > Special on-the-job training was conducted by Goodrich’s engineers to assist us in broadening our knowledge of the A340-500 undercarriage systems.
February 2004 > Commenced construction of Hangars 4 and 5, with investments of S$120 million. Plan is to raise airframe maintenance capacity by 30%.
May 2004 > Embarking on B747-400 passenger-to-freighter (PTF) conversion as part of our strategy to offer a complete suite of MRO services in Singapore.
May 2004 > SIA Engineering Company received the CAAS Limited Design Organisation Approval (LDA) to perform limited engineering design and modification work on Singapore registered aircraft.
August 2004 > Successfully commissioned the $5 million Rolls-Royce Trent 500 Test Adaptation System to gear up for the Airbus A340-500 aircraft.
December 2004 > Eighth operational line established to optimise workflow and manpower utilisation. This line has its own painting, sheet metal and fibreglass repair capabilities within the hangar.
June 2005 > Fifth hangar operational, bringing overall hangar capacity to 43,200 square metres.
FY 2006 > Workshop division reorganized and renamed Component Services Division, which has 4 separate business units. Also merged our Hydraulics shop with our newest joint venture Aerospace Component Engineering Services (ACE Services)
December 2006 > Among the first MRO players in the world to gain the capability of servicing the Boeing B777-300ER, an extension of the highly popular B777 series.
FY 2007 > Signed a 10-year Integrated Materials Management (IMM) agreement with Boeing. Under the agreement, the aircraft manufacturer takes
responsibility for purchasing, inventory management and logistics for expendable aircraft parts used to support our MRO activities.
FY 2008 > Extended our FMP territorial coverage to Australia to support Tiger Airways. The FMP contract with Cebu Pacific Air was also extended to cover an additional 18 aircraft.
November 2008 > Commenced construction of first narrow-body hangar at Clark International Airport, Phillipines.
February 2009 > Inked an agreement with Saigon Ground Services to establish a jointly owned line maintenance facility at Tan Son Nhat International Airport at Ho Chi Minh, Vietnam. Plans are in the pipeline to expand to other airports in Vietnam and to scale up operations to provide heavy maintenance when conditions are right.
March 2009 > Clinched major contract with Bahrain’s Gulf Air to manage its Airbus fleet of more than 40 aircraft (comprising A320, A330 and A340).
September 2009 > Opened first heavy maintenance facility outside Singapore (JV with Cebu Pacific Air). Based at Clark International Airport in the Philippines to provide maintenance services for Cebu Pacific Air’s Airbus fleet, the facility has completed 15 ‘C’ checks by March 2010.
Hangar Specializations
Hangar 1 > B747 heavy maintenance and modifications
Hangar 2 > Airbus and narrow-bodied Boeing aircraft heavy maintenance
Hangar 3 > B777 heavy maintenance
Hangar 4 > B747 Passenger to Freighter (PTF) conversions
Hangar 5 > B747 heavy maintenance and modifications
Hangar 6 > A380 Aircraft
Line Maintenance
Brief Description of Business Activities
This division provides aircraft certification and ground handling services to an international client base; while a dedicated team of engineers and technicians also provided dedicated cabin management services to ensure high despatch reliability for in-flight entertainment and cabin systems.
History and Development of Division
April 2000 > Line Maintenance Division added Transmile Air from Malaysia to its client base of more than 60 airlines at Singapore Changi Airport.
September 2000 > Base Maintenance Division carried out an Airbus 310 “C” check for new customer Emirates from the United Arab Emirates.
December 2000 > Line Maintenance Division commenced technical handling services for new customer Airwagon from Indonesia.
FY 2002 > Invested in capital equipment that helped boost productivity and
work efficiency: a platform for window change operations as well as fuel tank purging equipment.
FY 2003 > Welcomed 6 new airline customers; Air Macau, Australian Airlines, Gemini Air Cargo, Pacific Airlines, Orient Thai and Xiamen Airlines.
FY 2003 > Expanded work scope by undertaking maintenance of inflight entertainment systems and major component changes, such as landing gears and engines.
September 2004 > Implemented the concept of Cluster Operations to improve operating efficiencies
August 2005 > Implemented a computerised system for manpower allocation known as the Dynamic Resource Assignment Module (DRAM). Line Maintenance is able to present the flight and manpower allocation plan on a central display system called the Flight and Resource Information Display System (FRIDS). This gives everyone, including units in different locations, clear visibility of resource allocation.
FY 2007 > Successfully introduced the Integrated Maintenance Operations Control (IMOC). This is an integrated centre that monitors daily aircraft operations for customers under our FMP (Fleet Management Program).
January 2008 > SIA Engineering Company’s team of qualified A380 Licensed Aircraft Engineers and Technicians undertook the first 750-hour check for SIA’s first A380.
FY 2008 > Completed a total of three B747-400 conversions, which were delivered to Dragonair. We also significantly reduced the turnaround time from 163 days to 106 days with process improvements
As can be seen in the above, SIA Engineering Company has come a long way in the last 10 years in growing the business and its capabilities and competencies. It has managed to stay abreast of new developments in aviation, avionics and aircrafts and is always at the forefront of the newest technologies in the industry. And it manages to do all this through the formation of strategic partnerships and joint ventures, thereby keeping its capital expenditure minimal (in relation to its revenues).
The next part (Part 3) of this Analysis of Purchase will focus on SIA Engineering Company’s numerous subsidiaries, associated companies and joint ventures; including describing their evolution, principle activities, value-add and how they contribute to the Group’s growth. I will also be providing some compelling numbers to show the significance of these alliances and joint ventures to the Group.
Note: Just to inform all readers that the new value investing forum Value Buddies is now up and running! This is a continuation of the Wallstraits/Afralug forum which focuses on value investing. You can visit at this link and register to start reading all the threads!
2 comments:
Here is my kick.
Since it is already provided here, put the history of expansion since 2000, revenues, operating profits and margins side by side.
Exclude JVs and associates, last 10 years = all efforts not turned into profit. Or what if those efforts were not taken?
This is the business of MRO. Move forward, every player will face the same thread which include JVs and associates.
Hi Donmihaihai,
Thanks for the "kick". Point noted and taken into consideration. If you can, please wait for Part 3 on JVs and Associates; then perhaps you can start putting them "side by side" to compare.
And just a gentle correction - it's "threat", not "thread".
Regards,
Musicwhiz
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