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bring economies of scale to bear, says Chang,
adding that possibilities include access to the spares
pool, sale-and-leaseback deals and paying fees for
ST Aerospace also does work on other engines --
it has recently provided engine wash and on-wing
support for the General Electric GEnx, for instance.
Chang says that the ST Aerospace would like to
diversify into more engine types and is talking to
engine manufacturers. There are no serious talks on
the CFM LEAP-X engine yet, says Chang, but this
would certainly be of interest further down the line --
and something of a natural progression.
The issue of getting licences from OEMs in
general is certainly on the agenda. Chang says he is
happy with the current Airbus network and Boeing
Goldcare programmes -- ST Aerospace is involved
in both. "The problem is whether Airbus and Boeing
will take it beyond that. I think they'll have a stronger
proposition if they remain agnostic," he says.
"Airbus and Boeing are both very good aircraft
producers, but when it comes to the ad-hoc nature
of MRO, historically they have not proven to be
successful," Chang says. In any case, the real issue
for now lies with component suppliers, as suppliers
are becoming more reluctant to share data.
This is in part because of the growth of revenue-
sharing models for new airframes and the pressure
to make a return for shareholders. "They are under
pressure to control the aftermarket," notes Chang.
"But the other trend is unhappy airlines, especially
those that have their own MRO operations."
He adds: "In any case, it's not natural that you
control everything -- airlines have their own cost
pressure. Airline tickets are not priced according to
costs. It's a very artificial thing that the OEMs are
trying to force."
In terms of other airframe opportunities, ST
Aerospace has had discussions with Chinese
aircraft manufacturer Comac on aftermarket service
provision. There is involvement with the ARJ21
regional jet, but for the C919 jetliner, Comac has
opted for Fokker Services.
"But the C919 has the LEAP-X engine," Chang
notes. "Are we going to be a LEAP-X support
provider? That's part of bigger question. We would
ST Aerospace also offers component support for
Bombardier Q400 turboprops for Air Phil Express
and some European carriers and is interested in
adding ATR capability.
"We're looking at it - they've been successful in
this region. We're doing well on Q400 so why not
ATR?" Chang asks, adding that Maintenance-By-the-
Hour component support is the most likely scenario.
In the meantime, the Boeing 757 freighter-
conversion programme continues to provide a steady
stream of work. As of the first quarter this year, 53 of
87 converted 757 freighters had been delivered to
FedEx -- a contract that will provide work until 2016
at least, with some 17-18 deliveries a year. Another
15 757s from an "unnamed customer" bring the total
number of 757s up for conversion to 102.
ST Aerospace clearly has plenty of work lined up
-- and is working hard to ensure that continues to be
the case, wherever in the world it operates.
ST Aerospace broke ground for Hangar
800 at its Seletar Aerospace Park facility
earlier this year, where it is constructing a
dedicated hangar for business and general
aviation (GA) maintenance.
The new hangar will double its business/
GA capacity at Seletar to around 24
aircraft at any one time. Hangar 800,
which is being built on the site of the first
hangar ever built by ST Aerospace back in
the early 1980s, will have a floor area of
3,960 square metres. It will also cater for
air charter services.
ST Aerospace supports various aircraft types
in the business aviation and GA sectors,
including helicopters. It also has approvals
from all key civil aviation authorities.
Next to Hangar 800, ST Aerospace is
developing a training and support centre on
23,100 square metres. This will eventually
house six full-flight simulators and one, full-
size, fixed-base simulator. This is designed
to cater for the newly legislated Singapore
Multi-crew Pilot Licence (MPL) programme.
ST Aerospace's commercial pilot training
arm, ST Aerospace Academy (STAA)
successfully completed Singapore's first MPL
programme for Tiger Airways last year.
The new site will also house a VIP lounge and
handling facilities for air charter customers.
The Boeing 757 freighter-conversion programme continues to provide a steady stream of work for ST Aerospace.
"The question is, if we don't have an
internationally competitive cost structure
for component repair in Europe, do we
continue to do it there." -- ST Aerospace
President Chang Cheow Teck
ST Aerospace saw its 2011 revenue inch up
3% to S$1,927 million (US$1,541 million),
while earnings before interest and tax were
4% higher at S$242.1 million.
The component/engine repair and overhaul
business saw higher revenues and there were
more project milestone completions in the
engineering and materials services business
group. This was partially offset, however, by
lower revenue in the aircraft maintenance and
modification business and the impact of a
weaker US Dollar.
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