SIA Engineering (SIAEC) has remained profitable, even as mass aircraft groundings and disruptions plague the Singapore air hub amid the COVID-19 crisis.

In its fiscal year ending March 31, the MRO arm of Singapore Airlines posted a net profit of S$193.8 million ($136 million), a year-on-year (YOY) improvement of 20.4%. 

Notably, SIAEC remained profitable for its last quarter, from January through March this year, despite the coronavirus outbreak, earning S$52.2 million—up 5.9% YOY—although revenue and operating profit declined 10.4% and 26.3% respectively. 

The Singapore government introduced a wage credit scheme and the job support scheme (JSS) which partially helped reduce Q4 costs by 9.1% YOY to S$215 million. Under the JSS, part of Singapore’s COVID-19 budget, the government will subsidize 75% of all employees’ monthly salaries, capped at S$4,600.

SIAEC said COVID-19 flight cancellations had impacted its line maintenance and fleet management revenue, which is based on flying hours. The most significant impact came in March when the number of flights handled at Changi dropped by 50%.

“Base maintenance unit and the engine and component segment were not immediately affected during the last quarter but are expected to be affected going forward,” SIAEC said in its report. 

The MRO provider is also wary of the financial situation of its airline clients. SIAEC has made higher doubtful debt provisions and also taken a write-down on some of its rotables to fair value. 

The company, which is highly dependent on the air traffic movements in Singapore and its 30-odd line maintenance stations in six other countries, expects the recovery to be slow. 

However, SIAEC described its balance sheet as “healthy” with a strong cash position and low borrowings, putting it in good position to weather the slump. Equity and assets now stand at S$1.6 billion and S$2 billion respectively. 

Over the 12-month period, SIAEC’s revenue decreased 2.6% YOY to S$994.1 million due to reduced airframe and maintenance work. Operating profit improved 19.2% YOY due to higher productivity and reduced costs from its ‘Transformation’ efforts. Costs were reduced 3.9% YOY to $926.4 million. Shares from joint venture companies—mainly from engines and components—also helped add S$127.9 million to the balance sheet.