SIA Engineering Takes Full Control Of Airbus JV, Cuts Exec Pay Again
The virus crisis is having some very strong impacts on aviation companies in Singapore, a major aircraft maintenance center hit hard by the drastic cut in cross-border passenger travel in Asia-Pacific.
SIA Engineering, the MRO arm of Singapore International Airlines, has acquired the remaining 35% of capital of Heavy Maintenance Singapore Services, which has been its joint venture with Airbus Services Asia Pacific, a wholly owned subsidiary of Airbus.
The JV began in October 2016 to provide airframe maintenance, cabin upgrade and modification services for Airbus A380s and A350s in Asia-Pacific and other regions.
The acquisition followed a joint review of the business in view of the COVID-19 pandemic. SIA paid its former partner S$1.00 in cash for nearly 10 million shares, “taking into consideration HMSS’s financial position,” the acquirer says. SIA Engineering also received more than S$7 million in cash pursuant to termination of the joint venture agreement.
The book value of the shares acquired was about S$900,000 (US$658,324), and net tangible assets attributable to the shares about S$100,000 (US$73,147).
SIA Engineering says it and Airbus will continue to collaborate on projects and consider joint opportunities.
Another consequence of virus stress is more pay cuts at SIA Engineering. Senior management has decided to take a further pay cut of 5%, effective Aug. 1, 2020. These cuts are in addition to previously announced pay cuts.
For senior vice presidents, the executive vice president and the chief executive officer, total reductions will increase from the current 15-25% to 20-30%.
The company says it will stay nimble, adjust to the evolving situation and maintain adequate liquidity. It has invested in Lean methods and digital transformation to improve productivity.