SIAEC Stays Profitable, Faces Multiple External Pressures
SINGAPORE—Singapore Airlines Engineering Company (SIAEC) remained profitable for the three-month period ending June 30 thanks to strong revenue from its joint ventures.
The MRO provider’s primary business operations were dragged down by the reduction of wage subsidies offered by the Singaporean government, although revenue did increase 37% year-on-year (YOY) as flight operations at Singapore Changi Airport started to recover.
During SIAEC’s fiscal 2022-23 first quarter—which began April 1—line maintenance work more than doubled YOY from 9,755 to 20,281, while light checks increased from 85 to 118. Total revenue increased 37% to S$172 million ($124 million), although costs kept pace at S$176 million as the subsidies tailed off, resulting in an operating loss of S$4 million. SIAEC said excluding the impact of wage support, its operating performance improved S$16.4 million.
Joint-venture earnings increased 10.8% YOY to S$16.4 million, giving SIAEC a net profit of S$12.8 million, although this was down 11.7% compared to the same period in 2021.
“Apart from North Asia, rising infections have not appeared to dampen the demand for international travel,” SIAEC said. “However, many challenges remain that can affect the pace of recovery, including the growing manpower crunch in the aviation industry, macroeconomic risks of rising inflation, higher interest rates and recession, supply chain disruptions arising from the Russian-Ukraine conflict, as well as possible threats of outbreaks from new COVID-19 variants.” Additionally, supply chain issues had delayed component deliveries to SIAEC’s joint ventures, the company said.
SIAEC said it will “exercise financial prudence” as the Singapore government ceased all wage support as of July 2022. During the height of the pandemic, the government subsidized aviation wages by as much as 75%. This amount has been slowly tapering off to 10% over the last quarter as the situation improves in Singapore.