MAINBOARD-LISTED SIA Engineering SIA Engineering: S59 +3.15% is looking at the market of stripping retired aircraft, a segment that the maintenance, repair and overhaul (MRO) services provider thinks there will be a need for in this region.

 

Ng Chin Hwee, chief executive officer of the group, shared at an analyst call on Monday (Nov 8) about its role of removing the variable components from aircraft for its parent company Singapore Airlines (SIA) in October.

 

Then, SIA had two of its superjumbo planes Airbus A380 and a Boeing 777-200 aircraft scrapped, and that was the first time the national carrier parted out its aircraft locally.

 

Ng stated that SIA Engineering helped to strip the variable components from the aircraft for re-use. " Certainly, this is an area that is of interest to us. We think that there is going to be a need for quite a bit of parting out in the industry in this region."

 

The company saw its business improve as flight activities picked up amid international borders reopening, and reported a net profit of S$10.5 million for the second quarter to September, reversing out of a S$29.7 million loss in the year-ago period.

 

While it saw its Singapore line maintenance unit handling 84 per cent more flights year on year in the first half, this represents only 25 per cent of the pre-pandemic workload. The pace of flight recovery remained slow, only up 4.1 percentage points, in the 6 months up to September.

 

And Ng noted: " Now, at this current point in time, the source of the flight activity improvement is actually coming chiefly from all the Singapore based carriers, basically Singapore Airlines. As you are well aware, all their VTLs are operating."

 

The company, however, does not see having more lanes under the quarantine-free vaccinated travel lane (VTL) arrangement " to be significant enough in recovery for us in flight activity" .

 

Singapore currently has VTL arrangement with a total of 13 nations, which accounted for 15 per cent of Changi' s annual passenger arrivals pre-pandemic, but the VTL quotas of up to 4,000 mean actual levels will be closer to about 5 per cent.

 

And in preparation for further recovery and as flight activities increase, SIA Engineering has rolled back manpower management measures.

 

While Ng cannot put a number on how the group' s manpower cost will grow as it all depends on activity, he said the costs will not be the same for the same level of activity pre-pandemic as its ongoing transformation is translating into improvements in operating performance through reduced costs and better manpower utilisation.