SIA Engineering eyes opportunities from Air India’s major aircraft orders

SIA Engineering is looking at tapping opportunities that arise from the transformation of Air India, which placed orders for 470 aircraft in 2023.

At the financial results briefing of SIA Engineering on Monday (May 13), Air India was mentioned several times as it appeared that the carrier owned by Indian conglomerate Tata Group could feature increasingly on the radar of the MRO (maintenance, repair and overhaul) subsidiary of Singapore Airlines (SIA) .

Already, on Saturday, SIA Engineering was appointed to be Air India’s strategic partner to develop base maintenance facilities in Bangalore, India. SIA Engineering is the exclusive partner to help Air India with designing and conceptualising the outfit.

Projected to be ready in 2026, the Bangalore facilities will comprise both wide-body and narrow-body hangars, including associated repair shops, to support Air India’s fleet.

This comes after the Singapore MRO player bagged a deal in February to provide extensive component support coverage for Air India group’s current fleet of Airbus A320 aircraft for 12 years. 

That contract was valued at US$180 million, SIA Engineering chief financial officer Ng Lay Pheng disclosed at the Monday briefing. She declined to reveal the profit margin.

SIA Engineering and Air India would share the same parentage if the merger of Air India and Vistara (the airline joint venture between SIA and Tata) secures regulatory approval.

SIA will own 25.1 per cent of the merged entity if the corporate action proceeds without hitches. 

The chief executive officer of Air India, Campbell Wilson, is also no stranger to SIA Engineering executives. He was a long-time SIA executive and last helmed SIA’s budget carrier Scoot before taking over the reins at the Indian carrier. 

While SIA Engineering said that it was too early to talk about investing in Air India’s Bangalore base maintenance facilities, its senior vice-president for partnership management and business development Wong Yue Jeen noted that there will be opportunities for MRO investments in component shops and engine shops to support the set-up.

“Watch this space. Let’s see how things develop,” SIA Engineering CEO Chin Yau Seng added.

SIA Engineering is not barred from providing MRO services to existing customer and Air India’s budget competitor IndiGo, which also placed orders for 500 Airbus A320 aircraft last year, and has an MRO facility near Air India’s Bangalore site. 

Meanwhile, SIA Engineering might be doing fewer heavy checks at its bases in Singapore and at Clark Air Base (in the Philippines) – 114 in FY2024 to March, and 126 in FY2023.

Chin pointed out that the absolute numbers do not tell the full story. This is because more Airbus A380s have been undergoing heavy checks, and these jumbo planes take up a lot more hangar time as these older aircraft and the B777s are kept flying amid production challenges faced by the plane-makers. 

SIA Engineering delivered an 11.5 per cent rise in earnings year on year to S$37.8 million for the second half of FY2024 to March, driven by robust aviation maintenance, repair and overhaul demand. Revenue was up 33.7 per cent to S$580.2 million for the period, the MRO group announced last Friday.

The counter was up 1.8 per cent or S$0.04 at S$2.33 at the market close on Monday.