SIA Engineering (SIAEC) narrowed its third-quarter operating loss on the back of an increase in MRO demand, but it has warned that its near-term operating margins could be impacted by ongoing supply chain challenges.
For the three months ended 31 December 2023, the MRO unit of Singapore Airlines posted an operating loss of S$3.4 million ($2.5 million), narrowing from the S$12.5 million loss in the year-ago period.
The company saw a 40.2% rise in operating revenue to nearly S$292 million during the quarter, outpacing a 34% rise in costs to S$295 million.
SIAEC says the number of flights handled by its Singapore-based line maintenance unit in December recovered to about 94% of pre-pandemic levels, up from 75% a year ago.
The company reported a net profit of S$26.9 million for the quarter, more than double the profit in the year-ago period. SIAEC attributes this to a higher share of profits from its associates and joint ventures.
SIAEC expects MRO demand to continue to rise as Asia-Pacific traffic recovers. Still, the MRO provider says supply chain challenges “have continued to affect turnaround times and output rates”.
It adds: “Headwinds from macroeconomic and geopolitical uncertainties, along with tight labour market conditions, may exacerbate inflationary pressures and supply chain issues, and impact our near-term operating margin.”
