SINGAPORE Technologies Aerospace (STAe) has gone ahead with the recapitalisation of its loss-making maintenance company ST Aviation Services (SASCO), after reaching agreement with partner shareholders Singapore Airlines (SIA) and Japan Airlines (JAL).
Under the restructuring plan, STAe has converted a S$20 million ($14 million) loan into preference shares in SASCO. STAe president Boon Swan Foo says that the airline partners have been "...asked to come in and help in other ways".
The airlines will inject more work into SASCO over the next year. JAL, which already uses SASCO for its Boeing 747 section 41 modifications, has committed additional work. SIA is likely to transfer work later in the year, as its own hangars reach capacity.
The two carriers each hold a 10% stake in the maintenance operation, while STAe holds the remaining 80% of ordinary stock, as well as its new preference shares.
STAe has been forced to act after mounting losses at SASCO drove the group's first half results for 1995 into the red. SASCO lost nearly S$18 million over the half.
A weak market and rising costs were compounded by the fact that little work had come from SIA, while JAL has been under pressure to keep work back in Japan.
According to STAe, the situation has begun to improve over the last three months, with the stabilisation of the US dollar and a firming up of work rates around the critical $45/h break-even point. SASCO's two-bay Changi hangar has therefore been working at capacity.
Source: Flight International
