Singapore Technologies Aerospace (STAe) has bounced back into profits with a better-than-expected year-end result, boosted by an up-turn in commercial business and stronger earnings from associate companies.
The Singapore company made a net profit of S$27.8 million ($19 million) in 1996, turning around a loss of more than S$48 million. Sales climbed by 9% to S$523 million, largely because of a recovery in the civil- aircraft maintenance and overhaul business.
ST Aviation Services (SASCO) and its US-based subsidiary Mobile Aerospace Engineering (MAe) received a major boost on the back of major new contracts from FedEx and Northwest Airlines, while maintenance work rates over the year have risen from $40 an hour to $45 - STAe hopes they will climb to $50.
"To many people, this is confirmation of a turnaround in the maintenance cycle, but how much higher it goes is another matter," cautions a James Capel analyst. Among commercial businesses, STAe also earned S$4.5 million from its joint venture in the 1996 Asian Aerospace show.
Despite cost cutting over the past year, the performance of STAe's Military Business Group continued to lag, although it made a S$7 million profit, largely because of the recovery of S$4.5 million worth of bad debts. Analysts say that the company is still owed a further $26 million, mostly from defence contracts.
Emboldened by its improved performance, STAe is set to invest heavily in commercial businesses. SASCO is adding a third maintenance bay at Paya Lebar and is looking to expand MAE either at Mobile, Alabama, or at a new site in the USA.
A new aircraft-leasing business, ST Aviation Resources, is also planned, as well as a 5% stake on the proposed Sino-European AE-100/A318 development. Parent company Singapore Technologies and sub-partner Taiwan will each take another 5%.
Source: Flight International
