SIAEC under threat as engine business flounders

It makes up over 30% of SIAEC's profit.

Improved Trent-engine reliability has affected the aircraft MRO company's joint venture with Rolls Royce, jeopardizing 30% of the firm's net profit.

The increased reliability of Trent engines is a profit bane for SIA Engineering. Its joint venture with Rolls-Royce, which represents over a third of the firm’s net profit, has been affected by fewer shop visits from customers.

Analysts from Maybank Kim Eng are pessimistic of a meaningful rebound for this segment in the near future.

Meanwhile, concerns over its engine business are remedied by an expected uptick in maintenance workload from global airlines. This is on back of accelerating capacity development and a fleet retirement slow-down due to lower oil prices.

“MRO work could pick up as global airlines return capacity & slow fleet retirement. Small beneficiary of USD strength. However, engine headwinds persist on improved Trent-engine reliability,” said Maybank Kim Eng.