SIA Engineering Group posted a -58.5 per cent year-on-year reduction in revenue in the third quarter of FY2020-21 (ending 31 December), to S$104.6 million.
Cost-cutting measures and government grants drove a reduction in group expenditure of -56.1 per cent to S$132.5 million, but this did not fully offset the reduction in revenue, SIA Engineering said.
Consequently, the group recorded a lower operating profit of S$1.1 million (-93.2 per cent) compared to S$16.1 million in the same quarter last year.
Share of profits of associated and joint venture companies was S$12.3 million, a -68.9 per cent reduction. Contributions from associated and joint venture companies were similarly impacted by the reduction in flying hours and extended maintenance intervals, partially offset by cost saving measures and government support.
During the quarter, an S$11.8 million impairment charge was made on the company’s investment in an engine programme.
Net profit was S$7.7 million for the quarter, representing a -85.7 per cent decrease compared to the same quarter last year.
Without government support, SIA Engineering said it would have recorded a loss of S$44.7 million.
Basic earnings per share and net asset value per share as at 31 December 2020 were 0.69 cents and 135.8 cents respectively.
“All business segments continued to be adversely affected by low flight activities and the reduction in the number of active aircraft,” said SIA Engineering. “The number of flights handled by the line maintenance unit at our Singapore base in the third quarter was 19.3 per cent of the same quarter last year, an increase of 3.3 percentage points quarter-on-quarter.
“The reduction in flying hours and lower work volume continued to impact on the fleet management business as well as our engine and component joint venture companies.”
During the quarter, SIA Engineering completed the integration of the operations of subsidiary Heavy Maintenance Singapore Services into its base maintenance unit. But the company said demand for aircraft maintenance checks remained weak, with most checks having lighter work content.
Looking ahead, SIA Engineering commented: “While many parts of the world are experiencing new waves of Covid-19 infections, the progressive rollout of vaccines offers hope of a gradual recovery of the aviation industry and the MRO business.
“Government support, especially the Job Support Scheme, has been critical during these difficult times. However, in the next quarter, [the scheme] will taper down to 50 per cent from 75 per cent. Amidst the uncertainty, we will continue to stay nimble and adaptable. We will remain focused on working closely with our partners and customers to jointly manage the challenges during this period, while prudently managing our cashflow and expenditure.
“We are accelerating Phase 2 Transformation efforts to boost our competitiveness in the post-Covid-19 MRO landscape with investments in digitalisation, technology and automation. The recently launched digitalisation initiative (SMART-MX) provides our line maintenance engineers with immediate access to information and decision support which improves efficiency. At the same time, we are focusing on proliferating Lean process improvements across the company, upskilling our staff to broaden their expertise, and developing a culture of continuous improvement.”
SIA Engineering also said it would continue to closely review the rationalisation of its portfolio of joint ventures and subsidiaries in the current environment, and “concurrently explore new investment opportunities for capability expansion”.
