SIA Engineering, France’s Safran in US$118 million JV for aircraft engine maintenance in Singapore

[SINGAPORE] SIA Engineering Company (SIAEC) has partnered French aerospace giant Safran Aircraft Engines in a US$118 million joint venture (JV) to set up a full-fledged aircraft engine shop in Singapore.

This will provide maintenance, repair and overhaul (MRO) services for CFM Leading Edge Aviation Propulsion (Leap) engines, the engineering arm of Singapore Airlines said in a bourse filing on Saturday (Jun 6).

Safran will hold a 51 per cent equity stake in the JV, while SIAEC will own the remaining 49 per cent.

Currently, SIAEC performs quick-turn maintenance for Safran’s Leap engines at its Aircraft Engine Services facility in Changi North.

These operations will be folded into the new JV, “forming the foundation for a future state-of-the-art engine MRO facility”, said SIAEC.

The new facility will increase engine servicing capacity and broaden the range of maintenance services available for Leap-1A and Leap-1B engines, said SIAEC. These engines power the Airbus A320 neo family and Boeing 737 Max aircraft.

Financial effects

Of the estimated US$118 million in investment, SIAEC will contribute up to US$57.8 million  – including US$13.7 million in in-kind contributions – and Safran up to US$60.2 million. Further capital injection can be made in one or more tranches.

If SIAEC had made the total contribution of US$57.8 million on Mar 31, its consolidated earnings per share would have increased by around 6.5 per cent to S$0.1608, said the group.

Meanwhile, the group’s consolidated net asset value per share would have risen 0.6 per cent to S$1.579.

Wong Yue Jeen, SIAEC chief commercial officer, said the JV builds on the group’s Leap 10-year engine maintenance services agreement with Safran, signed in 2019, to provide engine maintenance services to the French manufacturer. 

It also combines Safran’s original equipment manufacturer expertise with SIAEC’s “MRO excellence”, Wong noted.

This will help meet growing demand for Leap engine servicing in the Asia-Pacific region, added Safran executive vice-president of support and services Nicolas Potier.

Shares of SIAEC closed flat at S$3.18 on Friday, before the announcement.