Singapore Technologies Engineering Ltd (ST Engineering) today announced that its Aerospace arm and Vietnam Airlines Engineering Company (VAECO), a subsidiary of Vietnam Airlines Co Ltd, have incorporated a new joint venture company, Vietnam Singapore Technologies Engineering Aerospace Co. Ltd. (JVCo), in Vietnam.
The setting up of the JVCo, which establishes the Group's first presence in Vietnam, follows a Memorandum of Understanding announced on 26 April 2018. The JVCo was set up with a paid up capital of US$3.9m (approximately S$5.3m) to provide component Maintenance, Repair & Overhaul (MRO) solutions. ST Engineering has a 49% stake in the JVCo, with the remaining 51% held by VAECO.
The JVCo will leverage Vietnam Airlines' existing maintenance facilities at Noi Bai International Airport in Hanoi and Tan Son Nhat International Airport in Ho Chi Minh City by investing in new infrastructure for carrying out component MRO work at these facilities. The new component MRO facilities are expected to begin operations in mid-2019 to cater to Vietnam Airlines' requirements and the region's rising needs for aircraft component MRO services. These facilities will be equipped to support aircraft types including but not limited to the A320 Family, A350, Boeing 787 and ATR72, and carry out MRO work on pneumatics, hydraulics, electrical components, wheels and brakes as well as safety equipment.
"Asia is a key region driving the growth of the global commercial aerospace sector. A presence in Vietnam, which enjoys double-digit growth in the air travel sector, will enable us to better capture that growth with an expanded MRO network in the region," said Mr Lim Serh Ghee, President of ST Engineering's Aerospace sector. "Our partnership with Vietnam Airlines, which has existing maintenance facilities in the country, not only enables us to set up capabilities within a very short timeframe but also allows us to start operating with a ready base-load."
Through a global network of distribution centres, satellite stores and in-house and external repair shops, ST Engineering provides a wide range of aircraft component management and support services including its trademarked Maintenance-By-the-Hour programme. In addition to component MRO, ST Engineering has expertise that covers airframe and aerostructure MRO, which will help in the JVCo's future expansion into a wider range of aircraft maintenance solutions.
The setup of this JVCo is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.