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Singapore Technologies Aerospace Gains Long-Sought China Foothold
Singapore Technologies Aerospace president Tay Kok Khiang has
finally realized one of his long-term goals by establishing a
maintenance, repair and overhaul operation in China.
Through a new joint venture with China Eastern Airlines, ST Aero
will establish an MRO facility in Shanghai that will initially
focus on the airline's Airbus aircraft but later be expanded to
Boeing airliners. China Eastern "is one of the premier airlines
in China," Tay noted. He described the JV as the formulation
of a strategic relationship that, in time, is likely to allow
ST Aero to establish other MRO centers in the country.
The company will court other partners in China, although China
Eastern will be the main partner for the time being. Tay shares
Boeing's and Airbus's vision that the China market will eventually
register significant growth.
The JV should start operations later this year. Progress on establishing
the business was slowed by the SARS illness, which has complicated
travel in Asia. However, Singapore and now Hong Kong are off the
World Health Organization's SARS-watch list, and all of China
should follow in two weeks, allowing progress to be made, he added.
The turn-around in the SARS situation should be good news for
airlines and therefore for ST Aero, Tay noted. The development,
in addition to conclusion of the Iraq war and signs of economic
recovery, make him hopeful that business prospects will improve
in the next 6-12 months. "Things look brighter at the moment,"
he noted, but how fast the recovery might be is still unclear.
While Tay's main objectives for his Le Bourget visit are the usual
customer meetings and fostering relations with original equipment
manufacturers, the company also has been able to announce a new
deal. ST Aero and Honeywell International on Monday signed an
agreement to expand the work ST Aerospace Engines and ST Aerospace
Systems do as authorized service centers for the repair and overhaul
of T53 engines and Honeywell lighting and electronics equipment.
As part of its growth strategy ST Aero last year acquired Dee
Howard Aircraft Maintenance. The integration of the Texas-based
MRO facility that was in bankruptcy is progressing well, Tay said,
although maybe not quite as fast as he'd have preferred. However,
by next year he expects the unit to be well positioned.
The flurry of deals isn't diminishing Tay's appetite for more
agreements. "We will always be digesting [acquired units]
as well as eating [new ones]," he said.
By Robert Wall
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