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(I) Delivering Value in Turbulent Times
2003 was not an easy year for the aviation industry as a whole.
The Iraq War and the SARS outbreak caused a dip in demand that
negatively impacted many aviation companies, airlines and MROs
alike. However, bolstered by strong fundamentals, ST Aero’s
strategic direction and growth maintained a steady course despite
the downturn in the market.
Today, ST Aero is a global company with more than 5,000 employees
spread around the world. It has redelivered more than 3,500
commercial aircraft, 6,000 engines and 600,000 components over
the last two decades.
Many of ST Aero’s customers with global operations depend
on ST Aero’s support across the Asia Pacific, the US
and Europe. The ability to serve customers in multiple locations
is a significant benefit as the customers receive a consistent
and familiar level of service wherever they fly around the
world.
In March, ST Aero’s industry leadership was recognised
by the Overhaul & Maintenance magazine when the publication
ranked it as the world’s largest third party airframe
maintenance company.
In 2003, the ST Aero group capabilities were leveraged to
provide more balanced aviation solutions with integrated support
for aircraft, engines and components. ST Aero’s growing
global presence enabled it to make its one stop shop capabilities
accessible in more places than before. Customers enjoyed the
advantages of its comprehensive and unrivalled range of capabilities,
excellent design engineering expertise and materials power-by-the-hour
support across its growing global network.
Commercial and defence customers welcomed ST Aero’s
ability to deliver cost effective solutions. ST Aero’s
Maintenance-By-the-Hour™ (MBH™) programme, introduced
for AirAsia in 2002, was successfully extended across its subsidiaries
to Airline Rotables in UK and STA Supplies in Singapore in
2003.
As a result of the value added services it was able to provide,
ST Aero delivered another year of noteworthy performances.
All three business divisions – Aircraft Maintenance and
Modification (AMM), Component/Engine Repair and Overhaul (CERO)
and Engineering and Materials Services (EMS) – contributed
to the solid performance in 2003.
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(II) Extending the Suite of Capabilities
In 2003, ST Aero added to its already extensive suite
of capabilities by ramping up its repair capabilities
for all new narrow and wide-bodied Airbus, Boeing and
McDonnell Douglas (MD) aircraft types. It added the A330,
A340 and the B777 to its repertoire of capabilities and
increased its range of engine and component repair capabilities.
With this, ST Aero now offers maintenance support for
all Boeing and Airbus aircraft types in operation today.
On engine and component support, ST Aero further enhanced
its range of capabilities for the B737CG, B737NG, B757,
A320 and the MD-11 commercial components, including hydraulic,
fuel, pneumatic, instrument and electrical components.
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In the defence arena, it developed a wide range of
new capabilities for the F-16, KC-135 and CH-47 military
components, and additional repair and overhaul capabilities
for Bell 430 transmission components. New test facilities
including a Test Cell 4 for T55/T700 and CFM56-3 engine
types, and a Universal Fuel Component Test Stand for
components and engine accessories for the F100, F404,
JT5 and CFM56 were completed this year. Also added were
a F-16 Accessories Drive Test Stand and an Automatic
Test Equipment for Avionics Cards repair as well as test
facilities for various F-16 components.
ST Aero maintained its status as a highly sought after
authorised maintenance centre for key aviation Original
Equipment Manufacturers (OEMs). During 2003, STA Engines
and STA Systems, two of its subsidiaries, were appointed
authorised Honeywell service centres for the repair and
overhaul of its T53 engines, and Honeywell’s lighting
and electronics products respectively.
October marked an important milestone for ST Aero when
it celebrated the redeliveries of 2,000 aircraft to FedEx
Express (FedEx) from its global operations. ST Aero’s
MRO facilities in Singapore and the US are contracted
by FedEx to provide modification and heavy maintenance
support for the FedEx fleet of aircraft that includes
the MD-10, MD-11, DC-10, B727, A300 and A310.
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Longer term programmes involving international cooperation with
strategic partners help ST Aero’s engineers to constantly
renew and extend their engineering knowledge. One example was
a recent ST Aero and Boeing partnership on the design and development
of the passenger-to-freighter (PTF) conversion of its B757 aircraft.
ST Aero successfully completed all 17 aircraft redeliveries to
DHL.
ST Aero participated in a joint venture with Eurocopter
and China National Aero-Technology Import & Export
Corporation in China on a helicopter design and development
programme. The EC-120 project is 15% owned by ST Aero
and is another illustration of the Company’s
competencies and strength in engine design and development
for helicopters.
(III) Where Eagles Soar
ST Aero’s business of providing aircraft engineering
services to military forces around the world continued
to evolve.
The most significant engineering feat of 2003 was the
design of its very own unmanned air vehicle called FanTail.
The FanTail is a compact and light weight mini Vertical
Take-Off and Landing (VTOL) Unmanned Aerial Vehicle (UAV)
designed by ST Aero for urban reconnaissance and military
defence. During the year, it signed a Memorandum of Understanding
with an equipment OEM to jointly develop and conduct
fly off competition to supply a mini VTOL UAV to an overseas
customer.
In June, STA Systems and Parker Aerospace signed an
agreement to appoint STA Systems as the first authorised
Parker service centre for the repair and overhaul of
F-16 Integrated Servo Actuator in SE Asia. Setting
up the Parker ISA service centre is part of Parker
Aerospace and ST Aero’s strategy to enhance the
level of service to air forces operating the F-16.
ST Aero also successfully completed a flight test
of an advanced mission system integrated on a fighter
aircraft.
(IV) A Winning Way with Customers
ST Aero’s ability to continuously deliver excellent
quality, turnaround time responsiveness and value for
money, enabled it to retain key customers and attract
new ones. In preparation for increased customer demand,
ST Aero began the construction of three new hangars
for its ST Aviation Services Co (SASCO) and ST Mobile
Aerospace Engineering (MAE) facilities, which should
be ready in 2004.
In 2003, ST Aero consolidated its position as the
leading MD wide-body maintenance and modification facility
in the world, with more than 50 MD-11/DC-10 heavy maintenance
and PTF conversion redeliveries accomplished during
the year. They were carried out for customers like
FedEx, Northwest Airlines, United Parcel Service and
Biman Bangladesh Airlines (Biman). Having successfully
completed its B757 PTF programme for Boeing, it continues
to improve its turnaround time for MD-11 PTF conversions.
The Company remains confident of increasing its market
share of the engine repair and overhaul market in Asia
in 2004. It also expects to increase commercial engine
inputs from Europe and the Americas. On the military
front, ST Aero hopes to make further inroads with military
operators from the ASEAN, Indian subcontinent and Africa.
ST Aero also made progress in its EMS operations in
2003. Its MBH programme, together with its extensive
competence on the B737, A320, A321 and B757 aircraft,
helped to capture accounts and extend the number of
aircraft supported for both European and Asian customers
such as AirAsia, Flyjet and Islandsflug.
In 2003, ST Aero further extended its A320 capability
from its US facility, MAE, to its UK facility, Bournemouth
Aviation Services Company (BASCO), and ST Aerospace
Engineering (STA Engineering) in Singapore. STA Engineering
launched its A320 maintenance capability with the award
of ‘C’ Checks for Indian Airlines and Pacific
Airlines.
While MAE continued to build on its solid customer
base, San Antonio Aerospace (SAA) was just as successful
in completing three ‘C’ Checks for a European
customer, European Aviation Air Charter.
In April, ST Aero signed an Aircraft, Crew, Maintenance
and Insurance (ACMI) agreement worth over US$10m with
Biman to provide total aviation support for its B737-300
aircraft. ST Aero’s aviation spares and rotable
component specialist, STA Supplies, provided Biman
with ACMI support services for its two B737-300 aircraft
for one year. Biman is a long term customer with ST
Aero providing DC-10 ‘D’ Checks, component
maintenance and provision of aviation spares for more
than 10 years.
In July, ST Aero was appointed by AirAsia to provide
modification, maintenance support and engine MBH programme
for AirAsia’s newly purchased fleet of four B737-300
aircraft, at a total contract value of US$62.6m. STA
Engineering performed maintenance checks on AirAsia’s
four narrow-body aircraft to ensure it met the latest
airworthiness directives and installed avionics equipment,
single class seats, and painted to AirAsia’s
colours.
ST Aero’s engine overhaul specialist, STA Engines,
will provide AirAsia complete engine MBH services over
a 10 year period for the eight CFM56-3 engines used
on the aircraft, including engine condition monitoring,
repair and overhaul, field services support, engineering
support and spare engine support.
(V) Tapping New Opportunities
To tap into the identified growth potential in China,
ST Aero reinforced its global network of MRO facilities
with a joint venture with China Eastern Airlines (CEA)
in Shanghai in December 2002.
The joint venture company will involve a total investment
of US$98m, with ST Aero holding a 49% stake and CEA
owning the remaining 51%. ST Aero will manage the company.
It will be a commercial aircraft repair facility, providing
maintenance and modification services for Boeing and
Airbus aircraft from its facilities at Pudong Airport
and Hongqiao Airport when it begins operations in 2004.
It is expected to build up a capacity of more than
1.5 million manhours with a workforce of approximately
1,000 skilled engineers and technicians within five
years.
In October, ST Aero announced the closure of DalFort
Aerospace in view of its limited facilities capacity
and fit for the longer term needs of the group.
Despite the weak outlook for the aviation industry,
ST Aero did well to capitalise on its strong suite
of capabilities to provide total aviation support as
the global outsourcing trend increased. With extended
scope and continued conversion from existing customers,
ST Aero grew in capability and capacity despite the
difficult external environment.
(VI) Growing New Capabilities
ST Aero’s performance in 2003 ended on an upbeat
note with new wins and accomplishments. ST Aero is
determined to build and grow long term, mutually beneficial
relationships with customers around the world. Its
customers are globally-based and include many advanced
military forces, seven of the world’s 11 largest
airlines and all three of the world’s leading
freight carriers.
Beyond 2003, ST Aero will look to fortify its worldwide
network with the launch of its new joint venture with
CEA in 2004. In addition, it will continue to capitalise
on the global outsourcing trend and its ability to
address the needs of the low cost carriers segment
through value added services like the ones it is providing
to established airlines and freight forwarders.
Innovative, value offerings such as the MBH programme
and strong total aviation support capabilities will
stand ST Aero in good stead. With a consistent quality
of service and workmanship, ST Aero continues to serve
customers according to their needs for a broad range
of services across the globe.
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