ST Engineering Annual Report 2020

T he world economy entered a challenging period in 2020 due to the COVID-19 pandemic and the global aviation industry was one of the biggest casualties. Globally, airlines suffered from a plunge in air travel demand following widespread travel bans to curb virus transmission. Along with the global aviation sector, our aerospace business took a hit. Our Maintenance, Repair and Overhaul (MRO) and Original Equipment (OE) manufacturing businesses experienced lower demand, supply chain disruptions and efficiency declined due to travel bans, safe distancing and lockdowns. Although the pandemic caused passenger traffic volumes to plummet, air cargo was a silver lining as e-commerce continued to be robust. The phasing out of grounded passenger aircraft by airlines also created ample feedstock for freighter conversions; and we saw heightened interest in our Passenger-to-Freighter (PTF) conversion solutions. Amid the uncertainties, we focused our efforts on capturing new opportunities and readying ourselves for a recovery in the market. We continued to drive innovation – from smart MRO to unmanned solutions – and pursued collaborations with industry partners to develop new and improved solutions across MRO and aviation products to better support our customers. At the same time, we continued to strengthen our workforce by investing in skills upgrade and talent development programmes so that we are well prepared to catch and ride the recovery wave. Aircraft Maintenance & Modification During the year, we continued to build on our value proposition, focused on quality and on-time redeliveries to customers. These efforts paid off in the form of several multi-year contract wins for airframe MRO. Contracts included a multi-year heavy maintenance contract to support a Chinese cargo airline’s Boeing 767 fleet, a three- year heavy maintenance contract for Alaska Airlines’ A320 fleet and a five-year heavy maintenance contract to support an international air cargo carrier's multiple fleet types. Setting our sights on future needs and longer-term demands for airframe maintenance, we intend to stay the course in our expansion plans for our airframe MRO facility Executed first engine securitisation transaction to free up capital for future investments including engine leasing Expanded unmanned capabilities with new solutions, contracts and partnerships Boosted our conversion track record with the redelivery of the world’s first A321P2F WHAT WE ACHIEVED IN 2020 OPERATING REVIEW & OUTLOOK AEROSPACE / ST ENG I NEER I NG 38