OPERATING REVIEW AND OUTLOOK Driving Efficiency To drive higher efficiency across our various businesses, we will increasingly leverage technologies that enable us to do more with less. For instance, at our aerostructures manufacturing facility in Baltimore, U.S., we are further digitising our supply chain and shop floor to enhance manufacturing processes, making them less manual and more paperless. In addition to using technologies to drive efficiency, we continually adjust and optimise resource allocation, such as by streamlining our freighter conversion sites and reallocating hangar capacity to support airframe MRO. Adding Value through Innovations Through continuous innovation in our products and solutions, we strive to better meet the market's evolving needs and deliver greater value to our customers. Seeding the future with our unmanned aircraft system solutions, we built on our drone portfolio to develop DrN-40, a fixedwing drone which can carry out middle-mile deliveries with longer endurance and heavier payload. At our engine MRO facilities, we implemented AI-powered solutions such as an Engine Health Monitoring programme, which empower our engineers with data insights to optimise customers’ engine maintenance schedules. We are increasingly using AI-powered solutions in our operations to empower our engineers and technicians with data insights. 2 Source: 2025 Commercial Aviation Fleet & MRO Forecast, Aviation Week Network OUTLOOK Barring unforeseen events, the aviation industry is expected to continue growing along an upward trajectory, driven by increasing fleet utilisation rates, fleet growth and higher passenger and cargo demand. Aviation Week2 predicts the global MRO demand to grow at a compound annual growth rate (CAGR) of 3.2% between 2025 – 2034. We expect our OE manufacturing business and MRO business to grow in tandem with the air travel market. With freighter conversion activity normalising after the surge in demand for cargo capacity during the COVID-19 pandemic, our P2F business is expected to sustain at a moderate pace. Nevertheless, challenges remain. After three years of facing COVID-19 and shortages in raw materials and labour, the aerospace industry continues to grapple with supply chain issues and a shortage of skilled technicians. The availability of essential aircraft parts and components has been challenging, leading to delays in deliveries and services. As airlines extend the operation of aircraft while waiting for the delivery of new aircraft, the shortterm unavailability of feedstock for P2F has also caused deferment of some freighter conversion inductions. OEMs and MRO providers hence need to navigate a rapidly shifting landscape with agility, adjusting their strategies to maintain service quality and operational efficiency. POSITIONING FOR GROWTH Despite ongoing challenges, our Commercial Aerospace team continued to innovate and adapt. The team remains steadfast in incorporating technological and digital solutions aimed at enhancing efficiency. We continue to enhance our supply chains through various proactive measures that mitigate risks and invest in talent development programmes to strengthen our global workforce. At the same time, we maintain nimble footing to align swiftly with market conditions and reposition ourselves to compete for work and seize growth opportunities. 30 ST ENGINEERING | ANNUAL REPORT 2024
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