ST Aerospace lags behind European MRO operators

Despite being the largest MRO operator, it lags behind in revenue terms.

ST Engineering's ST Aerospace ranks as top in maintenance, repair and overhaul (MRO) in man-hours terms but it faces heating up competition from European MRO operators.

According to UOB KayHian, whilst being the largest operator, ST Aerospace lags behind European MRO operators, Lufthansa Technic and AFI KLM in revenue terms, due to higher engine and line component revenue.

"While there has been a spate of M&A out of North America ( MRO Holdings and Aeroman and Flightstar Aircraft services) and Europe (ST Aerospace and EFW, Airbus’s MRO and conversion arm), the Asia Pacific region has yet to see meaningful consolidation," UOB KayHian noted.

The brokerage firm said that in fact, hangar capacity has been rising, particularly out of Indonesia and Philippines, both relatively low-cost centres. The region could see more
alliances with European MRO operators as evidenced by Lufthansa Technic’s MOU for airframe and engine component JV with Garuda Indonesia’s GMF AeroAsia.

"The latter is also building a 25,000sf hangar facility at Batam. This will pose a direct threat to Singapore’s leading MRO providers," UOB KayHian said.

More so, Singapore's MRO providers also faces threat from Thailand's announced plans to boost its MRO capability by inviting companies to set up operations and with Thai Technical, the MRO arm of Thai Airways mulling a JV with a top-tier MRO operator.