ST Engineering's aerospace arm bags S$1bln contract

ST Aerospace will provide comprehensive engines maintenance and engineering support for Jet Airways’ 143 CFM56-7B engines.

ST Engineering announced on Mar. 31 that its aerospace arm, ST Aerospace, has been awarded a Maintenance-By-the-Hour (MBHT) contract by Jet Airways (India) Ltd for the support of Jet Airways' CFM56-7B engines that power Jet Airways' and JetLite's fleet of 67 Boeing 737 next generation aircraft. The contract is worth US$750m (S$1.0b) and will commence immediately.

Under the agreement, ST Aerospace's wholly owned subsidiary, ST Aerospace Engines Pte Ltd, will provide comprehensive engines maintenance and engineering support over 10 years for Jet Airways' 143 CFM56-7B engines, which includes the fleet operated by Jet Airways' low cost carrier subsidiary, JetLite Limited. Work for both airlines will involve off-wing, on-wing and on-site support, as well as fleet technical and asset management support. This 10-year agreement will provide a high standard of maintenance quality with improvement in technical reliability and longer on-wing life of the engines.

"We are pleased to award ST Aerospace this engine MBHT contract for our CFM56 engines. Having worked with ST Aerospace over the years, we appreciate the excellent quality of its maintenance support, performance levels and high dependability. We are therefore happy to extend our working relationship with ST Aerospace through this agreement. We are confident that as a leading MRO service provider, ST Aerospace will be a reliable partner as we expand our operations," said Nikos KARDASSIS, CEO, Jet Airways

"The award of this contract by Jet Airways and JetLite is a strong attestation of its confidence in our support for Jet Airways' and JetLite's maintenance needs. We are pleased that Jet Airways is happy with the level and quality of services that we have consistently provided, and appreciate the award of this contract that enables us to extend the support we provide to its operations. We are committed to building long term relationships with customers and look forward to delivering more engineering and maintenance services to help Jet Airways achieve its vision," said TAY Kok Khiang, President, ST Aerospace.

Jet Airways' relationship with ST Aerospace began in 1993 when ST Aerospace provided component services to its Boeing 737 Classic fleet. Service support extended to airframe MRO and in 2007, to engines when the first two CFM56-7B engines were inducted. ST Aerospace has since completed more than 40 engines under a time-and-material agreement for Jet Airways' CFM56-3 and CFM56-7B series of engines.

The award of this contract marks a significant milestone for ST Aerospace engine business. ST Aerospace started maintaining CFM engines since 1999, and today has capabilities for CFM56-3, -5B and -7B engines. ST Aerospace manages over 500 engines on the MBHT basis as well as more engines on a time-and-material basis for a large number of airlines. It continues to grow its repertoire of services and customer base.

With the partnership with GE Aviation and CFM International announced in 2008, ST Aerospace further value-adds to the support it provides to customers through its Engine Total Support solution, leveraging the materials support and engineering data from Original Equipment Manufacturers (OEM). CFM56 engines are a product of CFM International (CFM), a 50/50 joint company between Snecma (SAFRAN Group) and General Electric Company.

This contract is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.