SIA Engineering Company (SIAEC) reported a $19 million loss for the 1HFY2020/2021 ended September, a decline of $106.6 million from the $87.6 million in earnings a year ago.

This was mitigated by government support schemes, especially the Jobs Support Scheme (JSS), without which, SIAEC would have recorded a loss of $114.6 million.

Basic loss per share was 1.69 cents for the current period compared to earnings per share of 7.82 cents the year before.

Revenue for the half-year period saw a 56.5% drop y-o-y to $223.0 million due to a reduction in the group’s business activities as a result of low flight activities and widespread grounding of aircraft.

Group expenditure also fell 47.4% y-o-y to $250.2 million on reduction in manpower costs and subcontract costs. Manpower costs were reduced mainly through a set of staff measures that included salary cuts, furlough, no pay leave, release of contract staff as well as voluntary Special Early Retirement Scheme.

Share of profits of associated and joint venture companies registered a 46.8% y-o-y drop            to $28.4 million. The engine and component segment saw profit of $37.9 million, while the airframe and line maintenance segment saw a loss of $9.5 million.

SIAEC says contributions from associated and joint venture companies remained negatively impacted by the reduction in flying hours and extended maintenance intervals. This was partially offset by cost saving measures and government support.

The group also recognised a non-cash impairment loss on its base maintenance unit’s assets of $35.0 million. This was due to          significant decline in hangar revenue projects brought about by lower flight hours, a large number of aircraft taken out of operations and parked, and the likelihood of the parked older generation aircraft not returning to operations.

As at Sept 30, equity attributable to owners of the parent saw a 5.6% y-o-y decrease to $1.54 billion due to the payment of the final dividend in respect of FY2019/2020, a loss in foreign currency translations due to the weakening of the US dollar and losses incurred for the period.

Net asset value per share as at Sept 30 was 137.1 cents.

During the same period, cash and cash equivalents stood at $514.9 million.

There are no dividends declared this quarter due to the group’s weak performance and need to conserve cash.

Due to the Covid-19 pandemic, the number of flights handled by the group’s line maintenance unit in Singapore was only 14% of the number handled in the same six-month period in 2019.

Business in its overseas stations were similarly affected.

The number of flights handled in the second quarter was 16% of the same period the year before, which was only three percentage points higher compared to the first quarter.

Recovery of the MRO business, which is contingent on the recovery of the aviation industry, remains uncertain.

“The current forecast by the International Air Transport Association for full recovery to pre-pandemic levels is not expected till 2024, one year later than its previous forecast,” says the group in a statement via SGX.

“We are encouraged by the efforts of Singapore and various countries to revive air travel through the establishment of green lanes and air travel bubbles and hope that this would stimulate travel and higher flight frequencies into Singapore,” it adds.

“To emerge stronger in the post-COVID future, we are deepening and broadening the scope of our Transformation efforts, which have yielded positive results thus far. Under Phase 2, we have developed a pipeline of Transformation initiatives in digitalisation, automation and continuous improvement programmes like ‘Lean’.”

Shares in SIAEC closed 4 cents higher or 2.5% up at $1.67 on Nov 3.