(07-11-2014, 10:28 AM)hongonn Wrote: [ -> ]Thanks csl123, still have some enquiries 
I supposed the engine check is enforced by the regulation authority and it shouldn't subject to what model or what technology that your engine used. After certain flight hours it will still required to be checked, enforced by the rule? In this case airlines are the ones to approach regulators asking for check extension, not because regulator has changed the flight hours?
I also wonder what is exact technology invented to give engines less maintenance? Hehe based on my car experience, in fact the engine parts are made smaller, cheaper and shorter life span, and easily replaceable. I thought manufacturers are more focus on engine fuel efficient than maintenance.
On-wing friendly you mean instead of sending the engine to workshop, now they can overhaul the engine on the wing? Are they still performing the same check and any impact to the price? Less labour cost for dismantle the engine from the wing?
The regulatory overhaul requirements are enforced. But it is the OEMs of the engines (GE, RR, CFM and P&W) to propose the overhaul requirements based on their certification of the engines. The airlines/MRO needs to demonstrate the compliance to the overhaul requirements.
For on-wing, in the good old days, the people working in the line are unable to perform indepth troubleshooting, due to technological limitations. More than often, these engines are sent for overhaul or hospital visits. But pressures from the airlines have forced engines OEM to "push the workshop forward" into the line through better engine diagnostics and in-situ inspections. This improves engine on-wing time and maximise availability on the aircraft.
If SIAEC and engine JVs are not pushing for on-wing collaboration with engine OEMs, the Company will be in serious trouble. I think the declining revenue will be permanent when all the older engines (PW4000, GE90 and Trent 700-800) are being phased out.
(07-11-2014, 10:01 AM)specuvestor Wrote: [ -> ]^^ Nice analysis 
I got to ask my friend who works in the aircraft engine industry on how it works
Do you think SIA and Tiger woes is overflowing into SIAEC?
Yes.
Tiger is an FMP customer for SIAEC. Tiger's woes will definitely impact SIAEC through lower revenue and/or credit issues for the FMP program.
Declining maintenance requirements (both extension of heavy checks and engine overhaul) increasing MRO competition means lower cost for SIA and other airlines. But this will be a problem for SIAEC.
SIA owns ~80% of SIAEC. But SIAEC has about 50% of its business from other airlines. I think the declining profitability of SIAEC will be more severe than the gain for SIA.
I doubt Tiger has business of even 5% of SIAEC revenue. Wiith decline, is like 1 or 2% hit only. It could be industry wide situation.
With lower oil price, the business maybe back soon ?
(07-11-2014, 12:08 PM)corydorus Wrote: [ -> ]I doubt Tiger has business of even 5% of SIAEC revenue. Wiith decline, is like 1 or 2% hit only. It could be industry wide situation.
With lower oil price, the business maybe back soon ?
Yes for Tiger likely has less than 5% of SIAEC. But the question is whether there is an impact.
Oil prices has higher relevance for airlines rather than MROs.
The difficulties facing SIAEC is 1) changing business nature of MROs due to improving aircraft technological and design 2) Increasing MRO competitions
Increasing or not, competition is always there. Unless there is an overwhelming competitor into the market, it is irrelevant
But I think the on-wing servicing would be what I consider "what-is-new"
The value chain effect of SIA and Tiger losing competitiveness will affect SIAEC because of diminished hub effect. As I wrote on SIA thread, SIA problem is not going to be a singular company problem... There is strategic 2nd and even 3rd order impact
I'm also wondering what % of bottomline does SIA and tiger contribute, with 50% sales.
(07-11-2014, 06:59 PM)specuvestor Wrote: [ -> ]Increasing or not, competition is always there. Unless there is an overwhelming competitor into the market, it is irrelevant
But I think the on-wing servicing would be what I consider "what-is-new"
The value chain effect of SIA and Tiger losing competitiveness will affect SIAEC because of diminished hub effect. As I wrote on SIA thread, SIA problem is not going to be a singular company problem... There is strategic 2nd and even 3rd order impact
I'm also wondering what % of bottomline does SIA and tiger contribute, with 50% sales.
Increased competition reduced profitability, this is business 101. Particularly in this case, large OEM competitors are moving into MRO space.
Ya large OEM going into the space is significant. But a generic "competition is increasing" usually is broker's speak for they dont know what happened
Porter's 5 forces is always there, it is irrelevant to quote it unless details of dynamics is given. Thats what i mean.
IMHO the structural change in on-wing servicing and SIA/ Tiger woes are the catalysts
(07-11-2014, 09:08 PM)csl123 Wrote: [ -> ] (07-11-2014, 06:59 PM)specuvestor Wrote: [ -> ]Increasing or not, competition is always there. Unless there is an overwhelming competitor into the market, it is irrelevant
But I think the on-wing servicing would be what I consider "what-is-new"
The value chain effect of SIA and Tiger losing competitiveness will affect SIAEC because of diminished hub effect. As I wrote on SIA thread, SIA problem is not going to be a singular company problem... There is strategic 2nd and even 3rd order impact
I'm also wondering what % of bottomline does SIA and tiger contribute, with 50% sales.
Increased competition reduced profitability, this is business 101. Particularly in this case, large OEM competitors are moving into MRO space.
hi csl123,
My general understanding as an outsider is that large OEM competitors have been around for the longest time but generally, they prefer to form JVs with pure MRO players or airlines to carry out the 'dirty' work. Particularly for SIAEC, it is dependent on its parentage (SIA) to form alliances with the various OEMs. Therefore, as you mentioned "OEM competitors are moving into MRO space", would you actually mean (1) OEMs are going at it alone now, (2) OEMs are providing more after sales services than before.
scanned through some news and i do observe some of the OEMs winning contracts on their own (esp UTC):
http://www.mro-network.com/news/2014/08/...racts/3635
http://www.mro-network.com/news/2014/05/...rdier/3150
http://www.mro-network.com/news/2014/02/...gines/2625
http://www.mro-network.com/news/2013/06/...tract/1040
^^ asked my friend who is in the airline engine maintenance industry. Incidentally he said the same as weijian.
In addition he do not think the on-wing servicing is big deal as it all depends on clients' request. Major repair will still need the engine to be removed vs on-wing routine maintenance
The major threat is actually the airlines forming their own maintenance team once their scale is large enough for eg Emirates
Nonetheless it is a good highlight to monitor the situation going forward as per our discussion
(09-11-2014, 10:33 PM)specuvestor Wrote: [ -> ]^^ asked my friend who is in the airline engine maintenance industry. Incidentally he said the same as weijian.
In addition he do not think the on-wing servicing is big deal as it all depends on clients' request. Major repair will still need the engine to be removed vs on-wing routine maintenance
The major threat is actually the airlines forming their own maintenance team once their scale is large enough for eg Emirates
Nonetheless it is a good highlight to monitor the situation going forward as per our discussion
You need to ask him how overhaul shops treat engines which require major repair services (repair and diagnostics) and why airlines are unhappy with the way overhaul shop treat these engines. Only then you will understand on-wing and engine-hospitals value proposition.
As far as I understand, there is no threat of airlines providing mro services. Emirates has all along have their own mro services. So they are not new competition. Besides, emirates mro is only for emirates aircraft only. They are not expanding for third party business.