(09-11-2014, 06:34 PM)weijian Wrote: [ -> ] (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
It is both actually. This includes engines, component and airframe OEMs. Often these OEMs engage Mro as subcontractors, or channel partners in a more elegant fashion. Either case, effect is revenue contraction or margin compression. The parent is exerting less influence for the next gen aircraft (a350 and b787), as the components, apus and engines are often sole source. This means the suppliers has greater bargaining power and they are not subject to SIA mercy.
(10-11-2014, 12:28 AM)csl123 Wrote: [ -> ] (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.
His sense is Emirates have been stealthily hiring capabilities past few years
in Singapore. We both feel that probably SIA woes is translating into margin squeeze for the aux services as well. I'll check with him again, bearing in mind he is talking from an engineering point of view, not a financial point of view
(10-11-2014, 10:00 AM)specuvestor Wrote: [ -> ] (10-11-2014, 12:28 AM)csl123 Wrote: [ -> ] (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.
His sense is Emirates have been stealthily hiring capabilities past few years in Singapore. We both feel that probably SIA woes is translating into margin squeeze for the aux services as well. I'll check with him again, bearing in mind he is talking from an engineering point of view, not a financial point of view
Emirates and most of the middle east carriers have been poaching skilled engineers, technicians and mechanics to support the growth of their own carriers. Middle East countries such as Qatar have 70-90% of their populations as expats/workers. They have had to hire from other countries for the expansion of their fleet. Europe and SEA are traditional sources of expats for these middle east carriers.
(10-11-2014, 10:19 AM)csl123 Wrote: [ -> ] (10-11-2014, 10:00 AM)specuvestor Wrote: [ -> ] (10-11-2014, 12:28 AM)csl123 Wrote: [ -> ] (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.
His sense is Emirates have been stealthily hiring capabilities past few years in Singapore. We both feel that probably SIA woes is translating into margin squeeze for the aux services as well. I'll check with him again, bearing in mind he is talking from an engineering point of view, not a financial point of view
Emirates and most of the middle east carriers have been poaching skilled engineers, technicians and mechanics to support the growth of their own carriers. Middle East countries such as Qatar have 70-90% of their populations as expats/workers. They have had to hire from other countries for the expansion of their fleet. Europe and SEA are traditional sources of expats for these middle east carriers.
From what I read in the post here,s the summary:
1) improved technology increasing maintenance intervals
2)0ems increasingly entering into MRO
3) increasing preference for processes like wing on
4)employee poaching and associated rising expense
5) airlines getting larger resulting in housing MRO services
Does anyone have anything to say postively about the long term of Sia engineering ? Can share?
I can only think of the pie ( more aircrafts) getting bigger.
Pls share.
IMO, the cost pressure will continue to challenge SIAE. The operating profit (average 10%) now drop to ~6.3%.
Extracted note from FY14/15 2Q Results...
OUTLOOK
The Group’s performance continues to be affected by the decline in engine shop visits and heavy checks. Pressure on margins has not abated with rising business costs and intense competition.
We are stepping up efforts to improve productivity to stay competitive in this overall challenging environment.
The Group stays the course in its pursuit of value-added collaborations with strategic partners. This will position us well to take advantage of long term growth opportunities in the region.
not vested. KIV.
(13-11-2014, 12:21 PM)Stephen Wrote: [ -> ] (10-11-2014, 10:19 AM)csl123 Wrote: [ -> ] (10-11-2014, 10:00 AM)specuvestor Wrote: [ -> ] (10-11-2014, 12:28 AM)csl123 Wrote: [ -> ] (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.
His sense is Emirates have been stealthily hiring capabilities past few years in Singapore. We both feel that probably SIA woes is translating into margin squeeze for the aux services as well. I'll check with him again, bearing in mind he is talking from an engineering point of view, not a financial point of view
Emirates and most of the middle east carriers have been poaching skilled engineers, technicians and mechanics to support the growth of their own carriers. Middle East countries such as Qatar have 70-90% of their populations as expats/workers. They have had to hire from other countries for the expansion of their fleet. Europe and SEA are traditional sources of expats for these middle east carriers.
From what I read in the post here,s the summary:
1) improved technology increasing maintenance intervals
2)0ems increasingly entering into MRO
3) increasing preference for processes like wing on
4)employee poaching and associated rising expense
5) airlines getting larger resulting in housing MRO services
Does anyone have anything to say postively about the long term of Sia engineering ? Can share?
I can only think of the pie ( more aircrafts) getting bigger.
Pls share.
If we look at the lower rev, this is catered for by lower staff cost.
What's really hits them is the sub-contract cost. what are they and why is it so ?
33.9 M Q2 2013/14
52.0 M Q2 2014/15
Anyone has insights ?
(13-11-2014, 02:37 PM)corydorus Wrote: [ -> ]If we look at the lower rev, this is catered for by lower staff cost.
What's really hits them is the sub-contract cost. what are they and why is it so ?
33.9 M Q2 2013/14
52.0 M Q2 2014/15
Anyone has insights ?
Will this help boost its earning?
http://www.moneycontrol.com/news/busines...15446.html
This JV was announced by SIAE in 24Jul2014 news release.
Indeed, it will add more revenue and profit for SIAE.
However, it seem that mr. market does not think so. I think mr. market is very concern on profit margin erosion than increase in revenue.
SIAE JV with Boeing SG
(13-11-2014, 02:40 PM)crow123 Wrote: [ -> ] (13-11-2014, 02:37 PM)corydorus Wrote: [ -> ]If we look at the lower rev, this is catered for by lower staff cost.
What's really hits them is the sub-contract cost. what are they and why is it so ?
33.9 M Q2 2013/14
52.0 M Q2 2014/15
Anyone has insights ?
Will this help boost its earning?
http://www.moneycontrol.com/news/busines...15446.html
(13-11-2014, 03:45 PM)Ray168 Wrote: [ -> ]This JV was announced by SIAE in 24Jul2014 news release.
Indeed, it will add more revenue and profit for SIAE.
However, it seem that mr. market does not think so. I think mr. market is very concern on profit margin erosion than increase in revenue.
SIAE JV with Boeing SG
(13-11-2014, 02:40 PM)crow123 Wrote: [ -> ] (13-11-2014, 02:37 PM)corydorus Wrote: [ -> ]If we look at the lower rev, this is catered for by lower staff cost.
What's really hits them is the sub-contract cost. what are they and why is it so ?
33.9 M Q2 2013/14
52.0 M Q2 2014/15
Anyone has insights ?
Will this help boost its earning?
http://www.moneycontrol.com/news/busines...15446.html
Actually, why does boeing want to work with sia engine ?
(Other then SIA factor ).
Working with Boeing, wouldn't it kill off SIA engine working eon Airbus contracts?
(13-11-2014, 03:45 PM)Ray168 Wrote: [ -> ]This JV was announced by SIAE in 24Jul2014 news release.
Indeed, it will add more revenue and profit for SIAE.
However, it seem that mr. market does not think so. I think mr. market is very concern on profit margin erosion than increase in revenue.
SIAE JV with Boeing SG
(13-11-2014, 02:40 PM)crow123 Wrote: [ -> ] (13-11-2014, 02:37 PM)corydorus Wrote: [ -> ]If we look at the lower rev, this is catered for by lower staff cost.
What's really hits them is the sub-contract cost. what are they and why is it so ?
33.9 M Q2 2013/14
52.0 M Q2 2014/15
Anyone has insights ?
Will this help boost its earning?
http://www.moneycontrol.com/news/busines...15446.html
In the near term, both revenues and profits will be affected due to
1) JV will result in a cannibalization of existing SIAEC's Fleet Management (FM) Business and thus Revenue.
2) Startup cost of the JVs will be incurred in the first year and most likely the second year. Implication : Profit will decline.
3) Accounting wise, prior to JVs, the whole B777 and B787 FMP program is under SIAEC. SIAEC recognize all the revenue and profits. With Boeing in the picture,
half of the profit and
all of the revenue goes to Boeing. (I assume SIAEC will not consolidate the revenue as it owns 49% of the JV). Assume leveraging on Boeing's brand, the fleet management business will grow, the JVs will not be getting those customers until the JV has established itself (might take 5 - 7 years). Anyways, a quick search on the Internet has revealed that not many customers sign up for Boeing fleet management business.