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August 2016

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Palm Beach Capital, through one of its investment entities, has announced the sale of CTS Engines, jointly owned by Palm Beach Capital and CEO Brian Neff, to Platte River Equity, and management, including Mr Neff. CTS is headquartered in Fort Lauderdale, FL, with testing operations in Jupiter, FL. The company provides a full spectrum of MRO services for established engine platforms, and performs developmental testing on next generation engines.


Rolls-Royce and its partners have received regulatory approval and met all other closing conditions for its previously announced changes to three Approved Maintenance Centre (AMC) joint ventures. The changes, announced last November, were subject to certain closing conditions that have now been satisfied and relate to Hong Kong Aero Engine Services Limited (HAESL), Singapore Aero Engine Services Pte Ltd (SAESL) and N3 Engine Overhaul Services (N3).


Under the completion of the agreements announced today these joint ventures will now operate under a new business model where the existing geographic territory-based arrangements used by Rolls-Royce to direct maintenance, repair and overhaul (MRO) work to each AMC will be replaced with a competitive model where each AMC will need to compete to secure their Trent TotalCare engine overhauls. Rolls-Royce believes that this competitive model will encourage greater capability and flexibility across the Trent Service Network. The AMCs are also able to compete globally for MRO Services under time and material business terms.


 The completion simplifies the shareholding structure and management of HAESL and SAESL. The former will become a 50/50 joint venture between Rolls-Royce and HAECO, the latter a 50/50 joint venture between Rolls-Royce and SIAEC. The shareholding arrangements with Lufthansa Technik AG for N3 remain unchanged at 50/50 ownership.


These changes to create a competitive, capable and flexible Trent Service Network complement the announcement that Delta TechOps will be joining the Trent Service Network as an independent AMC. Additional AMCs to further enhance the Trent Service Network will be announced at the appropriate time.


In addition to SAESL, Rolls-Royce and SIAEC have a second joint venture in Singapore, International Engine Component Overhaul (IECO), which overhauls and repairs aero engine components. As part of these new agreements, and to further simplify
the joint venture structures, Rolls-Royce and SIAEC intend to take the opportunity
to amalgamate the business and operations of SAESL and IECO into a single entity, enabling them to compete more effectively for global component repair business.


SIAEC Group posted a profit attributable of $198.4 million for the quarter ended 30 June 2016, an increase of $157.1 million. During the quarter, the Group made a $141.6 million gain from the divestment of its 10% stake in Hong Kong Aero Engine Services Ltd (HAESL) to Rolls-Royce Overseas Holdings Limited and Hong Kong Aircraft Engineering Company Limited (HAECO). In addition, the Group received a special dividend of $36.4 million from HAESL following the divestment of HAESL’s 20% stake in Singapore Aero Engine Services Limited (SAESL) to Rolls-Royce Singapore, bringing the overall gain from the divestment to $178.0 million. Revenue decreased by $5.7 million or 2.1% to $271.6 million, attributable mainly to a drop in fleet management revenue. This was mitigated in part by higher revenue from line maintenance and airframe and component overhaul.


SR Technics has announced that sole shareholder Mubadala, the Abu Dhabi investment and development company, has agreed to sell an 80% stake in the company to HNA Aviation, a global enterprise group based in Haikou, China. SR Technics will remain a standalone business within HNA Aviation’s portfolio of aviation business. Mubadala, a shareholder since 2006, will retain a 20% stake in the company.


ST Aerospace secured new contracts worth $770 million in 2Q16, for projects ranging from airframe maintenance and cabin interiors, to engine wash, and component repair and overhaul. New contracts included in the 2Q16 contracts are line and heavy airframe maintenance for commercial airlines and military operators, as well as cabin interior modifications for various customers.


For component support, the aerospace sector signed a general trade agreement with a European airline for Boeing 787 nacelle component exchange and repairs, while securing landing gear work for a military operator. Multiple contracts have also been sealed with customers in Asia Pacific, Europe and the US for EcoPower engine wash services.


It redelivered a total of 722 aircraft for airframe maintenance and modification work in 2Q2016. This included the first Boeing 787 C level maintenance check completed for a regional airline, cabin interior modifications for both VIP aircraft and commercial airliners, as well as an A380 cabin overhaul for a European customer. Additionally, a total of 11,790 components, 37 landing gears and 29 engines were processed, while 2,643 engine washes were conducted for both commercial and military customers. A total of 187 composite shipsets were delivered to the aircraft OEM.


On aircraft capability, the airframe facility in Mobile, Alabama, added heavy maintenance capabilities for the Boeing 767 aircraft, extending the facility’s range of maintenance services for customers in the region. Spotlighting freighter conversions, ST Aerospace has completed the preliminary design phase for the Airbus A321P2F (passenger-to-freighter) conversion programme. On component MRO, the aerospace sector continued to add new capabilities to support the Boeing 787 operators. The newly added capabilities cover electrical systems and harnesses.


Separately on aircraft seats design development, ST Aerospace became the first company to receive the Production Organisation Approval from the Civil Aviation Authority of Singapore.

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