Government grants cut SIAEC's H1 loss from S$114m to S$19m

Singapore

SIA Engineering Company (SIAEC), the maintenance arm of Singapore Airlines, swung into a net loss of S$19 million in the first half of its financial year, the mainboard-listed company said in an exchange filing on Tuesday.

This is a reversal from the S$87.6 million net profit it recorded in the April-to-September period in 2019.

Revenue more than halved to S$223 million from S$512.7 million, while group expenditure slid 47.4 per cent to S$250.2 million.

The group incurred an operating loss of S$27.2 million compared with an operating profit of S$37.3 million in the same period last year.

SIAEC said this was due to a reduction in the group's business activities as a result of fewer flights and massive grounding of aircraft amid the Covid-19 pandemic.

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It said: "The adverse impact of Covid-19 on the group's financial performance for the first half was cushioned by grants from government support schemes, most significantly, the Jobs Support Scheme. Without this support, the group would have recorded a loss of S$114.6 million."

Meanwhile, the group also recognised a non-cash impairment loss on its base maintenance unit's assets of S$35 million.

"As the recovery outlook remains uncertain, we will continue to monitor the situation and make additional impairment if required," SIAEC said.

Basic loss per share amounted to 1.69 Singapore cents, compared with an earnings per share of 7.82 cents in the corresponding period a year earlier. Net asset value per share as at Sept 30 was S$1.371, comparable with the value in 2019 at S$1.374.

The number of flights handled by its line maintenance unit in Singapore was only 14 per cent the amount handled in the corresponding six-month period last year.

In the second quarter, the number of flights fell to 16 per cent of last year's level. This was three percentage points higher than in the first quarter, indicating a continued but slow recovery rate, the company said.

As part of the review of its investment portfolio, SIAEC restructured its investments in the Philippines, as well as Heavy Maintenance Singapore Services, and proceeded with the dissolution of its joint venture, Line Maintenance Partnership (Thailand), in Q2.

It is now working closely with its joint-venture companies to ensure they overcome operating challenges for sustained growth. In the meantime, it is continuing with its transformation efforts, which it said has yielded positive results so far.

SIAEC's shares closed at S$1.67 on Tuesday, up four Singapore cents or 2.5 per cent.