STEng – BT

ST Aero beats 10 rivals to clinch US$750m deal

Contract to maintain engines for India’s Jet Airways may open more doors

ST Aerospace, the world’s largest independent maintenance, repair and overhaul (MRO) player, has clinched one of its largest engine maintenance contracts ever.

The ST Engineering company yesterday announced that it had been awarded a US$750 million engine maintenance contract with Jet Airways, India’s leading private carrier.

Jet Airways’ executive director Saroj Datta said ST Aero beat out 10 other global competitors to clinch the deal.

‘The contract was highly contested, with many leading global players in the race,’ said Mr Datta. ‘But then, our relationship with ST Aero goes back to 1993, when we started out our first scheduled flights with four 737-300 classics.’

The deal, ST Aerospace’s biggest since it clinched one with Skybus in 2006, is a maintenance-by-the-hour (MBH) contract for the support of Jet Airways’ CFM56-7B engines that power Jet Airways’ and JetLite’s fleet of 67 Boeing 737 next-generation aircraft.

Under the contract, which kicks in immediately, ST Aerospace’s wholly owned subsidiary, ST Aerospace Engines Pte Ltd, will provide comprehensive engine maintenance and engineering support over 10 years for Jet Airways’ 143 CFM56-7B engines, which includes the fleet operated by Jet Airways’ low-cost carrier subsidiary, JetLite Ltd.

The maintenance works will be carried out at ST Aero’s engine maintenance facilities in Singapore and Xiamen, China.

Compared to the traditional time and materials- based engine maintenance contracts, MBH ties maintenance to the actual usage of engines, thus saving cost, cutting downtime and boosting productivity.

The deal is particularly critical for ST Aero, which is already the world’s largest player in the airframe repair and maintenance area, with six global facilities (in the US, Panama, China and Singapore). As ST Aero’s president Tay Kok Khiang put it, this deal also boosts the Singapore-based multinational MRO as a leading player in the engine repair and maintenance arena.

‘We are already the global leader in airframe maintenance, and have established ourselves as the leader in passenger-to-freighter conversions,’ Mr Tay said, referring to the huge B767 conversions and ongoing conversions of 87 B757 jets for FedEx.

‘This is one of the largest contracts we have secured, and establishes us as one of the largest players in the repair and maintenance of CFM56.’

The CFM56 is designed for the single-aisle fleets of B737 and A320 around the world.

Jet Airways, founded by chairman Naresh Goyal in late 1992, has been consistently rated as one of India’s top carriers, with a 99.8 per cent technical despatch rate and high service quality. It has a fleet of 89 planes, which fly to 21 international destinations and 43 domestic destinations. Its wide-body fleet comprises B777-300ERs and A330-200, which fly to Europe, Asia and the US.

Mr Datta hinted that Jet Airways could also contract ST Aero to maintain its growing fleet of long-haul wide-body jets in the future.

‘We have no doubt this contract will serve us in good stead, and there is enormous opportunity for expanding cooperation.’

Turning to the Indian aviation market, Mr Datta said the country – whose economy is rebounding at over 8 per cent growth – will see aviation taking off in a big way in the future.

‘The number of planes you see today is just a drop in the ocean of what is possible in a vast nation of over one billion people,’ he said.

Asked if ST Aero would establish facilities in India in future to capitalise on this growth, Mr Tay said such decisions would have to be driven by the market.

‘The business case has to be made on the basis of market size and growth,’ he said. ‘We went into China only five years ago, long after that market opened up, and Panama just two years ago. We are constantly identifying locations where we can invest.’

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