Bullish on the Airline Maintenance business

The airline industry is set to expand fast within the next few years with companies already submitting their orders for more planes to cope with the increased demand for transport  or vacation flights. With the increased number of flights operation to different parts of the world, the demand for maintenance, repair, and overhaul (MRO) for flights have to be expanded to cater to more planes. SIA Engineering and ST Engineering are both MRO companies which are set to benefit from the aviation expansion. With more flights landing into Changi airport, SIA Engineering will expect more maintenance numbers to contribute to their revenue. 

ST Aero, a subsidary of ST-Engineering is in aircraft maintenance and engineering with operations in Singapore, Australia, USA and UK is also set to profit from the expanding aviation industry. The recent contract win from Royal Air Force of Oman shows that ST-Engineering is well positioned to penetrate the country-level type of contracts, possibly related to government links. I spoke with an ST staff regarding their business and he explained ST-Engineering benefits from the neutral stance of Singapore among the richest countries in the world. This might explained the consistent earning growth of the company and the capability of winning more contracts in future.

Expansion of the aviation industry shown in some of the news stated below:

AirAsia to buy 100 Airbus planes (dated 15 Dec 12)
source: http://www.philstar.com/business/2012/12/15/886091/airasia-buy-100-airbus-planes

Hawaiian plans to buy 16 new Airbus planes (dated 8 Jan 13)
source: http://news.yahoo.com/hawaiian-plans-buy-16-airbus-210437949.html

Oman set to buy 20 aircraft from BAe (dated 21 Dec 12)
Source: http://www.guardian.co.uk/world/2012/dec/21/oman-bae-fighter-jet-sale

China to buy 50 Airbus planes for $3.5bn (dated 30 Aug 12)
Source: http://www.bbc.co.uk/news/business-19419526