Singapore Airlines’ MRO unit fell into the red in the first-quarter, as it reiterated a “challenging” outlook with no clear recovery pathway. 

For the quarter ended 30 June, SIA Engineering (SIAEC) reported an operating loss of S$8.6 million ($6.2 million), reversing the S$17.7 million operating profit it posted last year. 

The MRO saw revenue for the period more than halve, at S$118.5 million, compared to S$258.1 million made last year. Expenses shrunk 47.1% to S$113.3 million, helped by cost cutting measures, as well as government grants. 

For the period, SIAEC reported a net profit of $10.7 million, a 74% decline year on year. 

The MRO saw the number of flights handled by its line maintenance unit at Singapore Changi airport collapse for the period, amid travel restrictions put up to curb the spread of the coronavirus. 

It handled nearly 5,000 flights for the quarter, compared to more than 38,000 flights in the corresponding period in 2019.

SIAEC adds that the impact was “severely felt” across all its business units. 

“Our base maintenance unit had fewer airframe overhaul checks while airline customers under our fleet management business saw significant reduction in flying hours. Work volume at our engine and component joint venture companies also slowed as decreased flying hours resulted in extension of maintenance intervals,” the MRO states. 

Despite a slight uptick in flight activity in June, SIAEC says it has not been material. “With no clear signs of stronger pickup in flight frequencies, the outlook for our MRO business will be challenging,” the company adds. 

To this end, it will double down on cost saving measures, including management-level pay cuts, voluntary and compulsory no-pay leave, and deferring non-essential expenses. 

SIAEC adds: “Plant shutdown was also implemented at some of the engine and component joint ventures on specific days, in response to slow work volume, to reduce operating cost.” 

It notes that grants handed out by the Singapore government have gone some way in cushioning the financial impact. In May, the Singapore government announced an increase in wage support for MRO companies to 75%. 

SIAEC says it will continue in its transformation efforts, despite the challenging outlook. 

“The close monitoring and review of our portfolio of joint ventures will continue under the current environment to ensure long-term sustainability of our portfolio,” the MRO adds.