‘Catching sunrises’: ST Engineering’s commercial aerospace head sees more tailwinds for the business

[SINGAPORE] Kevin Chow, the president of ST Engineering’s commercial aerospace business, is bullish on the segment’s outlook, describing what he calls the business’ agility to be able to “catch sunrises”.

One example he gave was the group’s work with the Leap engine, which is produced by CFM International, and used on the Airbus A320neo and Boeing 737 Max.

ST Engineering is licensed by CFM International as a premier maintenance, repair and overhaul (MRO) provider for its Leap-1A and Leap-1B engines. MRO is a key revenue driver for the group’s commercial aerospace business.

The Leap-1A is used for the Airbus A320neo, while the Leap-1B is for the Boeing 737 Max. Chow calls these “sunrise platforms” due to the high volume of these planes being delivered.

“If you go by CFM’s numbers, more than 10,000 engines have been delivered. And CFM themselves, when they look at the growth rate, they are pretty bullish,” he said in an interview with The Business Times. 

In October, data from Airbus and Boeing showed the plane manufacturers delivering 55 units of the A320neo and 32 units of the Boeing 737 Max, respectively. For context, there are two Leap engines each on the A320neo and 737 Max. 

More of these planes are expected to be continually delivered as commercial plane deliveries are still backlogged, driven by a combination of pandemic-era supply chain disruptions and growing post-pandemic demand. 

Yet, the backlog also works in ST Engineering’s favour, as airlines still have to keep older planes in the air to meet demand, and older engines that are in service will also generate MRO demand, according to Chow. 

“The fundamentals are there for us to go and capture business. That’s why we’re trying to ride on this,” he said.

Strong commercial aerospace revenue

While ST Engineering may sometimes be better known for its defence business, commercial aerospace drives a significant portion of the group’s revenue.

Its commercial aerospace revenue reached S$1.37 billion, making up 40 per cent of the group’s S$3.4 billion revenue for the three months ended Oct 31, its third-quarter update published on Friday (Nov 13) showed. 

The group said its commercial aviation segment was driven by higher revenue from engine MRO and nacelles.

ST Engineering also designs, develops and produces nacelle components for the A320neos that are powered by the CFM Leap-1A engine in partnership with Safran Nacelles, a designer and service provider of aircraft engine nacelles.

Nacelles are streamlined housings for aircraft engines that are designed to reduce drag and provide engine protection from external factors such as debris or lightning. 

Chow, who returned to Singapore with ST Engineering in September 2024 after a stint in France with Thales, said he has also been working with the various units within the commercial aerospace segment to “rejuvenate” some of what he describes as ST Engineering’s best-kept secrets.

For example, while the group may be recognised in the industry for its MRO work with airplane bodies and engines, it also does MRO work on landing gears, passenger-to-freighter conversions, and even leasing.

“It’s cross-selling, but it’s also bringing that value from our network to serve the customer, so that’s something we have reimagined and rejigged,” Chow said. 

Ultimately, he wants ST Engineering to “create value” for customers, keep aircraft flying safely and “win the market”. 

ST Engineering has four aerospace facilities in Singapore, including its recently opened Changi Creek facility, which is a green-field investment.

This latest facility is also a test bed for ST Engineering to use artificial intelligence applications, robotics and automation to complement its engineers and technicians, in order to free them up for higher-value work.

Chow said in October that learnings from the Changi Creek facility will also be scaled up to ST Engineering’s global operations.

The Singapore-headquartered group also has extensive aerospace facilities in the world’s two largest aerospace markets – the US and China – and in parts of Europe.

Some of ST Engineering’s commercial aerospace clients include Delta Air Lines, Japan Airlines and Xiamen Airlines. 

Chow said ST Engineering also has “a lot of China customers” and its reputation there has been built since the 1990s, when it first entered the country after identifying it as a growth market. 

When asked about the rise of China’s Comac planes, Chow said that would also be a potential tailwind for ST Engineering as the key suppliers for Comac are also the ones for Boeing and Airbus.

“The Leap-1C is the CFM engine for Comac,” he said. “Today, we are serving the Leap-1A and Leap-1B market because they are sizeable, but if the Leap-1C becomes significant, then we are certainly open to serving that.”

While Comac is still a long way from challenging Airbus and Boeing’s dominance, Chow noted that it is a “big priority for the Chinese”. Comac’s C919 plane entered commercial service in May 2023 and is largely used for domestic flights within China by major Chinese air carriers.

Looking ahead, Chow said that India, along with some South-east Asia countries, are markets that ST Engineering is watching closely for potential new MRO facilities.

“When you see that kind of economic growth, it’s always very encouraging,” he said. “Then you look at what that means for aviation. Moving more people, moving more goods, and usually in terms of MRO, that’s where the demand gets created.”