SIA to leave PW1500G risk-revenue sharing programme

The SIA engineering company (SIAEC), a major provider of MRO services in the Asia-Pacific region, has entered into an agreement with Pratt & Whitney to exit from the PW1500G engine risk-revenue sharing programme (RRSP) that was held through its wholly-owned subsidiary, NextGen Network (2) (NGN2). NGN2 invested in the RRSP in 2010, bringing derived benefits for Eagle Services Asia Private (ESA), a joint venture between Pratt & Whitney (51%) and SIAEC (49%) in Singapore. Under the agreement, ESA received new engine capability and MRO work, alongside relevant investment support grants related to the development of new engine capability. SIAEC explains that ‘partners of the RRSP are required to share the costs, risks and revenues of the PW1500G geared-turbofan engine, from its design and development to its production (including engine spare parts), post-certification engineering support, marketing and sales, as well as the provision of aftermarket services including maintenance, repair and overhaul services’. However, issues with the PW1500G – concerning powder metal manufacturing defects affecting up to 3,000 engines, necessitating further inspections and potential repairs – have caused complications with the powerplant. ‘As the RRSP requires further capital injection, after careful deliberation and with PW’s agreement, a decision was taken to exit from the RRSP,’ confirmed SIAEC. Upon exiting the RRSP, the group will write off $25.1 million of net assets associated with the programme. SIAEC states it will now redeploy the diverted capital “to other areas that are better aligned with its growth strategy”.