Singapore Airlines 2005 Annual Report Download - page 26

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per cent. The acquisition of a 24.5 per
cent stake in AAT from CIAS was
valued at $76.5 million. To cope with
increasing volumes, AAT recently
approved plans for the construction
of a second air cargo handling terminal
that will add 910,000 tonnes to its
total annual capacity.
SATS added Air Zimbabwe, Jetstar
Asia, Shandong Airlines, Tiger Airways
and Valuair as new clients during the
year in review.
SIA Engineering Company (SIAEC)
SIAEC posted a net profit of $175
million, a 25 per cent increase over
last year. The year in review also saw
the company augment its capacity,
capabilities and list of clients.
SIAEC added two new hangers,
which increased its capacity by 30 per
cent. In May 2004, the company also
embarked on a new line of business.
The B747-400 passenger-to-freighter
conversion programme is part of the
company's strategy to offer a complete
suite of maintenance, repair and
overhaul (MRO) services at its one-
24 SIA Annual Report 04/05
Operating Review
SUBSIDIARIES AND
ASSOCIATED COMPANIES
Singapore Airport Terminal
Services Ltd (SATS)
The year saw SATS post a net profit of
$174 million, a commendable effort
given a year of challenges and changes.
Domestically, the competitive landscape
changed with the entry of two new
international players. A new ground
handler commenced operations in
March 2005. SATS made changes to
its organisational structure in the first
half of the financial year. It reorganised
departments and streamlined senior
management levels to improve
efficiency and cost effectiveness.
SATS also took steps to restructure
its workforce. In September 2004,
1,064 staff positions were outsourced
to labour supply companies and
another 108 staff were released from
employment. The painful decision
was necessary for SATS to take on
the new competition with a more
flexible and efficient cost structure.
Though the restructuring exercise
incurred a one-time cost of $28
million, SATS expects to derive savings
of approximately $20 million a year
hereafter.
The year also saw SATS expand its
overseas portfolio of businesses. In
April 2004, SATS acquired a 49.8 per
cent shareholding in PT Jasa Angkasa
Semasta TBK (JAS Airport Services) of
Indonesia, valued at US$60 million.
JAS Airport Services is the market
leader for ground and cargo handling
services in Indonesia and is present in
12 airports in Indonesia. SATS also
doubled its stake in Asia Airfreight
Terminal (AAT) in Hong Kong to 49