ST Engineering has announced the divestment of its 49% equity interest in Shanghai Technologies Aerospace Company Limited (STARCO) to China Eastern Airlines (CEA). The joint venture, established in 2004, provided airframe maintenance, repair, and overhaul (MRO) services in Shanghai. The decision to end the partnership comes as both companies aim to focus on their individual growth strategies.
The sale, valued at approximately $91.2m (S$124.6m), will be completed in two tranches. The first payment of $67.9m (S$92.8m) is due upon completion, with the remaining $23.3m (S$31.8m) to be paid by 31 December 2026, secured by a bank guarantee. This transaction is expected to result in a one-off gain of $35.2m (S$48.1m) for ST Engineering.
The divestment aligns with ST Engineering’s strategy to rationalise its MRO facilities and enhance operational efficiency. Despite the sale, the company maintains that its total MRO capacity remains above pre-COVID levels, supported by ongoing expansions in Singapore, China, and the US. “The Group’s total capacity remains higher than pre-COVID levels, ensuring continued ability to meet customer MRO demand,” the company stated.
The transaction is anticipated to close in the coming months, subject to customary conditions. ST Engineering plans to use the proceeds to reduce debt, expecting annual interest savings of $3.1m (S$4.2m). The company will continue to support CEA as a valued customer, reflecting the strong collaboration between the two entities over the years.
