Singapore Technologies Engineering, the parent of ST Aerospace and its US subsidiary Vision Technologies Aerospace, has terminated the agreement under which VT Aerospace intended to acquire Pemco World Air Service’s MRO facility in Tampa, Florida, as well other Pemco assets including Pemco’s 737-300 and 737-400 passenger-to-freighter and passenger-to-combi STCs.
US-based MRO and freighter conversion specialist Pemco filed a voluntary petition to restructure under Chapter 11 protection in March of this year, and majority owner Sun Capital Partners, through a subsidiary, provided DIP financing to keep the company going throughout the restructuring process, with the announced intention of emerging from bankruptcy “within the next ninety days.” Just past the end of that ninety-day period Singapore Technologies Engineering, through its VT Aerospace subsidiary, announced that it had made a successful bid at the bankruptcy auction for Pemco’s MRO facility in Tampa, Florida, “and certain assets of Pemco World Air Services Inc, including the Boeing 737 freighter conversion Supplemental Type Certificates.” The purchase price was US$49.7 million.
That purchase was expected to complete in late July, but the end of July passed with no announcement, and then at the beginning of August the news broke that United Airlines, Pemco’s biggest MRO customer had cancelled its contract with Pemco, and as a result Pemco said it would lay off close to 500 employees at the Tampa facility. This was followed today with the announcement from ST that it had terminated its agreement to buy the Tampa facility and the conversion STCs, and it is not clear where Pemco goes from here.
Pemco still does MRO work for JetBlue in Tampa, and two of the company’s senior executives (CEO William Meehan and President Kevin Casey) have been quoted as saying they hope to rebuild the business and eventually hire back some or all of the laid-off employees. Of course, Pemco also still has its 737 and 757 conversion STCs, so assuming it can successfully complete its restructuring it could once again become a player in the MRO and narrowbody conversion business. Time will tell.
For its part, ST Engineering, through it’s ST Aerospace arm, also recently bought a 35% stake in EFW, the MRO and conversion arm of European aerospace giant EADS, and is developing a P-to-F conversioon program for the Airbus A330-200 and A330-300, so it will have plenty to keep it busy.