Singapore - Singapore Technologies Aerospace (ST Aerospace) and AirAsia Bhd announced today that AirAsia has awarded ST Aerospace Engines (STA Engines) a US$63.5 million contract to provide engine Maintenance-By-the-Hour (MBH™) services over 10 years for 10 of AirAsia's aircraft powered by CFM56-3 engines. STA Engines is a subsidiary of ST Aerospace, the aerospace arm of Singapore Technologies Engineering (ST Engineering).The contract is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.

This contract is the second engine-support agreement STA Engines has signed with AirAsia. The first was awarded in July 2003, for engine MBH™ services over 10 years for AirAsia's four other aircraft powered by CFM56-3 engines. STA Engines' MBH™ services to AirAsia include engine condition monitoring, repair and overhaul, field services, engineering and spare engine support. The award of this second contract attests to the performance of STA Engines in supporting AirAsia. STA Engines, together with the other ST Aerospace companies, is well established to provide a total aviation support programme for low cost airlines and other operators of the B737 aircraft.

"We are pleased to award this contract to STA Engines in recognition of their performance in supporting our air planes. We are happy with the outstanding services we have received from STA Engines and the whole ST Aerospace group of companies that supports our operations, and are confident that as the leading aviation MRO in Asia Pacific, ST Aerospace would provide us a quality maintenance programme that would enable us to deliver our safety commitment to our passengers."

~ Tony FERNANDES, Group CEO, AirAsia

"We are honoured by the confidence AirAsia has extended to ST Aerospace and its commitment to our co-operation. Our ability to meet AirAsia's demanding requirements is a demonstration of our capabilities to provide total aviation support to customers who operate on a very intensive level. We shall continue to leverage on our broad based capabilities to provide a highly responsive and efficient maintenance programme to AirAsia."

~ TAY Kok Khiang, President, ST Aerospace

ST Aerospace signed agreements with AirAsia in July 2003 to provide airframe maintenance and modification services for AirAsia's current fleet of aircraft, engine MBH™ services (under an earlier agreement), and in Nov 2002 to provide complete rotable component management and support services for AirAsia's fleet of Boeing 737-300 aircraft.

AirAsia is no stranger to charting milestones throughout its 2½-year operation. Since its take over in 2001, AirAsia has revolutionised air travel in Malaysia to become a leading low fare airline in South East Asia. AirAsia presently operates over 100 domestic and international daily flights with a fleet of 13 Boeing 737-300s from its hubs in Kuala Lumper International Airport and Senai International Airport (Johor Bahru) in Malaysia, and its associated company, Thai AirAsia, which operates an additional 4 Boeing 737-300 from Bangkok International Airport. AirAsia was recently named Asia Pacific Airline of the Year 2003 by the Centre for Asia Pacific Aviation (CAPA), and Airfinance Journal's Developing Airline of the Year 2003.

STA Engines, a wholly owned subsidiary of ST Aerospace, is today one of the largest independent engine maintenance, repair and overhaul (MRO) facilities in Asia. With an extensive in house rework and accessories capabilities and a highly competent and experienced OEM trained workforce, STA Engines has in the past few years become a significant player in the highly competitive CFM56-3 engine MRO market.

ST Aerospace provides a full spectrum of maintenance and engineering services through its three business segments: Aircraft Maintenance & Modification (AMM), Component / Engine Repair & Overhaul (CERO), and Engineering & Materials Services (EMS). Its services include airframe, engine and component maintenance, repair and overhaul, engineering, design and development, and aircraft spares supply and management services for commercial and military aircraft. With international offices and facilities located in key aviation hubs in Asia Pacific, Europe, the Middle East and the United States, ST Aerospace has a staff strength of more than 5,000 certified engineers and administrative specialists. For more information, please visit our website at www.staero.aero.

ST Engineering is an integrated engineering group providing solutions and services in the aerospace, electronics, land systems and marine sectors. Headquartered in Singapore, the Group reported revenues of S$2.82 billion in FY2003. Its market capitalisation of about S$6 billion ranks it among the ten largest companies listed on the Singapore Exchange. ST Engineering has 12,000 employees worldwide, and over 100 subsidiaries in 15 countries and 22 cities.

Media Contacts:

LIM Beng See
VP / Head Corporate Communications
Singapore Technologies Engineering Ltd
Tel : (65) 6722 1883
Fax : (65) 6720 2293
Email: limbs@stengg.com

Audrey TAN
Head, Corporate Communications
ST Aerospace
Tel: (65) 6380 6152
Fax: (65) 6280 8213
Email: audreytan@stengg.com

Jeamie Lee
Senior Executive - Promotions & Publicity
AirAsia Bhd
Tel : (612) 390 0048
Fax : (603) 8776 0222
Email : jeamielee@airasia.com