AirAsia, Singapore’s SATS form ground handling partnership
In this article (5)
Airasia is entering into a ground handling services joint venture with Singapore-listed ground handling and in-flight catering services provider SATS Ltd with the aim of growing the operations across the Asean region.
This would be effected through a share swap agreement and a share sale agreement which will see AirAsia and SATS owning a 50% stake each in Ground Team Red Holdings Sdn Bhd (GTRH), the low-cost carrier told Bursa Malaysia.
SATS is swapping an 80% equity interest in unit SATS Ground Services Pte Ltd (SGS Singapore) for an 11.4% stake in AirAsia’s unit GTRH. AirAsia will sell a further 38.6% stake in GTRH to SATS for S$119.3mil (RM370.97mil) in cash.
At the same time with the share exchange, AirAsia will transfer 98% of Ground Team Red Sdn Bhd (GTR Malaysia) – which provides ground handling services in Malaysia – to GTRH, which (as mentioned above) will also hold 80% in SGS Singapore, which will serve SATS’ customers at Changi Airport’s new Terminal 4 (to open Tuesday).
AirAsia will hold directly 2% in GTR Malaysia and 20% in SGS Singapore.
According to AirAsia, it will realise a gain on disposal of RM365.7mil in the fourth quarter of this year following the sale of the GTRH stake.
The airline also said the partnership with SATS would foster greater efficiency and cost savings to its ground handling operations.
“This will facilitate growth of AirAsia, with SATS bringing in the necessary expertise and skills set to create a synergy which will enhance the ground handling business,”
“This will facilitate growth of AirAsia, with SATS bringing in the necessary expertise and skills set to create a synergy which will enhance the ground handling business,” it explained.
In a joint press statement, AirAsia and SATS said GTRH would be renamed SATS Ground Team Red Holdings Sdn Bhd.
AirAsia and SATS, responsible for growing the ground handling business in their respective markets, would also explore expansion into Indonesia, the Philippines and Thailand in the near future, the statement said.
AirAsia group chief executive officer Tan Sri Tony Fernandes said: “Today, we are very pleased to announce that two home-grown companies have partnered together to form a new Asean joint venture.
“We believe this joint venture will allow AirAsia to unlock significant value and grow it as we have done with AirAsia Expedia, our aviation academy Asian Aviation Centre of Excellence and later this year, our leasing arm Asia Aviation Capital. Our assets are very valuable and slowly people are beginning to see the true value of AirAsia, as today’s announcement proves.”
SATS, through wholly-owned subsidiary SATS Investments, also has an in-flight catering service partnership with Malaysia Airlines Bhd (MAB).
SATS owns a 49% stake in Brahim’s SATS Investment Holdings Sdn Bhd, which in turn owns 70% in Brahim’s SATS Food Services Sdn Bhd (BSFS). The remaining 30% equity interest in BSFS is held by MAB.
BSFS, whose main customer is MAB, is the principal in-flight catering service provider at both Kuala Lumpur International Airport and Penang International Airport. It also provides cabin handling services covering laundry services for pillows and blankets, filling the cabin trolley with items for in-flight sales as well as providing passenger headsets, newspapers and periodicals.
Questions & Answers
Q.How will AirAsia and SATS achieve 50% ownership each in Ground Team Red Holdings Sdn Bhd?
How will AirAsia and SATS achieve 50% ownership each in Ground Team Red Holdings Sdn Bhd?
SATS is swapping an 80% equity interest in SGS Singapore for an 11.4% stake in GTRH. AirAsia will then sell a further 38.6% stake in GTRH to SATS for S$119.3 million in cash, achieving equal ownership.
Q.Which specific ground handling services will Ground Team Red Holdings Sdn Bhd now encompass?
Which specific ground handling services will Ground Team Red Holdings Sdn Bhd now encompass?
GTRH will hold 98% of GTR Malaysia, which provides ground handling in Malaysia. It will also hold 80% of SGS Singapore, which serves SATS’ customers at Changi Airport’s new Terminal 4, combining operations.
Q.Does SATS have existing partnerships with other Malaysian airlines besides this new joint venture?
Does SATS have existing partnerships with other Malaysian airlines besides this new joint venture?
Yes, SATS has an existing in-flight catering service partnership with Malaysia Airlines Bhd. Through a subsidiary, SATS owns a 49% stake in Brahim’s SATS Investment Holdings, which in turn holds 70% of BSFS, the main caterer for MAB.
Reader pulse
Is this joint venture a smart move for AirAsia?
21,416 votes so far