The Borneo Post

AirAsia-SATS JV to complement AirAsia’s expansion plans

- By Rachel Lau rachellau@theborneop­ost.com

KUCHING: The proposed joint venture partnershi­p between AirAsia Bhd (AirAsia) with the chief ground- handling and inflight catering service provider at Singapore Changi Airport, SATS Ltd (SATS) will complement AirAsia’s long-term expansion plans in Asean.

In a corporate update, researcher­s with MIDF Amanah Investment Bank Bhd (MIDF Research) saw that both parties completed the share-swap agreement transactio­n yesterday.

AirAsia is currently in the midst of transferri­ng 38.6 per cent of its equity stake in Ground Team Red Holdings Sdn Bhd (GTRH) to SATS for a total considerat­ion of RM360.2 million.

SATS also owns a 49 per cent stake in Brahim’s Airline Catering Holdings Sdn Bhd – the major airline catering vendor in Malaysia.

Upon completion of this transfer, both AirAsia and SATS will have equal ownership in GTRH which holds majority stakes in both group’s ground handling subsidiari­es – Ground Team Red Sdn Bhd (GTR) and SATS Ground Services Singapore Pte Ltd (SGSS) respective­ly.

“Both companies will be re- sponsible for growing the ground handling business in their respective markets and will explore expansion into Indonesia, the Philippine­s and Thailand,” added the research arm.

All up, the partnershi­p between AirAsia and SATS is expected to complement AirAsia’s expansion plans across the fast-growing travel landscape of Asean of a planned capacity of 500 planes.

“We believe having an efficient ground handling service is crucial to enhance its low-cost business structure.

“Additional­ly, we believe further improvemen­t in turnaround time is likely, leveraging one each parties’ expertise to enhance efficiency and drive down operationa­l costs,” said MIDF Research.

That being said, MDIF Research maintained its ‘buy’ call on AirAsia due to the group’s continuous efforts in innovation, stable demand growth and new areas of growth in Air Asia India and Air Asia Japan.

While the divestment of GTR is expected to yield a total gain of RM360.2 million, the research arm will make not changes to their earning forecasts at this juncture as they will treat this gain as a one-off item.

However, they believe that there is a possibilit­y of a special dividend.

“This is premised on management’s promise to pay out proceeds of business disposal.

Assuming 100 per cent pay-out of the RM360.2 million gain, the special dividend is estimated to be 10.8sen.”

 ??  ?? The partnershi­p between AirAsia and SATS is expected to complement AirAsia’s expansion plans across the fast-growing travel landscape of Asean of a planned capacity of 500 planes.
The partnershi­p between AirAsia and SATS is expected to complement AirAsia’s expansion plans across the fast-growing travel landscape of Asean of a planned capacity of 500 planes.

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