AirAsia and SATS agree to form ground-handling tie-up
PETALING JAYA: AirAsia Bhd and SATS Ltd have agreed to a ground-handling partnership in Malaysia and Singapore to expand their operations in South-East Asia.
Under the terms of the partnership, SATS will acquire a 50% interest in AirAsia’s unit, Ground Team Red Holdings Sdn Bhd (GTRH), in exchange for SATS’ 80% stake in the new ground-handling entity, SATS Ground Services Singapore Pte Ltd (SGSS), in Changi Airport, Singapore, and an aggregate cash consideration of S$119.3mil (RM372.2mil).
GTRH will be renamed SATS Ground Team Red Holdings Sdn Bhd, which would be the 50:50 joint investment vehicle of AirAsia and SATS that would own stakes in both its Malaysia and Singapore subsidiaries, Ground Team Red Sdn Bhd (GTR) and SGSS, respectively.
AirAsia would effectively own 51% of GTR and 40% of SGSS, while SATS would effectively own 49% of GTR and 60% of SGSS.
“Both companies would also be responsible for growing the ground-handling business in their respective markets and would explore expansion into Indonesia, Thailand and the Philippines in the near future,” AirAsia and SATS said in a joint statement.
In its filings with Bursa Malaysia yesterday, AirAsia said its partnership with SATS would foster greater efficiency and cost savings to its ground-handling operations.
“It is anticipated that these transactions will result in AirAsia realising a gain on disposal of RM365.7mil in the fourth quarter of 2017.
“The cash balance of AirAsia will increase by RM372.2mil following the sale,” the low-cost carrier said.
AirAsia group chief executive officer Tan Sri Tony Fernandes said: “We believe this joint venture will allow AirAsia to unlock significant value and grow.”
AirAsia expects its partnership with SATS to support its growth towards 500 aircraft and 150 million passengers by 2027.
SATS of Singapore is a regional leader in gateway services and food solutions services. The company also owns a 49% stake in the largest flight caterer in Malaysia, Brahim’s SATS Investment Holdings Sdn Bhd.