AirAsia, SATS in ground handling partnership deal

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PETALING JAYA: Singapore ground handling and inflight catering services provider SATS Ltd and AirAsia Bhd, Asia’s leading low-cost carrier, have formalised a ground handling partnership in the fast-growing Asean region.

SATS has formed a ground handling entity, SATS Ground Services Singapore Pte Ltd (SGSS), to serve customers at Changi Airport’s new Terminal 4.

Under the partnership, SATS will acquire a 50% interest in Ground Team Red Holdings Sdn Bhd (GTRH), AirAisa’s airport service business arm, in exchange for SATS’s 80% stake in SGSS and aggregate cash consideration of S$119.3 million (about RM372 million).

AirAsia will book a gain on disposal of RM365.7 million in Q4 2017.

GTRH will be renamed SATS Ground Team Red Holdings Sdn Bhd, which will be the 50:50 joint investment vehicle of AirAsia and SATS that will hold stakes in both its Malaysia and Singapore subsidiaries, Ground Team Red Sdn Bhd (GTR) and SGSS respectively.

AirAsia will effectively own 51% of GTR and 40% of SGSS while SATS will effectively own 49% of GTR and 60% of SGSS. Both companies will also be responsible for growing the ground handling business in their respective markets and will explore expansion into Indonesia, the Philippines and Thailand.

SATS has been deploying technology to enhance connectivity for airlines and their passengers within its growing network of 47 airports across Asia. The new partnership will give SATS, which already owns a 49% stake in the largest flight caterer in Malaysia, Brahim’s SATS Investment Holdings Sdn Bhd, access to the Malaysian ground handling market.

This partnership will support the rapid growth of AirAsia towards 500 aircraft and 150 million passengers by 2027 by combining AirAsia’s expertise in providing quick and low-cost turnarounds with industry best practices and innovative technology developed by SATS for passenger and ramp handling.

AirAsia Group CEO Tan Sri Tony Fernandes said, “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.”

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