In-flight catering service provider SATS entered into a partnership with low-cost carrier AirAsia to grow ground handling in the fast-growing Asean region.
As part of the agreement, SATS will acquire a 50 percent stake in AirAsia's Ground Team Red Holdings (GTRH) in exchange for its 80 percent stake in SATS Ground Services Singapore (SGSS) for S$119.3 million, the company said in a statement on Monday.
SGSS is a new ground-handling entity formed to serve customers in Changi Airport's new Terminal 4, while GTRH is the investment holding of AirAsia's airport-services businesses.
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.
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 in the near future.
The partnership will give SATS, which already owns a 4 per cent stake in the largest flight caterer in Malaysia, Brahim's SATS Investment Holdings Sdn Bhd, access to the Malaysian ground-handling market, said SATS.
For AirAsia, the deal will also support the rapid growth of the airline towards 500 aircraft and 150 million passengers by 2027.
The Malaysian-listed carrier said it expects the transactions to result in a disposal gain of S$75.1 million in the fourth quarter of fiscal 2017.
At 0144 GMT, shares in SATS fell 0.6 percent to S$4.66 on the Singapore Exchange while AirAsia Bhd rose 2.2 percent to MYR3.25 on the Bursa Malaysia.