KUALA LUMPUR (Oct 30): AirAsia Bhd has formalised a joint venture partnership with SATS Ltd, a provider of gateway services and food solutions, via share swap and sale agreements.

According to AirAsia’s bourse filing, the share swap will be carried out between its wholly-owned subsidiary, Ground Team Red Sdn Bhd (GTR) and its other subsidiary, Ground Team Red Holdings Sdn Bhd (GTRH), transferring 98% shares in the former in exchange for 88.6% of the latter.

Contemporaneously, GTRH will acquire an 80% equity stake in SATS Ground Services Pte Ltd (SGSS), in exchange for 11.4% equity stake in GTRH.

The share sale agreement comes into place when AirAsia sells 38.6% of its shareholding in GTRH to SATS.

In short, under terms of the partnership, SATS will acquire a 50% interest GTRH, in exchange for  SATS' 80% stake in SATS Ground Services Singapore Pte Ltd (SGSS), and an aggregate cash consideration amounting S$119.3 million (equivalent to RM372.2 million).

As a result, AirAsia will effectively hold a 51% stake in GTR, and 40% of SGSS, while SATS will own the remaining.

The 50-50 joint venture will see GTRH be renamed as SATS Ground Team Red Holdings Sdn Bhd, which will hold stakes in both the Malaysia and Singapore subsidiaries, that is GTR and SGSS respectively.

SGSS was formed by SATS as a new ground handling entity to serve customers at Changi Airport’s new Terminal Four.

In a separate statement, AirAsia said both companies will 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.

It said the partnership will also support its rapid growth 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.

“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”, said Tony Fernandes, AirAsia Group chief executive officer said.

At closing bell today, AirAsia slipped two sen or 0.63% to settle at RM3.18, with 10.29 million shares done, giving it a market capitalisation of RM10.63 billion.