Friday 29 Mar 2024
By
main news image

KUALA LUMPUR: Brahim’s Holdings Bhd’s 70%-owned subsidiary Brahim’s Airline Catering Sdn Bhd (BAC) has signed two new catering agreements (NCAs) with Malaysia Airlines Bhd (MAB), the new company (NewCo) that will take over Malaysia Airline System Bhd’s (MAS) operations.

In a filing with Bursa Malaysia yesterday, Brahim’s (fundamental: 0.35; valuation: 0.9) said the NCAs were in two separate contracts, covering “wide-body aircraft” and “narrow-body aircraft” flights, and both shall commence on Sept 1 or such other date as agreed between MAB and BAC in writing.

The NCAs should remain in force for a period of five years, with an additional five years renewal, subject to no breach of any of the key events, which will trigger a termination of the NCA, as well as meeting of critical performance key performance index (KPIs) over the initial five years, and upon mutually-agreed pricing for the extended term of the next five years.

Brahim’s said the pricing of the NCAs is based on a competitive pricing methodology for meals and cabin handling, to realise savings and operational efficiencies for both MAB and BAC.

The signing of the NCAs, Brahim’s said, will now allow for a high degree of certainty in BACs business with MAS, and later with MAB as its caterer in the nominated flights, while maintaining its position as Kuala Lumpur International Airport’s (KLIA) principal halal in-flight caterer to the remaining 36 international airlines and other potential new airlines calling on KLIA and Penang International Airport.

On the other hand, MAB acknowledged BAC will use the in-flight kitchen in KLIA and Penang International Airport for services to other airlines, and BAC shall ensure it can continue to provide such services to third parties upon the expiration or termination of the NCAs.

The NCA is part of the MAS’ recovery plan announced by Khazanah Nasional Bhd in August last year. The new agreement will terminate BAC’s current 25-year catering agreement expiring in 2028 in KLIA and Penang International Airport.

“The NCAs are expected to contribute positively to the earnings and earnings per share of Brahim’s group for the financial year ending Dec 31, 2015,” said Brahim’s. “The board of directors of Brahim’s is of the opinion that the execution of the NCAs are “in the best interest of the company.”

However, Brahim’s said in view of the confidentiality clause on certain terms in the agreements, it would not be made available for inspection.

 

This article first appeared in The Edge Financial Daily, on May 12, 2015.

      Print
      Text Size
      Share