SATS and AirAsia form ground handling co-operation

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Asia’s leading provider of gateway and catering services, SATS, and Asian low cost carrier, AirAsia, formalised a ground handling partnership in the ASEAN region today (October 30).

SATS has formed a new ground handling entity, SATS Ground Services Singapore, SGSS, to serve customers at Changi Airport’s new Terminal 4. Under the terms of the partnership, SATS will acquire a 50% interest in Ground Team Red Holdings, GTRH, in exchange for its 80% stake in SGSS and total cash consideration of S$119.3m.

GTRH will be renamed SATS Ground Team Red Holdings, which will be the 50:50 joint venture of AirAsia and SATS that will hold stakes in both its Malaysia and Singapore subsidiaries, Ground Team Red (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, aiming to expand into Indonesia, the Philippines and Thailand in the future.

The new partnership will give SATS, which already owns a 49% stake in the largest flight caterer in Malaysia, (Brahim's SATS Investment Holdings), access to the Malaysian ground handling market.

This partnership will also support the rapid growth of AirAsia towards 500 aircraft and 150m passengers by 2027. Tony Fernandes, AirAsia Group Chief Executive Officer said: “Today, we are very pleased to announce that two home-grown companies have partnered together to form a new Asean joint venture. We believe this joint venture will allow AirAsia to unlock significant value…”

SATS President and Chief Executive Officer, Alex Hungate, commented that rapid urbanisation has seen increased demand for travel in Asia and low-cost carriers like AirAsia have made travel affordable for the masses. Airlines are consequently growing their fleet size: “The expanding fleet size represents a huge opportunity for SATS, and we are happy to partner with AirAsia in this joint venture,” he said.

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