Brahim’s confident will not lose contract in Malaysia Airlines revamp

  • Stocks,Earnings,Corporate News,Airlines,Investing
  • Friday, 12 Sep 2014

SEPANG: Brahim’s Holdings Bhd is confident that the company’s 70%-owned Brahim’s Airline Catering Sdn Bhd (BAC) will not lose its contract with Malaysia Airlines (MAS), even as its lucrative 25-year contract is being renegotiated under the airline’s massive restructuring exercise.

Brahim’s executive chairman Datuk Ibrahim Ahmad Badawi told StarBiz yesterday that he is expecting a “positive outcome” from a meeting today to discuss its catering contract.

“By Friday, we will know whether the contract has been revised upwards or downwards,” he told StarBiz on the sidelines of a press conference at BAC’s headquarters in Sepang.

“At any rate, we will remain as the supplier for MAS,” he added.

Ibrahim said the company had, in the last three weeks, been in talks with MAS to renegotiate the remaining 15 years of its 25-year catering contract.

The other 30% owner of BAC is Malaysian Airline System Bhd.

As a reaction to the announcement of MAS’ restructuring exercise on Aug 29, Brahim’s shares have fallen 14 sen to RM1.19 from RM1.33.

On Thursday, its shares closed at RM1.22 after hitting an intra-day high of RM1.25.

BAC contributes about 80% of Brahim’s income.

“Even without MAS, people will travel.

“We supply to 35 airlines that fly into KLIA, so that will mitigate the potential loss of revenue,” Ibrahim said.

For the second quarter ended June 30, 2014, Brahim’s posted a net profit of RM1.56mil, down 71.6% from RM5.46mil last year.

Revenue came in at RM92mil, down 6% from RM98mil last year.

Meanwhile, Malindo Air and AIRASIA BHD are in talks with Brahim’s for catering services.

The contracts, currently pending pricing negotiations, are expected to be signed by November or December.

Brahim’s is also expecting Qatar Airways and Brunei Airlines to formalise their contracts by year-end.

“We are expecting to up our airline catering clients to between 40 and 45 by next year, but that’s for MAHB to decide,” Ibrahim said.

Meanwhile, Brahim’s is diversifying its revenue base to reduce its reliance on the airline business.

Ibrahim said the global halal industry stood at about US$1 trillion a year.

“We have been spreading our ‘halal’ expertise overseas for nearly a year now.

“Recognised as a halal supplier, we have been assisting others to build their halal component. Japan is a potential market for us, as it is targeting Middle-Eastern tourists.”

Brahim’s also intends to amp up its halal certification component, which it began last year.

“The fees are not significant, but as more flight kitchens come on board, this brings about recurring income,” Ibrahim said.

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