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'MAG in talks with foreign caterers'

KUALA LUMPUR: A number of foreign in-flight caterers is knocking on Malaysia Aviation Group's door for a presence in the country's airline catering market.

Business Times learnt that one of the interested foreign parties is a Middle Eastern airline caterer.

Sources could not reveal its identity due to the ongoing discussions but said there could be two options for the potential alliance.

"Many (international airline caterers) are interested, especially after their (MAG and BFS) contract ends. Malaysia is situated in a strategic location and there is huge potential to expand and improve the in-flight meal choices for Malaysia Airlines Bhd," one of the sources said.

In an interview on Sept 5, MAG group managing director Datuk Captain Izham Ismail said it may operate its own in-flight catering facility via a joint venture with a foreign airline catering company or buy out the remaining 70 per cent stake it does not own in BFS.

When asked about the potential tie-up with an international in-flight caterer, Izham said there could be a possibility since many foreign caterers had expressed their interest to work with MAG. 

He could not name the caterers as the option is under discussion.

However, Izham hinted that the joint venture could either be to build MAG's own catering facility or possibly to buy the remaining 70 per cent stake in BFS. 

He stressed that MAG will need to have a controlling stake should the group opted for a joint venture with a foreign in-flight catering partner. 

Sources said a win-win situation would be for MAG to buy 21 per cent stake in BFS so that it could have at least 51 per cent controlling stake in it and let the remaining 49 per cent to be bought by the foreign caterer. 

Another option would be for MAG to buy the remaining 70 per cent stake and sell up to 49 per cent to an international shareholder which could be the foreign airline catering company. 

"It seems that there are two viable options where the end result would be MAG having the controlling stake in its own airline catering company," another source said, adding that price would remain a determining factor in the buy-out of the 70 per cent stake. 

BFS' parent Brahim's Holdings Bhd currently holds the 70 per cent stake in the airline catering company. The remaining 30 per cent is owned by MAG. 

Business Times had reported on Aug 23 that MAG could take over BFS by acquiring the remaining 70 per cent stake for up to RM129 million, excluding any goodwill.

An independent consultant, believed to be Deloitte Malaysia, has valued the whole of BFS at between RM162.8 million and RM184 million. 

On Sept 8, Brahim's executive chairman Datuk Seri Ibrahim Ahmad said there were a number of companies, including MAG, that had approached it to purchase the shares. 

"We do intend to let go of the 70 per cent at the right and fair price. There are local interested parties (that have approached us) and one foreign interested party also. But that's all is in discussion (right now)," he said.

Brahim's group chief executive officer Mohd Fadhli Abdul Rahman said the right price would be more than the RM129 million price tag which the independent valuer has attached to it.

He also said that BFS is ready to welcome Malaysia Airlines back with a condition of a fair agreement term should the national carrier decides to work together again.

BFS had stopped supplying in-flight meals onboard Malaysia Airlines' flights since Sept 1 after an effort to reconcile the differences between the two companies failed, leading them to end their catering contract that spanned over two decades.

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