KUALA LUMPUR (Sept 8): In-flight caterer Brahim's Holdings Bhd (BHB) said it is open to renegotiations with Malaysia Aviation Group (MAG), the parent company of Malaysia Airlines Bhd, after MAG ended the national carrier's catering contract with Brahim’s Food Services Sdn Bhd (BFS) on Aug 31.
BHB holds a controlling 70% stake in BFS, while Malaysia Airlines holds the remaining 30%.
"Yes, certainly. We would be happy to continue the relationship if we can come to terms on the agreement," BHB founder and executive chairman Datuk Seri Ibrahim Ahmad told a news conference on Friday.
Earlier, the main point of contention was MAG's request to include a new termination for convenience clause in the contract extension between Malaysia Airlines and BFS, which BHB said was something that had never been included with its 35 airline customers, including Malaysia Airlines.
Generally, a termination for convenience clause allows a party to terminate the contract for any reason by giving a written notice at least 30 days in advance.
"We are open [to renegotiations with MAG again], and agreeable to include the new clause [in the new contract extension], provided that the compensation terms are fair," said Ibrahim.
"Regardless of the meals and handling rates, the new clause will have to be properly defined to cover the circumstances applicable or with an acceptable compensation," he said, adding that a "fair" compensation would be one that covers the loss of future earnings for the remaining period of the contract.
BFS currently produces some 12,000 meals per day following Malaysia Airlines' exit as a customer since Sept 1. BFS, which has the country's largest in-flight catering kitchen, has a maximum capacity to produce approximately 70,000 meals per day.
"Pre-Covid-19, we produced about 53,000 meals per day," said Ibrahim.
Meanwhile, BHB group chief executive officer Mohd Fadhli Abdul Rahman told the media that although the caterer is "very open" to have MAG on board again, given that the airline contributed to almost 50% of BFS' revenue, he stressed that the terms would have to be fair.
“The new clause that is mentioned in the contract is as good as not having a contract. Why should we accept the clause if we end up with higher cost?
“I am doing a very fair business. If the terms are fair, then we are willing to accept it. However, if they don’t come back, we will continue to cater to the 35 airlines which we are already providing services to,” said Fadhli.
The CEO further said that it is unfair to label the group as the main factor that dragged down the earnings of the airline, given that the catering business only represented 3% of total operating cost of MAG.
The long-standing partnership between MAG and BHB ended after a “thorough and prolonged” negotiation period.
Following the discontinuation, MAG resorted to self-catering from Sept 1, where it would explore "diverse" strategies to ensure business sustainability, including partnering with “reputable" food and beverage providers.
MAG is reportedly relying on eight service providers for its in-flight meals, including its lounge operator MAS Awana Services Sdn Bhd and POS Aviation Sdn Bhd.
Read also:
Brahim's says 'quite a number of companies' show interest to acquire stake, form JVs
MAG mulls buyout of Brahim’s catering arm
Decision time for Malaysia Airlines’ partnership with Brahim’s
Temporary outdoor production area for airline catering 'not acceptable by normal standard' — Brahim’s chairman
Malaysia Airlines ends in-flight catering partnership with Brahim’s, resorts to self-catering during transition