Brahim's airline catering and MAS ink settlement agreement

Brahim's Airline Catering Sdn Bhd (BAC) entered into a settlement agreement (SA) with Malaysia Airlines System Bhd (MAS) yesterday, as part of the latter's recovery plan announced by Khazanah Nasional Bhd in August last year.

BAC, 70 per cent-owned by Brahim's Holdings Bhd, is the exclusive in-flight caterer to MAS under a 25-year catering agreement expiring in 2028 at the Kuala Lumpur International Airport and Penang International Airport.

In a statement, Brahim's said among the salient terms of the SA is that, it would commence on Oct 1, 2014 and remain in force until a new catering agreement (NCA) is signed on or before March 31, 2015.

During the interim period, BAC will provide a reduction of 25 per cent of the monthly final bill to MAS, and not compromise on the quality of meals provided.

BAC and MAS have also agreed to the full and final settlement of the monies withheld by the airline of RM94.03 million. After deduction of global settlement and other reductions, it will be RM37.95 million and be released in two stages.

Should the NCA be not entered into on or before March 31, all settlements in the SA shall be deemed null and void.

Meanwhile, Brahim's said the SA was signed with the intention of easing the tight cashflow of BAC and its own, caused by MAS' action of withholding payments.

MAS has indicated it would not hesitate to look for new caterers to replace BAC for MAS NewCo, should BAC not enter into the interim agreement, pending negotiation of the NCA.