It is a double whammy for recently delisted in-flight caterer Brahim’s Holdings Bhd (BHB) now on the brink of losing its 25-year contract with Malaysia Airlines Bhd (MAB). The PN17 company was delisted on June 3, 2023, after Bursa Malaysia rejected its appeal for more time to submit its regularisation plan.
“Risk is always there,” its group chief executive officer Mohd Fadhli Abdul Rahman said, admitting that its in-flight catering service, Brahim’s Airline Catering Sdn Bhd (BAC), was heavily dependent on MAB, which contributed to a whopping 50% of its revenue.
The rest comes from 35 foreign carriersm and BHB is eyeing four more, he told Bernama recently. It was reported that MAB’s parent company Malaysia Aviation Group (MAG) and BAC could not agree on the terms when renewing the contract.
PN17, Covid-19 and staying afloat BHB fell into PN17 in 2019 and recovery efforts was hit by the Covid-19 pandemic. Practice Note 17 (PN17) is issued to companies in financial distress.
BAC’s catering capacity is 60,000 meals. It was producing an average 55,000 meals per day before the pandemic. This plunged to 218 meals per day during the pandemic, although this has climbed to 32,000 meals per day at present day, said Fadhli.
MAB was contributing a monthly revenue of about RM12 million from 2003 until its pre-Covid-19 days, with minimal price adjustment, versus RM8 million currently, an amount it stands to lose in the event MAG ends the contract on June 30, 2023.
Foreign caterers combinedly contributed RM6 million per month, Fadhli said. Plans are in place to negotiate with vendors and the management will return to the drawing board on other non-value-added expenses, he said.
“We are also looking to explore other businesses such as retail and commercial markets, to ensure the business remains sustainable,” he added.
Will MAB dispose of its 30% stake? Obviously, a break-up with MAB is not BHB’s desired outcome, the group CEO said.
“This is not my desired outcome in the first place. If possible, we want to continue supplying to MAB,” he added.
At the same time, BHB is unable to accept short-term contract extensions of between two- and six months, which affect BAC’s operations and revenue, Fadhli said. MAB still has a 30% stake in the company’s catering service.
For the first quarter ended March 31, 2023, BHB narrowed its net loss to RM4.84 million, from RM6.92 million. Revenue, however, rose to RM16.19 million, from RM7.14 million.
