In-flight caterer Brahim’s Holdings Bhd (BHB) is grappling with a double setback. Following its recent delisting from Bursa Malaysia on June 3, 2023, the company is now on the verge of losing its quarter-century long contract with Malaysia Airlines Bhd (MAB).
After BHB’s plea for additional time to submit its regularisation plan was declined by Bursa Malaysia, the company had no choice but to delist. BHB’s group CEO, Mohd Fadhli Abdul Rahman, acknowledged the considerable risk faced by the company, especially its catering division, Brahim’s Airline Catering Sdn Bhd (BAC). With MAB contributing a staggering 50% to BHB’s revenue, the loss of this contract could significantly impact the company.
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In addition to its MAB contract, BHB also receives revenue from 35 foreign carriers. Despite the company’s current challenges, it is actively seeking contracts with four more carriers, reveals Fadhli. Unfortunately, the renewal of BAC’s contract with MAB’s parent company, Malaysia Aviation Group (MAG), has hit a roadblock due to disagreements on terms.
BHB slipped into Practice Note 17 (PN17) status in 2019, indicating financial distress, a situation further exacerbated by the Covid-19 pandemic. Before the pandemic, BAC was producing an average of 55,000 meals per day, a figure that plummeted to 218 meals during the peak of the health crisis. Though the company has rebounded to 32,000 meals per day, the crisis has significantly affected its profitability.
From 2003 until pre-Covid times, MAB provided monthly revenue of around RM12 million to BHB. This has dropped to RM8 million, a number that could vanish entirely should MAG terminate the contract on June 30, 2023.
While exploring new avenues to shore up revenue, Fadhli stated that BHB is planning to trim non-value-added expenses and negotiate better terms with vendors. Other business domains such as retail and commercial markets are also under consideration to ensure sustainability.
While BHB is not desirous of ending its association with MAB, the short-term contract extensions between two and six months have disrupted BAC’s operation and revenue stream. Currently, MAB still holds a 30% stake in BHB’s catering service.
Despite its challenges, BHB showed some positive signs in Q1 2023, with its net loss decreasing to RM4.84 million from RM6.92 million, and revenue rising to RM16.19 million from RM7.14 million.
This news is based on Malay Mail.
