Brahim's denies having "legacy contract", being a monopoly

SEPANG: Brahim's Holdings Bhd today denied having a 25-year "legacy contract" with Malaysia Airlines System Bhd (MAS), explaining that the partnership only lasted 10 years, cut short by the restructuring of the company.

The company's executive chairman, Datuk Seri Ibrahim Ahmad said the contract, which was supposed to end in 2028, ended early due to the MAS Act that came into effect in 2015 after MAS underwent a restructuring exercise.

"At that time, Malaysia Airlines was doing very badly. That's why the MAS Act came into effect to protect them. In that particular year, they paid us half or one-third of our monthly payment, there was about RM135 million owed to us," he said, speaking to media at a press conference here today.

Brahim's lost 15 years offf its contract and RM73 million in receivables due to the MAS Act.

MAS Act came into force in 2015 as part of the national carrier's restructuring strategy to seamlessly transition the business, property, rights, liabilities and affairs of MAS to Malaysia Airlines Bhd. The act was tabled in the Parliament in end-2014 and gazetted on Jan 5, 2015.

Ibrahim admitted that Brahim's should have addressed the "legacy" issue from the start when talks were rife that the company received the 25-year contract due to political connections.

Ibrahim is the brother of Malaysia's former Prime Minister, Tun Abdullah Ahmad Badawi, who held the premiership from 2003 until 2009.

"We made a mistake of not addressing the issue at that time when people were talking about it. We should've addressed the issue at that time," he said.

In 2003, Brahim's spent RM170 million cash to buy over then MAS Catering Sdn Bhd.

At the time of the acquisition, MAS Catering had a negative equity of RM240 million, which Brahim's absorbed.

In 2015, after MAS closed down, Brahim's and the NewCo signed a new catering agreement that lasted for five years with an option to renew for another five years.

However, the agreement was not renewed in 2020 due to the Covid-19 pandemic.

BFS instead continued catering to Malaysia Airlines via a service contract that was renewed every three to six months.

According to Brahim's group chief executive officer Mohd Fadhli Abdul Rahman the main contention for Brahim's when a new agreement was discussed between Brahim's and Malaysia Aviation Group (MAG) in November 2022, was the inclusion of a "Termination of Convenience" clause without including compensation for the remaining tenure should the agreement be terminated early.

"If we want the "Termination of Convenience" clause to be in the agreement, it's fine but there must be some compensation for the remaining tenure.""I'm being very fair in my business. I don't know how our ex customer work's, but for me we're being very fair in our business dealings," he added.

MAG and Brahim's in-flight catering unit, Brahim's Food Services Sdn Bhd (BFS) ended their two decade partnership on Aug 31.

Mohd Fadhli also said that claims that BFS holds a monopoly of the airline catering business in Malaysia is untrue as there are other players such as Pos Aviation Sdn Bhd and MAS Awana Services Sdn Bhd.

"The word 'monopoly' itself is wrong because we have competitors," he said.

Ibrahim added that new players are also welcome, even though the local airline catering scene is small.

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