Changi Airport was reported to be putting out the third ground handling licence tender in the next few months. It was also reported that SIE is interested in bidding for the licence and has engaged in talks with Changi Airport Group over the new licence. We assume SIE will not offer inflight meals catering as suitable space within the airport grounds to locate an additional inflight catering center will be hard to come by.
Therefore even if SIE clinches the license, the impact on both itself and SATS will be minimal as it will take time for customer contracts to unwind and without inflight catering, the cornerstone of SATS’ ground handling services, only its marginal customers may hop over. We maintain our BUY recommendation and target price for SIA Engineering.
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