Transat A.T. selling its airport services unit
May 23, 2012, Montreal - Canadian tour operator Transat A.T. is selling its airport services unit called Handlex to Servisair Holding Canada Inc. for an undisclosed sum as it focuses on efforts to restore profitability.
In addition to Air Transat, Handlex serves about 20 other airlines at various airports, including Trudeau International in Montreal, Pearson in Toronto and Vancouver International Airport.
"As the airport services sector gets increasingly competitive and international, Transat is making the strategic choice to focus on its core, tour operator, business,'' said CEO Jean-Marc Eustache.
The 1,200 employees at Handlex provide airport ground services, including passenger reception and check-in, baggage- and cargo-handling, aircraft cleaning and ramp services.
Servisair provides aviation ground services in 118 locations worldwide and currently has about 15,000 employees.
The value of the transaction was not released, although analyst Ben Vendittelli of Laurentian Bank Securities estimated it at $5 million. Servisair said closing is expected within weeks.
"This acquisition confirms Servisair's interest in strengthening its position in the Canadian aviation sector,'' said Servisair president and CEO Abderaman El Aoufir.
"It will allow Servisair to further develop economies of scale and provide our customers with more competitive rates in our current market environment.''
Vendittelli said Handlex is a relatively small part of Transat's business, generating about $50 million of annual revenues compared with $3.65 billion for Transat.
"We believe the transaction should not be overly material,'' he wrote in a research note.
Transat acquired the 50 per cent of Handlex it didn't own in 2000 for $1 million
Although Vendittelli said he continues to believe in Transat's long-term prospects, he said the company will have to show results from its restructuring efforts before its share price climbs again.
Benoit Poirier of Desjardins Capital Markets said the sale is not surprising since Transat had previously indicated it was considering the divestiture.
"We do not expect the transaction to materially affect Transat's cost structure — we understand Transat has signed a long-term agreement under which Servisair will provide Transat with ground services at rates similar to current costs,'' he wrote.
Poirier said Transat could also eventually sell its real estate investments, which could generate about $50 million.