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Air services provider dnata has agreed to purchase Qantas’s catering businesses for an undisclosed sum.
The transaction, announced on Wednesday, involved Qantas selling its Q Catering (based in Brisbane, Melbourne, Perth and Sydney) and frozen food maker Snap Fresh (based at Logan City in Queensland) to the Emirates Group-subsidiary dnata.
Qantas Domestic chief executive Andrew David said the sale would support efforts to “prioritise investing in the airline”.
“We’ve always said that we would explore the sale of certain assets where it makes sense, just as we’ve done before, including with the sale of our catering facility in Cairns and Qantas Defence Services,” David said in a statement.
“The catering businesses will benefit significantly from dnata’s global footprint, catering expertise, and ability to drive investment and growth for what is a core focus of its operation.”
Q CATERING THE LATEST IN A SERIES OF ASSET SALES
Qantas has been active in selling some of its non-airline assets in recent years.
In July 2012, Qantas sold its Cairns and Riverside (in Sydney) catering facilities to Gate Gourmet. As a result of that sale, Qantas no longer provided third-party catering services in Sydney. The airline group also offloaded its 50 per cent share of parcel delivery company StarTrack to Australia Post in that year.
Then in 2013, Qantas sold its wholly-owned subsidiary Qantas Defence Services (QDS), which provides maintenance and engineering services on aircraft and engines to government and military customers and engineering consultancy services to the naval industry, to Northrop Grumman Australia for $80 million.
In 2014, the company closed its Adelaide catering facility.
And in 2015, Sydney Airport paid Qantas $535 million to buy back the airline’s lease over Terminal 3 that was due to expire on June 30 2019. At the time, Sydney Airport said Terminal 3 would be a common use terminal from mid-2019, with Qantas retaining priority usage over the facility through to 30 June 2025.
DNATA TO SUPPLY CATERING FOR QANTAS OVER NEXT 10 YEARS
The sale also included an agreement for dnata to supply catering for Qantas flights for an initial 10-year period, while the airline would continue to work with key suppliers in menu design and development such as Neil Perry’s Rockpool.
“Customers will continue to enjoy Qantas’ premium service, including unique Rockpool-designed menus for First and Business passengers, showcasing the best of Australian produce for millions of travellers each year,” David said.
“Together with dnata, we’ll continue to deliver the inflight food and beverage experience we know our customers value, just as we work with catering companies in offshore ports for our international flights.”
Qantas said dnata already supplied inflight catering for its flights out of Adelaide, Canberra, Johannesburg and London.
dnata divisional senior vice president of catering Robin Padgett said the acquisition of Q Catering and Snap Fresh reflected the company’s “confidence in Australia as a market and the ongoing growth potential into the future”.
“By combining dnata’s network strength and international talent with Qantas’ domestic catering expertise, this will allow us to further grow our presence and deliver catering excellence to more customers across Australia than ever before,” Padgett said.
Qantas said about 1,200 Q Catering staff would become part of the dnata operation, which has 11 catering facilities in Australia, once the sale was completed.
The deal required Australian Competition and Consumer Commission (ACCC) approval.
When Qantas and Emirates established their global alliance in 2013, the two parties told the ACCC in their application there was “no intention for any coordination” between the dnata’s catering operations (then known as Alpha Flight Services) and Q Catering.
“The applicants are therefore willing to exclude coordination between catering and aircraft cleaning operations from the scope of the Application in order to seek to allay issues raised by interested parties,” the pair said in its 2013 application.
VIDEO: A look at dnata’s global catering business, from the company’s YouTube channel.
David
says:Tax wise, a good move. Will look good on the expenditure side of the ledger. However, assets create income. What is left for Qantas to sell in lean times?
franz chong
says:what does this mean for companies that send the non food side of the catering for flights.My workplace does Napkins,Salt/Pepper,Stirrers,Cutlery and the packets they go into for the airlines plus roll up’s for premium class cabins and for Qantas themselves.
Paul Brisbane
says:Passive incomes are good, selling ones assets look good on paper until the following year. Money should be injected into new assets and not lost internally. Classic example would be the Federal Government seeling off assets and squandering money, The business logic of selling off catering, freight and servicing seems strange when they are profitable and items you use or benefit from.
Chris
says:Huge mistake .Catering gets away with so many incidental charges due to owning the Catering as they found out when they outsourced the food ..now being charged triple the money..just so they didn’t have to pay staff..they will now be charged for every thing..British Airways went the Sam route a few years back as they couldn’t afford the losses they had to buy Catering back,Qantas is run by the most inept bunch of managers in history
D bell
says:They have been to the “government, clean out the pantry for short term gain school of poor management” Alan Joyce has to go.
Adrian
says:Accountant have a lot to answer, they will sell of the farm just like Ansett Airlines was sold off!!
Brendan
says:I feel sorry for the staff. They were forced to take a 18 month pay freeze and change work practices to help the company through the “Bad” times a couple of years ago. Then to have this happen to them!!
What was the secret deal for the sale?
Was it getting there A380’s painted for free or was it Emirates pulling out of a few routes in Australia????
Sounds very sus, hopefully the ACCC will block it.
JIM7
says:If you think that none of this money is going into top eschelon corporate bonuses, then you are naive beyond belief.
Neil Hansford
says:This is not new news!
It was almost sold back when Geoff Dixon was CEO but the largest caterer in the US market wouldn’t come up to the price.
Regrettably there comes a time when unionised aspects of Qantas can’t be kept if Qantas is to be competitive.
We hate having world class successful operations and have to always pull the tall poppies down. In Ansett days it was contemplated operating from either Canturbury or Randwick racecourses as the infrastructure is grossly underutilised and can feed a large number of people in a short term.
I notice Marriott didn’t come back for another attempt.
Eric C
says:I don’t know or care too much about the economics of the sale. All I hope, as a Qantas FF, is that this just might mean an improvement in the quality (dare I say edibility) of the Qantas food offerings in recent years. Even in International Business Class it is well below average and far behind Emirates. Also on the domestic scene the “snack” offerings in Economy have been running a dismal second to Virgin.
Davo
says:I’m with Eric C on this too. The food on a recent MELLAX flight in J class was v v ordinary. No flair,, basic presentation and taste so-so. Reminds me years back when Ansett, whose food was pretty good even in Y, but then the bean counters decided to sell off the Catering arm and employ a contractor. The result was dismal and the food was in a word .. crap. .
Samantha
says:The sale will affect many Australian in the long run. Without doubt they will control the future price of the food they catered to airlines without any competitor. It will automatically make ticketing price go up combine with fuel price. Airlines likes Qantas will have to buy back the catering centre in the future cause of the future impact on them. ACCC and foreign board has to step in and looking trough the sales to foreign ownership to make sure the profit they get benefit Australian people.