Singapore air cargo deal elevates its hub status

Sats

29/09/2022 04:20

(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own.)
       MUMBAI, Sept 29 (Reuters Breakingviews) - Singapore is
boosting its hub status as global recession fears loom. Aviation
services group SATS  SATS.SI  is acquiring the world’s largest
air cargo logistics provider for $2.2 billion from U.S. buyout
firm Cerberus. The backing of its sovereign fund shareholder
Temasek will help the buyer complete a supporting equity
issuance, equivalent to 40% of its $3 billion market
capitalisation, in a grim market. 
    The deal is highly complementary: Paris-based Worldwide
Flight Services  WLN.PA , a rival to Dnata and Swissport, has
almost no geographical overlap with its acquirer. The enlarged
entity will be present in 23 countries and handle 9 million
tonnes of goods annually, giving it an edge over smaller
competitors in attracting customers like e-commerce firms and
vaccine-makers that want to work with a single global provider
to minimise supply chain issues. 
    The deal could ultimately lift trade flows through Singapore
where aviation contributes more than 5% of GDP. SATS is part of
the city-state’s industry trinity that includes its former
parent Singapore Airlines  SIAL.SI  and Changi Airport. As
global cargo activity nears pre-pandemic levels, Singapore is
providing a strategic home to an asset that’s passed through
multiple financial owners. (By Una Galani and Thomas Shum)
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 (Editing by Robyn Mak and Katrina Hamlin)
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