SGS CEO says TLD agreement helps reduce OPEX by SAR 100 mln annually

Saudi Ground Services Co.’s (SGS) agreement with France’s TLD Group will reduce direct operating expenses (OPEX) by SAR 100 million annually in the coming years, CNBC Arabia reported, citing the company’s CEO Fahd Cynndy.

SGS partnership with TLD will also have a positive impact on other airlines, especially amid the current tight conditions, low returns and increased operating burdens to restore passenger confidence.

SGS has started to focus on the technical aspect, directing a huge part of capital expenditures to technology, so as to cater for customer demand. Next week, the company will deploy new mechanisms, which might be the first of its kind in the Middle East and North Africa (MENA) region, Cynndy said.

Earlier this week, SGS signed a joint venture (JV) agreement with France’s TLD Group to establish TLD Arabia for Equipment Services, a limited liability company, to provide ground handling equipment maintenance services across all Saudi airports.

Read: SGS, TDS Group sign JV for SAR 1 mln ground equipment maintenance services firm

Commenting on the layoffs during the COVID-19 crisis, Cynndy explained that the company’s strategy aims to keep Saudi workers “at any cost”, adding investment in local human resources is key for SGS future operations.

SGS operations have now reached 30%, compared to the pre-COVID-19 levels.

“The steady increase is a positive indicator, as the company’s operations stood at 18% at the end of June,” he added.

SGS targets flight resumption of 65%, and accelerates efforts to raise the safety area to up to 57%.

SGS is quite different, when compared to its peers, as it eyes fair and steady profit margins. The company aims to reduce profit margins to a reasonable percentage that enable it to break even, in line with other national carriers or service providers, the CEO stated.

SGS is looking to achieve these without any impact on its returns through diversifying income sources and focusing on size rather than profit margins, Cynndy concluded.