Malaysia's GSA a step closer to MNC dream, with maiden acquisition of Swiss giant's MRO ops


KUALA LUMPUR: Global Systémes Asia Sdn Bhd (GSA) has taken a big step towards its goal of becoming a multinational corporation following its maiden acquisition of Swiss maintenance, repair and overhaul (MRO) giant RUAG International’s operation in Malaysia.


GSA had on last Tuesday announced the acquisition of RUAG Aviation Malaysia Sdn Bhd from Swiss technology group RUAG International.


GSA chairman Datuk Nonee Ashirin Mohd Radzi said the company was on the lookout for strategic investment to turn into a sizeable Malaysian-owned MNC with a global presence.


GSA claimed that the acquisition signified the first for a Malaysian company within the MRO sector, reinforcing the nation’s agenda of becoming a regional and global hub for the aerospace industry.


“We have a proper execution and planning to achieve MNC status in the next three to five years. We are spearheading a string of corporate exercises, which are expected to conclude by 2022,” Nonee said.


She said the Covid-19 pandemic had severely affected the aerospace industry and realignment would be vital for the market’s survival with M&A opportunities to enhance networking, capability and develop human capital development for future growth.


The acquisition could support RUAG Aviation returning to the black in the second quarter (Q2) of 2023 with an expected revenue generation between RM10 million and RM20 million annually, she said.


“Currently, RUAG Aviation generates about RM3 million to RM5 million in revenue as the company suffers from the pandemic crisis. We expect to conclude the acquisition on June 16, owning a 65 per cent stake,” she added.


GSA’s opportunity to own the MRO came after RUAG International decided to sell its 65 per cent stake as part of the group’s consolidation plan in Europe.


Nonee said there could be a spillover effect on MRO outsource works from Singapore coming to Malaysia as operators would need to reorganise their supply chain due to the anticipation of economic recovery and travel rebound in 2022.


“We will need to find synergy between other companies. We believe there are more rooms and gaps to be filled to turn around RUAG Aviation as the company has various MRO capabilities to expand beyond its current capacities,” she said.


RUAG Aviation capabilities include starter-generators for original equipment manufacturers (OEMs) – Thales, Honeywell, APC/Skurka Aerospace and Safran; search and landing lights (Luminator); anti-collision light and power supply unit (Logic Spa); and engine control levers (Tema Spa).


The company’s key customers are Leonardo Helicopter (Malaysia and Australia), MASwings, Malindo Air, Weststar Aviation Services, BHIC AeroServices, Galaxy Aerospace Malaysia and Skyways Technics.


Nonee said GSA had been negotiating with RUAG International since last year.


“We feel that the acquisition will add value or expand GSA’s MRO services for drones as air mobility is coming our way. We can also look for a strategic contract from the government in new areas with the availability of building human capital development for the country,” she added.


Nonee said RUAG Aviation was certified by the European Union Aviation Safety Agency (EASA) and the US Federal Aviation Administration (FAA) to undertake MRO jobs.


“There is an opportunity we can capitalise on RUAG Aviation’s regional footprint to allow GSA to grow as the former has established a regional network for MRO services,” she said.


Nonee said GSA would want to contribute to the nation’s target of having RM55 billion contribution to the gross domestic product (GDP) by 2030 for MRO services.


“MRO and manufacturing are key contributors to the economy. There is a huge opportunity for us to source out MRO services from Singapore to Malaysia,” she said.


The acquisition will complement GSA’s military MRO unit, Global Turbines Asia Sdn Bhd (GTA), and establish a collective business avenue to create highly skilled jobs for the local.


“This will provide new career pathways and opportunities amid our industry transformation efforts. We need to forge more of such partnerships that benefit our partners and our people, who can learn and refine their skills over the long term,” she said.


On a larger scale objective, she said the acquisition would cement Malaysia’s position as the MRO hub in the Asia Pacific region, contributing about 15 per cent of the global output planned in the next first five years.


“I believe the Subang area should be leading the MRO One-Hub centre in the region. The area has a lot of growth potential with support by the federal and especially Selangor state government.


“Changes in international investment patterns and the advent of new technologies are reshaping the global economic environment, disrupting industry structures and business models,” she added.


Nonee said relevant stakeholders would need to harness the spirit of partnerships in the country’s industrial development and transformation efforts, given the uncertainties of the evolving landscape.


“Partnerships among industry players and between the public and private sectors will ensure that talent with different perspectives and skills collaborate to mitigate risks and optimise our resources,” she added.


The goal hinged on the merger and acquisition (M&A) for better growth prospect in MRO services segment, Nonee told the New Straits Times in an interview.