Nayak is the largest and oldest company in the Europe in the field of aircraft maintenance, operating at more than 50 airports
Tel Aviv, July __, 2023 - Knafaim Holdings Ltd. ("Knafaim", TASE - KNFM), a holding company in the aviation industry, announced earlier today that it is entering a collaborative agreement with the European Nayak Aircraft Services group, which is a group engaged in the provision of various maintenance services for aircrafts in the aviation industry. The purpose of this agreement is the establishment of a joint venture for the provision of line maintenance services for civil aircraft (passengers and cargo) of international airlines operating at Ben Gurion Airport. Additionally, this agreement includes the future option of extending operations to other airports in Israel.
The Nayak group is a well-established company in its field of operations and operating since 1974, providing various civil aircraft maintenance services, including Base Maintenance and Line maintenance. Their Line maintenance services are currently provided at more than 50 airports to many airlines and several types of commercial aircraft. In respect of and in connection with the provision of the services, and in accordance with the agreement signed between Knafaim and Nayak Israel (an Israeli subsidiary of the Nayak Group), the parties are to establish a limited partnership in Israel. Knafaim and Nayak Israel will hold 49.9% of the participation units in the partnership, while the general partner of the partnership will hold 0.2% of the participation units in the partnership. Knafaim will hold 49.9% of the general partner's shares, and Nayak Israel will hold the remaining 50.1% of the general partner's shares.
The operation is anticipated to start during the fourth quarter of 2023, with a limited number of anchor customers and the parties, respectively, intend to further expand the scope of customers and activity as well as the capacity of employees in the future. In the first three (3) years of the joint venture, which has been agreed upon by the parties as a period for penetrating the market and establishing the activity, the services will be provided to the customers under a services agreement between the partnership and Q.A.S Israel Ltd. (of which Knafaim holds 50% shares) (QAS). QAS deals with the provision of various services at the Ben Gurion Airport - ground services to airlines and private jets owners, VIP customer services as well as providing VIP and passenger lunches in the airport. In accordance with the agreement and the regulative demands, the Nayak group will be providing the professional umbrella for the operations and the services provision, which includes services related to licenses, insurance, ect..
The joint venture operations, to be working capital based, requires an initial and immaterial investment by both parties, which is not a substantial one to Knafaim.
Marco Smit, CEO and Managing Director of Nayak Aircraft Services: "as the leading and oldest independent company in Europe in the field of aircraft maintenance, active for nearly 50 years, we are excited to extend our operations outside Europe and collaborate with the Knafaim group in the establishment of this new operation in Israel. The Israeli market entails a strategic importance to us, both geographically and business wise, with an increasing presence here in Israel of international airlines and a growth and profitability potential. The fact that this is only Nayak's second station outside of Europe is evidence of our expectations of the Israeli market and its importance to us. We believe that our expansion to Israel will strengthen Nayak's global position and we see the Knafaim group as a long- term partner, thanks to its extensive experience, the expertise, and the industry appreciation it has. We look forward to start our operations by the end of the year and meeting high standards of availability and service."
Eran Ben Menachem, CEO of Knafaim Holdings, added: "we are proud to collaborate with the Nayak group, the largest and leading company in Europe in the field of aircraft maintenance, for the establishment of the Knafaim's group's new venture and activity in the field of line maintenance, and see this as an important expression of confidence coming from a reputable player abroad. The field of line maintenance includes a wide range of services supported by increasing demand in Israel given the ongoing growth in the number of international airlines operating at the Ben Gurion Airport and the recovery in the aviation industry. The establishment of this new venture requires an insignificant investment, especially when you consider the potential and in comparison, to the standard industry in providing such services. We believe when the strong synergy between the reputation, expertise and the professionalism of Nayak and the experience of the Knafaim group and QAS and their familiarity with the Israeli market and its demands, together with the relationships with global airlines brought to the table by both parties, will maximize the embodied value of the venture and bring an additional business expertise to the group.”
The agreement includes, inter alia, provisions customary in agreements of this sort, such as arrangements with respect to the initial financing required for the establishment of the partnership and its activity, and provisions regarding future investments, as necessary; provisions regarding the general partner board of directors, according to which each party shall have the right to appoint and replace two directors from the general partner board of directors; decision-making mechanisms, including a series of decisions that require the unanimous consent of both parties; agreed policy for distribution of the partnership’s profits; provisions regarding the transfer of the rights in the partnership to third parties; and non-compete provisions, including in the event of a breach of the agreement by either party. The agreement also includes customary representations and warranties of the parties.