Sats should allay concerns following departure of WFS CEO

ON MAY 3, Sats announced that Craig Smyth was slated to leave the organisation, and “new direct reporting lines” had been given to Sats’ chief executive officer, Kerry Mok. This succession move comes despite the inflight caterer and ground handler reiterating last month that Smyth, the chief executive officer of Worldwide Flight Services (WFS), would stay on to run the show after the cargo handler was acquired. At the time, Sats was updating investors on the completion of its Paris-based WFS’ takeover for an enterprise value of about 2.3 billion euros (S$3.3 billion). It was a surprising U-turn in such a short time, particularly so when Sats had first sought to assure investors about the continuity of Smyth’s leadership in its September 2022 announcement on the proposed acquisition of WFS. In fact, the company has said numerous times that he would continue to lead the day-to-day operations of WFS in the first year after the completion of the deal.

Responding to a query from The Business Times on the turnaround, Sats said it has restructured its global leadership team to include key members of WFS in their elevated roles, reporting directly to Mok. This is to harness the synergies and talent of the combined business.

The group management board oversees Sats’ global business, which includes food solutions and gateway services, both in Singapore where Sats is listed, and across more than 20 countries where the group is present, added the company.

WFS’ previous group chief financial officer is now the company’s deputy CEO; two other senior executives have been appointed as the CEO for Americas, and the region of Europe, Middle East, Africa and Asia respectively. The trio are now members of Sats’ group management.

While the direct leadership of Mok over the wholly-owned subsidiary would mean closer oversight, the management structure begs the question – being based in a different time-zone, would he be overly stretched, especially when Sats is expanding and also trying to recover from the savage impact of the pandemic?

For instance, Sats is in a joint venture with Air India that was selected in February to design, build, finance and operate an integrated multi-modal cargo hub at the upcoming Noida International Airport in the Indian state of Uttar Pradesh.

Studies show that out of 10 takeovers, as many as nine fail. Sats has stated that the successful integration of WFS is “crucial”, given the scale and transformational nature of the acquisition.

Interestingly, of the WFS trio, two joined at around the same time as Smyth.

Given Sats had reiterated his role just a month ago, it will probably need to reassure employees of its plans. The company had said that retrenchment is not on the cards, in an exclusive interview with The Business Times in November.

Updating on its strategy without Smyth’s leadership would also help to allay any concerns of shareholders, who have supported the nearly S$800 million rights issue after a plunge in Sats’ share price.