Qantas has struck a deal to spin off its catering division, as prospective purchaser Dnata looks to grow its presence in the Australian market and globally.

The deal means about 1,200 employees of the Qantas catering businesses will be transferred to Dnata. The value of the transaction is not being disclosed, and the agreement is subject to approval from the Australian Competition and Consumer Commission.

Dubai-based Dnata is part of the Emirates Group, which has a strategic partnership with Qantas.

Dnata will take over the Qantas Catering Group, which includes subsidiaries Q Catering and Snap Fresh. Q Catering has facilities in Brisbane, Melbourne Perth and Sydney, with Qantas its largest customer. Snap Fresh has a meal production plant in Queensland, providing frozen meals to airlines and other industries.

Under the deal, Dnata will continue to provide inflight catering to Qantas for an initial period of 10 years. Dnata operates 11 catering facilities in Australia and has 4,000 employees in that country in the catering, cargo and ground handling sectors.

Dnata said the acquisition reflects its confidence in the Australian market and its growth potential. The company intends to invest in more infrastructure there, starting with a new catering facility in Sydney.

The Qantas deal is the latest step in Dnata’s global expansion in the catering sector. It recently opened catering facilities in Dublin and Melbourne, Australia, and is constructing another in Vancouver. It has reached an agreement to acquire New York-based caterer 121 Inflight Catering.

Qantas said the sale will allow it to prioritize investment in its airline operations. “We’ve always said that we would explore the sale of certain assets where it makes sense, just as we’ve done before, including with the sale of our catering facility in Cairns and Qantas Defense Services,” Qantas Domestic CEO Andrew David said.

 Adrian Schofield, avweekscho@gmail.com