Edinburgh's Menzies flags losses but wins new business despite Covid turbulence
John Menzies, the Edinburgh-headquartered global aviation services group, has plunged to a first-half loss after revenue was cut by a third amid “very challenging conditions”.
In an update to investors, the firm said trading had remained tough due to the ongoing impact of the pandemic on global air travel. However, it said it was now re-staring operations and seeing a partial return of flight schedules.
Cargo volumes continue to be more resilient, it added, while its cargo brokerage business is trading ahead of expectations given the current lack of available capacity.
The group, which was forced to lay off thousands of workers amid the crisis, said: “As a result of the very challenging conditions experienced by the industry, revenue to the half year was down approximately 33 per cent, in constant currency, on the prior year.
“The revenue decline has had a significant impact on profitability and will lead to the group being loss making in the first half, although the extent of this has been limited by the speed and effectiveness of our cost management actions.
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“In the second half, profitability will benefit from a more significant contribution by various government support programmes and continuing tight cost management.”
The firm said that despite the crisis, it had made “very encouraging commercial progress winning significant new business”.
In the first six months, the group added some £27 million of net annualised revenue from commercial activities.
Since the half year end, it has won the ground handling and cabin cleaning business of Air France/KLM in Toronto and further strengthened its relationship with Qatar Airways, securing new cargo handling contracts at six locations across three countries together with ground handling contracts at four of those locations.
The update came as Menzies, which is one of Scotland’s oldest companies, dating back to 1833, said it had agreed a revised banking covenant structure.
The group is due to announce its interim results for the period ending 30 June on 29 September.
In June, Menzies saw its chief executive head for the departure gate to take up a top role at whisky maker William Grant & Sons.
The firm said Giles Wilson was leaving to become chief financial officer at the spirits giant behind brands including Glenfiddich.