Menzies to close Scots airport cargo operations

Business Correspondent/Personal Finance Editor

Tuesday 17 July 2012

MENZIES Aviation is to restructure its UK cargo business and close operations at four airports including Glasgow to stem continuing losses, the group said yesterday.

RESTRUCTURING: John Menzies hopes that staff employed at Glasgow Airport will be able to transfer to Servisair under its plans to focus cargo operations on London Heathrow.

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SIMON BAIN

John Menzies shares, already up by more than 15% this year, rose another 2% yesterday on the announcement.

Menzies will focus its UK cargo business on London Heathrow, together with smaller operations in Aberdeen and Belfast, and axe cargo operations at Glasgow, Birmingham, East Midlands and Manchester airports.

The restructuring, which will result in an exceptional write off of up to £3 million, is expected to be completed by the end of August and will return the UK cargo business to profitability.The company said it hoped that the small number of jobs impacted in Glasgow would be preserved in a transfer to Servisair, which was keen to mop up most of the business.Paul Dollman, finance director, commented: "We are hopeful that most of the staff will TUPE across."He added: "For a number of years we have struggled a bit with some of our UK cargo business, particularly in Manchester which is an over-supplied market, we have been loss-making there for some time."Menzies operates cargo at around 40 airports worldwide with its principal centres in Heathrow, Chicago, Los Angeles and Schipol. It picked up the UK operations 12 years ago with the Ogden acquisition which marked its serious arrival in the aviation services market.Its passenger ground-handling services have since developed into the group's growth engine, with a presence at 130 airports. In 2008, when the world downturn hit, cargo volumes dropped sharply and spooked John Menzies investors, sending the share price plummeting to 43p in early 2009. The recovery, alongside unexpected growth in the core newspaper distribution business and the growth of Menzies Aviation into the second biggest operator globally, has since driven Menzies shares to record highs. They rose 11p to 617p yesterday.In May, the group reported a 4% rise in absolute cargo volumes, but a 7% fall in like-for- like performance, while the smaller cargo forwarding business was said to be performing strongly. The ground-handling division has just started a new five-year con- tract with British Airways to handle some 19,500 flights a year out of Manchester, Edinburgh and Glasgow, adding to the group's momentum of net contract gains. Mr Dollman said: "Our focus has been more on the passenger side of late. Having said that we have just bought a cargo business in Romania." On the UK operations he said: "We have tried all sorts of things, reducing costs, but it just isn't a long-term viable business for us." In a high fixed cost operation, decisions had to be taken when leases came up for renewal, he added.He said: "There is constant churn of the portfolio. We are at 130 airports now, and each one gets looked at every day, every month. If it doesn't work we try to fix it, if we can't fix it we try to sell it, and if we can't sell it we close it."

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Menzies to close Scots airport cargo operations

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