By Scott Wright
THE Kuwaiti company that is hoping to acquire John Menzies has been granted more time to make a formal offer, as the Scottish company underlined its increasing recovery from the pandemic.
National Aviation Services (NAS) now has until 5pm on March 30 to announce a firm intention to make an offer for the Edinburgh-based aviation services company or walk away, following a request for an extension from the Menzies board.
The initial deadline for NAS to bid was due to fall at 5pm today.
The Takeover Panel agreed to the extension to allow more time for talks between Menzies, NAS and its parent group, Agility Public Warehousing Co. It comes after the Menzies board declared last month that it “would be willing unanimously to recommend an offer” from NAS that valued the company at 608p per share, or £550 million. The board had previously thrown out approaches that valued the business at 460p, 510p and 605p per share.
The extension was announced as Menzies reported a return to profitability in the year ended December 31 amid the recovery of the global aviation sector.
Menzies, which provides aviation services in airports around the world, made a pre-tax profit of $30 million for the period, following a loss of $155m in 2020. That came as long-term margins were boosted by restructuring, cost savings, new business wins, and “significant” growth in air cargo volumes. During the year, Menzies established new aviation services markets for the business in Pakistan and Iraq, and expanded into the emerging aviation markets of China, Costa Rica, El Salvador and Guatemala.
It also noted that net commercial wins contributed $112m of incremental annual revenue. Deals secured included an Avianca cargo win at Miami, outsourcing ground services with Qantas across Australia, and renewals with easyJet at 23 airports in Europe.
The company, which has a global headcount of around 27,000 people, saw revenue increase by 27% to $1.35 billion from $1.1bn.
Since year-end, Menzies has renewed and expanded a five-year deal to provide into-plane fuelling and fuel farm services for Shell in the UK, and a five-year cargo contract with Geodis in Amsterdam. It declared that it is targeting around $100m of net new annualised revenue in 2022.
Chief executive Philipp Joeinig said: “I am delighted to report a strong set of results for 2021, despite the continuing impact of Covid on aviation activity levels. The rebalancing of our business as a major aviation logistics player continues at pace.
“We have seen significant growth in our air cargo business by winning contracts and widening the global reach of our network, while our fuel and ground services businesses go from strength to strength. The reshaped business is emerging strongly from Covid and our opportunity for growth is significant.
“Our future growth will be driven by continued recovery in volumes, growth in the global aviation market, further commercial gains and the successful conversion of our exciting business development pipeline. As a result of significant management action to reduce costs, we expect that this growth will be achieved while delivering structurally higher margins.
“Our strong results and the successful implementation of our strategy would not be possible without the hard work of our global team. I would like to thank every member of the Menzies team for their continued hard work and dedication.”
Mulling the outlook, Menzies said it expects that its air cargo business will continue to grow, and that the “steady” increase in passenger flight volumes would continue this year, adding that “this trend will accelerate as we progress through 2022”. But it does not expect air travel activity volumes to fully return to pre-pandemic levels until 2024.
“This continued recovery would support further growth in revenues for our fuelling and ground services businesses into the medium-term,” the company added.
“We are anticipating that the commercial progress that we have seen since the start of the pandemic will continue.”
Shares in Menzies fell as much as six per cent in early trading yesterday but rallied partially during the day. Shares closed down 3.3%, or 16.9p, at 491.13p.
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