By Scott Wright

JOHN Menzies has signalled it expects to have fallen into the red in the first half of its financial year after revenue plunged amid the havoc wrought by coronavirus on the international aviation market.

The aviation services company reported that revenue had dropped by nearly one-third (33 per cent) in light of “very challenging conditions” in the first half, which saw flight schedules decimated under measures to halt the virus spreading.

Menzies has been consulting ground-handling staff at Edinburgh and Glasgow airports over redundancies as a result of the downturn in demand for its services, with around 300 jobs at risk. Up to 1,200 jobs are at risk in Menzies’ operations across all UK airports. Edinburgh-based Menzies, which has focused exclusively on aviation services since selling off its historic newspaper distribution business in 2018, said while trading conditions have remained challenging because of the pandemic, it is now “restarting operations and seeing a partial return of flight schedules”.

“Cargo volumes continue to be more resilient and our AMI business, a cargo brokerage, is trading ahead of expectations given the current lack of available capacity,” Menzies said.

Looking into the second half, the company noted that its profitability would benefit from a “more significant contribution by various government support programmes and continuing tight cost management”.

And it flagged that it had made “very encouraging commercial progress” during the crisis by winning new business, amid moves by the company to diversify into higher-margin areas.

Menzies added £27 million of net annualised revenue from commercial activities in the first half. Since then, the company said it has won the ground handling and cabin cleaning business of Air France/KLM in Toronto. It also noted that it has expanded its relationship with Qatar Airways by securing new cargo handling contracts in six locations over three countries; ground-handling contracts have been won at four of these locations, the company said.

Menzies had entered the crisis with 32,000 staff worldwide, but has since laid of 21,000 people, many of whom have been retained on furlough schemes.

Last month, corporate affairs director John Geddes spearheaded a campaign on behalf of Menzies and fellow aviation services companies Swissport, WFS (Worldwide Flight Services) and Dnata to call for continued government subsistence for the sector after the furlough scheme ends next month. In a letter to government ministers, the companies said that, with thousands of jobs at risk, the additional support would help the industry retain staff and ensure it is equipped to take part in the eventual recovery of the sector. Under the proposals, the companies would continue paying part of their employees’ wages, with the public purse picking up the balance until the market recovers.

While Menzies, which operates from more than 200 locations in 37 countries, pointed to a partial return of flights in its update to the market yesterday, the list of countries on the UK quarantine list continues to grow as coronavirus infection rates increase across Europe.

Menzies usually carries out significant work at airports in the Far East, including servicing planes connecting China with Singapore and Macau. But that market has still to show signs of meaningful recovery.

The company has agreed a revised banking structure, subject to legal completion, following “positive discussions” with lenders. It said the new package would provide additional flexibility as the aviation industry recovers from the pandemic.

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