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John Menzies swings to loss, hit by grounding of Boeing 737 Max

“We are right-sizing the business and now we believe we have the platform required from which to drive the business forward,” said chairman Philipp Joeinig.

John Menzies -
The Boeing 737 Max has been grounded since March

Aviation services firm John Menzies PLC (LON:MNZS) slumped to a first-half loss, reflecting weak cargo volumes and the impact of the grounding of Boeing’s 737 Max aircraft.

The company, which provides ground handling, cargo handling and fuelling services for airlines, posted a pre-tax loss of £4.4mln in the six months to June 30, compared to a pre-tax profit of £8.3mln last year.

The Boeing 737 Max has been grounded since March after two fatal crashes, leading to cuts in flight schedules for many airlines.

John Menzies was also hit by the loss of licences in the Dominican Republic and Panama, the end of a cargo joint venture in Hyderabad and costs that are no longer absorbed by the now disposed Menzies Distribution.

The group has taken action to address these challenges, including a £10mln cost savings programme, the streamlining of operations, customer service improvements and new incentives for the sales team.

“We are right-sizing the business and now we believe we have the platform required from which to drive the business forward,” said chairman Philipp Joeinig.

“Accordingly, our expectation for 2020 remains unchanged with the expected benefit from the full-year impact of the cost and efficiency improvement programme, excellent contract renewals, the renewed focus on opportunities with our key customers and the delivery of operational improvements within our underperforming stations.”

Revenue in the first half edged up to £646.9mln from £627.2mln last year with growth across all its regions including the US, the UK, Australia and the rest of the world.

The company secured contract renewals of £68mln at improved margins. 

The interim dividend was held at 6p each.

“Looking forward, our medium to long term outlook remains positive with strong market dynamics and significant opportunities for growth underpinned by our excellent people and strong customer relationships,” Joeinig said.

Quick facts: John Menzies

Price: 410.78 GBX

LSE:MNZS
Market: LSE
Market Cap: £346.35 m
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