John Menzies’ cargo volumes down as it evaluates UK&I redundancies

By Damian Brett

Handler John Menzies saw its air cargo volumes decline by 37% year on year in April as a result of the coronavirus outbreak-related downturn in passenger flights.

In a trading update, the company said that the spread of Covid-19 has had a significant adverse impact on the group’s financial performance.

It said that during April and May ground handling and fuelling activity was around 75% lower than 2019, with the Group’s ancillary passenger airline services similarly affected. Cargo performance was “slightly more resilient” with the 37% decline.

Its freight forwarding business AMI “continues to trade well” and in line with 2019 performance, with a “positive outlook for the coming months”.

A recovery in flight activity is anticipated to begin from early July, the company added.

During April and May, the group was cash generative as a result of unwinding its working capital and achieving good cash collection from customers, whilst also benefiting from reduced cash costs, as well as the material benefits of government support and payroll schemes.

“These schemes covering many countries have helped to mitigate a large proportion of our direct payroll costs, the group’s largest cost, accounting for in excess of 60% of our revenue,” John Menzies said.

However, in the UK and Ireland, ground handling staff have been told there is a risk of redundancy. The cargo business operates differently and it is continuing to evaluate the forecasted cargo schedules of its existing customers and the potential for new business.

“To date, we have simply advised employees whose roles are at risk of the reasons why we are considering redundancies and that we will be commencing consultation and inviting employees, where it is required to do so, to elect representatives for this purpose,” the company said in a statement.

“Once all preparatory steps have been taken then all requisite documentation relating to the proposals will be provided to the elected and trade union representatives and the formal consultation process will begin at this time.

 “Given the lack of certainty as to when increased air traffic might resume, we consider that retaining employees in employment for as long as possible is consistent with our own objective, together with that enshrined in the principles of the furlough scheme, to continue to look for opportunities to redeploy and/or re-engage employees who might otherwise be redundant, thereby reducing the number of redundancy dismissals.”

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