News / Menzies cuts 17,500 roles as handlers join to warn of 'imminent collapse'

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Menzies has made 17,500 “temporary reductions in staffing”.

In a trading update issued this morning, the aviation services company said it was “mitigating action wherever we can, but the situation is very fluid”.

The directors and senior management have taken a 20% cut in salary as part of the “cost reduction initiatives”.

The staff have been put on furlough, giving employees access to the government support package.

Menzies said it hopes the vast majority will be back when flight volumes start to pick up again.

The news comes as four major cargo and ground handling companies – Swissport, dnata, WFS and Menzies warned the UK government of the “imminent collapse” of the sector, and the resultant chaos in supply chains.

In a statement they said: “While the industry has welcomed the Chancellor’s work retention package, low margins and staff comprising 70% of costs mean that the viability of the industry remains immediately unsustainable.”

Jason Holt, CEO of Swissport for Western Europe, said: “I have profound doubts that the fundamental challenges for the industry, both now and in the future, are being addressed.

“Without immediate support with taxation and charges, operational flexibility, and the flow through of the Chancellor’s announcement from last week into actual cash funding to support our workforce, we are perilously close to collapse.

“Our thousands of employees are keeping goods and parts moving safely and securely during the COVID-19 pandemic and will be integral to the recovery of airlines and airports once the initial crisis concludes.”

Menzies, which has recently put significant resources into cargo, said that the impact of coronavirus on its business this month “has increased significantly and extended across all of our international operations”.

It said the situation was particularly challenging owing to the global nature of its business: it has operations in 34 countries.

“This adds very significant complexity to the situation, given the range of local circumstances, governmental and customer reactions.

“In the period since 10 March, we have seen our international and domestic airline customers ground passenger flights on an unprecedented scale. In turn, this has resulted in significant ongoing reductions in activity for our core operations, with the number of flights handled in the past two weeks down by over 60% and ancillary services similarly adversely impacted.

“The dynamics in the cargo sector are more mixed, with increases in activity in certain areas as freight customers seek to respond to underlying demand patterns, but volumes overall were down approximately 20% in the past two weeks.”

It is hoping to find support among various government schemes in the countries in which it operates, including the UK government.

“[We] await the refinement of the eligibility criteria for the Covid Corporate Financing Facility (CCFF) which we currently do not currently qualify for.”

The company said it had also implemented a “tight focus on cost management, the deferral of nonessential capital investment, selected asset sales and the suspension of dividend payments”.

Giles Wilson, chief executive, said: “John Menzies has existed since 1833 and been listed since 1962, but never have we faced such difficult and unpredictable times.

“Our industry has been one of the most affected by Covid-19 and we are doing everything we can to reduce costs while looking after the needs of our employees.

“I now look to our government to support our business, and for them to provide the support required to help the UK aviation sector to navigate this crisis. For the aviation supply chain to function, it requires a strong inter-reliant chain of airlines, airports and service providers.

“Without these three components of the supply chain working together, the sector will not function. Handlers such as Menzies are therefore essential to the recovery and future success of the UK and global aviation industry.”

Updated 13.30, 27.3.20 to include the joint statement from handlers.