Edinburgh-based aviation services firm John Menzies has announced it is axing 17,500 jobs globally as a result of the coronavirus pandemic.
The outbreak has had a catastrophic impact on the airline, travel and hospitality sector and for companies like John Menzies, which provides ground handling, fuelling and cargo handling services for airlines all around the world.
In a dismal trading update, John Menzies said it had been forced to cut over half its global workforce in a bid to cut costs and secure its future.
The company, which employs over 32,000 staff across 200 airports, warned that the impact of the virus on its business had ‘increased significantly’ in a short period of time, with the number of flights it handled down 60 per cent in the last two weeks.
Job cuts: Edinburgh-based aviation services firm John Menzies has announced it is axing 17,500 jobs globally
Chief Executive Giles Wilson, said: ‘John Menzies Plc has existed since 1833 and been listed since 1962, but never have we faced such difficult and unpredictable times.’
John Menzies said it was waiting for the refinement of the eligibility criteria for the UK Government’s ‘COVID Corporate Financing Facility’, for which it does not currently qualify.
While affected staff will receive the 80 per cent salary aid on offer from the British government, a company spokesman said that in terms of accessing emergency credit, the group was too big to be classified as a small to medium-sized business, but too small to have the credit rating necessary for the CCFF.
Britain’s state aid programmes for the coronavirus shutdown carry conditions related to the company’s contribution to the UK, rather than global, economy, and demand that firms were already on solid financial footing before 1 March.
John Menzies, which operates in 34 different countries, said global job cuts were ‘being supported in some countries by governmental schemes and we hope that in the fullness of time a high number of these employees can return to the business.’
With the group’s directors locked in crunch talks with its lenders, the company said it would continue to ‘review all options with regards to the Group’s overall liquidity needs.’
Dismal: John Menzies said the impact of the virus had ‘increased significantly’ in recent weeks
Before today, John Menzies had already gone to considerable lengths to stay viable during the crisis, having deferred its investment plans, halted dividend payouts for shareholders, cutting costs and reducing the salaries and fees of its top brass by 20 per cent.
Boss Mr Wilson said today: ‘Our industry has been one of the most affected by COVID-19 and we are doing everything we can to reduce costs whilst 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.’
As a result of the turmoil, the company has, unsurprisingly, scrapped all its financial forecasts for the year. The company’s share price has been hit hard in the last few weeks and just before 11am was down 5.47 per cent or 4.60p to 79.40p.
John Menzies was founded in 1833 when John Menzies opened a bookshop on Edinburgh’s Princes Street.
This store started selling The Scotsman newspaper over the counter and Menzies became famous in the UK for retailing and wholesaling.
It was a major British high street name until the late 1990s, when it reinvented itself as a global provider of fuelling and cargo handling for airlines.
Operating in 34 countries for over 500 customers, the company was already struggling last year with weakness in Europe, lower cargo volumes and the fallout from the global grounding of Boeing’s 737 MAX jets.
History: John Menzies was founded in 1833 when John Menzies opened a bookshop on Edinburgh’s Princes Street
One City expert, Russ Mould at AJ Bell, told This is Money: ‘Statements from the major passenger airlines about capacity cuts have already given a good indication of the difficulties that face John Menzies so today’s update contains few surprises.
‘What is of interest is the speed with which management is addressing the challenges that face the 187-year-old firm and the painful choices they are having to make to see it through the crisis.
‘Widespread redundancies, cuts in capital investment and the dividend and reduced pay for senior management have all been brought into play and in a week when the stock market has been trying to persuade itself that the worst may be over, or least in the price, this may be a timely reality check.’
Amid the pandemic, the airline and travel sector, and all related companies like John Menzies providing support to the industry, have been under huge financial strain, with many grounding swathes of flights as a global shutdown takes hold.
Mass reduction: John Menzies has seen its workload fall by 60% in two weeks
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