Menzies mulls ‘optimal structure for the group’

Edinburgh-based aviation services and news distribution firm John Menzies — under shareholder pressure to split into two separate companies in aviation and distribution — said on Friday its board “is progressing its evaluation of the optimal structure for the group.”

Activist shareholder Lakestreet Capital Partners has been pressing Menzies to split into two companies and recently increased its stake in the Edinburgh company to more than 8.5%.

The sudden retirement of Iain Napier as Menzies chairman after Friday’s annual general meeting is the latest dramatic twist in a turbulent five months at Menzies which has also seen the company’s chief executive and chief financial officer both announce they would leave the firm.

Before the meeting in Edinburgh on Friday, Menzies issued a trading update and statement.

“The board is progressing its evaluation of the optimal structure for the group against the potential opportunities for expansion and acquisition in both divisions, as well as being mindful of its obligations to its pension scheme,” said the firm.

“We have therefore appointed additional pension advisers to work with our existing team and, following initial engagement with our pension trustees, we have begun to explore the various options.

“We intend to provide an update of the preliminary conclusions from this initiative by the end of the year.”

In a trading update for the first four months of the year, Menzies said both its aviation and distribution divisions “are progressing well with their strategic and operational agendas.”

“Menzies Aviation is trading ahead of last year with revenue growth in the period up 7% at constant currency,” said the firm.

“Absolute ground handling turns are up 4% reflecting continued contract win momentum.

“Following a very strong prior year, cargo volumes have reduced and are down 2% on a like for like basis.

“In February, we completed the acquisition of Renaissance Aviation in Bermuda which has a five year exclusive licence and we will provide a suite of aviation services to a number of international airlines.

“Contract win momentum has continued with ground and cargo handling contracts gained and renewed.

“Notable new contracts include British Airways in Copenhagen, Virgin America at their hub in Los Angeles and we have also secured preferred supplier status with Singapore Airlines.”

However, Menzies said that within Menzies Distribution, “the sales decline in print media remains similar to that experienced in 2015, at 4% for the period.”

“In the period the acquisitions of Oban Express and Thistle Couriers were concluded and are integrating well,” Menzies added.

“We continue to identify further business opportunities in the e-fulfilment market.”