Edinburgh-based airport services giant John Menzies plc said on Friday it is is laying off about half of its global workforce amid the global coronavirus-related slump in air travel.
Menzies also said it is “engaged with the UK Government as we attempt to secure some of the emergency funding” and is in talks with its “lending banks” as it reviews “all options” with regards to the group’s overall liquidity.
“As part of our cost reduction initiatives, we have reduced global headcount by over 17,500 in response to the dramatic fall in volume,” said Menzies.
“Reductions are 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.”
Menzies shares fell another 15% to around 72p, meaning its stock market value has plummeted to about £70 million. Menzies shares were trading above 400p a month ago.
All Menzies directors and senior management have taken 20% fee and salary reductions.
Menzies has 32,000 employees globally. It operates at more than 200 airports in 34 countries for about 500 airlines.
“We are engaged with the UK Government as we attempt to secure some of the emergency funding announced by the Chancellor of the Exchequer and await the refinement of the eligibility criteria for the COVID Corporate Financing Facility (CCFF) which we currently do not currently qualify for,” said Menzies.
“Given the challenging backdrop described above, we are taking mitigating action wherever we can but the situation is very fluid.
“We are engaged in constructive discussions with our lending banks and we continue to review all options with regards to the group’s overall liquidity needs to ensure we are well positioned to withstand the impact of the virus on the aviation industry.”
Menzies added: “In the period since 10 March 2020, 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.
“Whilst it is clear that this disruption will have a very significant adverse impact on the group’s financial performance in the short term, the level of continued uncertainty means that the board has determined that it is not possible to provide financial guidance for the remainder of the current financial year.”
Menzies CEO 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.
“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.”