The executive chairman of Edinburgh-based airport services giant John Menzies plc said on Tuesday the firm will emerge from the COVID-19 pandemic “as a smaller but stronger team with a clear plan to recover and grow again.”

The prediction came as Menzies published results for the six months to June 30, 2020, showing an £80.1 million loss before tax and revenue that fell roughly 33% to £431.5 million “as a result of a 43% year on year decrease in passenger flight volumes.”

Menzies recently agreed a “revised temporary banking covenant structure” with its banks.

Menzies’ shares have fallen about 70% in the past 12 months, taking its stock market value down to around £95 million. Menzies employed 32,000 globally before the coronavirus pandemic but many staff were placed on furlough. 

In its outlook, Menzies said: “On the basis of current visibility and assumptions for ground handling and cargo volumes second half revenue is expected to be at a similar level to the first half with profitability benefiting from a more significant contribution from various government support programmes and continuing tight cost management.

“We continue to review the marketplace and work with our customers to gauge flying volumes.

“We are expecting a reduced winter season with flight schedules substantially lower than the previous year and have planned accordingly.

“We have made significant strides expanding our cargo handling portfolio in the first half.

“Given the current market outlook, we will look at further opportunities to rebalance our portfolio with further expansion in the cargo market and a greater focus on into-plane fuelling where we believe there are opportunities to increase our market share. 

“Commercially we continue to have success.

“Since the period end we have won further cargo business with Qatar Airways in Los Angeles, USA, our fifth contract award with Qatar this year, and won the ground handling and cabin cleaning business of Air France/KLM in Toronto, Canada. 

“The ability of the group to maintain significant liquidity headroom through this period reflects the strong fundamental cash generation capability of the business.

“We expect that continued strong cash generation, as activity levels recover, will give us the capability to invest in support of our commercial objectives whilst also enabling the group to reduce net indebtedness. 

“We currently anticipate market conditions will remain challenging through the winter and the early part of next year, but expect a sustainable recovery in activity levels thereafter, contributing to modest revenue growth in 2021 over 2020.

“Whilst cautious on the pace of activity level recovery over the next 18 months, our restructured cost base and the rationalisation of the global portfolio should enable the group to generate higher returns as volumes improve …”

John Menzies executive chairman Philipp Joeinig said: “The first six months of the year have seen us operate in unprecedented times due to the Covid-19 pandemic.

“The impact on our global operations has been material, but I am very pleased with how we have reacted.

“We acted decisively to reduce costs and moved to right-size our operations.

“As a result, our liquidity position is good, and we are well placed to navigate through the winter season and beyond.  

“Due to the actions taken in 2019 to re-shape the business commercially, we are making real progress, winning new contracts, particularly in cargo, and I expect this to continue in the second half.

“Expansion opportunities are emerging, and we will selectively look to take advantage of the current situation.

“Like others in aviation, we know we are not out of the woods yet.

“We continue to keep a strong grip on our costs, whilst encouraging governments across the world to react to the exceptional impact Covid-19 continues to have on the industry and extend their support schemes, as recovery will be gradual.

“Menzies has faced exceptional challenges as a result of the pandemic, however it remains a strong business with committed leaders and dedicated employees.

“We will emerge from this pandemic as a smaller but stronger team with a clear plan to recover and grow again.”