Shares of John Menzies plc, the Edinburgh-based global airport services business, rose about 3% on Tuesday despite it publishing results for the year ended December 31, 2020, showing its revenue fell 37% to £824.2 million and that it made a loss of £120.5 million compared to a £17.3 million profit in 2019.

Menzies said its “underlying operating cash flow” rose to £149.6 million from £134.9 million.

“2020 results reflect the severe impact of passenger travel restrictions imposed in response to the Covid-19 pandemic,” said Menzies, adding it has revised its banking covenants to provide “sufficient liquidity headroom to invest in growth.”

Menzies added: “Revenue down 37% in constant currency, with decrease in flight activity leading to a 49% year on year reduction in flight volumes in ground handling and fuel services …

“Air cargo services (were) more resilient and cargo forwarding business delivered a record performance, boosted by strong yields.”

Menzies said it is now targeting a wider spread of activities by promoting the organic growth of air cargo and fuelling services.

“We will continue to grow our ground services business but our focus will be on areas where we know future growth opportunities are stronger and returns will be higher,” said the Edinburgh firm.

“We are also pursuing selective growth of our ancillary services offering, where operating margins are typically higher.”

Menzies shares rose about 3% to around 242p to give the firm a current stock market value of about £200 million.

Analysts at Peel Hunt wrote: “2020 results were in line with expectations and liquidity remains strong …

“We increase our target price to 331p (from 286p) and retain our Buy rating.”

Menzies said that given the impact of flight restrictions and ongoing uncertainty, it believes it “prudent and in the best interests of shareholders” to suspend its dividend for the time being.

In its outlook, Menzies said: “The board is confident about the group’s long-term outlook.

“Despite the crisis we are well placed to prosper as the aviation sector gradually recovers …

“As the market recovers and we exit the pandemic, we are ready to scale up our operations to meet the demands of our customers.

“Overall, we anticipate a slow increase in volumes through the second quarter with a stronger recovery during the second half of the year.

“However, we currently do not anticipate a return to the volumes witnessed in full year 2019 before full year 2023 …

“Despite the pandemic, 2020 was a strong year commercially with key contracts won across the product portfolio and we successfully deepened relationships with a number of key airlines.

“Our pipeline in all geographic regions is strong as we continue to seek out new opportunities, and as a result we expect further strategic progress during the year.

“Since the year end, we have commenced operations at five new locations in Canada with WestJet.

“We have also successfully strengthened our well established relationship with Qantas in Australia following the award of an outsourcing contract for domestic ground handling to Menzies at four airports across Australia.

“Despite anticipated ongoing low flight volumes, we expect that the group will maintain significant liquidity headroom throughout the year ahead.

“Once activity levels start to recover, Menzies’ strong fundamental cash generation will provide the group with the capability to invest in support of our commercial objectives and reduce leverage.”

John Menzies plc chairman and chief executive Philipp Joeinig said: “The Covid-19 pandemic has brought about unprecedented challenges to our business as the effects on travel continued to have a significant impact on our global operations.

“Despite the difficulties it presented we acted decisively, adjusting the size of our operations and ensuring sufficient liquidity was maintained.

“We remain a strong business and well placed to benefit as the market recovers and the industry returns to structural growth.

“Looking forward we will continue to deliver against our strategic priorities.

“We are winning new contracts, entering new markets and optimising our portfolio.

“As flight volumes recover, I am confident that we will emerge as a more agile, resilient and profitable business with a sharply focused footprint and portfolio.”

According to Menzies’ website its biggest shareholder is Saudi Arabia-based Mithaq Capital with 8.89% of Menzies’ issued share capital.

Sterling Strategic Value Fund SA has 6.73%, Switzerland-based Lakestreet Capital Partners and its CEO Christian Kappelhoff-Wulff (a Menzies director) own 6.47%, DC Thomson Pension Fund owns 5.94%, Axxion SA (acting on behalf of Frankfurter Aktienfonds für Stiftungen and Frankfurter Stiftungsfonds) has 4.97%, and Menzies Family Holdings have 3.48%.