Board reports 'good visibility'
Menzies close to hiring CEO and unveils £10m cuts
John Menzies: ‘improvement programme’ planned
Aviation services business John Menzies is taking £10 million of costs out of the business and said it hopes to conclude its search for a new chief executive early next month following the surprise departure of Forsyth Black in March.
Mr Black’s resignation left the Edinburgh-based company looking for a third CEO in as many years after Jeremy Stafford resigned in 2016.
In a trading update today the group said it has begun an “efficiency improvement programme” across its central and regional operations following the completion of a management review and investment in systems and processes.
“This programme will drive efficiencies across Menzies to ensure bottom line benefits are delivered while building on the new systems and processes we are deploying. Actions already taken will help underpin this year’s forecasts and will deliver incremental benefits in 2020.”
The company said it is on track to meet the board’s expectations for the full year. Trading across the group has improved with good visibility on summer schedules and a positive start to the year renewing key contracts. Cargo volumes had a poor start to the year and while there has been some improvement they continue to track behind last year.
“The process to appoint a chief executive officer is progressing as planned and the board is hoping to conclude this process in early June.”
The acquisition of Airline Services Limited, which received full CMA clearance in January, has won significant new business recently securing cabin cleaning contracts with British Airways at London Heathrow and easyJet at London Luton and Edinburgh.
Giles Wilson, interim chief executive, said: “I am pleased to report we are on track to meet our expectations. We have started the year well commercially with key contracts renewed and new contracts won and our recently launched efficiency programme is progressing well and benefits are being delivered.
“We have a strong and experienced team in place and I am confident that by continuing to deploy leading edge systems and processes that we will deliver our customers needs and sustainably grow our business.”
Airline Easyjet’s first half ‘headline’ loss before tax has increased to £275m from £18m for the same period last year.
The company said its cost per seat had risen by 3.9% after fuel price increases, the impact of currency movements, and “the impact of drones at Gatwick in December”.
Passenger numbers for the six months to 31 March increased by 4.9 million (13.3%) to 41.6 million.
Total revenue increased by 7.3% to £2,343 million (H1 2018: £2,183 million) due to capacity growth and a foreign exchange benefit negatively offset by, the impact of the move of Easter.
Johan Lundgren, easyJet Chief Executive said: “EasyJet has performed in line with expectations in the first half.
“I am pleased that despite tougher trading conditions, we flew more than 41 million customers, up 13% on last year, performed well operationally with 54% fewer cancellations in the period and customer satisfaction with our crew is at an all-time high. We have also continued to make good progress on our strategic initiatives in holidays, loyalty, business and with data.
“Cost control remains a major priority for easyJet. Our focus is on efficiency and on innovation through data and we are on track to deliver more than £100m in cost savings during 2019.
“We are well-equipped to succeed in this more difficult market through a number of short term customer and trading initiatives for the summer; measures to improve our operational resilience; and by focusing on what is most important to customers – value for money, punctuality and great customer service. All this is underpinned by a market leading balance sheet.
“We have invested in the operation by doubling our standby aircraft and changed our schedules so that even though the external operating environment over the summer is not set to improve, we plan to alleviate the impact on our customers. We have rolled out Auto Bag Drop to 17 airports, which combined fly over 34 million of our customers and we are now the number one airline in Berlin and at our newly opened base in Nantes in France. In total we are now the number one airline at 27 airports across the network, up from 18 two years ago.
“Our focus on our customers continues to grow their loyalty. Our loyal customers are choosing us time and again and now account for 76% of total bookings, an increase of seven million since last year.”