JOHN Menzies wins easyjet handling contract
JOHN Menzies has won a £20 million contract with EasyJet to handle all passengers and baggage at Luton airport, the budget airline’s main hub.
The Edinburgh-based group said the four-year deal will come into effect from 12 January, with 262 staff transferring to Menzies from two EasyJet subsidiaries.
The deal follows a string of similar contracts with budget airlines for the group’s Menzies Aviation division, which has been expanding rapidly since Menzies sold its newsagent chain to WH Smith.
Menzies head of investor relations John Geddes said: "What we’ve been doing in the past few months is positioning ourselves towards the low-cost market, which is where all the growth is in aviation.
"Traditionally the likes of Servisair has been all things to all men, handling BA passengers one minute, and EasyJet the next. But the low-cost airlines work on a slightly different model and we’ve adapted to that. For one thing, they all fly the same type of aircraft so you only need one set of kit."
He added: "We work with EasyJet already in both Amsterdam and Prague, but this is its main hub we’re talking about. We’re talking about something like 60 flights a day compared with 21 flights a day at Prague."
Menzies handles baggage for airlines all over the world. Its other budget carrier clients include bmi baby at East Midlands airport and Virgin Express in Amsterdam.
The aviation arm contributes around £250m to the group’s annual revenues of about £2 billion. Menzies makes most of its money from newspapers and magazines distribution.
But, hit by the war in Iraq and the SARS outbreak, the aviation arm was largely blamed for the slump in profits from £8.8m to £6.4m which the firm announced in September.
The diversification has been prompted by Patrick Macdonald, who took over from David Mackay as chief executive earlier this year.
Macdonald has also put the brakes on an acquisition programme designed to expand the aviation division, stating that some of the businesses it has bought have underperformed. He has singled out Fr8, a Dutch cargo handler bought for £4.9m in February 2002 and JASA, an airline cleaning unit based in Australia.
News of the EasyJet deal failed to move Menzies shares, which have underperformed the FTSE’s support services sector by about 12 per cent since the start of the year. The stock currently stands at 320p.
Menzies will be handling all the ground operations for EasyJet at Luton, from information, sales and check-in staff to the baggage handlers that load the planes. Geddes stressed that "all the people in those orange uniforms" will actually be employees of the Edinburgh firm.
The deal has been structured as a joint venture between the two firms, which sees Menzies Aviation Group take a 76 per cent stake and EasyJet retain the remaining 26 per cent. EasyJet chief executive Ray Webster said this allowed the airline to "maintain a strategic interest in the business, influencing its culture and future development".