Ground services firm Menzies has temporarily halved its active global workforce, as it assesses the impact of the coronavirus outbreak on its operations.
The company – which has some 32,000 personnel, across 34 countries – says it has reduced its headcount by 17,500, although it stresses that these are not job cuts and the “vast majority” of these personnel are undertaking various types of leave.
“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,” it states.
It says the spread of coronavirus has added “very significant complexity” to the business, given the variations in governmental and customer responses.
Menzies had cautioned on 10 March that it could be facing a profit impact of £6-9 million for 2020, as it unveiled a 2019 pre-tax profit of £17.3 million. At the time it was experiencing particular problems relating to Chinese carrier handling, and within its Macau division.
But over the past two week the number of flights handled by the company has sunk by more than 60% and ancillary services are being similarly adversely affected.
Although freight operators have been maintaining supply routes, Menzies says volumes in the cargo sector are still down around 20%.
Menzies is expecting a “very significant adverse impact” on its financial performance in the short term, and – like many companies – it is unable to provide full-year guidance, and has been putting in place now-familiar measures including tighter cost-management, capital expenditure deferrals, and salary reductions.
Since mid-January the company’s share price has fallen by more than 80%.
It says it is trying to obtain emergency funding from the UK government, and says it is awaiting “refinement of the eligibility criteria” for the UK’s liquidity support scheme for businesses.
Menzies says it is holding discussions with its lending banks but warns that the situation is “very fluid”.
“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,” it adds.
