Home | Internacional | Swissport set to slash half its UK workforce
Postado em 29 de junho de 2020 | 20:28

Swissport set to slash half its UK workforce

Cargo cuts expected to be far less severe than among passenger staff, but a loss of up to 4,556 of its 8,500 jobs is likely to be felt across the airport services company’s business.

One of the world’s top two air cargo handling companies, Swissport, is set to cut around half of its UK workforce as the airport services company struggles with the massive downturn in airline traffic due to the effects of the coronavirus crisis.

Although the cuts to its cargo staff and services are expected to be far less severe than among its passenger services and teams, Lloyd’s Loading List understands that the loss of up to 4,556 of its 8,500 jobs is likely to be felt across its business.

Sources close to the company said further details would emerge after talks with union representatives. And although a possible softening of the UK’s stance on quarantines for passengers in the coming weeks may help to limit the scale of the losses facing the aviation sector, it will not prevent major cuts within the sector, with airline representatives almost unanimous in predicting that the industry will not recover to its pre-Covid levels for at least two years.

It was unclear at the time of writing to what extent Swissport staff in other countries will also face cuts.

In a message to staff this week, Swissport CEO for Western Europe Jason Holt thanked the company’s UK staff for their contributions during what has been “a long, stressful and uncertain period for everyone”, highlighting that the way they have responded to the Covid-19 outbreak – “working tirelessly to keep PPE and other goods moving, supporting furloughed team members, volunteering for the NHS – has been outstanding to see”.

He said Swissport had been “hit hard by the Covid-19 outbreak, which many of you will recall began with the collapse of Flybe back in March. While some areas of the business have been busier than others, across the company revenue has almost been completely lost. As of May, it’s down by more than 75%, and we still have bills to pay.

“Our company is a crucial part of the industry triangle made up of airports, airlines and airport services companies. But we operate a low-margin, high-volume business model. We are fundamentally reliant on a high volume of flights taking place – whether for cargo, ground handling or lounge operations.

“When aircraft aren’t flying, our source of revenue evaporates. The unfortunate fact is that there simply aren’t enough aircraft flying for our business to continue running as it did before the Covid-19 outbreak, and there won’t be again for some time to come. We must adapt to this new reality.”

He continued: “And although our airline partners are hoping to increase their numbers of flights, they too are struggling to plan schedules and stick to them. The International Air Transport Association has forecast that airline industry traffic may not recover to 2019 levels until 2023, and under some scenarios not until 2024.”

Although the sector had weathered tough times before – highlighting the disruptions from the volcanic cloud, 9/11, the financial crisis – “this time it’s different. We have never seen anything like Covid-19 in our lifetimes.

“We are now facing a long period of uncertainty and reduced flight numbers, along with significant changes taking place to the way people travel and the way goods move around the world. There is no escaping the fact that the industry is now smaller than it was, and it will remain so for some time to come.”

As a result, he said Swissport’s revenue is forecasted to be almost 50% lower than last year, adding: “Hence, we must adapt by reducing the size of Swissport’s workforce if we’re going to survive as a company. Of our circa 8,500 Swissport employees, 4,556 colleagues could be leaving us, comprising around 53% of our workforce. We must do this to secure the lifeline of funding from lenders and investors to protect as many jobs as possible in the United Kingdom and Ireland.”

He continued: “Nonetheless, I remain confident the industry will eventually recover, and our goal will be the same then as it is now: to be the aviation industry’s most trusted single-source ground services and cargo handling provider. Whatever form the industry takes after the Covid-19 outbreak, we will be there as a reliable, valued partner.

Over the last few months we’ve been fighting hard for Swissport, leading the way in uniting our industry and working with the Unions to make sure our employees’ and our industry’s interests were being represented to the Government. We’ve been having frank conversations with partners and customer airlines, renegotiating contracts, implementing surcharges and testing every commercial option available to us.

“Thanks to the incredible hard work of people across the company, and with the help of Government schemes, we’ve kept the business running, and that bought us the time to really understand our situation, explore all our options and avoid rushing to decisions.

“But we’ve now reached a moment that requires clear and decisive action. We will thrive again. But we must first face up to the fact that our industry will not be the same size and shape as it was before Covid-19. We must focus our energy now on adapting our business to this new reality.”

Swissport’s Belgian closures

Earlier this month, Swissport announced it is to close its Belgian ground handling and cleaning operations after the pressures of the Covid-19 pandemic added to many years of loss-making operations to make the businesses unviable. But the group’s cargo business at Brussels and Liège airports “is a separate legal entity and will continue to operate and to provide key logistics for Belgian and European imports and exports by air, the company stressed.

Swissport Belgium SA/NV, which has been providing ground services at Brussels airport, will file for bankruptcy alongside Swissport Belgium Cleaning SA/NV after all attempts to turn around the notoriously loss-making unit failed, the company said, noting: “The two Belgium entities have for many years relied on repeated liquidity provisions from their parent Swissport International AG. During years of financial support by the group, numerous local efforts to turn around the business failed.

“The funding need for the two entities has been further exasperated by the COVID-19 crisis and the expiration of the largest airline customer contract in just a few months gives great revenue uncertainty for the future. Despite close consultations with unions, key airline customers and Brussels Airport, local management could not present a plan to warrant additional funding by the group.

But Swissport stressed: “The group’s cargo business at Brussels and Liège airports is a separate legal entity and is not affected. It will continue to operate and to provide key logistics for Belgian and European imports and exports by air.”

Other cargo and ground handling companies

Other airport cargo and ground handling companies have also faced severe challenges during the past four months. In late March, UK, European and global business leaders from the main airport cargo and ground handling companies warned of the potential imminent collapse of their sector because of the collapse of European and global air transport markets, bringing airports to a halt and severely impacting supply chains during the COVID-19 pandemic. In a message that was repeated across Europe’s main capitals, business leaders from the four main airport cargo and ground handling companies – Swissport, dnata, WFS and Menzies – took “the unprecedented step” of jointly writing to the UK government warning of the imminent collapse of their sector and highlighting the implications of this to the UK’s airline sector and supply chains and during the COVID-19 pandemic.

In April, several airport cargo handling companies – including Swissport and Menzies – introduced new coronavirus-linked cargo handling surcharges, angering some freight forwarding and shipper representatives. Swissport said the “primary objective is to maintain the supply chain”, highlighting that “due to the loss of almost all passenger flights and their cargo capacities, we can no longer rely on stable and recurrent flight schedules on the basis of which we plan capacities. Today we have primarily irregular peaks”, caused by the fact that so much of the cargo currently is being delivered by charter flights rather than scheduled services.

“This leads to a dramatically worse cost structure at Swissport,” the company said. “We now have to pass on some of these additional costs to our customers.

Menzies Aviation told Lloyd’s Loading List that that the measures were “necessary to keep our operations going at those key stations where we have experienced the most significant volume reductions. We are keen to play our part in maintaining movement in global supply chains. The surcharge is not intended to fully absolve us of the impact of COVID-19, nor have we sought to introduce it across all of our global locations but is required to help contribute to our ability to maintain our operations in the most severely impacted markets.”

Menzies update

Earlier this week, Menzies also reportedly warned staff that it could be forced to make cuts, although it reported that its business was in slightly better shape than it had feared and “that there will be significant opportunities for aviation services groups who are able to emerge from this crisis with their capability and service offering preserved. We are pleased that our liquidity headroom is capable of providing a secure platform as we start to build back our operations. Overall, the Board is confident in the long-term growth potential of the aviation services market and believes that, as a global leader, John Menzies plc will emerge strongly from this challenging period.”

In a trading update, it said: “As expected, the very challenging conditions experienced from the end of the first quarter have continued during the second quarter to date, with the majority of customer flights grounded. During April and May 2020, ground handling and fuelling activity was circa 75% lower than 2019, with the Group’s ancillary passenger airline services similarly affected.

“Cargo performance continues to be slightly more resilient overall with total volumes down circa 37% year on year in April. As a result of this substantial reduction in activity levels, revenues in April and into May were consistent with expectations at the time of the March Trading Update and circa 64% below budgeted levels.”

But it said that despite the significantly reduced revenue, “strong cost management, together with quick and effective mitigating actions, resulted in an overall performance for April and into May that was better than expected at the time of the March Trading Update. We continue to tightly manage outstanding payments with our airline customers and are pleased that in the majority of cases payment terms continue to be adhered to. At this time, whilst we have been affected by the impact on our customers, we have not incurred any material bad debts during the current crisis.

“Whilst the level of ongoing uncertainty is such that the Board does not consider it appropriate to provide financial guidance for the remainder of the current financial year at this time, the Group has been working closely with its customers on planning for forthcoming flight schedules. The Board currently expects activity levels witnessed in May to remain subdued into June, before a gradual return from early July.

“As volume builds, we expect to see short haul capacity return first with long haul capacity taking longer to recover. In addition, we expect cargo revenues to continue to build back as customers employ more innovative measures to meet demand, such as using passenger aircraft for cargo only flights.

“Our freight forwarding business, AMI, continues to trade well and in line with 2019 performance, with a positive outlook for the coming months.”


Source: Lloyd’s

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