John Menzies lays off 55% of staff as coronavirus hits air travel

By Yadarisa Shabong

(Reuters) - Airport services group John Menzies <MNZS.L> said on Friday it was laying off more than half its global workforce to cope with the impact of the coronavirus-related slump in air travel, adding that it hoped to hire many staff back in future.

It also said it will need special dispensation to get aid from a UK emergency fund for which it does not currently qualify.

Among the biggest providers of fuelling, ground handling, lounge services and maintenance, Menzies said its volumes had dropped 20% in the past two weeks as airlines ground flights in response to faltering demand and government curbs on movement.

"John Menzies Plc has existed since 1833 and been listed since 1962, but never have we faced such difficult and unpredictable times," Chief Executive Giles Wilson said in a statement.

Menzies, which employs over 32,000 employees at more than 200 airports worldwide, said it has reduced headcount by more than 17,500 and that the reductions are being supported by some countries' government schemes.

The company said it intended to take as many staff back on as possible in future, and it later described the reductions as furloughs and not redundancies.

A company spokeswoman said the company hoped "the vast majority will be back when flight volumes start to pick up again".

The company said it was waiting for the refinement of the eligibility criteria for the COVID Corporate Financing Facility (CCFF), for which it does not currently qualify.

While it will receive the 80% salary aid on offer from the British government, a company spokesman said that in terms of accessing emergency credit, the group was too big to be classified as a small to medium-sized enterprise (SME), but too small to have the credit rating necessary for the CCFF.

Britain's state aid programmes for the coronavirus shutdown carry conditions related to the company's contribution to the UK, rather than global, economy, and demand that firms were already on solid financial ground before March 1.

Wilson said Menzies plays an important role in the aviation supply chain, which includes airlines, airports and service providers.

"Without these three components of the supply chain working together, the sector will not function," he said.

Menzies said it was in talks with its lenders as it reviews all options to shore up liquidity and withstand the impact of the virus.

Edinburgh-based Menzies was a major British high street name until the late 1990s, when it reinvented itself as a major global provider of fuelling and cargo handling for airlines.

Operating in 34 countries for over 500 airline customers, the company was already struggling last year with weakness in Europe, lower cargo volumes and fallout from the global grounding of Boeing's <BA.N> 737 MAX jets.

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Jan Harvey and Hugh Lawson)