Over a year on from Menzies Aviation and National Aviation Services (NAS) joining forces, Philipp Joeinig, Chief Executive Officer, explains how the merged entity intends to grow
“The motto and the credo of this merger between Menzies and NAS was accelerating growth,” said Philipp Joeinig, in an interview with ARGS during the Airport Services Association (ASA) Leadership Summit in Athens in September.
“When Agility [the supply chain services, infrastructure and innovation company] acquired Menzies, we were able to integrate NAS into Menzies to create a new powerhouse in the industry where we are now a true global player,” said Joeinig.
“This means we are able to provide services to our customers around the globe with a meaningful presence on all continents,” he said.
For Joeinig, ‘meaningful’ means being able to significantly expand Menzies’ service provision from two or three stations or countries in a region to throughout a continent. This is the case now in Africa, where NAS had built up a substantial business base.
“The same goes for our North and South American businesses where we have been able to grow our presence throughout the year,” he explained.
The Americas region delivered outstanding results as measured by safety, operational performance and commercial success, making it the best year [to August 2023] yet for the region, said Joeinig. In addition, an exceptionally high contract renewal rate in Europe was testament to its high-quality service and strong customer relationships.
Coupling a larger global footprint with the service that is associated with the Menzies brand is a strong combination, said Joeinig.
“It’s fundamentally important for us to have the best safety and quality track record with our customers,” he said. “Our strategic aspiration is to be the undisputed number one, most importantly to match the growth rate of our customers, which is a testament to our safety and performance, but also to have the highest number of countries and stations to be able to provide the services our clients need.”
Bringing the Menzies brand and the Menzies way to the fore, which was more globally known in the market than NAS, is key for customers. “It is important that when you buy Menzies, you get Menzies whether you are in Nairobi, Edinburgh or Los Angeles,” said John Geddes, Chief Governance and Sustainability Officer.
“It was important to deploy our systems and processes, and our ESG (Environmental, Social and Governance) content, to the new stations that we have welcomed into the Menzies world through the integration of NAS,” noted Joeinig.
And it is working, he explained, with a growth rate of 15% achieved in the past year. The plan is to continue this level of growth for the foreseeable future.
“But just being in a station doesn’t bring business. Our ability and our ambition is to follow the customer,” said Joeinig. If a customer seeks to begin operating at a station Menzies will endeavour to follow by whatever means, be it a tender for a licence – and the company is “not shy” of buying a business, he said.
Integration
The integration of NAS into Menzies is a work in progress, but well advanced. “The main chunks of the businesses have been integrated successfully,” said Joeinig.
And a beefed-up Menzies is becoming one family, he added. “The integration has been very successful from a people perspective, with both sides feeling at home and excited to be part of a larger group. People do not feel NAS or Menzies, they feel part of one company, which is testament to a successful integration.”
Since the merger was completed on 4 August 2022, Menzies has entered six new countries and grown its workforce to a remarkable 42,000 employees over the past year, the highest in the company’s 190-year history.
Now that Menzies is once again a privately owned company it does not publish full financial results. However, its revenues were US$1.9 billion in 2022 and will rise to $2.2 billion this year, and are likely to top $2.5 billion in 2024, said Joeinig.
“Notwithstanding the challenges brought about by the Covid-19 Omicron variant, followed by the rapid rebound in air travel, and disrupted summer travel, we still experienced a strong financial performance in 2022, with a 26% increase in revenue compared to the previous year,” he explained.
Overtaking Swissport does drive the Menzies team “a little bit”, but more importantly, “it is about being the best,” he explained. That means “the best safety track record, the highest growth rate with our customers and the largest number of stations and countries”.
Menzies is already the largest global handler both in country terms and by aircraft turns, and number two by number of stations (Swissport has about 300 stations while Menzies has 260).
This number is rising rapidly. In the fourth quarter of 2023 Menzies will add another 20 stations, and more are in the pipeline. The new additions were “bolt-ons”, not involving major acquisitions.
Chile and Serbia
Joeinig highlights two of markets that are of special significance. “The first is in Chile, where we are opening up in 16 new airports with a long-term contract with JetSMART,” he said. Launched in 2017, JetSMART is a Chile-based ultra-low-cost carrier operating point-to-point routes across the continent.
Menzies has partnered with large Santiago de Chile-based shipping player Agunsa and formed a joint venture to enter this market. Chile is an interesting market with a good mix of growth opportunities, ranging from the advance of low-cost carriers to a strong import and export cargo business, he explained.
The other significant location is Serbia. Menzies has obtained a full services licence to operate at Belgrade Nikola Tesla Airport from February 2024, adding another country to its large presence in Eastern Europe.
“We are number one in Eastern Europe,” Joeinig noted, with operations in Prague, Budapest and Bucharest. “If you look at our competitors, they are nowhere in comparison to us.”
Menzies won the Belgrade licence in competition with Swissport. “I think we were successful because we have a very strong set-up and management team in Eastern Europe,” said Joeinig. “Next to Latin America, one of our growth engines remains Eastern Europe.”
In October, Menzies cemented its Belgrade win with the signing of a Memorandum of Understanding (MoU) with Air Serbia, the leading airline in the wider Balkan region, to form a joint venture to support the Serbian national flag carrier’s ambitious growth plans.
As part of the planned co-operation, and in the company’s biggest deal in Eastern Europe to date, Menzies will deliver passenger and ramp services at Belgrade with local teams managing over 22,000 turns in the first year.
Eastern Europe is an interesting market because the region has been growing strongly in the past decade and looks like continuing that trajectory. In addition, there is less oversupply of service providers at airports, as there can be in some other European countries.
In this region, the regulators set high standards, looking into the track record and governance of the providers seeking to enter the market, said Joeinig. “They are not looking at someone small popping up and trying to go in with the lowest price as has sometimes happened in the UK, for instance.
“We think that the framework [in Eastern Europe] is a bit more beneficial to the whole industry than it is in the West,” explained Joeinig.
Low-cost provider of choice
“We are the solution for the low-cost carriers. Menzies started on the back of [the launch of] easyJet,” he noted, and the handler today provides services to players like Frontier Airlines, Viva AeroBus and Wizz Air, often at their hubs.
“We understand them and have a similar mindset: quick, agile, dynamic, solution-oriented, easily accessible,” said Joeinig.
When it comes to entering a market, Menzies analyses the market potential for all service types – ground, passenger, cargo handling and refuelling services.
Cargo has been a growth market, with Menzies doubling the number of warehouses it operates between 2018 and today, rising from 35 to over 70, as it seeks to boost its proportion of cargo handling in revenue terms, said Joeinig.
“We continue to invest heavily into cargo and the balance between the business segments is a healthy one,” said Joeinig. Today around 50% of Menzies revenues comes from ground services, with cargo representing 30% and refuelling making up the balance.
An interesting piece of the Menzies global empire, which not too many handlers possess, is its Air Menzies International (AMI) arm, where it buys airline belly space on behalf of the smaller freight forwarders. AMI achieved a record year in 2022 as well as opening four new locations in Germany, Pakistan and Canada.
Growth pipeline
Looking at the Menzies pipeline of new opportunities, Joeinig sees “massive growth” in the coming six months, with the addition of 40 stations to its network in Europe and the Americas.
On top of this is the Menzies acquisition of Portuguese handler Groundforce, which it will take over operationally in Q1 2024. In April the firm signed an agreement with TAP Air Portugal and Groundforce Portugal to acquire a 50.1% stake in Groundforce, which had entered insolvency.
Groundforce handles over 100,000 aircraft turns annually across its operations at five of the busiest airports in Portugal, as well as providing ground and air cargo services to several global airlines with TAP as its main customer.
“This is a significant business, north of €100 million [$106 million] in revenue,” said Joeinig. “We will deploy our processes and systems and integrate that business into Menzies,” he added.
Just days after the Athens event, Menzies obtained the welcome news that it had won seven ground handling licences in Spain. In what was described as the largest ground handling tender in the world, worth €5 billion [$5.3 billion], and spanning 41 licences at 43 airports across Spain, Menzies has been awarded ground handling licences for Barcelona, Palma Mallorca, Malaga, Alicante, Gran Canaria, Tenerife Sur and Tenerife Norte airports.
The seven-year licences will see Menzies provide full ramp and passenger services at these airports from early 2024 to 2031. The company has been operating in Spain since 2004 and will continue to provide passenger services at a further seven airports.
The long-term deal will enable Menzies to invest in equipment, employees and facilities to enhance safety, sustainability and performance, said the company, including a “clear road map for a new-generation digital aircraft turnaround”, and “ensuring operational IT systems are connected and integrated with airport and airline IT platforms”.
The addition of these stations and others means that by the middle of 2024 Menzies will be operating at more than 300 stations, a significant milestone. “In terms of numbers, the 15% growth rate is the target for us, and we continue to work hard to explore opportunities,” Joeinig said.
“Then equally important is to grow with our customers, have a high retention rate, grow the business and make sure that customer needs are satisfied. That’s it,” he concluded.
