Exclusive: Deal of the year - Agility's £763m acquisition of Menzies

The Editor exclusively speaks to Chairman of Menzies, Hassan El-Houry, and CEO Philipp Joeinig of Menzies after Agility’s £763m acquisition of the company. National Aviation Services (NAS) and Menzies have now combined under one brand.

Q: Why did Agility purchase Menzies? 
Hassan El-Houry: At its heart, the acquisition was about accelerating growth. It has given Menzies the platform to grow exponentially,to become the undisputed world leader in aviation services. The new business will shape the future of commercial aviation across six continents.

Q: Why will Menzies be an asset platform for Agility?
HE:Menzies is a globally recognised brand, with a reputation for providing outstanding services. The potential to build on this established position with further investment was clear. The acquisition has resulted in Menzies becoming the world’s largest aviation services company by countries it operates in. Now with 35,000 employees, operating at 254 airports in 58 countries, Menzies will handle 600,000 aircraft turns, 2 million tonnes of air cargo and 2.5 million fuelling turns per year. Within the currently fragmented market, the new business is a leading player in terms of revenue, footprint and customer base.

Q: What does this acquisition mean for the future of ground aviation services?
HE: The combined business has the scale, financial strength, deep customer relationships and global footprint to succeed. Providers with scale are best positioned to maintain and improve service levels, meet carrier needs in growing markets, lead the drive to lower emissions, and advance the sector’s recovery. Menzies now has a strong presence across six continents and can serve more customers in more airports with better equipment, technology, and training for staff, cementing our position as a leading provider of aviation services.

Q: Sustainability is a trend close to the heart of the Menzies business, how will the combined company ensure sustainable change in other markets with lower standards like Africa?
HE: Menzies will continue to be a leader in sustainability. This reflects our long-term commitment to reducing emissions and environmental impact, whilst supporting strong health and safety standards, fair labour practices, and continuing our strong training and people development programmes. We are continuing to work towards our existing goal of becoming carbon neutral by 2033, Menzies’ 200th anniversary. Our sustainability strategy is global, so we are approaching sustainable change in a co-ordinated and consistent way.                                                                                                    

As Menzies and NAS are merged, our focus is on ensuring the business is dynamic, disciplined, sustainable and operationally outstanding

Q: What specific targets has the new company set for 2022/2023?
HE: In the short term, our target is to ensure the smooth transition of staff and operations to the new company. More broadly we are looking to accelerate Menzies’ growth. Our industry typically grows between 3 and 5% each year. Every year, we would like to outperform this and achieve double digit growth.

Q: What are the business priorities?
HE: As Menzies and NAS are merged, our focus is on ensuring the business is dynamic, disciplined, sustainable and operationally outstanding. People are at the heart of our business, so a key priority is to make Menzies an even greater place to work and develop a career.  

Philipp Joeinig, Menzies'CEO

Q: Congratulations again, how important is the acquisition to Menzies’ journey so far?
Philipp Joeinig:The Menzies brand reflects our heritage, the pride we take in everything we do, our passion to go above and beyond for customers and people being at the heart of our business. The combined business brings the best of both Menzies and NAS, and now we have the capital to invest in the talent, technology, infrastructure, equipment, expansion and sustainability leadership required to be the global aviation services leader.

Q: What’s the long-term strategy for the ‘new Menzies’?
PJ: In short: accelerated growth. However, our performance will not only be measured by size, but the quality of our services and prominence of our customers. It is all interrelated – with our strong presence across six continents, we are able to serve more customers in more airports with more advanced equipment, technology and staff training. We will support our customers’ growth in an increasingly competitive market – and help shape the future of aviation. 

Our strategy is underpinned by the combination of the dynamism, performance-culture, and agility that helped NAS become one of the leading aviation services companies in emerging markets, with Menzies’ growth mind-set, high safety standards and outstanding performance in some of the world’s largest and most-demanding markets.

Q: With existing widespread supply chain disruption and labour shortages affecting the industry worldwide, how does the new company plan to overcome these challenges and make the industry more attractive to new recruits?
PJ: The Menzies-NAS combination has created a global leader that offers employees more career development and advancement opportunities in a larger, stronger organisation. We are building a business that is truly a great place to work, with a culture that people want to be part of, and where people stay and do their best, where differences are respected and valued, and people thrive. We have a recognition programme for all our employees, celebrating their successes.

We have recruitment initiatives in place across the globe which are helping us to fill vacancies. For example, we are having success with in-person hiring events and are harnessing the power of social media to advertise our roles.
We understand that people may be wary of working in aviation given the impact of the pandemic. However, there are good career prospects for anyone with the right mindset and interest in aviation. Our industry is expected to grow significantly over the coming years, with the International Air Transport Association (IATA) expecting overall traveller numbers to reach 4.0 billion in 2024, exceeding pre-Covid-19 levels (103% of the 2019 total). This growth is set to open up further career opportunities.   
As an industry we need to work together to make our industry an attractive option for people from all walks of life. In this competitive labour market, the perception of the aviation sector is key to attract talent. This needs to be tackled collectively by our industry to boost the appeal of careers in aviation, raising awareness of the transferable leadership and managerial skills you build at a firm like Menzies – as well as the flexibility and long-term prospects it offers. With automation, there are also new, exciting roles opening up in data science and digitisation.

Q: What investments are being made to adapt to the environmental and technological demands on the ramp?
PJ: We are committed to sustainability, including reducing environmental impact. Technological advancements mean there is now more electric ground service equipment available, including pushbacks, beltloaders, container loaders, baggage tractors and baggage carts. At Menzies, we are constantly evaluating our GSE fleet to reduce our carbon footprint as we work towards achieving our goal of becoming carbon neutral by 2033, our 200th anniversary. We are already seeing the benefits of investing in electric GSE with carbon dioxide output reduced, easier maintenance, and quicker charging making them more efficient. 
Wherever possible, we are investing in electric GSE and collaborating with our airport and airline partners to make the transition away from fossil fuels. Our partnership with Manchester Airport is a good example where our close collaboration with partners enabled us to become the first handler to have electric hi-loaders. Infrastructure was quickly adapted to enable GSE charging and a significant amount of our wide body kit is now electric, as we lead the charge for investing in electric equipment at the airport.
Refurbishing existing equipment from petrol or diesel to electric is also proving successful and something we are looking to do more of as it makes economical and ecological sense. In the United States, we recently invested in refurbishing baggage tractors and beltloaders rather than purchasing new equipment. Refurbishing means we avoid the cost of purchasing a new unit and also removes the additional cost of training associated with new machinery. It also means equipment is used for longer and isn’t sent to landfill.

Q: What do you have to say about the timing of this acquisition when many airports in Europe are still going through a crisis following Covid and now due to the Ukraine-Russia war?
PJ: After two difficult years for our industry and our people, this deal has marked a new chapter and era of growth and opportunity. With our global scale, financial resilience, and close customer relationships, we are well-positioned to support our customers in tackling supply chain challenges and labour shortages.

Q: On that note, how is the business navigating the consequences of the war, especially in regards to its cargo operations?
PJ: As with the rest of the industry, we have seen a decrease in flight volumes to and from Russia due to the ongoing war in Ukraine. Our European business in particular has experienced a reduction in volumes at certain locations. The war has also caused a reduction in freighter capacity. This is because a reduction in passenger numbers returning has meant a reduction in cargo payload availability on scheduled flights due to the uplift in baggage onload.

Q: Have passenger volumes now recovered to pre-Covid levels in 2022? How do you see volumes progressing for the rest of the year and going into the next as we enter a worldwide recession?
PJ: Overall, global passenger volumes have not yet fully recovered to pre-Covid-19 levels – they are currently at around 85%. However, we have seen travel demand accelerate rapidly, and we are just emerging from a busy summer travel season. This has demonstrated that when government Covid-19-related restrictions are lifted, people want to travel. Indeed, many international route areas within Europe, the Middle East and North America have already exceeded pre-Covid-19 levels. Of course, the aviation industry is always exposed to seasonal fluctuations, but overall we are optimistic that the recovery will continue, as people need and want to travel.

Q: Anything else that you would like to add or share with our readers regarding the acquisition?
PJ: We are building on our reputation for doing the right thing for our customers, suppliers, partners and society as a whole and will continue to grow responsibly and sustainably.

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