The Big Interview: John Geddes, corporate affairs director and group company secretary at John Menzies
John Geddes is corporate affairs director and group company secretary at Edinburgh-headquartered John Menzies, which is one of Scotland’s oldest companies, starting out in 1833 when its eponymous founder opened a bookshop that also sold The Scotsman.
The group later pivoted to focusing entirely on aviation, now encompassing 205 airports in 35 countries, with operations from Auckland to Anchorage. It said recently that it had plunged to a first-half loss after revenue was cut by a third amid “very challenging conditions” – but it also highlighted “very encouraging commercial progress winning significant new business”.
Can you give more details on the impact of Covid-19 on the firm and broader aviation industry since its outbreak and how you are tackling this?
Covid-19 has had a major impact on our global business. We have had to take swift action to reduce our cost base to react to the sharp reduction in volume. At its worst, volumes were down by about 90 per cent. We have reduced cost wherever possible and delayed non-essential capital expenditure.
Sadly, we have had to reduce our workforce by 21,000, many of this temporary, but ultimately, we will be a smaller business after we emerge from the pandemic as it will take several years for volumes to fully recover.
We operate three broad product categories: ground handling, cargo handling and fuelling. All have been materially impacted. Cargo has been more resilient as high-value products and emergency provisions continue to fly, but volumes are still more than 50 per cent below normal.
The aviation supply chain is a perfect triangle, with airlines, airports and services businesses inter-reliant as airlines and airports predominantly outsource all aircraft-related handling activities. With virtually no plans in the sky, all parties of the supply chain have been materially affected.
We have been grateful to receive support from a variety of government schemes across the world. People is our largest cost and payroll support schemes were and continue to be vital.
We are now actively encouraging governments around the world to continue job support schemes into 2021. Aviation is an industry that will be impacted for many years. Our start-up will be gradual and we will not have the volumes to sustain our current workforce.
Some countries have already decided to continue with job support schemes into next year, including sector-specific support for industries that have been hardest hit. We’d love to see that happen in the UK.
Despite the current crisis, we do look to the future and see opportunity. During 2019 we put in place a number of measures to reduce costs, ensured we had the best technology to support our operations, and invested in our commercial structure to ensure we were listening to our customers and winning new business.
This work will continue to pay dividends and we will emerge as a strong market player who can be nimble and innovative to meet what will undoubtedly be a new normal. We will focus on sustainable returns and working with customers who are operating from stable platforms and with good growth prospects.
You recently co-ordinated a letter to the UK government, signed by Menzies and fellow aviation services businesses Swissport, WFS, and Dnata, asking the government for bespoke financial assistance. What prompted this move?
Aviation services businesses are the major employers within the aviation supply chain. We are, however, not as high-profile or as well-connected as airports or airlines, and we feel our voice and plight is not being fully understood. The aviation industry is one of the worst-hit sectors and recovery will be slow and gradual.
In October, with the end of the Job Retention Scheme and the start of further reduced winter schedules, the sector will have no choice but to let more staff go in the UK. Targeted support would help us to retain our skilled and security-cleared workforce while minimising the ongoing financial commitment from the government.
This is essential if we are to retain enough staff to be ready to play a meaningful part in the long-term recovery of the UK economy. Failure to tackle the issue quickly will lead to significant redundancies, a loss of vital skills, the likelihood of security and safety issues, and ultimately could lead to the failure of ground handling companies or the removal of services from non-financially viable airports. Without appropriate support for ground handlers, a recovery in UK aviation will badly stutter.
You have taken the place of Jason Holt, the former chief executive of Swissport UK, on the Department for Transport (DfT)’s Aviation Expert Steering Group. What do you aim to achieve by this?
Above all I want to make sure that the voice of the ground handlers is heard. I want to ensure the DfT understands that without a handling community the aviation sector does not function. I welcome our presence on the steering group, but our crisis is now and we need action now. The committee is looking at too wide a remit and needs a more laser focus.
The group faces a period of management transition this year with the departure of chief executive Giles Wilson and you being among executives with increased duties, given that he will not be replaced. How is this changing your role?
I do not believe it will be a period of transition. Giles has left to join Wm Grant & Sons and we wish him the best. Our vision will not change and we are focused on the same goals. Given the strength of the existing team, we have chosen not to replace Giles.
Philipp Joeinig, executive chair, will take a more active role in the running of the group and the strategic direction, and will work closely with myself, Alvaro Gomez and Mervyn Walker. We will steer the group through this crisis and then look to return it to growth mode.
You have been with John Menzies for about 22 years – what led you to join the firm and can you talk through the changes you have seen in that time?
I joined the group in 1997 as John Menzies was embarking on a re-structure that would ultimately lead to an exit from retail and a move to be a logistics provider. Here I am 22 years later, with an aviation business making revenues of more than £1 billion, spanning 35 countries. Whilst I have spent much of my Menzies career in the centre, I also spent a period working directly within the aviation business that was a great learning curve.
On a business front I witnessed the exit of retail (including the disposal of iconic brands such as Menzies Retail and Early Learning Centre), the end of the sole right to distribute Nintendo product in the UK, and the closing down of some fledgling computer games development businesses.
The distribution business initially prospered, helped fuel the growth in the aviation division, and for a while they were logical bedfellows. Unfortunately, the newspaper and magazine sector faced annual reductions in volumes that meant the business needed to re-invent itself and use its assets to become a fully fledged logistics player.
With greater opportunities in aviation, Menzies could not fund this re-invention, and a split of the group became logical. The reinvention process was well on track when we disposed of it in 2018 and following this led to the relaunch of the group as a global aviation services business.
Within aviation we have been on a real growth journey, expanding into new airports and countries, welcoming many new colleagues and getting used to dealing with different cultures and working practices. We have acquired more than 20 businesses during this time as well as starting up major operations from scratch at new airports in places such as Bangalore in India.
Within the airline community, the traditional flag carrier airlines are re-inventing themselves to meet the competition from low-cost airlines and this may be accelerated due to Covid. The aviation industry is fast-moving and we need to constantly keep abreast of new technologies and be innovative to match our customer needs.
Overall, the group has evolved from a more traditional organisation with slightly old-fashioned ways when I joined, to where we are today as a fast-moving global aviation services group where there is never a dull day.Obviously, so much is “up in the air” – no pun intended – just now, but if we look, say, a year from now, what would you like John Menzies to look like then?
I don’t think I would be alone is saying that I’d love us all to have more certainty a year from now. Firm schedules and clear and coordinated protection measures across airports would go a long way in helping to restore more confidence in travel. And, of course, huge progress with finding an effective vaccine. For Menzies, I would hope we will find creative ways to keep as many of our employees with us as we can. I think we will be smaller though.
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