(Reuters) - Aviation services group John Menzies (MNZS.L) swung to a first-half loss on Tuesday after weakness in Europe, lower cargo volumes and fallout from the global grounding of Boeing’s (BA.N) 737 MAX jets hit its business.
The British company, which reshuffled its top management this year, is looking to boost profit through cost cuts and has already said it is considering options for the company after warning that earnings would not grow in 2019.
It expects to save more than 10 million pounds by cutting head office roles and duplication, Chief Executive Giles Wilson told Reuters.
Edinburgh-based Menzies, which offers ground handling, fuelling and cargo handling services for airlines, posted a pretax loss of 4.4 million pounds in the six months to the end of June, from a profit of 8.3 million pounds a year earlier.
Revenue rose 4% to 649.9 million pounds.
Menzies shares fell as much as 5% after it said the first half was also hit by contract losses in 2018, including licences in the Dominican Republic and Panama and the conclusion of operations in Hyderabad, India. The stock was down 38% in the last year prior to Tuesday’s trading.
Rival BBA Aviation (BBA.L) reported a dip in profit earlier this month.
Europe, where airlines have warned of a tougher market in terms of passenger numbers, has been a difficult market for the company, offsetting strength in Macau and Sydney.
The aviation sector in Europe has also been battling higher fuel costs, competition among budget airlines, a slowing economy as well as the fallout from the 737 MAX situation.
“Menzies is historically second-half weighted ... We think a number of dynamics will feed through that give us confidence in full-year numbers being achieved,” Berenberg analysts said in a note.
Menzies, which traces its roots back to a bookshop founded in 1833, became a pure play aviation business after it agreed to sell its newspaper distribution business to a private equity firm last year.
Additional reporting by Kate Holton in London; Editing by Keith Weir