Specialist
Former VP at Swissport International Ltd
Agenda
- Regional ground handling demand impacts from the novel coronavirus outbreak
- Flexibility of equipment, contract and staff costs
- Potential for customer payment delays and contract pricing negotiation
- M&A potential during downturn
Questions
1.
What total downturn do you expect for ground and cargo handling volumes in Europe as a result of the coronavirus pandemic?
2.
A significant amount of cargo is in passenger aircraft. What impact is that having on total cargo volumes?
3.
Lufthansa has grounded 90% of passenger flights. Does that significantly impact cargo volume?
4.
Are there any airlines that carry a significant amount of cargo on the passenger routes?
5.
What is Swissport’s exposure to challenged airlines such as Norwegian, Korean Air, Asiana and AirAsia?
6.
Are there any other airlines that Swissport has exposure to, that you would be particularly concerned about?
7.
Why do you think Swissport is in a position where it doesn’t have big exposure to weaker airlines?
8.
When you incentivise early payments, what type of discounts would you typically offer?
9.
Do you think there will be any scenarios where there won’t be payment in full without early discounts ?
10.
What is Swissport’s exposure to domestic into and across Europe and the US and across-continent flights?
11.
What do you expect for Q1-4 2020 revenues in comparison to 2019?
12.
What is the magnitude of the clients on the ground handling for Q2 and Q3?
13.
In a typical year, how much of the total yearly revenue do Q2 and Q3 account for?
14.
What is the rough split between volume-based and fixed contracts?
15.
How do passenger numbers relate to aircraft turnarounds?
16.
I think passenger numbers have decreased by around 62%. How might that relate to the number of aircraft turnarounds?
17.
Swissport claimed around 70% of its costs were flexible. How flexible do you think those costs truly are? Given the revenue declines you’re expecting in Q2 and Q3, what do you think would be fixed vs variable within that timeframe?
18.
When Swissport mentioned how much it’s expecting to cut its full-time employees by, does this translate into how much it’s expecting the revenue to decline?
19.
Of Swissport’s 65,000 full-time employees, what proportion work in HQ vs on the ground?
20.
The UK has the furlough scheme. Do you expect a significant cost of redundancies in other regions for Swissport across Europe?
21.
Swissport’s CAPEX has historically been as low as 2% of sales. You’ve said it could go as low as zero for up to six months. How low can CAPEX go across ground and cargo handling?
22.
Equipment costs are 8% and that’s all owned by Swissport. Is there any opportunity to sell and lease back on the warehousing side?
23.
How much do you think Swissport could get off its contracts with the airports? Do you think airports are being particularly supportive?
24.
What proportion of total airports Swissport works for would you expect to be regional airports?
25.
What impact do you think Swissport’s lost volume and lost scale synergy will have on unit costs?
26.
What kind of price increases would you expect?
27.
How positive do you think Swissport’s “not using the middle seats” scheme will be, given that it’s going to reduce the load factors and, if the same number of are flying, presumably increase the number of plane turnarounds?
28.
Do you expect more aggressive pricing from players such as WFS [World Flight Services] and John Menzies as they try to recover last quarter’s revenue?
29.
Why is the price competition in the airlines likely to decrease cost focus, whereas the cargo and ground handlers are expected to be able to increase their prices?
30.
Do you expect significant changes of airline-ground handler partnerships over the next 6-12 months?
31.
How do you think about airlines and airports renegotiating? How might that renegotiation impact the ground handler’s relationship with airlines and airports?
32.
How long do you think it will take to get a significant proportion of contracts over the cost-plus models?
33.
How could Swissport get access to further liquidity?
34.
Are there any downsides to selling off the lounge business? How hard would it be to carve out? How reliant is the rest of the business on it?
35.
Do you know how important the lounge business is to Swissport’s total EBITDA?
36.
Who do you think would be a likely buyer for the lounge business?
37.
Are you expecting any challenges in re-hiring staff when recovery comes in the ground handling sector?
38.
You mentioned CAPEX could be significantly deferred. Do you think on the ground handling side it could go to zero for Q2 and Q3?
