Specialist
Former Senior Executive at John Menzies plc
Agenda
- Regional impact across cargo and ground handling from the novel coronavirus outbreak
- Flexibility of CAPEX and OPEX
- Implications of WFS's financial position on contract pricing on renewals
- Strategic options to expand into passenger to secure volume
- Cargo bounce during restocking 6. M&A potential during downturn
Questions
1.
WFS [World Flight Services] forecast a maximum worst-case revenue drop-off of 5% as a result of the novel coronavirus. That was before President Trump banned transatlantic flights from Europe to the US. How realistic do you think that 5% drop in revenue was pre-suspension, and what do you think is more likely post-suspension?
2.
What kind of delayed payments would you expect from Norwegian and the exposure WFS has to Asian carriers?
3.
If Norwegian and others don’t pay, would you expect other airlines to take a similar stance?
4.
How would you compare the situation to what happened in 2008, or what happened in Iceland with the grounded aircraft?
5.
How do you expect declines to break down between cargo and ground handling?
6.
If there is no tonnage or planes standing around, does WFS still get paid or is it paid on a per tonnage or per flight basis?
7.
If all airlines globally were to cut capacity by 30-50% for 2-3 months, what impacts would you expect on earnings for cargo and ground handlers?
8.
Lufthansa announced a 50% capacity cut. Can you get insurance on that kind of cut that could compensate WFS?
9.
What proportion of WFS’s warehousing and equipment is leased vs owned?
10.
If a contract was at a country level, can WFS get rid of entire countries?
11.
If a decision was made to bust an entire country, what would happen to the rest of the contracts WFS has in other countries?
12.
Given the contracts come up for re-negotiation relatively regularly, what is the chance of contracts being re- negotiated over the coronavirus pandemic period?
13.
Is the 10% of contracts you think could be variable, and the 10% you think are coming up for re-negotiation the same 10% or do they add up to 20%?
14.
What percentage of revenue accounts for personnel? How much could that be cut over the novel coronavirus period?
15.
What do you think is fixed vs variable vs temporary staff? Presumably temporary staff are all gone now?
16.
What is the process and how costly is it to perform lay-offs beyond temporary staff? What is the process of re-hiring like? What are the impacts on long-term performance?
17.
Given that we’re facing an industry-wide downturn, do you think rehiring will be easier or harder?
18.
What are your thoughts on CAPEX? How low do you think it can go during this period?
19.
Do you not think that, in any areas, WFS will be offering significantly lower rates in order to entice airlines into contract renegotiations?
20.
What is the landscape of cargo and ground handlers you think could potentially go bust, and WFS could pick up? For which of those do you think WFS will be the only other player in a duopoly vs WFS competing for that contract against companies such as Swissport and John Menzies?
21.
WFS’s CFO has estimated the company’s total lease cost to be 10% of sales. Does that figure seem correct to you?
22.
Do you think there is any other access to liquidity WFS could draw upon?
23.
Who do you think would buy Bangkok Flight Services?
24.
Do you think any other players could raise cash to buy Bangkok Flight Services?
25.
Do you think the government could inject emergency cash into the sector? What would that take, given what happened with Flybe?
26.
What do you think is going to happen to WFS? Do you think it can survive without a cash injection from the PE backers?
27.
How long do you think WFS could survive the suspension of flights for?
28.
What sort of cost-cutting measures were done in 2008? I’m interested in the Swissport UK bust. What happened there?
29.
What could be the most likely cost-cutting scenarios? What did WFS do in 2008, and over the 9/11 period?
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