Air Services: Menzies-NAS, a fruitful marriage and fierce appetites

By Nelly Fualdes
Posted on Monday, 24 October 2022 11:32

Menzies and NAS mean 35,000 employees, 96 warehouses and 2 million tons of air cargo per year. Facebook Menzies Aviation Official

After the absorption of the British Menzies, the Kuwaiti NAS is about to lose its trade name but sees its activities and its perimeter reinforced, in Africa in particular.

Searching for lost luggage at the airport or resting in a lounge between flights in Abidjan, Casablanca or Kinshasa: this is – for the average traveller – the tip of the iceberg of NAS (National Aviation Services), the Kuwaiti airport services giant.

The company, which also offers cargo handling, refuelling and aircraft de-icing services, is preparing to abandon its commercial name. After a “smooth” transition, the company promises all the NAS divisions will come under the Menzies banner by mid-2023, the British airport services platform that Agility, the Kuwaiti company’s parent company, acquired on August 4.

The deal was worth £763 million, or about €900 million at the exchange rate at the time.

Global market leader

The new entity that unites Menzies and NAS employs 35,000 people, manages 96 warehouses and handles two million tonnes of air freight annually. In total, with Menzies more focused on the European and American markets, and NAS more active in Africa, Asia and the Middle East, some 58 countries are covered.

In the equation, 16 African countries are represented, with 19 airports out of the 254 in the group. Thus, Menzies-NAS is the world’s number one in terms of markets, and the second in terms of presence, behind Swissport (285 airports in 45 countries, including Algeria, Morocco, Ghana and Tanzania).

“Our objective is to inject capital into Menzies to enable it to accelerate its development and impose itself in a highly fragmented market,” said Ehab Aziz, Agility’s Chief Financial Officer, during the presentation of the half-year results to shareholders on August 18.

One of the main difficulties for ground handling service providers in Africa is that airport authorities issue concessions of limited duration.”

Ambition will be the focus of the group’s priorities for the next three to five years, said Aziz, who wants to see Menzies become the undisputed leader in its sector.

From Egypt to Benin, the Central African Republic and Rwanda, NAS has gradually imposed itself in a fragmented landscape, often in competition with local airlines, traditionally the preferred players in ground handling services for third parties.

While Africa followed the global trends of sector liberalisation in the early 2000s, the continent, which accounts for only 2% of the global air transport market, has been slow to attract the interest of international leaders – leaving all the more room for Kuwait.

Exclusive contract in Côte d’Ivoire

Its airport services subsidiary, NAS, launched a major offensive in the 2010s on African markets, winning an exclusive ground handling contract in January 2015 (passenger services, ramp handling, cargo management and storage… ) at Abidjan’s Félix Houphouët-Boigny airport for 10 years.

In November 2016 the Moroccan Office National des Aéroports (ONDA) awarded a contract to manage lounges at nine airports (Casablanca, Rabat, Marrakech, Agadir, Tangier, Fez, Oujda, Dakhla and Laâyoune).

For its part, Menzies, with its subsidiary Aviation Handling Services (AHS), has made a foray into Senegal and the Central African Republic and retains Equatorial Guinea and Ghana. In contrast, the Swiss company Swissport has focused mainly on the Maghreb and southern Africa.

Another global giant, Dubai’s Dnata (a subsidiary of Emirates), has hardly gone beyond South Africa on the continent.

As for the Europe Handling Group, which can be found in Congo, Mali and Sierra Leone, its international weight remains low (in addition to these three subsidiaries, it is present in France, the United Kingdom and Ireland).

“One of the main difficulties for ground handling service providers in Africa is that airport authorities issue concessions of limited duration, which affects the amount of investment they are willing to put in,” analysed Vees Lochan, director of operations at the Airlines Association of Southern Africa, in 2019, interviewed by the specialised news site AviationPros.

NAS and Menzies, opposite practices

But the sector is investment-intensive. “When NAS arrived in Côte d’Ivoire, it had to buy, ship and clear more than 100 different equipment, including forklifts, airport tractors, etc. Knowing that a single forklift costs $150,000, it cost several million, not to mention staff training, which also represents a considerable investment in money and time,” says a former executive who has worked for both companies.

Our objective is to inject capital into Menzies to enable it to accelerate its development and impose itself in a highly fragmented market.”

“There is a real cultural difference between the two groups, whose practices are at the opposite ends of the spectrum,” says our interviewee, who describes management that is “very cautious in its investments, with a long period of analysis before making any decision” at Menzies, but praises the “reactivity” of NAS, which is very present on the ground.

“For two equivalent opportunities, the decision can be made in a week at NAS, compared to three months at Menzies”, says this former employee, convinced that if NAS’s vision prevails, the development of the giant “will go very fast”.

New operations

Founded as the Public Warehousing Company (PWC) in 1979, Agility was gradually privatised between 1997 and 2002 and is now listed on the Kuwait City and Dubai stock exchanges.

The group, which indicates having achieved 271 million Kuwaiti dinars (865 million euros) of turnover in the first half of 2022 (without Menzies), is however discreet about the role of each of its subsidiaries in this result.

At most, it was stated that in the second quarter of 2022, NAS saw its revenues grow by 40.1% compared to the same period in 2021, reflecting the general recovery in commercial aviation, but also “significant value creation in some of its newer markets”.

In particular, NAS recorded new operations in DRC, Kenya and South Africa in 2021. The company just opened its new Pearl Lounge at Kenneth-Kaunda International Airport in Zambia and will officially open the Pearl Lounge at Robert Gabriel Mugabe International Airport in Zimbabwe in late October.

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