Exclusive: Swissport eyes at least 10% revenue growth in Middle East

Aviation services company Swissport is targeting double-digit revenue growth in the Middle East during the 2019 financial year amid worries that escalating US-China trade tensions may stall its cargo volumes growth in the coming months.

"Our revenue growth in the Middle East will be over 10 per cent year-on-year whereas in other mature markets, like Europe, it will be in the range of only 2 to 3 per cent," Luzius Wirth, executive vice president Europe Middle East and Africa at Swissport, told The National on Wednesday.

“This region is a fast accelerator and contributing nearly 10 per cent in our global revenues…we will work to drive this contribution to higher levels in 2019.”

Growth in the cargo market, which is currently contributing 40 per cent to Swissport’s Middle East revenues, would be one of the main expansion drivers in 2019, Mr Wirth said. The growth also depends on local aviation authorities opening more doors for foreign players, he added.

The Zurich-based airport-cargo handler, which also offers ticketing, cabin cleaning and aircraft maintenance services in nearly 50 countries, is expecting nearly 10 per cent flattening in its global cargo volumes growth if US-China trade tensions keep escalating. He is also worried about a potential rise in labour costs if there is a no-deal Brexit.

“We have probably seen a peak in cargo market… it could be flat for the time being because of uncertainties on US and China trade issues. We haven’t seen any impact in 2018 but we are expecting a low in 2019, leading to a drop in revenues to some extent,” Mr Wirth said.

Swissport, which is owned by China's HNA, also denied market speculations that the indebted Chinese conglomerate is looking for buyers for the aviation company.

“Our 2018 performance has been very strong and 2019 growth plans are not restricted as we aim to enter new markets. HNA rumours hold no grounds [and] have not impacted our business,” said Mr Wirth, who is also a member of Swissport’s executive management

Swissport is an asset in itself and even the news of HNA’s financial constraints has not impacted its business, he added.

HNA, which is seeking to strengthen its finances, had also abandoned plans to float Swissport in 2018. The listing was planned on the Swiss stock exchange but it was deferred for an indefinite period.

Swissport, which has invested $70 million in Oman and Saudi Arabia in airport ground handling services in the last two years, is also looking for fresh investments in the Arabian Gulf region.

“Right now our main focus in GCC is on Saudi and Oman, where we are currently handling only ground services. Besides trying to enter into cargo services, we are also in talks with other countries in region,” said Mr Wirth, who predicts that local markets will ultimately open up in the coming years.

“We are bringing competitive costs and better quality. We will keep pushing and we are quite confident that more customers will come.”

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Spreading into Saudi Arabia, the Arab world’s biggest economy, Swissport has recently won contracts from Dutch airline KLM and Indian carrier Indigo. In addition to the new business with these airlines, Swissport is also working with flydubai, Jordan Aviation, Fly Baghdad and Sun Express for airport ground services in Jeddah.

Swissport’s global operating profit in the first half of 2018 was up 45 per cent year-on-year when compared to the same period in 2017, said Mr Wirth.

“Same trend continued in the second half of 2018… it was a strong year revenue wise. In 2019, we will focus on those contracts that are not delivering up to optimum levels,” said Mr Wirth.