SWISSPORT INTERNATIONAL AG
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Swissport International AG Company Profile 2019 3 Dear Readers, In 2019, Swissport achieved solid results in a Furthermore, we are making efforts to increase weakening market environment. On revenue of data availability to efficiently steer our busi 3.13 billion euros, operating EBITDA1 came to ness and to create a framework that supports 272.3 million euros. In constant currency, our data-driven service innovations. revenue was up 2.3 percent, largely in line with sector growth, while EBITDA was 2.4 percent As the global leader in aviation ground services, below previous year – and roughly on previous we are committed to contributing to the success year in actual terms. Our operating cash flow 1 of airlines and logistics companies, while delivering improved to 196.4 million euros in 2019, up from sustainable growth to our investors. 182.5 million euros the year before. Thank you for your interest in Swissport. In our pursuit of continuous improvement, we remain focused on enhancing our operational execution in line with our quality objectives and our service principles. As a people business, we continually invest in our employees. To this end, we train our frontline employees and foster the development of leaders across the organization. Since 2018, more than one thousand mid-level leaders have enrolled in leadership development. Eric Born 15 senior-level managers attended a pilot pro President & CEO gram on transformational leadership in 2019. Swissport International AG 1 Pre-IFRS 16, as defined in our audited financial statements
4 Company Profile 2019 Swissport International AG 6 2019 KEY FACTS Facts and figures are to the point, but don’t account for the people of Swissport standing behind them – around 64,000 in 2019. Our company profile tells the stories behind the numbers. CONTINENTS 115 47 COUNTRIES WAREHOUSES 5LOUNGE GUESTS (million) 4.6 TONS OF CARGO (million)
Swissport International AG Company Profile 2019 5 265 2.1 AIRCRAFT TURNS (million) AIRLINE PASSENGERS (million) >850 300 CORPORATE CLIENTS AIRPORTS 64,000 EMPLOYEES
Swissport International AG Company Profile 2019 7 CONTENTS 2019 key facts 4 Our commercial ambitions 26 Swissport at a glance 8 Our competitive advantage 29 Group executive management 11 Full range of mission-critical services 30 Overview of results 12 Competitive cost base 32 Interview with the CEO 14 Safe and industry-leading operations 34 Our global presence 16 Global consistency 36 Our story 18 Sustainable stakeholder relations 38 Market review 20 Pricing discipline and commercial governance 40 Objectives & strategy 22 Corporate sustainability 42 Our corporate strategy 25 Credits /Contact 50
Swissport International AG Company Profile 2019 9 Group executive management 11 Overview of results 12 Interview with the CEO 14 Our global presence 16 Our story 18 Market review 20
Swissport International AG Company Profile 2019 SWISSPORT AT A GLANCE 11 GROUP EXECUTIVE MANAGEMENT 1 Eric Born Glenn Rutherford Luzius Wirth President & CEO 2 Executive Vice President Executive Vice President Asia-Pacific Europe, Middle East & Africa Andreas Hugener Dr. Peter Waller Chief HR Officer Chief Financial Officer 1 As per 30 April 2020 2 Ad-interim EVP Americas
12 SWISSPORT AT A GLANCE Company Profile 2019 Swissport International AG OVERVIEW OF RESULTS 2019 BUSINESS PERFORMANCE Against a weakening global economy, Swissport was able to achieve solid results by taking decisive cost-efficiency measures. A strong de-icing business in the first quarter and the first full-year consolidation of Aerocare also had a positive impact. FINANCIAL PERFORMANCE OPERATING PERFORMANCE Management statements not included in the consolidated financial statements section In 2019, revenue growth of 2.3 percent was largely The weakening global economy and inter commenting on “operating result” refer to operating in line with the sector’s overall growth. EBITDA national trade impacted our business, earnings before interest, tax, depreciation and stood at 272.3 million euros, 2.4 percent below especially in the cargo segment. Swissport amortization (“operating EBITDA”) as reported in previous year in constant currency and roughly performed 2.05 million aircraft turns and → note 1.1. Segment Information in the financial on previous year in actual terms. handled 4.62 million tons of cargo. report. Statements discussing results’ comparison year on year are made on a constant currency basis, i.e., adjusted for movement in foreign currency REVENUE AIRCRAFT TURNS exchange rates between the two comparative periods. € 3.13 bn 2018: €3.06 billion 1 2.05 m 2018: 2.16 million EBITDA2 CARGO TONS € 272.3 m 2018: €278.9 million 1 4.62 m 2018: 4.78 million 1 On a constant currency basis 2 Operating EBITDA (pre-IFRS 16), as defined in our audited financial statements
Swissport International AG Company Profile 2019 SWISSPORT AT A GLANCE 13 REVENUE AND EBITDA CASH FLOW AND LIQUIDITY 2019 2018 2018 Operating cash flow improved over the previous constant as reported MEUR currency year, owing in part to a solid business per Revenue 3,134.5 3,063.9 2,994.5 formance and effective working capital manage Operating EBITDA 272.3 278.9 273.2 ment. Total liquidity increased overproportionally Operating EBITDA margin 8.7 % 9.1 % 9.1 % due to a decrease in investment activity and a long-term refinancing in August 2019. REVENUE PER REGION OPERATING CASH FLOW 1 + 7.6 % Our revenue growth stemmed from increased activities from various business lines across the globe. Strategic acquisitions also supported top-line growth. 2019: €196.4 million 2018: €182.5 million 2019 2018 CASH AND CASH EQUIVALENTS EMEA 54.7 % EMEA 55.8 % + 74.5 % 31 Dec 2019: €253.4 million Americas 35.4 % Americas 36.0 % 31 Dec 2018: €145.2 million APAC 9.9 % APAC 8.2 % 1 Operating cash flow (pre-IFRS 16), as defined in our audited financial statements
14 SWISSPORT AT A GLANCE Company Profile 2019 Swissport International AG INTERVIEW WITH THE CEO Eric Born, Swissport’s President & CEO, reviews an eventful 2019 and shares his outlook on 2020. How do you rate Swissport’s business results Would you say that Swissport’s business model continuously work on further improving our in 2019? with ground services and cargo handling is overall efficiency. This will strengthen Swissport’s We achieved solid results in a weakened market working to our advantage under more challenging ability to compete for business, help in realizing environment. Our revenue climbed to 3.13 market conditions? margin-improvements and increase our cash billion euros. That’s 2.3 percent more than in Absolutely. The ground services business, which flow. In the longer term, we will be able to 2018 on constant currency and 4.7 percent contributes about 80 percent of Group revenue, further strengthen our balance sheet and increase more in real terms. Our operating EBITDA was added stability. In line with past market our capability to invest. On the revenue side, we 272.3 million euros, a 2.4 percent drop over last behavior, the segment reacted to the global aim for growth at least in line with the sector. year at constant currency, but roughly stable economic slowdown with a delay and a smaller in real terms. Our operating cash flow increased contraction than cargo. It also has a higher When Swissport acquired Aerocare in 2018, it to 196.4 million euros, a 7.6 percent year-on- share of variable cost and we can swiftly react had high hopes for the Australian affiliate to year improvement which was supported by our to downturns by adapting our workforce or by serve as a platform for growth in Asia-Pacific. Is effective working capital management. selling equipment. We successfully did this in the business delivering on the expectations? Brazil in 2019, for example, where a sizeable We continue to see opportunities across the In 2018, the first-time consolidation of our newly share of our revenue was lost due to the market Asia-Pacific region. We are expanding our acquired business in Australia and New Zealand exit of a client. Cargo, on the other hand, current activities and developing new lines of contributed significantly to our above-market contributes higher margins, which compensate business, with a focus on Australia and New growth. This effect was no longer there in 2019, for the risks associated with long-term lease Zealand, where we can indeed build on the basis of course. And in the spring of 2019, the weakening obligations for facilities and equipment. of our existing operation. Next year, a brand- global economy increasingly impacted sector new airfreight warehouse will go online in growth. As a result, our EBITDA-margin ultimately Where do you see the main challenges for Melbourne, Australia, our first on the continent. slipped by almost half a percentage point com Swissport? And in Perth, we will open the first Australian pared to 2018. So 2019 was not great, however; Process efficiency and cost leadership are Aspire airport lounge, with further locations in all in all it was still a solid year and we are working becoming ever more important in our industry. the planning. And Skycare, the former fixed base hard to improve further. And now we are operating in a weaker economic operation of Aerocare, has been integrated in environment than just 18 months ago. Thanks Swissport Executive Aviation. I am pleased to to its position as the world market leader, see that Asia-Pacific is delivering on our Swissport is ideally positioned to strive for and aspirations as a platform for growth. defend cost leadership in key markets. We
SWISSPORT AT A GLANCE 15 “We are also continuing to develop smaller business lines with a strategic focus on high-margin aviation services.” Apart from our Asia-Pacific expansion, where Where do you see Swissport in 2020? else is Swissport investing? From a macroeconomic perspective, 2020 got We are focusing on projects of strategic impor off to a bumpy start. The global economic tance. In Brussels, Belgium, we are investing in a slowdown became more pronounced in the fourth 25,000-square meter warehouse. In Frankfurt, quarter of 2019 and the Covid-19 health crisis Germany, we are developing a 17,000-square adds to the uncertainty. Depending on the meter facility. We are also making tangible further course of the pandemic and the timing progress in redesigning our IT infrastructure and and speed of the recovery in demand, 2020 applications landscape, which will support a could be a rocky year for aviation. We will continue more data-driven steering of the business and to do our homework on the cost side, work to service innovations. The multiyear project is well further enhance our service level and seize under way. attractive market opportunities. We are also continuing to develop smaller business lines with a strategic focus on high- margin aviation services. Our airport lounge business, which operates under the Aspire brand, is one such example. While still comparatively small in revenue terms, we see a lot of potential here. The segment grew profitably last year and Aspire now operates 48 lounges worldwide. Another interesting business that we continue to expand are load control services. In Nairobi, Kenya, we opened an additional office providing centralized load control services. It complements the first such unit in Casablanca, Morocco, and our load-control teams in Zurich and Geneva.
16 SWISSPORT AT A GLANCE Company Profile 2019 Swissport International AG OUR GLOBAL PRESENCE 92 AVIATION SERVICES ON SIX CONTINENTS By the end of 2019, Swissport was operating at 300 airports in 47 countries. We have a broader global presence than any of our competitors and our NORTH AMERICA clients benefit from the industry’s widest single-source service portfolio. Swissport’s global presence in combination with As a global organization, Swissport strives to our knowledge of the local markets and the provide its international clients with services that breadth of our service portfolio, is the basis of are consistent around the globe. Therefore, our continuous success in a competitive environ standardizing our structures and processes ment. We proudly serve more than 850 corporate continues to be high on our agenda. Our Swissport clients with airport ground services and air cargo Formula, first introduced in 2008, is a proven handling at 300 airports globally. set of principles that defines the way we work – focusing on training and operations. It also serves With the acquisition of Australian Aerocare in as a framework for standardization. As we 2018, Swissport expanded its footprint to six continue to further digitize our business processes continents. While Aerocare was originally focused and our service delivery, standardization becomes on airport ground services, our Australian even more important. It will allow us to unlock management team moved swiftly to build on the full potential of our industry expertise to the Group’s service portfolio, launching expan the benefit of our clients. sion projects into air cargo handling and the 34 airport lounge business. At year-end, work was under way for the opening of a cargo ware house in Melbourne, Swissport’s first such facility in Australia. And in Perth, Australia, the Group’s first Aspire airport lounge on the continent was under construction. SOUTH AMERICA
Swissport International AG Company Profile 2019 SWISSPORT AT A GLANCE 17 80 EUROPE 20 THE INDUSTRY’S MOST COMPREHENSIVE NETWORK ASIA 47 COUNTRIES 45 26EMEA 16Americas 5APAC AFRICA 64,000 EMPLOYEES 29 > 29,000EMEA ~29,500Americas > 5,500 APAC PACIFIC 300 300 AIRPORTS 125EMEA 126Americas 49APAC AIRPORTS WORLDWIDE
18 SWISSPORT AT A GLANCE Company Profile 2019 Swissport International AG OUR STORY FROM LOCAL PLAYER TO GLOBAL LEADER Cargo services Ferrovial Swissport was incorporated in 1996. Today, the company is the wissport significantly expands S Spanish construction company its cargo handling business by Ferrovial purchases Swissport global leader in airport ground services and air cargo handling, acquiring Cargo Service Center B.V. from British private equity both based on revenue and the number of airports served. with 61 stations in 15 countries. company Candover. Candover British private equity company Candover purchases Swissport from Swissair Group. 1996 1998 1999 2000 2002 2004 2005 2006 101 130 153 166 180 Swissport is incorporated Global expansion 25 countries UK expansion Asia expansion Swissport is incorporated in Expansion to Turkey and Swissport expands to 130 Acquisition of Groundstar Ltd. Swissport acquires Globeground August 1996 in Switzerland South Africa. Acquisition locations in 25 countries. adds five locations and doubles Korea, adding Seoul to its network with an initial presence in of DynAir in US and Aer Swissport’s business volume in as the third major station in its Zurich, Geneva and Basel. Lingus Ground Handling the UK. Asia-Pacific network after Manila he company subsequently T in London. and Singapore. expands into the UK, Germany KLM cargo, SWISS and United and Brazil. Swissport and KLM conclude a Aviation security five-year worldwide agreement Swissport diversifies and enters covering 64 stations. the security business via its ajor outsourcing agreements M acquisition of Protectas Aviation signed with SWISS and United Security Ltd., today branded Airlines. Checkport. warded for Best Global Ground A Handler five times in a row. Number of stations
Swissport International AG Company Profile 2019 SWISSPORT AT A GLANCE 19 Growth in Asia-Pacific Following through on its plan to use Finnair Servisair Aerocare as a platform for growth, Swissport wins contract as Swissport substantially Swissport announces plans to open an ground handling partner for expands its global presence air cargo facility in Melbourne, its Finnair’s Helsinki hub. by acquiring the ground first in Australia, and to bring its Aspire handling group Servisair. lounge business to Perth, Australia. PAI Partners errovial successfully concludes F HNA Group sale of Swissport to PAI Partners. Chinese HNA Group acquires Swissport from PAI Partners. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 178 191 266 303 Lufthansa Munich Mexico expansion Middle East Expansion Swissport-Losch, a joint venture Swissport expands its presence Swissport expands into the with Losch Airport Service, in Mexico to 28 stations Middle East with start-ups in wins the handling of Lufthansa’s via a joint venture with AGN Saudi Arabia and Oman. regional fleet as a major initial Aviation Services. contract at the Munich hub. Fueling Apron Flightcare Swissport invests in its fueling Acquisition of German cargo handler Swissport acquires business through the acquisi Apron GmbH makes Stuttgart the second- Flightcare Spain and tion of a majority stake in AFS largest cargo hub of Swissport in Germany, Belgium. Aviation Fuel Services GmbH. only topped by its Frankfurt facility. Aerocare Major expansion in the Asia-Pacific region: Swissport acquires Aerocare, the number one ground handler in Australia / New Zealand.
20 SWISSPORT AT A GLANCE Company Profile 2019 Swissport International AG MARKET REVIEW Swissport is well positioned to take advantage FORECASTED ANNUAL of major trends in the global aviation industry. 3.7 % GROWTH GROUND SERVICES FORECASTED ANNUAL The global economic slowdown became more ROBUST SECTOR GROWTH 4.5 % GROWTH CARGO HANDLING pronounced in the fourth quarter of 2019 and 2020 got off to a bumpy start from a macro Historically, passenger and air cargo volumes economic perspective, as the Covid-19 pandemic have been outperforming GDP growth by over sent shock waves through the global economy. 50 percent. Despite the challenging economic environment, the airport ground services sector In 2019, the world economy grew by just 2.9 AVERAGE SAVINGS BY AIRLINES is expected to deliver a compound annual 10–25 % percent, down from 3.7 percent in 2018, ac FROM OUTSOURCING SERVICES growth rate (CAGR) of 3.7 percent between 2018 cording to the OECD. Last year’s growth was and 2023, according to a Roland Berger industry the weakest since the global financial crisis report. For air cargo handling we expect a CAGR of the previous decade and was projected to pick of 4.5 percent. And with the risk of a prolonged up only marginally to 3.0 percent in 2020. The impact of Covid-19 on aviation, market escalating international trade conflicts between uncertainty is growing further. the US and China and between the US and the OUTSOURCED AVIATION 42 % EU, persisting uncertainty around Brexit, and HANDLING MARKET As industry estimates predict a potential doubling rising tensions in the Middle East continue to of global aircraft numbers between 2015 and weigh on the industry. All this leads to declining 2035, we expect our sector to grow at least in volumes and increased pricing pressure. line with these figures. With established oper ations at 300 airports worldwide, Swissport is Despite the short-term challenges, the medium- well positioned to participate in the sector term outlook remains positive for Swissport growth. overall. There are several supporting industry trends. MARKET DEREGULATION The deregulation of airport ground services and air cargo handling in many countries and regions continues to open new markets to independent service providers like Swissport. The trend supports Source: Roland Berger industry report
Swissport International AG Company Profile 2019 SWISSPORT AT A GLANCE 21 our growth and continues to be a positive driver and New Zealand and a strong foothold in Japan of Swissport’s global expansion. and Korea, it is well positioned to leverage on this trend. Swissport’s expansion in the Middle East after the market was opened to international ground In line with our ambitions to build on our newly service providers, first into Saudi Arabia and acquired Australian business as a platform for soon after into Oman, has developed favorably. growth, we launched an initiative to expand our In 2019, Swissport added Dutch airline KLM, cargo business in the greater Asia-Pacific region. India-based IndiGo, Fly Jordan from Jordan and The Swissport cargo warehouses in Melbourne Salam Air from Oman to its growing customer and Sydney will be our first such facilities in portfolio in the Middle East. The prospects Australia. 2019 also saw our Aspire lounge busi remain promising. ness expand to Australia with Perth planned to open next year. OUTSOURCING INDUSTRY CONSOLIDATION Outsourcing of ground services and cargo handling by airlines has led to an increase in the With the top four players accounting for less share of the freely accessible aviation handling than 30 percent of the global market, the sector market to an estimated 42 percent of the total remains fragmented, which supports further market volume. On average, estimates indicate consolidation. Since its foundation in 1996, a savings potential from outsourcing ground Swissport has been a driver of consolidation in services and cargo handling between 10 and 25 the industry. Scale contributes to realizing cost percent. Low-cost airlines with their focus on synergies with respect to investments. There are cost efficiency are at the forefront here. With its also synergies in global sales and key account long-standing partnerships with leading low- management. cost carriers around the world, Swissport has a strong position in this growing segment, too, Swissport latest strategic expansion was to and expects the outsourcing trend to continue. Australia and New Zealand by acquiring Aerocare in 2018. Last year, the Group introduced a leaner global structure with just three regions; GROWTH POTENTIAL IN Americas, EMEA and APAC and consolidated ASIA-PACIFIC overheads across the organization to unlock efficiency gains. Growth in Asia-Pacific remains high. We expect this to continue to stimulate demand for air cargo handling and airport ground services. With Swissport’s leading market position in Australia
22 SWISSPORT AT A GLANCE Company Profile 2019 Swissport International AG 2 OBJECTIVES & STRATEGY
Swissport International AG Company Profile 2019 23 Our corporate strategy 25 Our commercial ambitions 26 Our competitive advantage 29 Full range of mission-critical services 30 Competitive cost base 32 Safe and industry-leading operations 34 Global consistency 36 Sustainable stakeholder relations 38 Pricing discipline and commercial governance 40
OUR VISION IS TO BE THE MOST TRUSTED SINGLE-SOURCE GROUND SERVICES AND CARGO HANDLING PROVIDER IN THE AVIATION INDUSTRY.
Swissport International AG Company Profile 2019 OBJECTIVES & STRATEGY 25 OUR CORPORATE STRATEGY ANCHORED IN A RESILIENT BUSINESS MODEL Swissport is the world’s leading independent provider of airport ground services and air cargo handling based on revenue and the number of airports served. Swissport is active in airport ground services, Diversity extends to our client structure and our AIR CARGO HANDLING including a number of adjacent services like geographical presence, too. Our 850 clients lounge hospitality, and in air cargo handling. worldwide include multinational airlines, low- With some 4.6 million tons of cargo handled, There are many benefits to this diverse business cost carriers, regional carriers, airports and Swissport is one of the global market leaders model, ranging from exposure to the economic freight forwarders. The top ten account for 30 in this business segment as well. By the end of cycle, to profit margins, risk profiles of capex percent of our Group revenue and even our largest 2019, the company was operating 115 air cargo commitments and even staff training. client contributes just a single-digit percentage warehouses, providing clients with a range of share of Group revenue. With operations across services for general freight, mail and documents, With its broad portfolio of services, many of a wide variety of markets, including mature as well as specialist shipments, such as express which are critical to airline operations, Swissport’s markets and emerging markets in Eastern Europe, services and pharmaceuticals. In 2015, the first business model is not only diverse, but also Africa, Asia and the Middle East, Swissport Swissport cargo warehouse was certified by the resilient to short-term volume changes by its can cushion declines in one region with positive IATA Center of Excellence for Independent airline clients. developments in other regions. Validators in Pharmaceutical Logistics (CEIV Pharma). 14 Swissport facilities were certified Airport ground services and air cargo handling under the CEIV Pharma standard, by the British complement each other perfectly. Cargo AIRPORT GROUND SERVICES MHRA (Medicines and Healthcare products handling yields higher margins at the cost of Regulatory Agency) or other recognized industry a steeper risk profile, as Swissport is often Swissport offers its clients ramp handling and associations, by the end of 2019. committed in long-term lease agreements with passenger services. These include activities its cargo warehouses. like the movement of aircraft, fueling, de-icing and anti-icing, baggage handling, as well as Ground services adds stability to our revenue check-in, gate and security services, and lounge stream and is a very flexible business. In a hospitality. Our clients can customize the services market downturn it is reasonably easy to react they wish to source, ranging from a single by selling or decommissioning equipment, like service to full hub outsourcing. In 2019, Swissport a push-back tractor, or to adapt our workforce. performed some 2.1 million aircraft turns and Last, but not least, there are synergies in served 265 million airline passengers, making it training and resource planning. the undisputed global market leader.
26 OBJECTIVES & STRATEGY Company Profile 2019 Swissport International AG OUR COMMERCIAL AMBITIONS At Swissport, we are committed to sustainable value creation. We want to further strengthen our leadership in our core markets and expand our global presence through targeted investments in emerging markets. We are driving growth by combining organic STRENGTHENING LEADERSHIP We are also driving our expansion by entering growth with selective acquisitions and greenfield AND GROWING PROFITABLY IN into framework agreements with existing clients. developments. Organic growth comes with CORE MARKETS Such agreements contain terms and conditions business expansions by airline customers or by for ground services or cargo handling, allowing diversifying our own service portfolio. We also Swissport has grown consistently since its existing clients to better plan their expansion to support growth by maintaining a loyal customer founding and continues to develop favorably. new locations – provided that Swissport already base. Partnerships with our ten largest We seek to build on our existing portfolio offers its services there and has infrastructure in customers date back over ten years. and exploit new opportunities. place. Such agreements actively support our core-market growth beyond passive growth, which Large incremental growth opportunities typi With the acquisition of Aerocare in March 2018, occurs when clients expand their business. cally present themselves when airlines decide Swissport was able to expand its presence to to outsource parts or all of their ground services Australia and New Zealand and now offers its In addition to realizing profitable growth in core or cargo handling. services on six continents. By the end of 2019, markets, we intend to expand our presence in the company was active at 300 airports in 47 the fast-growing Asia-Pacific region and other The outsourcing of ground services by airlines is countries. The acquisition added about six emerging markets. In combination with our an industry trend that is leading to dispropor percent to the Group’s business in terms of operations in Japan and Korea, our presence in tionate growth in demand for aviation service revenue. Australia and New Zealand provides an ideal providers. We expect to see this trend accelerate platform for this. further in the wake of the Covid-19 pandemic. Initially, Swissport will be concentrating on leveraging its presence in Australia and New Contracts typically have a local and not a regional Zealand by winning new airline customers and or even global scope. This additionally stabilizes by adding new services to former Aerocare’s Swissport’s long-term development, as the com traditional offer. In September 2018, following a mercial impact of contract wins or losses is competitive tender focused on safety, quality initially a purely local issue. and performance, Air New Zealand chose Swissport as their ground services provider at four major Australian airports.
Swissport International AG Company Profile 2019 OBJECTIVES & STRATEGY 27 “At Swissport we know how to grow profitably and we draw on all levers to achieve this growth.” Matthias Pape – Head of Business Development OUR LEVERS OF GROWTH EXPAND IN EMERGING MARKETS couple of years, our Omani business has developed from a greenfield start-up into an established In aviation services, deregulation is a key driver organization. of the global market volume expansion. We expect new opportunities for market entries to Since its inception, Swissport Oman has been ORGANIC arise from the deregulation in emerging markets. adding prominent brands to its client portfolio – SELECTIVE CUSTOMER AND We want to exploit economically viable oppor the customer base today includes flydubai, Air ACQUISITION SERVICE LINE tunities when markets open to competition. Arabia, Turkish Airlines, Pegasus Airlines, Air ACTIVITY GROWTH New Zealand, and the homebase airline Salam When we consider market entries, whether Air. In Saudi Arabia, KLM and IndiGo are just through greenfield developments or an acquisition, some of the latest big-name clients that decided we maintain a disciplined approach, based on to develop their business with us. Onboarding commercial rationale and the benefit/risk profile. renowned customers helps us consolidate our To this end, we will also continue to focus on position as a high quality service provider on the further developing existing emerging markets Arabian Pensinsula and forms a solid base for LARGE projects – both by winning new business and future growth. We also note that many customers GREENFIELD OUTSOURCING by growing our contract volumes with existing utilize our services across our operations in DEVELOPMENTS PROJECTS clients. Oman and Saudi Arabia, realizing operational synergies. Where required by local legislation or deemed beneficial from a business perspective, we seek In emerging markets, too, we capitalize on the to expand our activities through joint ventures. trend of airlines outsourcing ground services and Such partnerships can also be an effective vehicle cargo handling. Our business development team for entering new markets from a risk perspective. continuously analyses opportunities in Eastern One example was our start-up operation in Europe, Africa, Latin America, the Middle East Oman that we had established with a local joint and Asia-Pacific. venture partner, the Al Jarwani Group. In just a
28 OBJECTIVES & STRATEGY Company Profile 2019 Swissport International AG
Swissport International AG Company Profile 2019 OBJECTIVES & STRATEGY 29 OUR COMPETITIVE ADVANTAGE BASED ON DISTINCTIVE SUCCESS FACTORS Swissport’s competitive advantage is based on a set 1 of distinctive success factors. They are supported by FULL RANGE OF MISSION- the Swissport Formula, which defines the way we work. CRITICAL 6 SERVICES PRICING 2 THE SWISSPORT FORMULA DISCIPLINE AND COMPETITIVE COMMERCIAL COST BASE GOVERNANCE The Swissport Formula is a management philosophy and a set of principles to support our distinctive success factors. It helps Swissport in creating a sustainable competitive advantage and in executing its corporate strategy. 5 3 SAFE AND Our aspirations are the same around the globe. SUSTAINABLE INDUSTRY- Based on innovation, engagement and reliability, STAKEHOLDER LEADING RELATIONS OPERATIONS 4 we deliver high-quality, tailor-made solutions to meet the expectations of our clients. That is why the Swissport Formula is the way we work. GLOBAL CONSISTENCY Watch our video to learn more about the Swissport Formula UNDERPINNED BY STANDARDIZED INNOVATION GLOBAL IT OPERATIONS & LEADERSHIP SYSTEMS TRAINING
30 OBJECTIVES & STRATEGY Company Profile 2019 Swissport International AG FULL RANGE OF MISSION-CRITICAL SERVICES Our customers can turn to us for almost any aviation ground service. Swissport’s services range from ramp handling, passenger services and lounge hospitality to air cargo handling and load control. Swissport offers a wide range of high-quality AIRPORT GROUND SERVICES Swissport served 265 million airline passengers services in aviation handling, many of which are handled around 4.1 million flights in 2019. This “mission critical” for our clients. Swissport Swissport generates around 80 percent of its corresponds to roughly one aircraft served by our customers can choose any degree of vertical revenue with classic ramp handling and passenger ramp personnel every 15 seconds. outsourcing. This can include selected passenger, services. Ancillary business such as airport lounge ramp and cargo handling services or a full hospitality, executive aviation and load control hub outsourcing. The scope of all cooperations is complement our portfolio. Combined with our PASSENGER SERVICES flexible over time, both geographically and in global network, it provides us with distinct terms of the services offered. This proves to be service and cost advantages. We strive for client ■ Check-in and Gate an key selling point for Swissport. partnerships that enable us to move from the ■ Passenger Mobility provision of selected services to broader service ■ Lounge Hospitality packages or even integrated hub management – ■ Executive Aviation as we have successfully established with several ■ Security Services leading airlines. ■ Lost & Found In 2019, Swissport accelerated the expansion of its airport lounge business, which operates under RAMP HANDLING the Aspire brand. New lounges opened at London Gatwick and at Edinburgh airports in the UK, ■ Baggage Services and at Eindhoven airport in the Netherlands. Perth ■ De-Icing is to become Aspire’s first lounge in Australia. ■ Fueling At the end of 2019, Aspire managed 48 lounges ■ Moving of Aircraft at over 30 airports in 13 countries. ■ Central Load Control ■ Aircraft Cleaning
OBJECTIVES & STRATEGY 31 AIR CARGO HANDLING Swissport also benefits from direct cost savings. Swissport Brussels piloted the deployment of Our air cargo business accounts for roughly 20 Cargo kiosks. percent of our revenue. We handle everything from general cargo to specialist shipments like Swissport has been using “Cargospot,” a tailored high-value or temperature sensitive products. cargo handling system for more than 15 years. Cargospot enables us to handle any carrier with Swissport keeps adding facilities where it sees our own system. It allows Swissport to optimize opportunities for profitable growth. The ware its cost base and increase its flexibility towards house infrastructure at Brussels’s Zaventem airline customers. Airport is nearing completion of a multi-million euros refurbishment and expansion. In October In 2019, Swissport handled 4.6 million tons of air 2019, the first part of the new cargo complex, cargo. By the end of the year, the company was a state-of-the-art Swissport Pharma Center, operating 115 cargo warehouses at airports was successfully put into operation. Major around the world. 14 Swissport facilities were expansion projects or market entries are also certified under the CEIV Pharma standard, by underway in Frankfurt, Germany, and in the British MHRA (Medicines and Healthcare pro Melbourne, Australia, where Swissport plans to ducts Regulatory Agency) or other recognized start its first Australian cargo operation. industry associations, by the end of 2019. In 2016, we had opened a new warehouse in Ghana, followed in 2017 by Chicago O’Hare. SERVICES We also invest in technology and automation at existing warehouses. Self-service cargo kiosks ■ General & Special Cargo Handling are one such example. The kiosks enable truck ■ Temperature-Controlled Handling drivers to skip queues at the counter during such as pharmaceuticals peak-hours and bypass the manual processing ■ Hub Handling of paperwork, saving them time that is sometimes ■ Express Services critical to get a shipment on an earlier flight. ■ Forwarder Handling
2 32 OBJECTIVES & STRATEGY Company Profile 2019 Swissport International AG COMPETITIVE COST BASE In a market with intense global competition and low margins, it is essential to keep costs under control to generate sufficient free cash flow to finance investments and profitable growth. In recent years, Swissport has developed impres On the regional level, January 2019 saw the in application consolidation and create the foun sively and profitably through a combination of introduction of a new structure with three instead dation for a data-driven business operating model. organic growth and inorganic activity. We take of formerly nine regions. With EMEA (Europe, our strategic decisions with a strong focus on Middle East & Africa), Americas and Asia-Pacific, Swissport has also made good progress in rolling customer service. At the same time, we are support functions, formerly scattered across local out a standard enterprise resource planning relentlessly striving to reduce our costs, as organizations, are now concentrated on the (ERP) system within our global Finance organi competition is intense, and margins are low. regional level. zation. Currently, over 80 percent of the Group’s revenue is handled through one ERP, In the autumn of 2019, in light of softening serving as the backbone for all feeder systems ORGANIZATIONAL DEVELOPMENT market conditions and trading deviations and processes. Our focus remains on finance compared to budget, Swissport identified 250 process standardization, automation and centrali Swissport has implemented structural adjust overhead positions to be eliminated. This zation to improve our cost position and further ments at all levels of the organization. Starting included positions at the head office, which will support our local finance teams in their role as with Swissport2020 in 2018, we introduced focus even more on support services creating business partners. global standard operating structures on the value through global alignment and governance. local level. In addition to improved efficiency and These measures allowed us to start 2020 with In the third quarter of 2019, Swissport introduced an enhanced service delivery, the program is a cost base that was 20 million euros lower. a new procurement structure featuring global expected to deliver some 20 million euros of category management, a shared project tracker recurrent annual savings. It will conclude at the tool and selected agreed suppliers. This will end of 2020 after delivering its first full-year IT AND FINANCE TRANSFORMATION allow Swissport procurement teams and the contribution. Going forward, we will take stan supply chain to increase their response time and dardization a step further by developing a truly IT transformation remains a focus as we work to to better support our operations and customer consistent way of working, which fully embraces increase IT performance and security. We have service delivery. Beyond enhancing our reaction process digitalization and allows us to take been preparing to embark on a cloud journey time, the focus of the new procurement structure advantage of Swissport’s global scale, in other starting in 2021. Critical workloads and appli is to protect our cash and improve our results. words to enhance the Swissport Formula. Our cations will be migrated to the cloud to reduce It will reinforce our actions on compliance and focus will be to better support our frontline cost and prepare for a data-driven strategy. safety all along our supply chain around the globe. colleagues in delivering material benefits for our Standardization of core business and support customers. services across Swissport is expected to result
Swissport International AG Company Profile 2019 OBJECTIVES & STRATEGY 33 “Efficient staff resource management is vital to creating a competitive cost base.” Artemis Papanika – Head of Planning and Performance Central & Eastern Europe ADVANCED RESOURCE PLANNING Our people are the key asset for a superior service delivery. At the same time, with 64,000 staff on our payroll at the end of 2019, personnel costs are our biggest cost element. Therefore, efficient staff resource management is vital and a constant focus. At Swissport we have been supporting mid-sized airports with technology since 2018. By digitalizing our staff and GSE allocation processes, we are able to manage operational resources more efficiently by optimizing productivity and reducing overtime while never compromising safety. We strive to meet the needs of all business lines across our network and are driving the development of this tech nology and our digital transformation.
3 34 OBJECTIVES & STRATEGY Company Profile 2019 Swissport International AG SAFE AND INDUSTRY-LEADING OPERATIONS Around 64,000 dedicated Swissport employees strive to fulfill our clients’ highest expectations – day in and day out. Above all stands our unwaivering commitment to a safety-first culture. A POSITIVE SAFETY TREND SAFETY CULTURE AND LEADERSHIP Swissport pursues a “Just Culture” philosophy, meaning that the company requests fully open Swissport aims to be the recognized global Beyond favorable numbers, we have been working reporting of unsafe acts, conditions, incidents sector leader in health and safety. That is why on a cultural leadership transformation with and accidents. Reports on such events are we are working relentlessly towards our goal respect to workplace safety. Swissport has a collected and analyzed continuously to prevent of zero accidents, zero work-related injuries and dedicated team of experts who focus on “Quality, similar incidents. While team leaders, managers zero illnesses. We are aware our goals are Health, Safety and Environment” (QHSE). or HR managers are the primary reporting ambitious, but they keep us focused and drive However, safety and other aspects of QHSE must channels, employees have the option to report continuous improvement. not be delegated. While the overall account incidents via our external “SpeakUp” hotline, ability ultimately rests with the Board of Directors introduced in 2019. SpeakUp includes an online And our efforts are paying off. In 2019, the “lost and the Group Executive Management, utmost and telephone service, enabling employees to file time injuries frequency rate” (LTIFR), which is a attention and focus by every manager, every reports in full confidentiality and anonymously. key performance indicator (KPI) measuring the team leader and every frontline worker is number of injuries leading to workplace absences, required in daily service delivery activities. was 29 percent below the 2015 level. This is a SAFETY INITIATIVES AND INDUSTRY significant improvement over 2018, when the Thanks to our Safety and Health Improvement STANDARDS KPI improved by 19 percent versus 2015. Aircraft Program (SHIP) we were able to establish an damages per one thousand turns, another effective incident reporting culture. Today, our Swissport’s corporate head office has been ISAGO safety KPI, also improved. In 2019, it was down staff and management are aware that they (IATA Safety Audit for Ground Operations) 20 percent from 2015 after 19 percent in 2018. all play an active role in mastering the daily registered since 2010 and by the end of 2019, We are encouraged by the progress but will have challenge of fulfilling high client expectations 19 locations across its global network were to intensify our efforts beyond 2020 to reach while always putting safety first. There is zero also ISAGO-registered. our goal of a 50 percent reduction versus 2015 tolerance when it comes to any shortcuts in for both KPIs. procedures.
Swissport International AG Company Profile 2019 “Safety cannot be delegated. It is everybody’s responsibility to adhere to safety measures and to support others in doing so.” Alexandre Bolay – Head of Global QHSE Swissport has developed its own integrated DIGITIZATION AND TECHNOLOGY management system, which conforms to current industry standards including the international Continuous innovation has been a catalyst for quality management norm ISO 9001:2015 as well enhanced service delivery and greater efficiency. as the sector-specific IATA Ground Operations It ensures that we maintain our competitive Manual (IGOM) and the ISAGO standard. By edge and our position as the industry’s partner aligning Swissport’s Management System with of choice. ISAGO and IGOM standards all locations that have implemented this management approach Standard digital applications, which have been automatically became ISAGO-compliant. around for some time, include frontline self- service applications, such as kiosks, web, mobile Swissport also invests in hands-on initiatives. check-in combined with bag-drop services. We Together with Auxivo, a spin-off of ETH, the took self-service a step further at Swissport by Swiss Federal Institute of Technology, we have introducing kiosks at selected cargo warehouses developed and tested operational support to speed up the delivery of shipments at gear for employees in physically demanding jobs. trucking gates and their transfer to the aircraft. The “LiftSuit” is a wearable exoskeleton that The use of technology and digitization, such helps prevent musculoskeletal injuries from as cloud-based platforms with real-time data baggage handling. At the IATA Ground Handling reporting across our operations, helps enhance Conference in Madrid, Swissport was awarded our performance and facilitates improved with the “Innovator Award 2019” for this inno tracking and tracing. Furthermore, we are running vation. In fall 2020, following further im pilots with advanced resource planning soft provements, the LiftSuit is scheduled to be intro ware, which have delivered promising results. duced for long-term testing at the airports in Basel and Zurich, Switzerland, with the aim of improving the wearing comfort of the suit.
36 OBJECTIVES & STRATEGY Company Profile 2019 Swissport International AG GLOBAL CONSISTENCY Consistency in the delivery of our services is a key success factor for Swissport. We can only realize our full potential through rigorous standardization. The Swissport Formula helps us achieve this. Swissport provides aviation services at some 300 At Swissport we never compromise on health, airports on six continents, and our aspirations safety, security or the environment. They are are the same around the globe. With our commit fundamental principles on which the Swissport ment to reliability, dedication and innovation, Formula is based and that we stand for. We we strive to provide our customers with consistent, measure our performance against the expec high-quality solutions. tations of our customers and our own goals. This include security, service quality, process efficiency as well as environmental, commercial THE SWISSPORT FORMULA and financial aspects. We also strive to con tinuously improve as an employer, a business Consistency is key: That is why the Swissport partner and in terms of our cost base. Formula is “The Way We Work.” More than ten “Consistency is key: That is years after the Formula’s inception, its principles Despite the Swissport Formula being solidly still drive our success. They define the global anchored in our corporate DNA, maintaining operational and organizational standards our consistency in processes and structures demands why the Swissport Formula staff comply with. To deliver on these standards, constant effort. This is true for any large orga we train our employees at the highest level nization and it rings even more true in organi is ‘The Way We Work ’.” and offer attractive career paths and progression. zations expanding at the rate Swissport has been This is recognized by over 20 airlines, airports growing its business. In just under 25 years since Matthias Hüttner – Head of Global Operations or authorities that accept Swissport training the company’s foundation in 1996, Swissport has material as being equal to, or of higher quality evolved from a local player with three locations than their own. in Switzerland into a global leader active across six continents.
Swissport International AG Company Profile 2019 OBJECTIVES & STRATEGY 37 SWISSPORT2020 We continue to work on the realization of cost savings beyond Swissport2020. The variance in Thanks to Swissport’s rapid growth, many the number of employees required to deliver structures and processes have remained local. certain service volumes, which we still observe While our service quality may still fulfill the across the organization, cannot be explained by expectations of our customers, irrespective of customer requirements, local regulation and exact process consistency, our inconsistent infrastructure constraints alone. Efficiency gaps structures and processes make steering the make it challenging to implement a global business more complicated. Varying operational pricing strategy. We are committed to continue or commercial processes also make client working on this to increase our commercial interactions more complex. We know that our performance, and ultimately to improve our larger clients expect global solutions for their results and our ability to invest. global needs. Therefore, we continue to focus on bringing global consistency to the next level. Last, but not least, we are working on standard job roles to reduce the complexity of our training Swissport2020 has contributed to remedy these and improve staff qualification. This will also issues. It has introduced global standard opera support our efforts to compete for talent and ting structures and strengthened our ability to improves the flexibility of our staff when serve our customers with a consistent service switching between locations. according to the principles of our Swissport Formula. The program also increased our efficiency and is expected to deliver some 20 million euros of recurrent annual cost savings. Swissport2020 launched in 2018 and will formally conclude at the end of 2020.
5 38 OBJECTIVES & STRATEGY Company Profile 2019 Swissport International AG SUSTAINABLE STAKEHOLDER RELATIONS When airlines outsource, they entrust us with mission-critical services, and they rely on our employees to meet their standards. Mutual trust and open dialogue are crucial for the success of such partnerships. OPEN DIALOGUE With so many passenger contacts on behalf of believe that Swissport has improved its services, our airline clients, mutual trust and open dia while 40 percent think that customer relations Strong and resilient relationships with key logue are crucial for positive long-term relation have been enhanced. Among the criteria that stakeholders are essential in any service busi ships. Sustainable customer and stakeholder were rated, Swissport customers are most ness. This particularly rings true in the aviation relations are therefore key to our success. satisfied with the relationship with their primary services business. When outsourcing mission- contacts and their level of professionalism. critical services, our customers place their We also listen closely to what our customers success in our hands. This fills us with a strong have to say and carefully analyze their feedback. sense of responsibility. In passenger services, Our latest customer survey was carried out in our employees are often the first faces our early 2020. It covered topics such as service clients’ customers see. quality, client relationships and the perceived professionalism of our staff. The annual survey With over 3,700 client contracts, Swissport results serve as a lever for continuous improve currently services some 850 corporate clients. ment, allowing us to focus on aspects creating In 2019, our employees served over 265 million added internal and external value. Of the more airline passengers in face-to-face interactions, than 250 participants who answered our questions, often in collaboration with third-party providers. over 30 percent of the customers surveyed “With so many passenger contacts on behalf of our airline clients, mutual trust and open dialogue are crucial for positive long-term relationships.” Steen Pedersen – Head of Global Commercial
Swissport International AG Company Profile 2019 39 FLEXIBLE COOPERATION MODELS To benefit from lower operating costs and specialist expertise, airlines around the globe continue to turn to outsourcing for their ground services, even at their home base airports. Swissport clients can select any combination of services, ranging from specific services to a full outsourcing of passenger services, ramp handling as well as cargo handling. With its broad service portfolio, Swissport offers clients a “one-stop shop” in service integration, should they so desire. Our commitment to sustainable stakeholder relations helps us build longstanding partner ships with airport operators and airlines alike. In addition to Swissport’s presence at 300 airports on six continents, having the industry’s most complete aviation service portfolio is one of our key competitive advantages. We continue to selectively grow our service offering across our network to provide an even more complete geographic coverage and a broader portfolio of services at each of the airports we serve. We are currently preparing to launch cargo operations in Melbourne and Sydney and will also enter the Australian market with our Aspire Airport Lounges, leveraging our recent expansion into Australia and New Zealand for lateral growth. By signing framework agreements airline cus tomers can secure general terms for the delivery of a range of ground services and cargo handling services that apply whenever they expand to new locations where Swissport already offers its services. Such agreements can reduce the complexity of client relationships and allow for more flexible and swift service adjustments.
6 40 OBJECTIVES & STRATEGY Company Profile 2019 Swissport International AG PRICING DISCIPLINE AND COMMERCIAL GOVERNANCE The focus on sustainable value creation in our business decisions contributes to Swissport’s reliability as a business partner. State-of-the-art commercial systems support us in making the right choices, together with our airline customers. PRICING DISCIPLINE offering. This is ultimately to the benefit of our This new state-of-the-art solution supports our customers who know they can count on employees with a host of commercial appli We apply our sustainable business principles, as Swissport and plan on us being a reliable partner cations that ensure we maintain a disciplined laid out in our Swissport Formula, to all our stake for the long term. approach to pricing, within a robust gover holders, including – of course – our clients. As nance framework. From a strategic standpoint, a reliable airline partner, we want to deliver as it delivers complete transparency for senior promised and therefore, we are flexible when COMMERCIAL GOVERNANCE management to make decisions on commercial participating in public tenders, but responsible matters and direct the business in a more and disciplined in our pricing. With Swissport’s The Commercial Steering Committee is a govern effective and efficient way. competitive cost base, coupled with the quality ing body that assesses, reviews, and makes and consistency of our service delivery, we enter recommendations on how the commercial teams In the markets, Salesforce allows our sales mana public tenders with confidence and ambition. should manage and negotiate business cases gers and our key account managers to access However, we do not compete under terms that to maximize our financial and operational perfor the latest information available through real- do not make sense to us from an economic per mance whilst minimizing risk. time reporting dashboards in a cloud-based spective or that cannot be maintained over the system. This new, sophisticated data and infor long-term. This underlines our firm commitment In January 2018, we successfully started the roll mation sharing platform enables our front-line to sustainable stakeholder and client relations, out of “Salesforce”, our new commercial manage sales managers to engage with our clients in a which is based on a deep understanding of the ment tool, bringing Swissport’s commercial well-informed and consistent manner to deliver business and a detailed global costing template. steering to our exacting standards as a leading the right solutions. global operator. The tool was set up over a six- Just as we focus on value creation in new agree month period, drawing on the experiences and The adoption of the tool across Swissport’s global ments, we may seek to apply corrective measures business requirements expressed by our work operations is progressing according to plan. to existing contracts in open and transparent force to ensure that the resulting solution was The number of active users of the Salesforce tool consultations with our customers, should market fit for purpose. has increased from 200 to 300 during 2019. conditions or the operating environment change. Going forward, it will support improved pricing Our disciplined commercial approach contributes discipline and commercial governance at to the stability of our network and our service Swissport.
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