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Menzies' profit rises 15.4 percent; Regulator to probe Airline Services deal

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By Reuters

(Reuters) – John Menzies Plc’s <MNZS.L> half-year profit rose 15.4 percent, as the logistics provider got a boost from higher cargo volumes, newer operations and big contract wins in Europe, the Middle East and Africa at its aviation business.

Menzies, which traces its roots back to a bookshop founded in 1833, is set to become a pure play aviation business after it agreed to sell its newspaper distribution business to a private equity firm, buckling to long-time pressure from top investors.

The company said on Tuesday that underlying operating profit at Menzies Aviation, which provides ground handling, cargo and fuel services, rose 9.2 percent to 23.7 million pounds.

Underlying profit at the company before tax rose to 28.5 million pounds from 24.7 million pounds a year earlier. Turnover rose 4.5 percent to 1.25 billion pounds.

Menzies said the second half of the year started well with ground handling turns in the key summer months in line and cargo volumes delivering good returns.

The company said it was on track to meet its full-year expectations, with trading since the half year in line with expectations.

Meanwhile, UK’s competition regulator said in a separate statement that it was referring Menzies’ purchase of Airline Services Limited for an in-depth merger investigation, citing competition concerns.

Menzies bought the trade and assets of Airline Services, a UK-based aircraft de-icing specialist, to boost its UK presence. Both companies supply UK airlines and airports with support services, including de-icing, ground handling and maintenance of aircraft interiors.

“As Menzies and Airline Services are close competitors at these airports, the deal could result in less choice for airlines operating there, potentially leading to higher prices and lower quality services,” UK’s Competition and Markets Authority said.

The regulator said it identified competition problems regarding de-icing services at Edinburgh, Glasgow and London Heathrow airports, and ground handling services at London Gatwick and Manchester airports.

The CMA said that Menzies chose not to offer proposals to address its concerns. The regulator’s deadline for the final decision on the investigation is Jan. 28.

John Menzies has said it will continue to work with the CMA.

Last year, a merger of British mail delivery company DX Group <DXDX.L> and John Menzies collapsed after the two sides were unable to agree terms.

(Reporting by Arathy S Nair in Bengaluru; Editing by Bernard Orr)