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John Menzies records first-half loss, hurt by 737 MAX groundings

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(Reuters) – John Menzies Plc <MNZS.L> on Tuesday reported a first-half loss compared to a profit last year, hit by weak cargo volumes, contract losses and cuts in flight schedules following the global grounding of Boeing’s <BA.N> 737 MAX jets.

The aviation servicing company, which reshuffled its top management this year, is looking to boost profit through cost cuts and is considering options for its business as it warned earlier this year earnings would not grow in 2019.

“The first half has also been impacted by the previously reported 2018 events and makes for a challenging year on year comparison. These include the loss of exclusive licences in the Dominican Republic and Panama,” the company said.

A number of airlines have removed the MAX from their schedules until January, expecting it to take that long for Boeing to win approval for reprogrammed stall-prevention software and training that deal with the problems behind MAX crashes.

The aviation sector in Europe has also been battling higher fuel costs, competition among budget airlines as well as a slowing economy.

Edinburgh-based Menzies, which offers ground handling, fuelling and cargo handling services for airlines, said it posted a pretax loss of 4.4 million pounds in the six months ended June 30, from a profit of 8.3 million pounds a year earlier.

Underlying pretax profit nearly halved to 8.2 million pounds. However, revenue rose nearly 4% to 649.9 million pounds.

“Menzies is historically second-half weighted … We think a number of dynamics will feed through that give us confidence in full-year numbers being achieved,” Berenberg analysts said in a note.

Menzies rival BBA Aviation <BBA.L> reported a dip in first-half profit earlier this month.

(Reporting by Pushkala Aripaka in Bengaluru)

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