TURNOVER in John Menzies aviation division has overtaken its distribution arm for the first time in what a company executive director called a “very significant event”.

Interim revenue at Menzies was up 20 per cent to £1.2 billion, with the group saying its aviation business was going “from strength to strength” following the completion of Florida-based refuelling company ASIG in February.

Menzies, which on Monday scrapped plans to merge its distribution arm with Slough-based logistics firm DX Group, reported that aviation revenue was £625m for the period, up 57 per cent, against distribution revenue of 591m, which was down two per cent.

Including the impact of ASIG, underlying profit more than doubled in the division, to £21.7m while excluding the ASIG, it was up 19 per cent. ASIG contributed £6.4m.

Underlying operating profit in distribution was down ten per cent to £10.8m.

“If you were the chief executive in 1996 who started out an aviation strategy, you’d probably be quite proud today that the business has grown from a Heathrow cargo business to something is in 250 airports in 35 countries, so it’s a significant day,” said corporate affairs director John Geddes.

Menzies also announced that long-standing director Dermot Jenkinson, who joined the board in 1986, will be stepping down in October.

Following the collapse of talks with DX, Mr Geddes said it was “a board priority to look at the group structure”.

“We spent the last six months trying to make the deal with DX work so we move on and see what our options are now,” he said.

Key to opening this up is the completion of changes to its pension structure, which Mr Geddes said gave the board “options and flexibility to change the group structure”.

In May, Menzies split its defined benefit pension scheme into two sections, with the overall company guaranteeing the funding of a new Menzies Distribution section “for as long as the business remains part of the group”.

Mr Geddes said the company was “really pleased” with the ASIG integration following completion of the acquisition on February 1, highlighting that the group had completed integration six months ahead of its 12 month schedule.

“We’re very much in charge of our own destiny now and we’re bang on track for the synergies,” he said, adding that the teams had now been tasked with finding further synergies. “We were conservative, we didn’t want to over-promise and under-deliver,” he said.

Mr Geddes said there was an opportunity to use the four million inter-plane refuelling turns it now undertakes to grow the 1.6 million ground handling turns.

The aviation division won 87 contracts in the period, worth £22m in annual revenue – 16 of these were at London Gatwick. The business lost a key contract with easyJet at Gatwick, but said it could not operate contracts where the risk profile does not match the return. Mr Geddes said the relationship with EasyJet was “great”, as evidenced by the awarding of contract at Nice airport with the airline.

The group also ended ground handling operations at New York’s JFK airport, which had been with ASIG, saying it had “no viable route to profitability”.

Mr Geddes said some tidying up of the portfolio could see Menzies pull out of further US airports.

During March Menzies entered the German market, handling BA baggage in four airports. It is also exploring its options in South Africa. The period also saw the acquisition of Gold Coast Air Terminal Services in Australia.

In its distribution business, Mr Geddes said the board was now looking at “plan B”, following terminating the DX merger.

Mr Geddes said there was no definitively preference for either growing its distribution business organically or through acquisition. “I don’t think we at any time want to pretend we’re going to be the next DHL or TNT. I think we’ll be a niche player in the market, but it’s a big old market.”