Cargo Forwarder Global has received reliable information that WFS is in very close discussion with Fraport Cargo Services (FCS) on either a takeover of FCS’s cargo handling business or
alternatively the formation of a joint venture between both companies.
It is said that these discussions, which apparently were initiated before the takeover of WFS by Platinum Equity, have reached a decision stage and that the results would be published in the coming weeks or even within days. Then it will be known who buys the rings.
Investor Platinum Equity intends to up WFS’s value
It’s a little more than two months ago that Worldwide Flight Services (WFS) changed owners.
LBO France who had owned WFS for some years sold the buoyant air cargo, ramp handling and passenger service company to Platinum Equity, a U.S.-based investment outfit which is said to have an investment war chest amounting to over US$ 3.75 billion.
The news of the takeover was broken at this year’s Air Cargo Europe show in Munich.
At that time the WFS President and CEO was quoted as saying that there will be new developments and investments by his company in the near future.
At first glance one might wonder where FCS and WFS really fit together.
FCS which is a 100 percent daughter of airport manager Fraport is the largest cargo handler at Frankfurt airport.
Although they have the majority of the air cargo handling there, they are still considered by some as being only a local player as far as cargo handling and documentation is concerned.
Fraport has holdings in various other airports, but none which are specifically related to cargo handling.
WFS on the other hand is seen as being the world’s largest air cargo handling entity, working out of more than 140 airports in 22 countries.
Their airline customer portfolio is made up of around 300 airlines worldwide.
WFS is also a big player in airport ramp and passenger services, although their cargo handling sector is seen to be their most important product.
No wonder! Considering that Olivier Bijaoui, President and CEO of WFS started his career in the cargo business and has in the past years put much effort into making WFS what it is today.
It is interesting to note that despite being a world leader in airport handling, WFS’s presence in Germany is so far still restricted to their cargo handling facility at Frankfurt’s Cargo City South.
Dnata is out of the FCS race
It is well known that FCS was in close discussions with Dnata, the Dubai-based handling giant, regarding a possible tie-up of both companies.
These talks ended abruptly a year or so back due to an apparent withdrawal of Dnata from the discussions.
It is rumoured that Lufthansa which has almost a 10 percent holding in Fraport, objected to having Dubai-based Dnata on their doorstep and possibly creating more friction or competition with the German national carrier.
Where would be the fit?
A 100 percent takeover of FCS by WFS is a possibility, but one which would have to be sanctioned by the strong German unions and workers council as well as by Lufthansa.
It has often been said that Fraport would like to partially or wholly sell off its cargo handling activities.
This has never been spoken of openly due to the possible adverse reactions from those mentioned above.
But, would it make sense for Platinum Equity to pay a large sum just to have control of FCS and what immediate or long term benefit would such a move have for WFS’s cargo set up in Germany?
It’s hard to determine the actual benefit for both sides.
The other alternative is that both companies are looking at some form of strategic tie-up on a joint-venture basis in order to enhance their cargo handling activities.
Fraport confirms search for FCS partner
All pure speculation at the moment - or is it?
When questioned by Cargo Forwarder Global, Fraport press spokesman, Joerg Machacek, confirmed that for some months already they have been on the lookout for a company which would be able to form a strategic partnership with FCS in order to enable them to enhance, strengthen and expand their cargo handling activities.
He would not confirm to us that WFS may be one of those discussion partners.
Whatever it may turn out to be, it is very interesting.
WFS has shown itself to be a pragmatic and profit driven entity which is seen by its clients as being a fair and operationally reliable handling partner for many airlines worldwide.
Mr Bijaoui’s statement in Munich that there will be new developments and investments still rings loud in our ears.
Let’s wait and see.
John Mc Donagh