WFS/FCS Contract Signed

It’s now official, the signatures have been put on the contract between Worldwide Flight Services (WFS) and Fraport Cargo Services (FCS).
The signing ceremony took place yesterday afternoon (7. July) in Frankfurt and the deal now gives WFS a 51% majority shareholding in FCS.

Signing the contract (l > r): Martin Bien, head of Fraport Ground Services / Olivier Bijaoui, President & CEO of WFS / Michael Mueller, member of Fraport’s Executive Board  / courtesy Fraport AG
Signing the contract (l > r): Martin Bien, head of Fraport Ground Services / Olivier Bijaoui, President & CEO of WFS / Michael Mueller, member of Fraport’s Executive Board / courtesy Fraport AG

The remaining 49% stay with Fraport as stated by their spokesman Joerg Machacek to CargoForwarder Global and that they do not plan to relinquish the remaining share in the foreseeable future or step out of the cargo handling business.
The sales process is expected to be finalised by latest September of this year after the relevant EU bodies have given their blessing.

Present at the signing ceremony were Olivier Bijaoui, President & CEO of WFS along with Michael Mueller, member of Fraport’s Executive Board and Martin Bien, Head of Fraport Ground Services.
 
Olivier Bijaoui is quoted as saying that “this is a major transaction that positions WFS and FCS as the leading cargo handler at one of the biggest cargo airports in the world. As Europe’s largest economy, Germany is obviously a prime focus in our growth plans.”

Stefan Schulte CEO of Fraport adds that “as in the past, the cargo business continues to be vitally important for our business model and to continue developing our cargo handling business successfully, it has been our wish to find a strong and competent partner that offers a strong international network.”

But, surely, selling a majority of your business does not put you in the driving seat anymore!

Fraport Chief Stefan Schulte
Fraport Chief Stefan Schulte

Where will this deal take both companies?
Who will be calling the shots in this new partnership?
It looks like the WFS management considering its majority share and extensive global sales experience.
This is another large and positive step forward for Worldwide Flight Services cargo handling product.
As CargoForwarder Global exclusively reported in its June 29 issue, WFS and FCS have been in negotiations for some time now with regards to cooperating together in Frankfurt.
Not an easy task for both companies to negotiate considering the fact that FCS has been the largest cargo handler at the airport for many years.

The most interesting part of this deal is the 51% gained by WFS.
Previous negotiations and information from Fraport side showed them looking for a 49% shareholder for their cargo handling daughter company.
This move effectively gives the WFS managers the future control on which direction FCS should and will take.
CargoForwarder Global has information that Fraport’s decision to give over 51% is due to the fact that WFS with its broad international network is in a better position to expand the business when being in charge.

Another aspect it seems is that FCS sees itself working in a very volatile market segment as far as pricing and other issues are concerned, and now being part of an international set-up can considerably cut risks for them.

Both sides are not revealing what price WFS has to pay for a majority share.
Is it a one or two-digit million euro figure?

 

It is understood that FCS and WFS will combine their biz activities at Frankfurt, with FCS remaining as a legal entity with a majority shareholder on board. Fraport informed us that the same will apply to the FCS work contracts and customer base. According to Mr Machacek the firm's marriage will not result in any job losses at FCS.

The specifics will be made known once both managements have a chance to sit down together and work this out.

This takeover by WFS was surely personally engineered by Olivier Bijaoui.
He and his company have been moving forward quickly during the past two years in establishing new joint venture agreements and acquisitions.
The recent takeover from LBO France of WFS by U.S.-based Platinum Equity gave an even stronger signal to the world’s handling community that Olivier and his team plan to use resources available to bring the company, especially in the cargo handling sector, even further forward.

WFS consolidates its position even further
The list of new agreements made during the past couple of years is quite impressive.
To name a few:

  • WFS took its first step into the South American ground handling market in late 2014 by acquiring a controlling stake in the Orbital Group, said to be one of the largest providers of passenger, ramp and airport security services in Brazil.
      One can be sure that cargo will be added to the list.
  • WFS opened new cargo handling terminals in Johannesburg and Cape Town.
  • A joint venture company was formed in Amman, Jordan for so called “Meet & Assist” services.
  • Swissport Cargo Services Copenhagen business was taken over by WFS.
  • WFS moved to new cargo handling premises in London Heathrow, thereby strengthening their already strong position there even further.
  • In December of last year WFS signed an agreement with ATA Italia with the aim of providing what they term as total handling solutions for carriers operating through Italy. ATA which was founded in the mid-nineties operates from five important Italian airport locations. WFS also gained a new cargo terminal concession in Milan, Malpensa.

Germany to play a new role for WFS and FCS?
Yesterday’s signing by both companies is something which will be watched closely by their competitors both in FRA and at other German airports.
Both WFS and FCS in Germany so far only operate in Frankfurt, which admittedly is the largest air cargo market in Germany.
The 51 percent holding by WFS is one which will cause many eyebrows to rise.
What will Olivier Bijaoui demand (in the positive sense) from FCS in order to consolidate his position in FRA and expand within the German speaking markets?
The present cargo handling facility used by WFS in FRA is totally inadequate, outdated and cannot be expanded.
It is said that the rental agreement WFS has there is running out this year.
So what better time join up with FCS, move to better premises and have direct ramp access in FRA which will save an enormous amount of cash on an annual basis.

The worldwide handling consolidation process is in full swing and one has to wonder who will be the next takeover candidate.

WFS moves ahead again and it will be interesting to follow their future developments.

John Mc Donagh

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