"Rumors are worse than theft, because they endanger the dignity of a company, its reputation and credibility," reads a slightly modified saying. This is true for Luxembourg-based CHAMP Cargosystems because the provider of global IT solutions is facing a severe credibility crisis, nurtured by a multitude of rumors. But what is substantiated by facts, what fake?
CFG has compiled which rumors and allegations are currently swirling around keeping CHAMP on tenterhooks. They come from well-informed, internal company sources, spread deliberately around via electronic channels beyond CHAMP’s own universe, and are partly substantiated based on facts we received from internal informers. Also leaked to us was a letter from CHAMP CEO Chris McDermott, from which we quote.
Is CHAMP for sale?
According to an anonymous source, majority owner SITA (51%) would prefer to get rid of CHAMP, noiselessly, but fast. This is indicated by a manager based in the Luxembourg headquarters of the IT provider, who writes: “Dirk Scholz (Group CFO at CHAMP), imposed by SITA to CHAMP in 2020, pursues a company course that makes it clear that he was hired to sell the company. He is probably already behind his plans due to Covid.”
The background to this statement is likely to be the fact that CHAMP’s development is stagnating, evidenced by the success of competitors such as Pennsylvania-based Unisys, or Indian newcomer, IBS Software. The latter in particular has succeeded in winning important contracts in larger tenders launched by airlines, outcompeting CHAMP. In his letter to the management, labeled as “internal response to a recent publication by CargoForwarder Global”, Mr. McDermott acknowledges that “like most other companies in our sector, 2020 was a challenging time (…) That is now behind us, and we have started the year well, ahead of budget, and growing again as expected.”
A success story after dire times, a sedative pill for the employees or an indirect sales argument, according to which a potential buyer would take over a financially well-positioned company? Everything is conceivable.
Is Cargolux turning away from CHAMP?
As people close to the case confirmed to CargoForwarder Global, minority owner Cargolux (49%) is in search of a new IT architecture to be built and hosted by an external provider other than CHAMP. Provided this is so, it would be an affront to its subsidiary as CV apparently does not trust CHAMP to develop a tailored solution in time and/or to competitive financial conditions as asked for by the carrier. A leading CHAMPion sent us his view on this (quote):
“It is not an internal secret that Cargolux will never take Cargospot. They hate the product that CHAMP has already tried to sell to them twice in the last ten years, without success. (CEO Chris) McDermott is trying to make an alternative offer, but no one really believes in it, since Cargolux’ teams are requesting on-site presence, although we have dismissed all developers and analysts in Luxembourg.
(CV CEO) Richard Forson has a new Chairman of the Board who has no more emotional relationships with CHAMP, and he will do it without problems to get rid of a company that has difficulties reaching its 2021 goals that were already reduced before. On top, CHAMP will soon no longer be important for its (CV’s) IT.”
In his internal letter to the CHAMP management, in which CEO McDermott explicitly refers to our ‘Quo vadis, CHAMP’ report, published on 16MAY21, where we outlined that CV is moving away from its
own IT provider, the executive does not elaborate: “I will not go into the specifics of this article, because to do so would not be helpful, and we do not comment on matters to do with our
Our comment: very regrettable!
Job losses less than claimed?
Staff allege that skilled jobs are transferred from high-wage Luxembourg to lower-cost regions, and that vacant positions at CHAMP’s HQ are not being refilled. Local Luxembourg papers speak of a headcount loss of 10%. The opaque employment policy is confirmed by a CHAMP insider: He sent these lines to us (quote):
“Cost saving requires that you swing the jobs in areas cheaper than Luxembourg (…)
The local press reported a 10% staff reduction. This was only the direct part of the termination; there are many departures not replaced. People have left CHAMP Luxembourg for another company, but they are replaced in London or Frankfurt, which are cheaper.
CEO and CFO are both waging a war against costs. But do you remember what life is like, when you consider that the CEO rents a luxurious and spacious house with more than EUR 5000 per month, and that the CFO’s wages were increased in the midst of the crisis of society while dismissing his colleagues?”
Tough stuff that drifts over into the personal level. These remarks in particular indicate a poisoned working atmosphere within CHAMP, jeopardizing further collaboration. But CEO McDermott does not want to expose himself to the accusation of job axing. Here is his point: “Most of our competitors made significant job cuts, some 25% and more, whereas we sought to preserve jobs and minimise job losses to around 5%.”
At least six former CHAMP experts have switched over to Accelya, a leading global provider of technology platforms, software and services to the travel and transport industry. One of the company’s key products is ‘Cargo Ecosystem’, designed together with Finnair to not only make the air cargo value chain smarter and more intuitive, but also unlock revenue and efficiency opportunities, the IT provider claims. Group CEO is John Johnston, who in his former role as CHAMP CEO had been responsible for developing the IT platform Cargosystems.
Accelya intends to grow organically but also through acquisitions. Insiders therefore suspect that Dirk Scholz and John Johnston will hold talks soon if they have not already done so. But maybe this is just one of the many rumors that are currently doing the rounds.
We always welcome your comments to our articles. However, we can only publish them when the sender name is authentic.