Swissport revenue climbs 6.1%

The air cargo-handling arm of financially troubled Chinese conglomerate HNA Group refinanced corporate debt in August.

Swissport has reported a rise in revenue and EBITDA. (Photo: Swissport)

Zurich Airport-based airport ground services and air cargo-handling specialist Swissport International, owned by financially troubled Chinese conglomerate HNA Group, reported €1.53 billion ($1.71 billion) in revenue for the first half of 2019, a 6.1% increase over the €1.44 billion posted for the same period in 2018.

Hainan-based HNA, which bought Swissport for CHF2.73 billion ($2.8 billion) in 2015, previously had held discussions to sell the division to potential bidders, including Brookfield Asset Management and Cerberus Capital Management.

The company reported operating EBITDA of €121.9 million for the six-month period, against €113.7 million posted for the first six months of 2018, representing a 7.2% increase. Operating cash flow for the first half of 2019 climbed to €78.1 million, up almost fourfold compared to the €20.2 million reported for the same period in 2018.

In accordance with IFRS16, which came into effect in January 2019, operating EBITDA in the first half of 2019 reached €191.4 million and operating cash flow totaled €148.1 million.

Swissport adopted IFRS16 using the modified retrospective method of adoption with the date of initial recognition on Jan. 1, 2019.

The €191.4 million of operating EBITDA reflects the impact of the new standard and represents the reported EBITDA, whereas the €121.9 of operating EBITDA is the IFRS16 adjusted (pre-IFRS16 adoption) result based on management estimates.

In the first six months of 2019, Swissport handled 1.02 million passenger flights globally, a decrease of 1.3% over the same period in 2018, serving some 128 million airline passengers.

Swissport noted that changes in Swissport’s customer portfolio at London Stansted Airport and at Bristol Airport in the U.K., and the decision to discontinue the ground service business at Los Angeles International Airport, were the main drivers of the 3.2% decline in passenger volumes compared to the 132 million served in the same period last year.

Swissport handled 2.23 million tons of air freight in the first half of 2019, compared to 2.35 million tons in the first half of 2018, with the shortfall attributed to the sale of the company’s cargo-handling business in France, completed in June 2018, as well as the 3.6% contraction of the global air cargo market.

In August, Swissport Group and certain subsidiaries refinanced existing corporate debt ahead of the 2021-22 maturities. The new senior notes and senior secured notes with maturities in 2024 and 2025, respectively, and a new term loan B, have a total volume of €1.51 billion.

Specifically, the offering comprised €410 million of senior secured notes, €250 million of senior notes and a €850 million term loan facility that priced at Euribor plus 4.75%.

The 5.25% senior secured notes are scheduled to mature on Aug. 15, 2024, and have been issued at 100% of par value. The 9% senior notes will mature on Feb. 15, 2025, and have been issued at 100% of par value.

Swissport used net proceeds of the offering primarily to repay outstanding borrowings, which consisted of existing outstanding term loan B facilities and an existing outstanding revolving credit facility, and to fully redeem the aggregate principal amount of existing outstanding senior secured and senior notes.

The company plans to use about €712 million of proceeds to fully repay existing term loan facilities and about €628 million to fully redeem outstanding existing notes of Swissport Financing issued in 2017.


HNA, which grew from a regional carrier in southern China into one of the country’s biggest privately owned conglomerates, has been among several Chinese asset buyers placed under government scrutiny amid concerns over large debt-fueled purchases that were exposing the financial system to undue risk.

HNA’s acquisitions ranged from golf courses to a stake in Deutsche Bank to owning the Hilton Group of hotels.

In April 2018, HNA was forced to cancel an initial public offering (IPO) of Swissport, with proceeds earmarked to boost liquidity. Citing market conditions at the time, the IPO was pulled from the market just weeks after HNA was forced to cancel plans to list shares in the Gategroup catering group.

Swissport had planned to list shares on the SIX Swiss Exchange in Zurich, according to a statement, with investment bank Rothschild as adviser. HNA had been expected to retain a long-term strategic stake in Swissport after the IPO and operate the company as a separate business.

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