WFS buys LA handler Mercury Air Cargo: industry insiders
WORLDWIDE Flight Services (WFS) has acquired Mercury Air Cargo, the largest air cargo handler in Los Angeles, according to industry insiders, reports London’s Loadstar.
The deal has taken some three months to prepare as the handling division had to be separated from Mercury Air Group, which operates a fuel subsidiary and a government services arm.
The news will raise concerns over an increased lack of competition in handling, particularly in the US.
As reported in The Loadstar Premium last month, the debt-heavy sector, which comprises numerous single-airport companies alongside a handful of global heavyweights such as Swissport and WFS, is undergoing fast-paced consolidation, under the watchful eye of private equity.
Paris-based WFS is owned by Cerberus Capital management, which one insider said was “very good, very supportive” of WFS and a “long-term investor”. WFS this year also bought Pinnacle in Texas and Paris-based RA Hand. In 2016, it completed the purchase of the US’s biggest handler, Consolidated Aviation Services.
“If you look at that recent purchase of Pinnacle and the Greenbriar private equity purchase of Alliance Ground International – which has just acquired MIC in Chicago – you can see how three of the largest globals are consolidating under private equity control,” said one senior source.
One senior handler agreed: “Private equity clearly wants to expand. But no airline wants to see monopolies in an airport. Private equity is about revenue generation, not what airlines want or need.”
According to one source close to WFS, competition authorities don’t get involved with any deals for companies with revenue of less than US$40 million.
The acquisition of Mercury gives WFS an even stronger foothold in the US, where it is hard to grow in major airports. Menzies, an independent handler without private equity money, wants to increase its footprint in the US, but is looking at “alternative” airports.
Robert Fordree, head of cargo for Menzies, told London’s Loadstar last month the company was “looking at secondary gateways”.