Worldwide Flight Services - FCF flying low as payroll support ends
- Josh Latham
The continued recovery in cargo volumes and strategic acquisition of Pinnacle Logistics helped Worldwide Flight Services (WFS) beat pre-pandemic revenues in the third quarter. The cargo handling provider survived the pandemic through the extensive use of the US CARES payroll, which provided €83.3m in the first half of the year, but support ended in Q3. WFS used the remaining €22.7m of Payroll Support Program (PSP) grants in the latest quarter, leaving the company to fend for itself at a time when labor cost inflation is on the rise and regions begin to re-enter lockdowns.
The air freight industry is straining under the twin pressures of high demand and disruption from lower capacity & labour shortages. Unemployment benefit schemes in the US have disincentivized staff to return to work, leading to labor shortages at WFS North America operations. Management explained that they've had to increase costs to retain and recruit staff, which has had an overall negative impact on field contribution margins versus 2019. When quizzed, CEO Craig Smith, explained they are able to include wage inflation pass-throughs into contracts, however these need to be negotiated and may sometimes be forgiven for the first couple of years of the contract.