Loss of licences threatens payment of €31 million to creditors of former Groundforce

The jury for the public tender for the concession of handling licences at Lisbon, Porto and Faro airports gave the highest score to the Clece/South consortium, calling into question the continued operation of Menzies Aviation in Portugal, which in 2024 acquired a majority stake in the insolvent Groundforce. If the decision is confirmed, the recovery plan and payment to creditors will fall through.

SPdH, known by the Groundforce brand, entered into a serious financial crisis with the paralysis of air traffic during the Covid-19 pandemic, eventually being declared insolvent in August 2021.

The insolvency administrators then proposed a recovery plan for the company, which was accepted by creditors in September 2023, leading to the British company Menzies acquiring a 50.1% stake in 2024, with TAP retaining 49.9%. The plan allowed the company to continue operating and maintain around 4,000 jobs, as well as the phased payment of €31 million in debts by 2029.

The main creditors are ANA – Aeroportos de Portugal, which is owed €12 million, the Social Security Institute (€3.4 million), TAP (€3.1 million), Fidelidade (€2.1 million) and BCP (€2.03 million).

The payment of these debts is now at risk. If it is confirmed that Menzies Portugal is unable to renew its licences for ground handling at Lisbon, Porto and Faro airports for another seven years, the company will cease trading and will not be able to generate the cash flow needed to repay its creditors.

Menzies Aviation was formally notified on Wednesday of the results of the preliminary report issued by the National Civil Aviation Authority (ANAC), in which the jury declares the Spanish consortium formed by Clece, owned by Florentino Pérez’s ACS, and South, the handling company of the IAG group, to which Iberia belongs, as the winner.

According to ECO, the regulator’s report stresses that “the final report has not yet been produced, nor has any decision been made or service provider selected at this stage”. The competitors will still be heard at a preliminary hearing, and Menzies said in a statement that it will “immediately initiate the formal appeal process and use all available means to ensure that the integrity and fairness of the result are fully reviewed, as stipulated in the tender rules”.

Union “stunned”

The result also caused serious concern among unions. In a statement to its members entitled ‘The worst has finally happened’, the Aviation and Airport Workers’ Union (SITAVA) said it was “stunned” by “the failure to comply with the assumptions set out in the recovery plan regarding the allocation of licences”. The Civil Aviation Workers’ Union (SINTAC) also considered that the decision “raises serious concerns about the future of workers and the maintenance of their jobs at Menzies Aviation”.

Menzies’ current licences expire on 19 November, but ANAC has asked the government to extend them for a year so that there is no interruption to the service, according to Dinheiro Vivo.

In addition to being a shareholder, TAP is also Menzies’ main customer, accounting for more than half of its business. If the licences are awarded to Clece/South, the Portuguese airline could be assisted by the same company that handles Iberia, its competitor. The only alternative in Portugal is Portway, which belongs to ANA and is much smaller. It is also worth mentioning that the IAG group, to which South belongs, is one of the strong candidates for the purchase of the national carrier.

For TAP, the bankruptcy of SPdH will also mean the loss of 49.9% of an asset in which it has already injected nearly eight million euros through the conversion of credits into capital.