Menzies NZ chases airport businesses

Menzies wants to buy the Skystar unit at Christchurch Airport. Photo / The Star

Menzies Aviation (New Zealand), an airport baggage-handling services arm of Britain's John Menzies, is seeking antitrust approval to buy the Skystar Airport Services unit at Christchurch and Dunedin airports as part of a 7.7 million ($15.3 million) deal spanning both sides of the Tasman.

The New Zealand Menzies unit, with local annual revenue of $31 million, has applied to the Commerce Commission for clearance to buy the Skystar operations, which are owned by ASX-listed Monadelphous Group. The local Skystar operations reported annual sales of $4.7 million in the year ended June 30, 2012, according to the latest financial statements lodged with the Companies Office.

The New Zealand acquisition is part of a bigger purchase for the British company, which last week said it had agreed to buy the Skystar Australasian ground handling business as part of a strategy to expand into attractive growth markets.

In its application to the Commerce Commission, Menzies said its commercial rationale was to expand its operations in Perth and pick up business in other parts of Australia where it did not yet operate.

"Despite the aggregation in the relevant markets, the proposed acquisition of Skystar New Zealand by Menzies New Zealand will not have the effect or likely effect of substantially lessening competition in a market," Menzies said in its application.

"This is because Menzies New Zealand will be constrained post-acquisition by near and potential competitors in the relevant markets, and by the countervailing power of its customer airlines."

Air New Zealand will remain the dominant player in the market, with an estimated 65 per cent of market share at Christchurch airport and 70 per cent at Dunedin airport, according to the Menzies application.

Across the country's four major airports, Air NZ holds 80 per cent of the market, followed by Skycare with 9 per cent, Menzies with 7 per cent and Skystar with 4 per cent.

Menzies said that it would combine certain operations if the deal got the go-ahead, reducing duplication of effort and costs, with the integration expected to take six months.