According to research carried out by the University of Surrey's specialist catering centre, there has been a 25% downturn in the global production of airline meals following the US terror attacks. In its survey of 50 production kitchens worldwide, it found that Asian operations - which are particularly reliant on transpacific flights - were hardest hit, while US operators made swingeing cuts in staff.
Notwithstanding recent events, it has been a turbulent time for the industry, says the University's Peter Jones, who is also the International Flight Catering Association's (IFCA) Professor of Airline Catering. Even without the terror attacks, the "industry was going through a period of dynamic change, looking at what in-flight service should be and what customers want". For instance, there could be a move towards the US philosophy of a very sparse in-flight offering on services of four hours or less, he says. American Airlines, for example, has stopped offering food at all on such services.
Then there has been the bankruptcy of Swissair and the "for sale" sign coming up over its market-leading catering subsidiary GateGourmet, long-described as the "jewel in the crown" of the airline's various divisions. Although the Swissair collapse was bad for GateGourmet, it only represented 7% of its global revenue so it was not a life-threatening event. There are believed to be three potential buyers - all venture capital groups - lining up for the company, with the sale to be resolved by February. It seems likely that the business will be sold in its entirety, and not split up, which would delight the company's managers.
Both GateGourmet and LSG Sky Chefs - which together account for over 60% of the world's in-flight catering market - laid off around 30% of workers in the USA after 11 September. Security costs also soared. Sky Chefs, for instance, had to create a new security company of over 1,000 staff from scratch in just two days to meet new FAA rules.
In a submission to a US Congressional sub-committee after the terror attacks, Randall Boyd, board member of LSG Sky Chefs, on behalf of his company and GateGourmet, said companies faced a "grim future" and that by the end of 2001 the industry in the USA would suffer a total revenue loss of $400-500 million. He pleaded for aid of $250 million for the UScatering industry, although this is thought unlikely to materialise.
For LSG Sky Chefs the situation has meant a radical "right-sizing" which has seen 4,200 redundancies, although it has closed only two of 80 kitchens in the USA. Business levels there have stabilised with a fall of 30% over previous levels. Now, the big questions are how long the industry will remain at this level, when the upturn will come and what shape it will take, says LSG Sky Chefs senior vice-president Joao Monteiro.
Despite the gloom, LSG Sky Chefs is aware there may be acquisition opportunities as smaller and more exposed caterers may either come up for sale or their assets become available after bankruptcies.
Source: Airline Business
