Alpha Airports Group PLC

International Directory of Company Histories, Volume 77 (2006) by Frederick Ingram

Alpha Airports Group PLC

Alpha Airports Group PLC

Europa House 804 Bath Road Cranford, Middlesex TW5 9US United Kingdom Telephone: 44 (0) 20 8580 3200 Fax: 44 (0) 20 8580 3201 Web site: http://www.alpha-group.com

Public Company Incorporated: 1994 Employees: 5,431 Sales: £487.8 million (2005) Stock Exchanges: London Ticker Symbol: AAP NAIC: 445292 Confectionery and Nut Stores; 445310 Beer, Wine, and Liquor Stores; 446120 Cosmetics, Beauty Supplies, and Perfume Stores; 448310 Jewelry Stores; 451211 Book Stores; 453220 Gift, Novelty, and Souvenir Stores; 453991 Tobacco Stores; 488119 Other Airport Operations; 722310 Food Service Contractors; 722320 Caterers

Alpha Airports Group PLC is an England-based supplier of support services for airlines and airports. The Flight Services division prepares in-flight meals, offers security and other services such as equipment management, and handles in-flight retail. The Retail side operates airport concessions such as restaurants, newsstands, and duty-free stores. Alpha Flight Services, which accounted for more than half of turnover and two-thirds of employees, operates at more than 60 airports in Europe, the Middle East, Australia, and the United States; Alpha Retail is active in about two dozen airports.

FLOATED IN 1994

The Forte Group's airport services division was spun off as Alpha Airports Group PLC in a successful February 1994 initial public offering (IPO). Shares began trading at 140p. Alpha's market capitalization was £211 million and its annual revenues were about £423 million, split evenly between flight catering and the less lucrative airport retail operations.

Forte had originally launched its airport services unit in 1955. In 1970 it merged with another large hotels group, Trust Houses Ltd., which had begun to provide its own catering service at airports; a majority owned joint venture, John Gardner (London) Limited, owned Gardner Merchant Caterers Limited, one of Europe's leading contract caterers.

Alpha's predecessors began serving European airports, as well as institutions, in the 1970s and 1980s. An operation was set up at Paris's Orly Airport in 1971, followed the next year by another at Schiphol in Amsterdam. A base at New York's JFK International was acquired in 1985.

By the mid-1990s, it accounted for nearly half the meals served on planes departing British airports. It also had operations at four sites in Continental Europe and in New York City. Altogether, Forte Airport Services was making 45 million meals a year. An equally large business was the network of duty-free stores. Overall, Forte Airport Services had 6,000 employees.

Forte had amassed a £1 billion debt along with its diversified holdings. A plan to sell Airport Services and contract caterer Gardner Merchant to the Compass Group in 1992 was called off as Forte Chairman Rocco Forte thought the offer of £530 million for the pair was too low. Three-quarters of Gardner Merchant was sold instead to management for £400 million, and Alpha was spun off.

The newly independent Alpha was quick to invest in far-flung flight catering operations in a bid to obtain global reach. It soon acquired a 49 percent holding in Australia's leading independent flight caterer, Connat Flight Services Pty. Ltd., for AUD 7.5 million (£3.6 million) in June 1994; this was raised to an 85 percent holding within a couple of years. It also bought a pair of small Florida flight kitchens owned by Jerry's, and set up the Allied Caterers joint venture in Trinidad. Alpha divested its flight caterer in Portugal, acquired several years earlier, after that country's national airline formed its own catering unit.

Reston, Virginia-based ground handler DynAir Services was acquired from defense services specialist DynCorp for $122 million (£79 million) in September 1995. DynAir operated at 52 locations in the United States, and was beginning to operate as far abroad as Russia. It had sales of $131 million a year. According to The Times , Alpha had been courting DynAir for three years.

Forte had retained a 25 percent stake in Alpha after the IPO. It was later acquired by the Granada group, and in November 1996 Harrods owner Mohamed Al Fayed bought the holding in Alpha from Granada for £52 million. Fayed also owned a chain of ten airport stores called Signature.

Alpha's loss-making U.S. catering operations were sold off in 1996 for £6.8 million. Alpha acquired a 60 percent holding in Sri Lanka's Orient Lanka duty-free store for $18 million.

RECONFIGURING IN THE LATE 1990S

Alpha had about 12,000 employees in the late 1990s. One new hire was Kevin Abbott, a former board director at Rexham, who took over from the original chief executive, Paul Harrison, in October 1997 after Harrison left to join the Standard Chartered bank.

Sales for fiscal 1998 were £702 million. Its retail division had more than 100 outlets, most of them in the United Kingdom, operating under names including The Beauty Centre, Glorious Britain, and A Taste of Ulster. It suffered a loss of business, however, after the British Airport Authority established its own World Duty Free chain.