Smaller Companies: Heavy cloud with a silver lining

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THIS week's contentious ruling from the European Commission that Air France should open up some key domestic routes to competition is the first sign of a heavy deregulation cloud, set to descend on airline and airport monopolies.

The decision has important implications for two small companies in the UK - Alpha Airports, the airline catering and airport retailing business that recently joined the stock market, and Servisair, the UK's largest independent ground handler, which is considering flotation.

Alpha's token presence in a couple of European countries is indicative of its decision not to fall victim to the unpredictability and volatility of emotionally charged nationalistic politics - particularly in France. In Alpha's book the disruptions caused by weather are par for the course, but the chaos caused by lightning strikes by employees of state- controlled monopolies have to be avoided at all costs.

The biggest break for Alpha and Servisair will probably come at Christmas; the EU is likely to rule that all airports dealing with more than 2 million passengers a year have to lower competitive barriers on services like baggage handling, catering and general support services for aircraft.

There are 48 airports, most of which operate anti-competitive barriers, that will be caught by the 2 million net. And there are few companies in the UK that seriously offer a competitive challenge to Alpha and Servisair; the labour-intensive and cost-inefficient monopolies on the Continent will pose even less of a threat.

If the EU does go the whole mile and open up air routes and airports, then management at Servisair is likely to push its parental shareholder hard for freedom to tap the stock market for growth funds.

Tony McCann, chairman of Servisair, is alert to the potential in Europe, but his toughest task will be in persuading the company's Swedish owners to cut the apron strings.

Servisair is wholly owned by Securum, an investment vehicle set up to rescue the property and business assets of Nordbanken, which was squashed by the Swedish banking crisis in 1991.

The decision to float Servisair, however, largely rests with the Swedish government, which has been subjected to immense pressure from taxpayers to recoup losses from the crisis. Securum's hand could well be forced by the civil service mandarins in Sweden.

'Securum's task is to convert assets into cash. There is no time scale . . . but Securum was started with the intention of getting the Swedish taxpayers' money back,' Mr McCann said.

He is used to difficult situations. He was previously drafted in as a company doctor for Astra Holdings, the munitions business embroiled in the Iraqi supergun affair. 'It was amazing. There was MI5 in the room next to my office, MI6 in another and the Fraud Squad across the hall,' he said.

Servisair, however, works alongside security of a much more low-key nature and is very profitable. This is the company that will sell you an airline ticket, check you on a flight, and handle your baggage. It is, in effect, a manpower services operation employing around 3,500 people, rising to 4,200 in the peak holiday season.

Last year it turned around 200,000 planes, and handled, excluding its operation in Spain, some 23 million passengers in all UK airports bar Heathrow, where the airlines tend to their own affairs. The result was a pounds 3.6m pre-tax profit on turnover of pounds 90m.

Securum also owns ANC, which specialises in trucking high-value goods like computer parts around the UK. But that's another story.