JOHN Menzies has said it expects to find a way of breaking up the group by March and reiterated its disappointment that plans to merge the firm’s newspaper distribution arm with DX fell apart.

The Edinburgh-based logistics group has appointed Rothschild investment bank to help find the optimum route to separate the distribution division from its aviation support businesses.

In an update on trading it told investors: “We expect to be able to make a firm announcement on the process to be followed by the time of our full year results in March.”

The group added: “The Board were disappointed not to be able to conclude the combination of our distribution division with DX … a deal that had strong strategic logic.”

Menzies scrapped plans to merge the division with DX in August after a profit warning issued by the Slough-based group made the revised cash and shares deal the firms agreed in June less appealing.

The trading update indicated Menzies aviation has faced challenges amid the disruption caused by Hurricane Irma in the Caribbean and upheaval in the airlines market.

It said positive underlying trading across the network has been tempered by the impact of the 225 mile per hour hurricane, and by airline failures within the Europe Middle East and Africa region.

John Menzies highlighted the devastation caused by Irma on the island of St Maarten, where operations will be affected into 2018.

However, directors said the group has continued to trade well since the half year. They are confident Menzies will meet full year expectations.

The board is pleased with progress on the integration of ASIG, the plane refuelling specialist Menzies bought in September last year in a $200 million deal it said would create one of the largest aviation services businesses in the world. Menzies noted yesterday: “Milestones are being met and we are confident that the full year synergy target will be exceeded.”

It said Rothschild will complete a strategic review of the distribution arm with the aim of assessing the optimum route to split the group and create two strong focused players.

The group has faced pressure from investors over the years to separate the divisions, which serve very different markets.

Menzies resisted the calls for some time arguing cash generated by the distribution arm could be used to grow the aviation business. Directors believe the operation has achieved the scale to support itself.

But efforts to separate the businesses have run into complications. Rothschild has been helping Menzies identify ways to complete the split since last October.

Led by a three-strong executive, Menzies announced in March that it had agreed terms to merge the distribution wing with DX.

In June Menzies accepted a big cut in the valuation of the distribution arm amid opposition to the merger plan. Activist investor Gatemore had claimed the original proposal undervalued DX.

Analysts at joint house broker Shore Capital said the failure of Monarch and Air Berlin had impacted earnings. The firms that take over the landing slots left vacant might not choose Menzies Aviation to provide handling support.

However, the analysts added: “We believe this statement demonstrates the improved robustness of the business under the still relatively new management team. The Group has faced a number of headwinds in H2 yet despite these challenges trading remains inline.”

Dermot Smurfit became chairman in July last year soon after Giles Wilson was appointed chief financial officer and aviation head Forsyth Black was promoted to the board.

John Geddes became corporate affairs director last November.