Unlike many of its European rivals, Lufthansa Cargo overcame another year of lacklustre air cargo market performance, rising oversupply of capacity and a damaging pilots strike to post another year of profit, albeit down from the previous year.
After a strong first quarter, demand on the global air cargo markets weakened steadily, the cargo carrier noted. On top of this, there was turbulence in the Chinese market and a very strong US dollar, which affected export-driven industries in the US in particular, the carrier said. The numerous strikes of the pilots’ union and cabin attendants’ union led to further reductions in transported cargo volumes and revenues.
The German carrier posted adjusted earnings before interest and tax (EBIT) of €74 million, a 40 per cent drop from €123 million in 2014, on the back of a 3.3 per cent reduction in revenue to €2.35 billion. Earnings before interest, tax, depreciation and amortization were 17 per cent lower at €155 million.
The cargo carrier remains Europe’s largest cargo operator, uplifting 1.6 million tonnes of cargo during the year, down slightly on 2014 figures by 2.4 per cent. Yields contracted by only 0.7 per cent and load factors shrank by 3.4 percentage points to 66.3 per cent, well above the industry average.
But with the relatively healthy set of results, given the current market conditions, Lufthansa Cargo isn’t resting on its laurels and is instead taking steps to implement what it said are a “comprehensive range of measures to counter the decline in the 2015 annual results”.
Besides an ambitious cost-cutting programme, the airline has announced further product innovations and is also pressing ahead with initiatives from the Lufthansa Cargo 2020 future programme, including close partnerships with other airlines.
“We will still be operating in an extremely challenging market environment in the years ahead”, commented Lufthansa Cargo chairman and CEO Peter Gerber at the presentation of the 2015 annual results. “But we have a clear strategy that has been set up to facilitate sustainable and profitable growth again. With innovative products, superb service and competitive cost structures, we will make the most of the advantages offered by our Frankfurt base.
“With our new Boeing 777Fs, we are flying more efficiently and saving more fuel than ever before in our company’s history,” he added.
“The cooperation with ANA has gotten off to a superb start and we will be working very closely with another strong airline, United Airlines, in the future. We are also marketing the cargo capacities of Eurowings long-haul flights, which makes our network even more appealing.”
The Chairman and CEO also emphasised the successful, global renewal of the IT landscape: “This has been an important requirement to getting us working efficiently and successfully. This step has also been a milestone in our efforts towards achieving a fully digitised air cargo business.”
In order to open up new growth areas, Lufthansa Cargo is also focusing on offering an innovative product range. Besides enhancing the product portfolio (including in the hotly contested standard freight market), the company will also address a completely new market segment and consider the transport needs of private travellers, especially Lufthansa passengers. Through the myAirCargo product, passengers and private individuals will now be able to send any kind of personal item via air freight, quickly, simply and cost-effectively.
“Lufthansa Cargo has often been a pioneer in the past when it comes to developing and launching new products and services”, said Gerber. “We want to live up to this again with myAirCargo.”
Cargo Board Members Gerber and Martin Schmitt, board member Finance and Human Resources said they are confident of strengthening the Lufthansa Cargo market position for the long term with this comprehensive range of measures.
“In spite of challenging competition, including a number of state-subsidised airlines from e.g. the Gulf, the preconditions are very good for Lufthansa Cargo,” they said. “We have a superb base in Frankfurt Airport. Nowhere else on our continent are air cargo volumes higher than here in the heart of Europe”, added chairman and CEO Mr Gerber. “This is an opportunity we aim to and will exploit.” The Lufthansa Cargo Board is expecting this year’s earnings (adjusted EBIT) to slightly exceed those of last year.
