Lufthansa Cargo expands industry leadership in crisis year 2009

Lufthansa Cargo ended the 2009 business year with an operating loss of 171 million Euros. The global recession left the logistics industry reeling. In the toughest year in company history, revenues at Lufthansa Cargo slumped by almost a third to around 1.95 billion Euros. In the present year, the Company is aiming to post a significantly better operating result. Short time working, introduced at the Company on 1 March 2009, is to be discontinued, initially in April and May. Depending on business developments, it is to be ended finally in September.

Lufthansa Cargo Chairman and CEO Carsten Spohr, emphasised at the Company’s annual press conference that only early capacity cuts and
comprehensive crisis management had averted appreciably higher losses, enabling the Company to keep all its staff on board. "In comparison with the previous year, we lost a billion Euros in revenues, plunging the Company into an absolutely exceptional situation. That we managed to make good about two-thirds of our lost earnings is an achievement of which all Lufthansa Cargo employees can be proud." An operating loss of 171 million Euros is a result that no Lufthansa company can be satisfied with, said Spohr. But in direct comparison with competitors, Lufthansa Cargo had still underlined its role as industry leader in the crisis year 2009.

The cargo carrier had assumed an active role in the crisis and systematically made the most of its opportunities. "Our strategy has paid off. At the very onset of the crisis, we quickly and drastically reduced our costs. We then selectively expanded capacity for customers so as to actively open up new markets," Spohr observed. At times, new freighter flights were laid on to destinations in the space of very few weeks. In the current year, the Company is looking ahead, Spohr noted. "Ongoing market developments are giving rise to a degree of optimism for 2010. The crisis has bottomed out and demand is rising steeply. We are experiencing a marked upswing especially in Asia." In face of developments, short time working, which was introduced for all Lufthansa Cargo ground staff in Germany on 1 March, is to be discontinued initially in April and May. Should the upturn continue, it will be concluded finally in September. "For the Company, for our staff and for the logistics business generally, the planned ending of short time is good news and an important signal," said Spohr.

Peter Gerber, Board Member Finance and Human Resources, emphasised that the flexible use of short time had played a key part in successfully mastering the crisis. "Despite the dramatic economic developments, we managed to avoid redundancies and dismissals. That is not a common occurrence in the circumstances." However, discontinuation of short time does not mean that the Company is abandoning its rigorous savings policy, remarked Gerber. "The airfreight industry has lost four years of growth in the crisis. Cost discipline will, therefore, remain essential for success in the present year." Unit costs at Lufthansa Cargo are to be cut by ten per cent by trimming company organisation and making processes more efficient. At the same time, Lufthansa Cargo will be seeking to raise earnings by a minimum of 20 per cent.

Over the full year 2010, the Lufthansa Cargo Executive Board is cautiously optimistic. The Company is aiming to attain positive operating results at the earliest possible date, but at the latest in 2011.

At the press conference on the year’s result, Chairman Carsten Spohr again expressed the wish to invest long term in Germany as an operating base. "Lufthansa Cargo is a motor for the German export industry. We want to further expand that role and invest three-digit million in Euros in a new and highly modern freight centre in Frankfurt." But that depends on planning security, said Spohr, referring to the dispute over an outright ban on night flights at Frankfurt Airport. "The Federal Government has expressed a clear commitment to internationally competitive operating hours in the agreement on the coalition. It is imperative that the issue is dealt with promptly in Berlin." The company has demonstratively detailed the need for 23 night flights in 2020. "Freight needs the night. The Frankfurt hub will remain competitive only if we are enabled to transport goods produced during the day."