Improved profits for Lufthansa Cargo
Cargo airline remains on course with its “Lufthansa Cargo 2020” programme
Lufthansa Cargo achieved an operating profit of EUR 100m last year. This represents a significant increase for the cargo airline when compared with the previous year (EUR 79m*). Speaking in Frankfurt, Chairman of the Executive Board and CEO Peter Gerber presented a result for the year that stood out from the competition and was achieved in a challenging market environment. The airline is continuing to systematically implement its “Lufthansa Cargo 2020” future programme. Lufthansa Cargo expects increase profits further in the current year.
Although global demand for air freight increased slightly in 2014, traffic at Lufthansa Cargo declined initially and did not fully meet expectations dating from the beginning of the year. However, good business around Christmas contributed to improved demand towards the end of the year.
Peter Gerber, who has been Lufthansa Cargo’s CEO since 1 May 2014, emphasised the following: “We achieved a good result in challenging conditions. A strong focus on top quality, high-performance products and flexible capacity management played a key role in this, along with Lufthansa Cargo’s strength in sales.”
Looking to the future, the CEO of Europe’s leading cargo airline added that “air freight is and will continue to be a growth market”. Despite growth rates being slightly lower than in the past, he was confident that air freight will always be the only viable transport option for certain goods. Major exporting regions like Germany are an excellent long-term basis for the air freight sector.
“Frankfurt is the epicentre of Europe’s industrial sector. Geographically, it’s much better positioned than London or Paris. The metropolis is the main European hub for our customers, the major international freight forwarders. They have their main consolidation centres here. It’s an ideal location for us to continue investing,” emphasised Gerber. Lufthansa Cargo wants to act on the opportunities provided by its location and expand on its market position in Europe.
“Our ‘Lufthansa Cargo 2020’ programme is our response to the strategic challenges of the future,” explained the airline’s CEO. Lufthansa Cargo has set up nine ambitious projects to be equipped for the future. “The fifth fuel-efficient Boeing 777F aircraft joined our fleet in spring 2015. The Triple Seven is the best aircraft in its class, with low fuel consumption, outstanding range and superb reliability,” is how Gerber explained the advantages of the aircraft’s design.
The cargo airline is also in the process of implementing a modern IT system for freight handling which is based on a well-proven industry solution. The roll-out is scheduled for completion by this autumn.
The strategic eCargo project, which involves the digitalisation of all of the company’s main processes, is also picking up pace. “We are optimising processes and improving how data is exchanged. This will enable us to improve our quality and speed even further,” explained Gerber. Preparations for the new construction the air freight terminal at Frankfurt continue. The “Air Cargo Community Frankfurt” was established with other partners at Frankfurt Airport to promote industry-wide issues and make the location more attractive as an air freight hub. Gerber highlighted the partnership with Japanese airline ANA Cargo: “The joint venture is a real advantage for our customers. They can already benefit from more flights and a denser network on routes from Japan to Europe.” The joint venture partners intend to include eastbound connections this summer. Additionally, the cargo airline plans to enter into another partnership later this year.
Dr Martin Schmitt, Board Member Finance and Human Resources, highlighted the importance of successful cost management for the ambitious programme. “We are making ambitious investments in our future – to do this, we require a solid long-term earnings base.” The SCORE profit improvement programme was a major factor behind the airline reviewing its earnings situation last year. The SCORE programme contributed EUR 116m of earnings in total. “We will continue to work hard on our cost structure and find ways to increase revenue,” said Schmitt, making it clear how Lufthansa Cargo intends to improve earnings and return over the coming years. Lufthansa Cargo therefore expects profits to increase once more in 2015. Profit for the year should be up slightly on 2014 in an environment with solid growth rates.
The 2014 financial year in figures*:
|Lufthansa Cargo||2014||2013*||Veränderungen in %|
|Total revenue||in â‚¬m||2,435.3||2,443.3||-0.3|
|Operating result||in â‚¬m||100.3||79.3||26.6|
|Operating margin||in %||4.1||3.2||0.9P.|
|Employees as of 31.12.||Number||4,663||4,659||0.1|
|Freight and mail||in thousand t||1,669||1,715||-2.7|
|Available cargo tonne-kilometres||in millions||12,354||12,490||-1.1|
|Revenue cargo tonne-kilometres||in millions||8,612||8,731||-1.4|
|Cargo load factor||in %||69.9||69.6||-0.2P.|
* Last year's figures adjusted due to the first application of IFRS 11.