With an operating profit of 104 million euros, Lufthansa Cargo AG has underlined its leading role in the global air freight industry. Chairman and CEO Karl Ulrich Garnadt presented healthy results for the 2012 business year in Frankfurt and noted the significant progress made by the cargo carrier with its “Lufthansa Cargo 2020” future programme. The innovative thrust of the airline will be singularly evidenced by delivery of two brand-new Boeing 777 freighters in autumn. The cargo carrier is anticipating a rise in profits in 2013.
Lufthansa Cargo remained in the profit zone again in 2012. “The results show that we can defend our outstanding position in the international air freight industry even in difficult conditions,“ emphasised Chairman and CEO Karl Ulrich Garnadt, presenting the annual results in Frankfurt. In common with the air freight industry generally, the Company had to contend with an extremely difficult market environment last year: Demand declined in all the major markets. Lufthansa Cargo reacted by pursuing flexible and demand-driven capacity management. “That was the only way for us to keep the capacity utilisation and profitability of our flights at a high level and be one of few cargo airlines, worldwide, to return a profit again in 2012.” During the year, Lufthansa Cargo returned an operating result of 104 million euros (2011: 249 million euros). Owing to disciplined capacity steering, revenues fell below the year-earlier level of 2.9 billion euros to 2.7 billion euros.
Despite the global decline in demand, the Lufthansa air cargo subsidiary invested with a wide-ranging programme in the future. With six ambitious projects initiated in its “Lufthansa Cargo 2020” strategy, the cargo carrier is set on securing and expanding its lead in the air freight industry. The construction of a new logistics center at the Frankfurt hub and huge capital expenditure agreed last year on a leading-edge IT landscape “signal the Company’s path into the future”, says Karl Ulrich Garnadt. A further milestone will be achieved with the delivery of the first two of five Boeing 777 freighters on order in autumn 2013: “The 777 is the most efficient freighter of its class – and both within and without the most visible sign of our renewal. The low fuel consumption and high efficiency of the type will strengthen us in competition and will, moreover, through lower emissions ease the impact on the environment.” Furthermore, the new aircraft type is much quieter than other freighters. That, not least, will be beneficial for nearby residents, especially at Frankfurt Airport.
Lufthansa Cargo is currently making intensive preparations for the introduction of the new aircraft type into the fleet. Production of the first of the new freighters will commence at the Boeing plant at Everett near Seattle in the next few weeks. The first of Lufthansa Cargo’s pilots have, simultaneously, begun training for the type in the Triple Seven flight simulator.
“Top quality distances us clearly from the competition”
Fleet renewal is also furthering the ambitious quality objectives of Lufthansa Cargo. “Sustainable quality improvement enjoys the utmost priority, since it distances us clearly from the competition,” observed Chairman Karl Ulrich Garnadt. In order to realize that aim, Germany’s biggest cargo carrier has initiated a broad quality offensive. Already in 2012, the airline vastly improved key quality parameters, such as on-time performance: Its MD-11F fleet is currently the most punctual of its kind in the world. That is reflected in customer satisfaction, which reached an all-time high in 2012.
Sustained profitability is an essential prerequisite for successful implementation of the Lufthansa Cargo 2020 investment and strategy programme, noted Dr. Martin Schmitt, who assumed responsibility for Finance and Human Resources on the Lufthansa Cargo Executive Board in January 2013: “We will, therefore, continue to work hard on improving our earnings and our cost base.” The Group-wide SCORE programme will especially drive us forward in that direction, said Dr. Schmitt. Its aim is to raise earnings sustainably by 70 million euros compared to 2011 by 2015.
A positive contribution also came in 2012 from Lufthansa Cargo’s equity stakes, for example, in the Jettainer global ULD management company or the successful joint venture in the PACTL air freight terminal in Shanghai. The Lufthansa Cargo Charter Agency, which took over charter business in 2001, is to be integrated in Lufthansa Cargo AG in April this year. The new structure will make the organization leaner and, simultaneously, capable in future of delivering fast and flexible charter solutions.
Positive Outlook for 2013
In the wake of the global decline in demand in 2012, Lufthansa Cargo is anticipating a more positive trend in the air freight markets in 2013. A perceptible recovery in demand is expected at the latest in the second half-year. In this market environment, Lufthansa Cargo will continue to steer capacity in accordance with demand so as to stabilise utilisation and average yields. The Company is likely to increase capacity marginally in the single-digit percentage range in comparison with the previous year. It is expecting operating profits to be in the region of three-digit millions again in 2013 and higher than in the previous year.