News / Lufthansa Cargo outperforms market in Q2, but profitability falls

Lufthansa Group said its cargo unit did better than the market generally in the second quarter, despite profitability dipping sharply compared with the same period last year.

“The normalisation of rates in the global airfreight market continued as expected in the second quarter of the year,” it noted in a trading statement released today.

“Despite lower demand, however, Lufthansa Cargo’s average yields remained a good 40% above the pre-crisis level of 2019, meaning that Lufthansa Cargo again outperformed the market as a whole in the second quarter.

“Freight capacity was 6% up on the previous year, mainly due to the recovery in passenger flight operations and the associated expansion of belly capacities. Lufthansa Cargo thus gained market share in the second quarter,” it added.

However, as a result of “market-wide developments”, an allusion to the rate declines and low volumes, Lufthansa Cargo’s adjusted ebit (operating profit) decreased to €37m ($40m), compared with €482m a year earlier, but still remained significantly above the 2019 (pre-Covid) result.

In the first half, adjusted ebit was €188m compared with €977m in the same period a year ago.

Remco Steenbergen, group CFO, said: “Lufthansa Cargo’s market environment continued to normalise in the second quarter, as industry capacity increased due to the return of belly capacities and demand decrease, resulting in a yield decline of 47% compared with the prior year quarter. Adjusted ebit as a consequence declined to €37m.

“Having said that, Lufthansa Cargo yields remained at around 40% above the pre-crisis level, a significant premium over the broader markets, demonstrating Lufthansa Cargo’s favourable position, which is also helping the business to gain share.”

He added: “While we do not see any significant (air cargo) trend changes in the short term, it will be a question of time, as companies will have to replenish inventories if growth of the global economy picks up again. For the remainder of the year, we expect yields to remain at current levels, relative to 2019. We have a confidence that Lufthansa Cargo will be able to achieve an adjusted ebit of around €300m for the full year of 2023 – a very good result by historical standards.”

At group level, the German aviation giant said the second quarter formed the basis for “a successful year”, with adjusted ebit and net income reaching new record levels at €1.1bn (compared with €392m a year earlier) and €881m (from €259m) respectively. Revenue was €9.4bn (up 17%).

However, the group warned of “various constraints in the system” impacting punctuality, which “will limit growth in the industry for a long time to come.”

These will include bottlenecks in air traffic control, staff shortages at handling providers, aircraft missing spare parts, significant delays in aircraft deliveries, engine durability issues and industry-wide personnel shortage, it said.