News / Air cargo carriers see a brighter year on the radar after 2023 disappoints

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Airlines are posting declining revenues last year for their cargo subsidiaries, but stakeholders remain optimistic for an air cargo uplift, following an unexpected bright start to 2024.  

This week, Lufthansa and Etihad released annual financial results that reflected 2023’s weak air cargo demand in the wake of the Covid-19 pandemic.  

Lufthansa Cargo reported revenue of €2.98bn ($3.3bn) last year, down 36% on 2022’s €4.6bn, and generated an adjusted ebitda of €401m, down 77% from €1.7bn in 2022. 

“A respectable result in a difficult market environment,” said Lufthansa CFO Remco Steenbergen.  And CEO Carsten Spohr added that the numbers reflected how the entire air cargo industry had declined in the past year, following the “special economic situation caused by the coronavirus”. 

Indeed, Etihad’s cargo revenues also sank year on year in 2023, by 38%, to $914m – but it said 2022 had registered an “exceptional yield” as a result of demand during Covid. 

Despite the loss in revenue, the Abu-Dhabi-based carrier transported 371m tonnes last year, almost identical to 2022’s 372m tonnes. It therefore attributed the financial decline to the “overall cooling in global cargo rates”, rather than a decrease in demand.  

However, Mr Steenbergen was optimistic for the year ahead. He said: “Encouragingly, the air cargo market seems to have bottomed-out in the second half of 2023. In the fourth quarter, volumes were up year on year. In addition, yields continue to stabilise at levels of around 40% above 2019.” 

And more positive foresight for air cargo largely came from immense e-commerce growth and uncertainty in ocean shipping making air freight more attractive, he added.

Mr Steenbergen said Lufthansa Cargo had lately seen “a little bit more impact of the Red Sea”and that the German carrier was well positioned to benefit from the growing e-commerce sector. 

“With especially good deals out of China, we are seeing a very competitive and profitable part of the cargo network in that regard,” he said. “Especially, large e-commerce companies from China need extensive freight capacity to secure their growth. This also holds true for European short-haul routes, which we now serve with four freighters. 

“We believe what’s going to happen in the coming year is very promising,” he added.  

However, he noted that while geopolitical uncertainties were “currently driving short-term demand for airfreight in the right direction”, the environment “remains challenging” for the foreseeable future.  

“It should be noted that this [positive] estimate is subject to considerably uncertainty, given the early stage of the year and the potentially significant impact of geopolitical and macroeconomic developments on commodity prices, to which we continue to be exposed.”