Revenues soar 40% and steer Volga-Dnepr Group into clearer skies
Volga-Dnepr is out of the woods of potential bankruptcy and is now sitting on a ...
It’s a very peculiar time for air cargo: the ‘peak’ season should be seeing the market tighten and, in a couple of months when collated data is released, we may find there was some measure of volume and/or rate rise.
However, new and more up-to-date data on the market is showing confusion.
Rates and volumes are low – although the latest news on September, from WorldACD, is that the cargo load factor dropped 4 percentage points year on year, but increased by 2 percentage points on August.
At the moment, there is a lot of spot market buying, making the market unpredictable.
One source told The Loadstar last week he thought his company had “hit the bottom” in August, after a “reasonable” first four months and “a pretty bad” following four. But he added: “September has been busier than last year. Companies seem to be re-stocking and even Germany showed some recovery.
“There have been some new hi-tech products too, which has helped.”
He noted that although there was a dip during China’s Golden Week factory shutdown, October was showing an upward trend.
“The market is much healthier than it was. And we have seen more charter activity.”
While it’s good to hear of some growth, it is more complicated than that: there is a disparity between airlines that both overall data and anecdotal evidence does not show clearly. Airlines are responding to the market in individual ways, based on their own requirements, making a wholesale look at the market rather redundant.
The business model for an airline that is struggling and has no reserve funds, is going to be different from one braced for a soft market with deeper pockets.
For example, there has been much talk recently about the financial struggles of Volga-Dnepr Group. It has seen a difficult combination of a severe drop-off in revenue, with increased spend – new aircraft, Antonov maintenance, global expansion.
And then there’s carriers like Lufthansa, which wants to maintain market share and support, and is dropping rates, leading to a 88% year-on-year fall in first half ebit, while revenue FTKs have dropped only 1%. Cathay Pacific is said to be in a similar position. Cargolux, meanwhile, earlier this year said it was financially ready for a soft market and would not drop prices to gain market share.
The outlook for carrier finances is highly diverse. And each carrier will handle the market differently, according to need, strategy and routes. This essentially means there are no immediately discernible trends.
According to one analyst: “The market is at a bit of a bridging-point, where immediate price projections are fairly impossible, beyond fixed BSAs.”
There is no crystal ball for this one.