News / Cargolux CEO proud of 'normal' 2023 profit; 'generally upbeat' on 2024

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2023 might not have been Cargolux’s best-ever result: but it’s the one CEO Richard Forson is most proud of.

$286m is not a profit to be sniffed at for a freighter operator: although it is significantly lower than 2022’s record $1.6bn, and 2021’s $1.3bn.

But as Mr Forson pointed out, it was a good profit in a “normal” year.

“Excluding the Covid years, it’s the best set of results we’ve ever achieved to date because the Covid years were exceptional. 2023 was a return to normalcy, so that’s what makes it a bit more special for me.

“Extraordinary circumstances obviously do not repeat every year, but for a year in which normalcy returned to the market, and with a significant injection of belly capacity back yes, we were fairly happy.”

Mr Forson is well acquainted with the highs and lows of running a freighter airline. He became CFO of Cargolux in 2012 – full-year results that year revealed a loss of $35m, the carrier’s lowest point. Cargolux then yo-yoed through single digit and double-digit profits, reaching $122.3m profit the year after he became CEO. But the memories have lasted. “The down cycle always comes round.”

It was his fear of the inevitable downcycle that caused management to have its first fights in a while with unions last year – and the unions won.

Mr Forson told The Loadstar at the time: “My biggest responsibility as CEO is to the board and to ensure the company is economically sustainable. And it all costs money.

“If Cargolux doesn’t exist, there won’t be any jobs.”

Nevertheless, he has now reconciled himself with the additional costs, which began in the fourth quarter of last year.

“The extra costs are already there. Yes, it will have an impact, as for many other airlines. That’s obviously the part that has to be managed extremely carefully, grossing costs versus a very volatile revenue stream.”

It’s not just labour costs hitting airlines in Europe: the closure of airspace – notably Russia, but with concerns over parts of the Middle East – means more costs in comparison with competitors.

“As an EU operator, we avoid Russian airspace. So to fly to Asia, we have longer routings and that’s adding more operating costs onto the airline, in the tens of millions of dollars per annum. If additional closures of airspace were to take place, it could result in even longer routes.”

At the same time, Cargolux hasn’t really received a Red Sea bounce.

“It’s ports like Dubai from where people will ship into Europe – but that’s obviously the backyard of Emirates and its fleet. There’s a lot of capacity there, so the whole sea-air thing I think tends to favour those countries that are located on the way to Europe with major ports.

“We’ve seen a slight increase due to the Red Sea situation, but how long it’s going to last for we don’t know, but what obviously is of bigger concern to us are the current geopolitical tensions that are taking place specifically in the Middle East.”

The other geopolitical concern is the increasingly heated US-China trade, following a week in which the US added new tariffs. Is Cargolux, with its Chinese shareholders and hub, worried about the US elections?

“I think a lot of people are concerned about the outcome of the US elections and what impact it could have on global relations. I was looking at a report by one of the major consultancies on what is the most prominent thing on CEOs minds – and geopolitical tensions was probably either number one or number two.

“But what keeps me really awake at night is what happens if global trade comes to a standstill. And especially with the big players like the United States, which is a huge consumer of product, what tariffs on imports could mean for the aviation industry in total and for the maritime industry as well.

“We rely on global trade taking place. So the more isolationist countries become, or the more tariffs that are being implemented, it’s definitely going to impact the movement of goods.”

It’s not the only thing on Mr Forson’s mind, he admitted. “I want to try to surpass 2023’s profits. How do I do that? Well, with careful planning, and managing our capacity versus our revenues.”

And there is one more worry: sustainability. “How are we actually going to get to carbon neutrality?”

For now, he is “cautiously optimistic” about the rest of the year.

“The summer season still looks quite positive for us. If the ecommerce volumes continue to expand, and I don’t see any reason why they won’t, then from our side of the industry, I think it’s generally upbeat rather than downbeat.”