News / Cargolux eyes move into SAF production and distribution

Cargolux is looking to expand its business activities, including getting into the production and distribution of sustainable aviation fuel (SAF) and logistics. 

Last month, the carrier amended its articles of association with a Luxembourg business register, which defines its activities, to read: “…the company can also provide and/or invest in services or projects for the operation of any other aerial related activities, including but not limited to, fire spotting and firefighting, emergency rescue services, sustainable aviation fuel production and distribution, logistics.” 

Cargolux did not respond to The Loadstar’s questions, but in an interview last summer, CEO Richard Forson said environmental concerns “kept him awake at night”. 

The problem of SAF production – or lack thereof – is well-known. Mr Forson told The Loadstar: “Sustainability represents a significant challenge for any business, especially in the EU, in terms of all the reporting requirements we would have to do, the costs that we are going to incur to try and get to net zero by 2050 and real reduction of emissions. 

“We have been working on it now for the last couple of years. We’ve had meetings with the financing arena which is focused on this. From an airline perspective, the two major levers of reducing emissions is buying new-technology aircraft, which is extremely expensive, and the utilisation of sustainable aviation fuels. Those are the biggest levers you’re going to use to reduce emissions other than to stop flights. 

“The unfortunate thing though, at this stage, is that the price of sustainable aviation fuel is still significantly higher than jet kerosene. And also the availability of sufficient volumes at all airports in the European Union to meet the obligations being set out by the EU.” 

He continued: “What’s available on the market today is the first-generation fuels, the use of biomass, animal fats, used cooking oil, etc. But within the used cooking oil, one of the sensitive topics is also palm oil. 

“There are certain shippers or manufacturers that don’t want that kind of sustainable aviation fuel because it contains palm oil. But the second- and third-generation types will probably be a lot more carbon-intensive.

“The one that I think everybody is trying to get to is power-to-liquid; the use of electricity, of hydrogen and CO2 to generate e-fuels. But that is also, at this point in time, the most expensive to produce because of the cost of electricity, which is a major input.” 

He acknowledged that the ideas were still in infancy, but said: “There are various prototype plans being put up to produce this, but the quantities are going to require significant investment in order to generate, I think, economies of scale in terms of the availability of those.” 

EU stipulations on the reduction of jet fuel use over the coming decades means production of alternatives needs to step up. 

“It’s going to require significant investment, trillions of dollars. Where is the money going to come from? And who is going to pay for the additional costs if the price of the kerosene does not decrease?” 

Cargolux has money to invest in its future – 2023 reaped a profit of $286m, but in 2022 it hit a record $1.6bn, following 2021’s $1.3bn. And 2024 was likely to have been a reasonably good year. 

Alongside SAF production and distribution, the amended articles also include a reference to Cargolux’s firefighting arm. In January last year, it announced the launch of Aquarius Aerial Firefighting – investing in 12 Air Tractor Fire Boss aircraft, which Mr Forson said was another example of trying to reduce carbon emissions. 

“One of the huge contributors to CO2 emissions today are forest fires. Now, yes, trees and plants absorb CO2 during their lifespan, which is a great and wonderful thing, but when fires break out they all get destroyed and all that CO2 and particulate matter that’s released into the air is obviously damaging not only the ability of the planet to absorb CO2, but also in terms of health on populations that are nearby.  

“We are ready to play a part in combating what is going to be, I think, happening more and more often with global warming.” 

The carrier asked pilots to volunteer for training for the initiative, which Mr Forson said was “a unique skill”, which went hand-in-hand with Cargolux’s safety management systems. “We are a commercial airline, and for commercial airlines flying safely is the first priority. So that kind of culture we want to bring across into firefighting as well. 

“I would look at it as a service to society. And there is a shortfall of firefighting, aerial firefighting capacity worldwide, and especially in the southern European countries.” 

He added that some firefighting carriers relocated their aircraft from the northern hemisphere to the south in summmer, but said it was unlikely Cargolux would do the same, due to the long flights involved, and would stick to Europe for now.