News / Early passenger-to-freight conversions cushion IAG Cargo Q1 results

07/05/2020

In what could be one of the first indications of how cargo carriers have fared financially during the Covid crisis, IAG Cargo said this morning revenues had fallen 11.6% in Q1.

IAG Cargo reports few results, but it said between 1 January and 31 March, it saw commercial revenue of €246m ($265m), with yields up 4.8% compared with last year at constant currency. Capacity was down just 13.8%.

Sold tonnage was down 14.9%, while cargo tonne km (CTKs) fell 15.7%.

But the problems that beset March were offset by a “solid performance” in January and early February, it said.

CEO Lynne Embleton said: “Europe and Latin America were stable; there was noted dynamism in North America, where our premium products were performing strongly; and the Asia Pacific region showed promise for the year ahead.

“However, like many global businesses with an active Chinese market, IAG Cargo felt the impact of the Covid-19 pandemic early.

“The expected dip in activity around Chinese New Year was followed by a prolonged drop in manufacturing which continued throughout February and March as the coronavirus outbreak took hold. This saw our Asia Pacific and Middle East business affected the most, with a 19.2% revenue decline versus the same period last year.”

At the time, freight forwarders commended IAG on how quickly it set up a scheduled freighter service with passenger aircraft. This was at a time when few other airlines would commit to anything other than ad hoc charters – today’s results prove the wisdom of IAG’s decision.

Ms Embleton explained: “The majority of air cargo arrives in Europe in the bellyhold of passenger aircraft. When large numbers of passenger flights were suspended, IAG Cargo took immediate steps to provide creative solutions for our customers. We adapted quickly and were one of the first airline groups to announce scheduled cargo-only flights using passenger aircraft. In doing so, we have kept routes around the world open to cargo.

“Our commercial team was also quick to establish and communicate charter opportunities; offering our customers and governments a further solution for their capacity requirements.:

She added: “The first quarter of 2020 has posed unprecedented challenges for the air cargo industry, for businesses and for society at large. It has called for adaptability, resilience and co-operation.”