News / Improvement in earnings steers Lufthansa Cargo back into the black

Lufthansa Cargo expects to make a profit this year after announcing a strong improvement in earnings in the first half.

Sales, in revenue cargo tonne km, rose 5% in the first half, while capacity rose 2%. Revenues rose 18.6% to €1.15bn, up 18.8% in the second quarter while EBIT for the first half was €84m, up from a loss of €46m a year earlier. Yields rose 10.3% to €0.25.

The airline, which has five 777Fs and 14 MD-11Fs, bought a MD-11F back into service in June and expanded capacity in the Americas and Asia Pacific. It said cargo load factors had improved in all regions except the Middle East and Africa. However, traffic, revenue and yields rose in all regions.

While its results had improved, the carrier said it would be continuing its cost-cutting strategy.

“The global airfreight market remains challenging,” it said. “Under these circumstances, Lufthansa Cargo intends to cut its annual staff costs and staff-related expenses by at least €80m a year by 2018.

“A strategic cost-cutting programme was drawn up and has been underway since autumn 2016. The reorganisation of sales and other areas as of the beginning of 2017 should contribute to strengthening its market position as Europe’s leading cargo airline.”

It added that technology would be a key factor in its future development.

“Digitalisation is an important pillar of the strategic Cargo Evolution programme. In the years ahead, the company intends to digitalise its relationships with all the players in the transport chain, from bookings to deliveries.”

The logistics segment, which includes ULD management company Jettainer, time:matters and an investment in AeroLogic, expects “adjusted EBIT for the financial year 2017 to be positive, thanks to good revenue and earnings performance in the first half-year, as well as initial earnings ­contributions from improvement measures initiated in 2016”.

You can read the full results here.

Meanwhile, Air Canada Cargo has also posted positive results.

In the second quarter, it saw revenues of C$154m, up C$43m or 38.7% year-on-year, on traffic and yield growth of 34.7% and 3%, respectively. Traffic increases were recorded in all markets – the Pacific reflected a particularly strong performance, said the airline.

In the first six months of 2017, cargo revenues of C$288m increased C$61m or 27.1% year-on-year, on traffic growth of 33.7%, partly offset by a yield decline of 5%.

You can see the full results here.