© Typhoonski LH Cargo
© Typhoonski

During the jubilation of a third consecutive year of record results, Lufthansa Cargo warned that the party was over: and its Q1 performance did nothing to suggest otherwise.

Earnings for the three-month period collapsed, from €495m ($546m) just a year ago to €151m today, as demand for capacity shrivelled amid the continuing return of passenger services and the associated spike in belly space.

In its earnings report, the German flag-carrier sought to mitigate any surprise, noting “in the first quarter… cargo business declined by comparison with the previous year as expected”.

It said: “The industry-wide increase in belly capacity in passenger aircraft as a result of the recovery, together with decline in the level of demand on account of the general economic slowdown, resulted in an industry-wide normalisation of global freight rates.”

That capacity increase was 10% year on year, bringing it back to 85% of pre-pandemic levels – amounting to a 5% climb compared with just three months ago.

As a result, cargo load factor was 9.4 percentage points off where it was in 2022, at 58.7%, and, with sales having dropped 5%, traffic revenue for the period plummeted 32%, to €902m, contrasting starkly with the more than €1.3bn it pulled in just 12 months ago.

A month ago, at the presentation of 2022’s record-breaking performance, now-former CEO Dorothea von Boxberg warned of “shadows on the horizon”.

“Demand has shrunk while capacity has grown,” she said, noting some of the boom times had been the result of shippers being lured to airfreight by poor seafreight service – but that this had since “gone back to where it was”.

Not everyone will be weeping over the weakening of Lufthansa’s cargo revenue, forwarders and shippers having been vocal in their discontent of pandemic-era pricing.

But, as Ms von Boxberg (who now heads Brussels Airlines) noted, capacity “is still less than 2019”, and there is the added reality that freighter capacity was stripped right back following Russia’s invasion of Ukraine, and the associated exit of AirBridgeCargo from the market.

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