News / Tweets, tariffs and Trump tantrums – all in a day's work for American Airlines Cargo

11/06/2019

“I can’t drive my business based on tweets,” said Rick Elieson, president of American Airlines Cargo, firmly. “Whether it’s a negotiating stance or a tactic [by President Trump], there are some things you can’t predict, but need to deal with at the time.”

While Trump has backtracked on implementing tariffs on Mexico, he currently appears to be raising the stakes with China, and has also threatened French – or by extension, EU – wine exports.

How is all this affecting American Airlines’ business? Mr Elieson believes some of the softening in the market is likely to be tariff-related, but as he notes, “it’s hard to dissect”.

He told The Loadstar at Air Cargo Europe last week: “The softening of demand has been a bit more pronounced out of China. But we have also reduced some Asia flying, so that could mask the effect. But there is a softening overall, which is slightly more accentuated out of Asia.

“And then there are carriers operating more aggressively, competition which has a secondary effect on places like Narita, Japan, and Vietnam. That’s more what I think I am beginning to see. But the data lags behind what you see.”

Despite IATA downgrading its growth forecast for air freight to 0% and uncertainty in the market, Mr Elieson said his forecast for the year would not change.

“We just have to work harder to find the traffic – it’s there. Last year, our sales team worked hard, but they will have to work even harder this year.”

And he remains optimistic: “What is different this year is the starting point. We are in a better place than two years ago, but there were more options then. It’s simply perspective – when you are on a rise, you can feel it.

“We are poised for our second-best year ever – our forecast is always going to be ‘to do better than the year before’.”

Nevertheless, he added, this year would be about balancing yield and traffic carefully.

“What we want is the most profitable combination of price and volume. My goal is to generate the most net revenue, and that is always a balance, a trade-off between yields and volumes and my costs. There are times when I would chase traffic on some lanes though.”