IAG Cargo's revenue fell 9.8% in the first half of 2014 to €488 million as volumes edged down 3.3 per cent to 441,000 tonnes, figures which reflect the ending of a long haul freighter leasing programme in April.
The freight arm of British Airways and Iberia terminated its agreement with Global Supply Systems (GSS), under which it leased three B747-8Fs. IAG Cargo then signed a long term commitment from May to purchase capacity on Qatar Airways-operated B777Fs, operating flights a week between Hong Kong and London-Stansted.
Announcing its second quarter results, IAG Cargo reporting commercial revenue (flown revenue plus fuel surcharges) of €238m versus €271m for the same April to June period of 2013.
On a like for like basis, adjusting prior year figures to reflect a directly comparable freighter operation, commercial revenue remains flat versus last year.
Volumes of 1,321 million cargo tonne kilometres (CTK) for the second quarter decreased by 5.1 per cent compared to 2013, while capacity decreased by 5.6 per cent. Overall yield (commercial revenue per CTK) for this quarter was down 7.4 per cent and down by 2.8 per cent excluding the effect of exchange.
IAG Cargo volumes of 1,321 million cargo tonne kilometres on a like for like basis for the quarter represent an increase of 7.1 per cent compared to like period last year, while capacity increased by 3.2 per cent. Overall yield for this quarter was down 6.6 per cent and down by 1.9 per cent excluding the effect of exchange.
Steve Gunning, chief executive at IAG Cargo, commented: “The strong second quarter performance is the result of us continually adapting our business to meet challenging market conditions. In particular, the decision to end our longhaul freighter agreement with GSS and instead purchase capacity on Qatar Airways’ freighter fleet has delivered real commercial value."
Added Mr Gunning: “Over the quarter we have utilised additional line capacity well and have achieved good load factors with notably strong flows from Asia Pacific to North America. Our newest routes to Austin, Texas and Chengdu, China have also performed well with impressive load factors.
“From a customer experience perspective, we have successfully launched Cargo Connector, our small freight connection service, in two additional US markets during the quarter, a move which has been particularly welcomed by small and medium sized forwarders.
He continued: “With the customer-focused changes that we continue to make to the business and a firm handle on costs, we are making good progress towards optimising IAG Cargo’s bottom line contribution and we are looking ahead to the remainder of the year with optimism.”