Lufthansa Cargo reviews China business

WEAK demand and a cash-strapped joint venture are pushing Lufthansa Cargo to assess its operations in China.

Back in October Lufthansa group chief executive Christoph Franz said the market in the country was becoming more difficult and that the company would review its investment in Jade Cargo. Now Karl Ulrich Garnadt (pictured) chairman of Lufthansa Cargo has waded into the argument.

“We are leaving all options open,” Garnadt said. “The market in China accounts for a fifth of our sales. But market share and strategic importance come only after economic viability.”

Lufthansa Cargo holds 25 per cent in Jade Cargo, with 51 per cent owned by China’s Shenzhen Airlines and 24 per cent by German development bank DEG.

Garnadt added that Lufthansa Cargo has known for years that Jade Cargo was undercapitalised and is now in “very constructive” talks with the Bank of China and Shenzhen Airlines to agree a capital increase. “This needs to be dealt with soon,” Garnadt commented.

Jade Cargo has a fleet of six 747 freighters with routes including Frankfurt (Germany) and Chengdu, Chennai and Shanghai (all China).

Lufthansa Cargo expects to lose €15 million (US$19 million) this year due to the night-flight ban in Frankfurt. A permanent ban would cost it about €40 million ($52 million) a year.

The carrier has adopted an emergency winter schedule, which includes cutting two flights a week to China, moving flights to daytime and introducing stop-overs in Cologne/Bonn (Germany) for flights to China.