How did Europe’s busiest air cargo carriers perform in the second quarter?

The second-quarter results are in and at first glance two out of Europe’s three largest listed cargo carriers appeared to have performed well at a revenue level.
Both Lufthansa Cargo and IAG Cargo recorded year-on-year growth in revenues, of 6.2% and 8.8% respectively, however this was heavily influenced by exchange rates, with IAG saying it would have reported a decline of 4% at a constant rate of exchange.
The worst performing carrier in terms of revenues was the Air France KLM (AF KLM) group; even with the help of exchange rates gains, its revenues still declined by 9.6% during the quarter.

The main reason for the decline in AF KLM’s revenues seems to be its change in freighter strategy, where it is withdrawing capacity.
During the second quarter, its freighter capacity was chopped by 26% on a year earlier, while belly capacity was up by 1.3%. Overall cargo capacity was down by 5.7%.

The strategic capacity cull also saw the AF KLM group perform worst on the volume front during the period as it experienced an 11.1% decline to 2.2bn cargo tonne kms (CTK).
During the quarter, IAG Cargo was also in the process of emerging from its strategic move away from operating its own freighters, in favour of a partnership with shareholder Qatar, so its capacity was affected in one of the three months by this change.
However, the effects of this withdrawal weren’t enough to offset capacity additions in the bellyhold side of the business and so it actually recorded a 2.1% increase in capacity. Despite the increase in capacity, volumes slid during the quarter by 2.1% to 1.3bn CTK.
Lufthansa Cargo performed the best on the volume front during the period as it was the only one of the three to record growth, registering a 1.4% increase to 2.1bn CTK.
However, the volume increase was much needed to protect its load factor as the German group also had the highest increase in capacity during the period, with a 5.5% jump on last year.

The volume additions appear to have helped offset the capacity increase and as a result its load factor only slid by 2.6 percentage points on last year.
This compares well with AF KLM which saw its load factor decline by 3.7 points compared with a year earlier.
IAG Cargo was the best performing on the load factor front, registering a 2 point decline compared with last year.

There was some good news for AF KLM though as it avoided finishing with the lowest revenues per CTK, recording a level of 25.6 cents per CTK. That honour went to IAG Cargo, which recorded 20 cents per CTK.
But all three companies recorded a year-on-year increase in this matrix; a reflection of the exchange rate gains.
Both Lufthansa Cargo and AF KLM’s air cargo divisions recorded a loss in the second quarter. IAG Cargo does not report profits.

Notes: Figures in all charts for Lufthansa Cargo