Record results for Cargolux in 2022

Cargolux Group achieved its best year on record in 2022 but warned of potential overcapacity and expected volatility in 2023’s already declining market.

The Luxembourg-based operator of 30 B747 freighters saw 2022 revenues rise 14.7% versus 2021 to $5.1bn as profit after tax soared 21.9% to $1.6bn.

A spokesperson for the European freighter airline said: “This financial result allows the further strengthening of the group’s balance sheet to enable the airline to remain resilient in weathering the expected volatility we expect in the industry.”

Cargolux said that “strong yields and high volumes” during the first half of last year contributed to the company’s strong financial performance, adding that a decline in demand in the second semester led to lower volumes and a “virtual absence of peak season” in 2022.

The market dynamic was significantly affected by the outbreak of the war in Ukraine, said the spokesperson, adding: “The closure of Russian airspace and Western sanctions on Russia impacted flight paths towards the Far East resulting in longer sectors being flown and increased operational costs.

“The conflict in Ukraine also severely affected supply chains which were already suffering from a lack of raw materials and products. The resulting uncertainty disrupted global commerce and affected the airline’s ability to operate optimally.”

The Covid-19 pandemic continued to affect operations worldwide. As sanitary measures eased throughout the year, passenger capacity returned to the market “softening demand for cargo space and bringing yields down”.

At the end of December 2022, Cargolux’s fleet comprised sixteen Boeing 747-400 freighters (10 B747-400Fs and 6 B747-400ERFs) and fourteen Boeing 747-8 freighters.

This uniform fleet enables Cargolux “to respond to changing market conditions in a flexible and timely manner”.

Operational key performance indicators saw 2022 aircraft utilisation decline 2.3% compared with 2021 to 13.57 block hours per day, while the load factor (FTK/ATK) fell by 3.6 percentage points to 69.2%.

In its 2023outlook, Cargolux stated: “Geopolitical tensions and the war in Ukraine continue to affect global trade. As a key component of the logistics chain, air cargo is directly affected by these issues. It is unlikely that the situation will change in 2023.

“The return of belly-hold capacity and the emergence of new players in the industry, including multi-modal companies, pose a risk of overcapacity in an already declining market.”

It continued: “The pressing questions about sustainability and the increased pressure on airlines to reduce emissions must also be factored in as we face a turning point in the industry.

“Cargolux will continue to invest in new technology and develop digitalization to drive the supply chain change and become a leader in sustainable operations.”