IAG Cargo hails resilient results in tough conditions

IAG Cargo saw revenues and cargo tonnages decline in last year in what the carrier described as “challenging market conditions”.
The cargo division representing British Airways, Aer Lingus and Iberia saw full-year revenues decline by 6.6% year on year in 2016 to €1bn, while tonnes of cargo carried were down 2.9% to 849,000 tonnes.
The decline in tonnes comes despite an increase in cargo tonne km, up by 3% to 5.4bn, effectively meaning the airline group carried less cargo than in 2015, but over a longer distance.

During the year, the cargo division launched services to several new long distance destinations: Lima, San Juan, San Jose (California), San Jose (Costa Rica) and Tehran; and announced the launch of Santiago, New Orleans, Fort Lauderdale and Oakland for 2017.
Revenues per cargo tonne km slipped to 18.74 for 2016 against 19.35 in 2015.
IAG Cargo chief executive Drew Crawley said the airline had focussed on cost and product.
Crawley said: “These are resilient results in the face of challenging market conditions. Growing supply from freighter and new generation passenger fleets have continued to outstrip flat demand for general freight.
“Our focus on aggressive cost management combined with premium product growth has enabled us to offset some yield pressure and grow our revenue share of the market this year.
“While there was a robust start to 2016, the second and third quarter suffered from diminishing demand, leading to significant yield pressures.
“The final peak months of the year brought some improvement, driven by stronger than expected consumer sales in December and a high demand for last minute e-commerce products.
“Our new ‘Critical’ product performed well during the peak, processing over 600 emergency shipments.
“More broadly our premium product mix now sits at 20%, with our industry leading Constant Climate product continuing to see significant volume growth year on year, shipping over 40,000 consignments in 2016.
“Despite a difficult year for the industry, we have delivered a resilient performance. We will continue to bring further benefits to our customers by understanding their needs and investing in all areas of our business through infrastructure improvements, network expansion, new partnerships and technology advances. We remain confident in our strategy for 2017 and beyond.”
At the start of the year, the carrier completed its purchase of Aer Lingus and figures from the Ireland based carrier are included for the first time.
Looking to the year ahead Crawley said the airline would continue to strive for efficiencies.
“We will continue to invest in our infrastructure and our technology through 2017 to make our operation as efficient as possible.
"In addition to the continued development of our new Premia building we will be implementing a new warehouse management system that will transform the way freight is processed through our premium operation.
“Our strategy is being developed to embrace the digital disruption in our industry. We believe digitisation will play a significant role in shaping our industry in the coming years and we recognise the benefits this can bring in relation to costs and improving customer experience.
“Throughout 2017 we will introduce a number of new innovations to help drive forward the digitisation of cargo and improve our customers shipping experience.”
In the fourth quarter cargo revenues slipped by 0.7% to €279m, traffic was up 3.6% to 1.5bn CTK and cargo tonnes were up 29.7% to 306,000 tonnes.
The overall company saw total revenues decline by 1.3% year on year to €22.6bn, while profit after tax was up 28.8% to €1.9bn.
“Our performance was affected by an adverse currency impact of €460 million. In particular, this was due to the weak pound following the UK’s EU referendum. However, despite that, we’ve made good progress and continue to build on all we’ve achieved in our first five years,” said chief executive Willie Walsh.

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