Lufthansa Cargo revenues lifted by capacity crunch

Lufthansa’s logistics division, which includes Lufthansa Cargo, saw revenues rise in the first half of this year, despite significant cuts to bellyhold capacity.

The carrier said this outcome was a result of demand outstripping supply. “Demand for the remaining cargo capacities went up during the first half-year of 2020, with the transportation of personal protective equipment in particular being in strong demand,” it said.

Lufthansa Cargo chief executive Peter Gerber said: “Even during the Corona crisis, we kept our freighter schedule stable to maintain supply chains via air with high flexibility. Our freighters are of high importance in the current crisis. To achieve massive cost reductions, we took measures early on.”

Last month, Air Cargo News revealed that Lufthansa Cargo will shed just over 10% of its workforce by 2023 as part of a restructuring at the overall airline group as it tackles the impact of the coronavirus outbreak.

During the first half of this year, Lufthansa’s logistics business posted a 7% year-on-year increase in revenues to €1.3bn, while its earnings before interest and tax (ebit) jumped from €9m to €258m.

Load factor for the first six months of the year also increased, by 4.4 percentage points to 65.5%.

Meanwhile, cargo capacity measured in available tonne km declined 33% to 4.7m tonnes.

The carrier attributed this loss to cutbacks in bellyhold capacity during the coronavirus pandemic. However: “to compensate for this, passenger aircraft were refitted and used to transport cargo”, the carrier said in its half-year results.

It added: “Demand for the remaining cargo capacities went up during the first half-year of 2020, with the transportation of PPE in particular being in strong demand.”

From April to June this year, Lufthansa Cargo’s revenues increased 23% to €766m, ebit declined 10% to €299m and cargo load factor increased by 9.4 percentage points to 59.9%.

The cargo division posted a 50% year-on-year decline in cargo capacity in the second quarter — to 1.9m tonnes.

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The pandemic negatively impacted the company’s overall group performance.

The group experienced a 52% year-on-year decrease in revenues to €8.3bn. Ebit also decreased from €417m in the first six months of last year to  a loss of €3.5bn this year.

Passenger figures during the first six months dropped by 66% year-on-year.

The group warned that its financial outlook continues to be challenged by the effects of the coronavirus crisis. “We expect to report a significant loss in 2020,” it said.

The group said that other factors affecting its performance were: the trade dispute between the US and China and the unclear impact of Brexit.

Lufthansa said it is “turning the Lufthansa airline into an autonomous company” and implementing “an extensive crisis package for Lufthansa’s employees that should allow us to cut our costs significantly” in order to save costs going forward.

The cargo division also recently announced the outsourcing of part of its handling business to logistics company Fiege.