Second quarter cargo surge for IAG
28 / 07 / 2017
British Airways, Aer Lingus and Iberia parent group IAG had a strong cargo second quarter as airfreight revenues at the European group soared by 7.9% to €260m against the same quarter of 2016, or an increase of 7.6% on 2016 at constant exchange.
IAG’s half year 2017 results saw cargo revenues increase by 2.6% to €516m in a "competitive market", and the outlook is of "increasing competition and capacity coming from road, rail and seafreight".
IAG Cargo saw a 1.2% rise in volumes to 330,000 tonnes in the first six months of 2017, versus 326,000 tonnes in half year 2016. Cargo tonne kilometres (CTK million) stood at 2,786, a 5% increase, while cargo revenue per CTK in the half year fell 2.3% to 18.52 € cents.
For the April to June second quarter, volumes rose 3.1% to 168,000 tonnes, and CTK million were up 6.4% to 1,419 while capacity grew by 5.9%, and revenue per CTK edged ahead by 1.4% to 18.32 € cents.
Said IAG of its airfreight arm for the half year: “Despite trading conditions remaining challenging in many regions, the result benefits from strong performance in the Asia Pacific region following a weaker performance in the same period last year."
Lynne Embleton, chief executive at IAG Cargo, commented: “The airfreight market continues to be very competitive. Our overall performance has been robust and the market has gradually improved through the first half of 2017. This improvement has come from ongoing growth in cross border e-commerce and pharmaceutical shipments, with encouraging regional performance in markets such as Asia Pacific and Europe.
“Demand from Asia Pacific has been strong throughout Q2 2017, with volumes up 8.7% versus 2016. Part of this increase has been driven by the two-way seafreight congestion between China and Europe, although volumes have also been boosted by strong consumer demand for products ranging from high end electronic tech to the globally trending fidget spinners."
Embleton continued: "India has also performed well, mainly due to a high demand for express and time-sensitive freight. Our time and temperature sensitive offering, Constant Climate, continues to support a burgeoning pharmaceutical industry in India.
“This month we announced that Critical, our emergency shipment product, will now be available to forwarders transporting Constant Climate shipments. This means that customers shipping pharmaceutical products can now upgrade emergency medical shipments to Critical, giving them non-off loadable status. This follows the continued success of Critical which recently surpassed 2,000 shipments since launch.
“In May we launched our new loyalty programme FWD.Rewards, which has been specifically designed to meet the needs of small and medium sized forwarders. Since its launch, we have already seen over 500 forwarders join the scheme and begin to earn points that can be used to pay for cargo shipments, hotel stays or reward flights.
She added: “Meanwhile, the integration of LEVEL, IAG’s new low cost long haul operation, into our network has offered our customers further breadth and flexibility with a new wide-body cargo gateway based in Barcelona. This follows the successful integration of Aer Lingus and opens up three new routes into the Americas from Barcelona to Los Angeles (LAX), Punta Cana (PUJ) and Buenos Aires (EZE).
“While IATA’s revised forecasts for 2017 are positive, we anticipate that the challenges we face as an industry, with increasing competition and capacity coming from road, rail and seafreight, will continue. In this competitive market we’re focused on developing our products, embracing digital innovations and always looking to improve how we deliver for our customers.”
A legal claims provision by IAG includes the payment of €104m for the reissued fine in March 2017 against British Airways, related to investigations by a number of competition authorities in connection with alleged anti-competitive activity concerning the Group’s passenger and cargo businesses
Said IAG: “The group is party to a number of legal proceedings in the English courts relating to a decision by the European Commission in 2010 which fined British Airways and ten other airline groups for participating in a cartel in respect of air cargo prices.
“The decision was partially annulled against British Airways but in full against other carriers and the fine was refunded in full. British Airways has appealed the partial annulment judgment and the appeal decision is awaited.
“In March 2017 the European Commission adopted a new decision and reissued the fine against British Airways for the same amount, being €104 million. British Airways subsequently repaid the fine which had been recognised as a provision. The new decision has been appealed.”