Mixed results for CargoLogicAir as it looks to future growth

UK-based all-cargo airline CargoLogicAir saw its revenues almost double last year but losses deepened.

According to figures just released, the B747 freighter operator reported a 99% year-on-year increase in revenues for the 2018 calendar year to £213.7m, but its net loss reached £18m, compared with £2.5m in 2017, and its operating loss stood at £17.8m.

The increase in revenues was down to the expansion of its fleet – from three B747Fs by the end of 2017 to four B747Fs by the end of last year – and the resultant increase in flights and services.

Meanwhile, the fleet and network expansion drove up costs as the airline also battled challenging market conditions.

“The entry into service of this aircraft has allowed CargoLogicAir to offer a greater range of services to customers and laid the groundwork for the expansion of the airline’s scheduled services.

“CargoLogicAir continued to develop its network, with more flights into the US.

“The growth in CargoLogicAir’s fleet has led to significant increases in block hour production and aircraft utilisation. While costs have also increased on the back of the rapid growth in operations, this presents an opportunity for greater efficiency in the future.”

On market conditions: “The market for air cargo continues to be heavily commoditised and highly competitive. While 2017 and 2018 were both strong years for air cargo, the industry remains volatile and intrinsically linked to the health of the world’s major economies.

“Strong passenger capacity growth (with the resultant bellyhold cargo capacity growth) coupled with the advent of more economical alternative modes of transport has continued to put pressure on a balanced supply/demand environment.”

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To combat this the airline said it would focus on building a more differentiated product offering by developing its unique and oversize capabilities and by expanding its sales capabilities on the back of its B747F fleet.

These aircraft, it explained, occupy a niche that cannot be readily substituted by belly capacity or smaller freighters.

The airline is also hoping to expand further: “CargoLogicAir’s growth ambitions have been and may continue to be impacted by the constrained market for available B747F aircraft but the airline is actively working with partners to mitigate and may also assess the merits of other aircraft types in the future.”

The report also revealed that the airline was marketing An-124 and IL-76 capacity, presumably that of partner Volga-Dnepr Group.

Like others in the industry, the airline is facing increasingly difficult market conditions this year. Meanwhile, David Kerr left the position of chief executive earlier this year.