Competition high but pharma and automotives strong

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Lufthansa Cargo is seeing strong performance out of Germany in pharmaceuticals and automotives, but continues to battle competition from additional bellyhold capacity from Middle Eastern and Turkish carriers.

The carrier’s vice president for area management in Germany, Florian Pfaff tells Air Cargo Week business has been driven by pharma and car business, while specialist product market have also developed strongly.

Pfaff says routes to North America are doing well, boosted by the better economy in the US and in the last few weeks China and India have performed well.

The pilot strikes have impacted Lufthansa Cargo and Pfaff says it did all it could to prevent customers from any inconveniences caused. “However, we of course would have preferred to dedicate these additional efforts to additional customers,” he adds.

This year has been a challenging one for Lufthansa as it has realigned its business, dealt with pilot strikes, while the Germanwings tragedy impacted the Lufthansa Group as a whole, but Pfaff says it has maintained its market share in a “challenging market environment”.

Lufthansa Cargo’s earnings before interest and taxes (EBIT) halved to 35 million euros ($37 million) between January and September. In the third quarter (Q3), between July and September, it made an EBIT loss of 22 million euros.

Freight and mail handled fell by 0.9 per cent in the nine-month period to 1.2 million tonnes, but dropped 4.3 per cent in Q3 to 400,000 tonnes.

In the first nine months the load factor fell by 3.2 percentage points to 65.8 per cent, with Q3 seeing a decline of 4.7 percentage points to 62.4 per cent.

But the last quarter has picked up for Lufthansa Cargo, Pfaff says: “The start of the last quarter was not fully matching our expectations, however we saw a slight recovery in the market during the last weeks. Load factors have also been improving over the last months.”

The carrier has reaped the rewards of the peak season, he says: “We definitively see a seasonal uplift in the fourth quarter of 2015.”

There are challenges and opportunities in equal measure in Pfaff’s opinion: “The market environment remains challenging while capacities are increasing. To make things easier for our customers and to meet the continued demand for transporting temperature-sensitive goods we have widened our offer by providing CSafe containers now directly.”

As for 2016, Pfaff says the main target is to further improve efficiency and optimise load factors: “To gain optimised load factors, we will adapt the size of our MD-11 fleet to 12 operative freighters plus five Boeing 777 Freighters.

“In addition with the growing capacity of the bellies in the dense Lufthansa network and our continuously enhanced product portfolio we are positive on the upcoming year.”