Cost savings and rising demand push up Lufthansa Cargo profits 50%

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Profits for Lufthansa Cargo have increased by almost 50 per cent in the first half of 2018 helped by substantial cost savings and increased demand for airfreight services.

Earnings before interest and tax (EBIT) increased by 48.8 per cent to €125 million, pushing the EBIT margin up 2.9 percentage points to 9.6 per cent for Lufthansa’s Logistics business segment, which includes Lufthansa Cargo as well as Jettainer, time:matters, AeroLogic and equity investments in various handling companies.

It says the global airfreight market remains volatile and challenging, but its strategic efficiency programme introduced in 2016 targeting savings of €80 million by the end of 2018 has almost been achieved already.

Lufthansa Cargo says it benefited from the unusual sharp market-wide increase in demand at the end of 2017 “overproportionally” and demand in the segment developed “better than expected” in the first half of 2018.

The airline is upgrading its freight centre in Frankfurt by expanding capacity and further improving infrastructure of the cool centre, with the upgrade expected to be under way by the end of 2018.

Two Boeing 777 Freighters will be joining the fleet in early 2019 to replace MD-11 Freighters in the medium term.

Lufthansa Cargo says digitalisation is an important part of its Cargo Evolution programme, focusing on process automation, connectivity and new business models as the airline plans to digitalise relationships with all partners in the transport chain to improve transparency, speed, quality, flexibility and efficiency.

Revenue for Lufthansa Cargo increased by 12.6 per cent in the first half to €1.2 billion with the Americas up 14.6 per cent to €517 million and Asia Pacific by 16.2 per cent to €532 million.

Capacity in available tonne kilometres was up six per cent to 6.5 billion though volumes measured in cargo tonne kilometres grew more slowly, rising 2.5 per cent to 4.4 billion, meaning load factors fell 2.3 percentage points to 66.9 per cent.