Rising revenue and yields help Lufthansa Cargo become profitable again

0
415
Lufthansa Cargo Boeing MD-11 Freighter

After an annual loss of €50 million in 2016, Lufthansa Cargo has become profitable again reporting earnings before interest and tax (EBIT) of €242 million in 2017.

Revenue rose by 21.1 per cent to €2.5 billion due to increased cargo tonnage and much higher yields particularly in the express business.

Sales increased by six per cent and cargo load factor on freight aircraft increased 2.2 percentage points to 75.1 per cent while load factors were up 2.3 percentage points to 63.9 per cent in the belly of passenger aircraft.

All regions registered an increase of revenue, with Europe up 11.2 per cent to €198 million, America by 22.2 per cent to €1 billion, Asia Pacific by 20.9 per cent to €991 million and Middle East/Africa by 7.9 per cent to €177 million.

The German airline had been adversely affected by overcapacity eroding yields in 2016 and started undergoing a cost cutting programme to streamline services and reduce staff numbers, with further potential cost cutting planned for 2018 including closing the unprofitable Lufthansa Cargo Service Center.

Lufthansa Cargo says it is looking to increase digitalisation and modernisation, having upgraded its revenue management to enable greater differentiation, and response times in sales were improved by significantly reducing the number of manual processes.

It is also working with start-ups as part of its Cargo Evolution programme, and took the first step by investing in Fleet Logistics, a neutral online marketplace for brokering international sea freight and airfreight services, which takes care of all payment processing.

The freight centre in Frankfurt is continuing to be modernised, with improvements being made to the Cool Center.

A new service, Road Feeder Service Cool was also introduced, and a special thermal foil was included in the service portfolio and the range of container services was expanded.

The whole Lufthansa Group also saw improvements, with total revenue up 12.4 per cent to €35.6 billion and net profit rising 33.1 per cent to €2.3 billion.