Recovery on the horizon at Lufthansa?

July statsAfter two quarters of falling traffic demand, and a €46 million first half operating loss, more bad news from Lufthansa’s cargo unit would not have been surprising, but July traffic figures are encouraging. As shown in the chart, Lufthansa’s Group cargo traffic was up 1.6% y-o-y — not a huge gain, but a great deal better than what we have seen lately. Europe’s other two big legacy carriers also showed improved performance to start the second half of this year.

Starting with Lufthansa: The carrier began to show signs of recovery when it reported July Group cargo traffic up 1.6% y-o-y to 854 million RTKs. Traffic to/from the Asia-Pacific region grew the most, up 3.3% to 393 million RTKs, and traffic to/from the Americas also grew, albeit a bit slower, up 0.9% to 370 million RTKs. Intra-Europe traffic was nearly flat (down -0.1%) at 30 million RTKs, while the Middle East/Africa continued to be a sore spot with traffic demand slumping 3.6% to 60 million RTKs. For the first seven months of the year, Lufthansa’s cargo traffic was still negative, down 1.8% to 5.67 billion RTKs, but the outlook may be improving.

In an effort to bolster demand, Lufthansa Cargo has launched a string of new products this month targeting new customer groups as part of its comprehensive restructuring plan. The coming months will begin to reveal what kind of impact such products have on the carrier’s traffic.

We also point out that while there have been rumors circulating recently that Lufthansa will cut additional freighters from its fleet, but the carrier has confirmed to Cargo Facts that “As of today there are no concrete plans to retire further freighters.”

Traffic improvements at Lufthansa Cargo were on par with growth at its main hub in Frankfurt (FRA) which saw a 1.4% increase to its July cargo handle, to 180,000 tonnes.

Air France-KLM: AF-KLM continued to face strong headwinds from domestic issues in France, including persistent strife with its labor unions, and tragic bouts of terrorism activity. Still, cargo traffic is no longer plummeting at double-digit rates, and the carrier has said it expects cargo to break even by 2017. Whether this will happen remains to be seen, but July cargo traffic was down 6.7% to 700 million RTKs — not good, but not as bad as the declines in the last eighteen months. For the year through July, AF-KLM’s cargo traffic was down 7.5% to 5.21 billion RTKs. The carrier’s freighter fleet count remains at six with just two 777Fs, three 747-400ERFs, and one 747-400BCF in scheduled service.

Amsterdam’s Schiphol Airport (AMS), KLM’s main hub, reported its July handle up 4.4% to 140,000 tonnes, indicating that other carriers are taking market share from KLM. Year-to-date, AMS’ handle was also in positive territory, up 2.0% to 937,000 tonnes.

Lastly, International Airlines Group, which does not operate any freighters of its own, once again reported healthy growth in demand for cargo, with July traffic up 5.9% y-o-y to 447 million RTKs. Year-to-date IAG’s cargo traffic was up 2.4% to 3.10 billion RTKs. IAG subsidiary carrier Iberia showed the strongest growth in July with traffic up 8.1% to 93 million RTKs (and up 4.5% to 610 million RTKs year-to-date), while British Airways’ July traffic was up 2.1%, a figure close to that at its main hub at London’s Heathrow Airport (LHR) which reported its July handle up 2.6% y-o-y to 124,000 tonnes. Year-to-date, LHR’s handle was up 2.2% to 879,000 tonnes.

Get more air cargo insights at the 2016 Cargo Facts Symposium, Oct.10-12 in Miami. Click here for details.

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