Cargolux considering more 747Fs on higher 2017 results

Last year at this time, the air cargo market had only just begun to recover from its protracted slump. The downturn hit cargo-focused airlines hard, and Luxembourg-based Cargolux was not immune. Even though Cargolux’s traffic rose by 10% in 2016, net profits fell from US$49 million the previous year, to just $5.5 million – not much, but at least better than the full-year net loss the company had expected. But, with the strong growth in air freight demand continuing through  2017, Cargolux is now expecting a full-year profit in the range of $100 million, and, according to a report in Luxemburger Wort, is now considering the addition of more 747Fs.

Besides this year’s strong demand growth, new partnerships and a reimagined business plan, in conjunction with favorable macroeconomic conditions, helped Cargolux to achieve to this year’s improved result.

Rewind to October 2016: Cargolux was just embarking on a “strategic review” which questioned the long-term sustainability of its business. At the time, moving into ACMI-operations or venturing into new business areas did not seem out of the question. But things quickly changed as modal shift from ocean (following the Hanjin collapse) and the recovery of organic demand growth for air cargo meant the return of opportunities for operators of widebody freighters, like Cargolux.

Regarding partnerships, Europe’s largest all-cargo carrier has aligned itself, and began cooperating with former competitor, Emirates. In May, Cargolux and Emirates SkyCargo agreed to a strategic operational partnership which include codesharing, block space, interlining and joint handling for air cargo shipments at each of the carrier’s major hubs (for more, see Emirates, Cargolux to codeshare for cargo). As part of the agreement, Emirates gained access to Cargolux 747Fs for heavy/outsized cargo requiring nose loading or cargo otherwise unsuitable for Emirates’ own 777F fleet.

A few visible changes have already come about as a result of the partnership: Emirates has begun offering regular scheduled freighter flights to Luxembourg, and Cargolux switched over to dnata for the handling of its cargo at Dubai World Central Airport. Emirates has also already chartered 747Fs from Cargolux.

In addition, Cargolux recently announced an expansion of its relationship with Japan-based Nippon Cargo Airlines (NCA). Cargolux’s Italian subsidiary, Cargolux Italia, began cooperation with NCA two years ago, but under the new agreement, next year Cargolux will begin operating a weekly service from Luxembourg to Tokyo (NRT), while Cargolux Italia will cease flights to NRT but maintain operations to Kansai Airport (KIX) in Osaka. Cargolux also plans to expand its operations through Komatsu Airport (KMQ) as it develops its services to and from Japan.

Looking ahead, it is no surprise that “depending on circumstances next year,” Cargolux may soon find itself in the market for additional freighters. The carrier’s preference for used freighters, which CEO Richard Forson told the Wort, “presents value for the airline” could mean that such freighters will end up in the fleet of the carrier’s Chinese jv, Henan Cargo Airlines, which is expected to launch next year and focus on trans-Pacific operations. Henan Cargo Airlines will be based at Zhengzhou’s Xinzheng Airport, where Cargolux already has a major presence.

Those interested in learning more about emerging start-up carriers throughout Asia like Henan Cargo Airlines, and rising cargo gateways like Zhengzhou Xinzheng Airport, are invited to join us next year at Cargo Facts Asia, co-hosted by the Shanghai Airport Authority. The Symposium will be held 23-25 April at the Mandarin Oriental Pudong. To checkout next year’s exciting agenda, or to register, visit www.cargofactsasia.com.