Profits plummet at Cargolux despite robust 2016 growth

While Cargolux Airlines reported a healthy growth of 10 percent in scheduled freight tonne kilometers (FTKs) in 2016, it’s modest net profit of US$5.5 million was nearly 90 percent below the $49 million net profit figure achieved in 2015. Total revenues also fell by 5.4 percent to $1.7 billion, compared to the previous year.

Most of the discrepancy between 2015 and 2016, the carrier said, was due to unusually busy period in early 2015, caused by U.S. West Coast port congestion, plus abnormally low fuel prices that year.

Still, Richard Forson, president and CEO of the Luxembourg-based all-cargo carrier, said 2016 produced “excellent results” that were a “testament to the strength of Cargolux” and its employees, especially during the booming peak season in the fourth quarter.

Despite the “extremely volatile environment” in the global airfreight market in 2016, Cargolux said it carried more than 964,000 total tonnes of cargo via its global network in 2016, and had a vigorous fourth quarter – “one of the strongest in many years.” In November 2016, the carrier said it registered more than 12,000 block hours flown and “in excess of 96,000 tons sold.” Daily aircraft utilization for last November, with 16:74 block hours per day, was the second-highest recorded, topped only by the 16:85 hours per day in November 2013.

The 10 percent rise in FTKs last year nearly tripled the average market growth of 3.8 percent for the airfreight industry, Cargolux said. Meanwhile, its worldwide market share reached 3.9 percent.

For most of the year, yields at Cargolux were “worryingly low,” the carrier said, as available tonne kilometers rose to 11.310 million. The overall load factor stood at 66.76 percent, the carrier said.

Cargolux operations to and from its hub in Zhengzhou grew significantly in 2016, making it now the largest hub in mainland China, surpassing Shanghai. Flights between Luxembourg and Zhengzhou were complemented by trans-Pacific services to and from Chicago. The airline carried more than 105,000 tonnes of freight to and from Zhengzhou during 2016, compared to 66,000 tonnes in 2015.