IAG Cargo sees airfreight revenue fall by 25.2%

IAG Cargo and Air France-KLM , two of Europe’s largest air cargo carriers, reported first-quarter earnings in line with the current cargo market downturn. Cargo revenue falls at IAG IAG, which operates Aer Lingus , British Airways , Iberia and Vueling , saw revenue of 5.9 billion Euro ($6.5 billion), a 71.4% increase from Q1 2022. [caption id="attachment_69382" align="alignright" width="300"] Photo: British Airways[/caption] “The largest single driver of growth in profitability was the change in passenger revenue,” IAG Chief Financial Officer Nicholas Cadbury said in an earnings call today. “This is a combination from Q1 last year being heavily impacted by the Omicron [variant of COVID] and the strong lessor demand that we’re seeing this year.” Cargo revenue fell 25.2% YoY to $356 million, despite cargo tonne kilometers (CTK) increasing 13.6% YoY to 1.125 billion. Cargo revenue per CTK fell 34.2% YoY. “Cargo revenue declined year on year due to the lower yields as a result of the continued increase in cargo capacity from aircraft flying, particularly in Asia, and the continued normalization of the supply chain,” Cadbury said. Nevertheless, cargo revenue was up $58.8 million, or 17.5%, versus Q1 2019, with cargo yields up 45.4% versus 2019. IAG’s subsidiaries saw sharp increases in revenue, again due to passenger travel: Aer Lingus reported revenue of $395.7 million, an 89% YoY increase; British Airways reported revenue of $3.4 billion, a 78% YoY increase; Iberia reported revenue of $1.6 billion, a 61% YoY increase; and Vueling reported revenue of $576.4 million, a 101% YoY increase. IAG expects its previous 2023 operating profit to be in the top end of its previous guidance between $1.98 billion and $2.54 billion. “We are mindful that we are still at a relatively early stage in the year, while fuel prices have fallen in the past few months,” IAG Chief Executive Luis Gallego said in the call. “They are subject to macroeconomic and geopolitical impact. So, there is no certainty that they will stay at current levels.” Gallego added that industry strikes in the past year affected the bottom line and he warned that future strikes, which appear on the horizon, will continue to affect earnings. Air France-KLM repays state aid Air France-KLM reported revenue of $6.98 billion, a 40.6% YoY increase. “The group continued to show strong revenue growth as well as robust cash flow generation thanks to the very encouraging summer ticket sales,” Air France-KLM CEO Benjamin Smith said in a release. “I am also pleased that we have now fully repaid all state aid, which releases us from the associated restrictions and gives us back our full strategic autonomy. We now stand on our own feet.” However, cargo revenue was $740.7 million, falling 26.4% YoY. Capacity was 3.291 billion available tonne kilometers, a 10.7% increase YoY, while tonnage fell 11.6% to 189.6 thousand tonnes. “After the first quarter last year, the demand for air cargo decreased due to slower growth of global trade and the partial rebound of sea freight,” the company’s Q1 earnings report said. “The first quarter last year still showed an exceptionally strong demand, and therefore traffic decreased year over year by 11.8%.”

IAG Cargo sees airfreight revenue fall by 25.2%

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