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Differing strategies in Europe

David Harris by David Harris
May 12, 2015
in Carriers, News Archives, Strategy
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The big-three European combination carriers continued to pursue their widely diverging cargo strategies in the first quarter, with – no surprise here – widely diverging results.

Historically, all three have had a strong focus on cargo, but all three have seen their cargo traffic fall while the general trend worldwide has been steady growth for over a year. And all three have come up with different strategies to put things right in the cargo department. Obviously, there is more to these strategies than can be summed up in a single sentence, but we feel that, distilled to the essence, the strategies of IAG, Air France-KLM, and Lufthansa are:

  • IAG Cargo: Get rid of all freighters, concentrate on being as profitable as possible using only the bellies of our passenger fleet.
  • Air France-KLM: Keep a few freighters to supplement our belly capacity, aim for operating breakeven by some time in 2017.
  • Lufthansa: Continue operating a large freighter fleet, and rely on “top quality and flexible capacity management” to continue improving profitability in the face of tough competition.

So far, Lufthansa’s strategy seems to be working. As shown in the chart below, despite a continued slight decline in traffic, operating profit is rising strongly.

Air France-KLM, on the other hand, continues to struggle. Operating losses are increasing, and the carrier continues to report heavy declines in traffic.

As to IAG, the jury is still out. The termination of the leases on three 747-8Fs following the end of the first quarter of 2014 makes year-over-year comparisons difficult, but Cargo boss Steve Gunning says the 1Q15 results are “strong” and show that the carrier made the right choice a year ago.

European Carriers' 1Q15 cargo results

 

Tags: Air Cargo StrategyAir France KLM Martinair CargoEMEA Air CargoIAG CargoLufthansa Cargo
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