Lufthansa Cargo to enter strategic alliance with All Nippon Airways?

It has been a year since Lufthansa Cargo announced that it intended to forge agreements with a selectfew combination carriers in order to broaden its international reach and strengthen its balance sheet. During that time there was speculation that the first partner would be Turkish Airlines, but according to reports in the German media, it will be Japan’s All Nippon Airlines (ANA) that claims that honor.

Neither carrier has publicly confirmed the agreement, but CargoForwarder Global quotes Harry Hohmeister, Lufthansa Executive Board Member and Head of Logistics, as saying that Lufthansa Cargo is in late-stage talks about a strategic cargo partnership with ANA. Both carriers are members of the Star Alliance, and cooperate closely in the passenger arena, but their proposed cargo agreement would be a separate, bilateral deal. More like the old Northwest Airlines/KLM cargo partnership than a multilateral arrangement similar to the SkyTeam Cargo Alliance.

What’s in it for Lufthansa? Japan is a major origin and destination for air freight, and All Nippon has an extensive domestic network that can feed freight to and from Tokyo. It also has a strong, and growing, regional express freight business based at its Naha hub in Okinawa. A cooperation deal with ANA will give Lufthansa far better access to the Japanese market, and the regional Asia Pacific market, than it could gain on its own.

What’s in it for ANA? Lufthansa is one of the two or three biggest international cargo carriers in the world, with nineteen widebody freighters as well as the belly capacity of its widebody passenger fleet. Cooperation with Lufthansa will greatly expand ANA’s worldwide reach.

How the agreement, assuming it is confirmed, will affect Lufthansa Cargo’s fleet plans is not clear. The carrier currently operates sixteen MD-11Fs and three 777Fs and has two more 777Fs on order. It posted an operating profit of 77 million in 2013, better than its main European competitors, but down from 105 million the year before. Not long before he was promoted to head parent Lufthansa’s passenger operations, then-CEO of cargo Karl Ulrich Garnadt indicated that the when the remaining two 777Fs entered service, it would be in addition to the current fleet rather than replacing any of the MD-11Fs. But Mr. Hohmeister reportedly is calling for a serious look at the size of the freighter fleet.