IAG Cargo revenues dip in Q1, despite rise in traffic

Like many carriers this year, U.K.-based IAG Cargo said its first-quarter 2019 revenues declined year-over-year, falling to €275 million during the period March 31 for a 2.5% loss, compared to Q1 of 2018, at a constant exchange rate. However, its cargo traffic increased by 2.6% to 1.39 billion cargo tonne kilometers (CTK), thanks to a surge in demand from South America and Africa.

Cargo volume also rose by 2.5%, year-over-year, to 174,000 tonnes, but yields for Q1 dropped by 5%, thanks in part to a 4.8% increase in cargo capacity.

“As expected, the international airfreight market has declined this quarter,” said Lynne Embleton, CEO at IAG Cargo (pictured). “A weak Asia-Pacific market has been partially offset by strong performance from South America and Africa, helping us to steadily grow volumes.”

Embleton remarked that IAG’s investment in its premium products has continued in Q1, with the February opening of a Good Distribution Practice (GDP)-certified Constant Climate Center in Madrid, as well as 24/7 support from its Heathrow hub for its Critical, high-priority shipments. As a result, IAG has seen “strong flows of pharmaceuticals to the burgeoning Latin American market,” including shipments of vaccines for diphtheria and MMR (measles, mumps and rubella) – medications that have seen increasing demand due to measles outbreaks in the United States.

In the carrier’s overall plan to partner with companies “from outside the industry to provide new fully-integrated products directly to consumers,” Embleton also mentioned IAG’s connections with Santa Fe Relocation, becoming the “first airfreight carrier” to offer home relocation services, as well as with PetAir UK, specializing in pet travel.

“No doubt market conditions throughout 2019 will continue to be challenging,” Embleton said, “but our pipeline of products, digital services and operational investment will position us well to become the carrier of choice for customers worldwide.”

One of IAG’s main European competitors, Air France-KLM, reported similarly disappointing results early this month due to an “economic slowdown” in Q1, resulting in a 4% y-o-y dip in revenue, and essentially flat growth in tonnage, at 270,000 tonnes. For its preliminary Q1 2019 results released in April, Germany’s Lufthansa reported a rise in revenues to €7.9 billion, but said adjusted earnings before interest and taxes fell to a €336 million loss, compounded by a €202 million rise in fuel costs.