Lufthansa Cargo reports solid 1H17 results

German flag carrier Lufthansa, reported 1H17 revenues for its logistics division up 18.6% year-over-year to €1.16 billion, driven in part by a 5.0% increase in revenue-tonne-kilometers over the same period. EBIT reversed course from a loss of €4 million during 1H16, swinging to an operating profit of €125 million in 1H17.

In the not too distant past, many of Europe’s top cargo carriers were focused on curbing costs and cutting capacity as their cargo operations hemorrhaged both revenue and volumes. Germany-based Lufthansa was no exception, and last year launched into extensive restructuring plans. Those plans were based on models that suggested the low-growth environment which prevailed at the time was unlikely to improve by any considerable measure. Now well-into 2017, the air cargo market has surpassed expectations, and Lufthansa’s logistics unit (which includes Lufthansa Cargo, the airfreight container management specialist Jettainer Group, the time:matters subsidiary, which specializes in urgent consignments, and returns from equity investment in the cargo airline AeroLogic GmbH and various handling companies).

While all regions Lufthansa Cargo serves reported net traffic revenue growth in 1H17, only Asia and North America saw significant traffic growth. Revenues derived from the Asia/Pacific regions rose 20.2% to €458 million, while the America region saw growth of 16.5%, to €451 million. Traffic was up 4.4%, and 7.5% respectively for the two regions. The region Europe saw revenues grow 5.7%, even on traffic that was 1.4% lower. Lufthansa Cargo’s smallest region by revenue, Middle East/Africa, saw revenues dip 1.2% to €84 million on traffic that was 2.8% lower.

Shifting to Europe’s number-two combination carrier, Air France-KLM has once again reported results that suggest that after a seemingly endless string of quarters of dropping revenues and cargo volumes, things are starting to bottom out.  The group reported 1H17 cargo revenues down 2.5% y-o-y to  €1.01 billion on traffic that was up 1.6% to 4.18 billion RTKs. Since AF-KLM no longer reports a breakdown of detailed financials by unit, it is hard to judge if profitability is improving for the group’s cargo division.  The Franco-Dutch Airline Group reported an overall net result of €353 million, €301 million of which was derived from KLM-Martinair which historically has a more robust cargo operation.