The Lufthansa Group reported revenues from its Logistics business segment up 11% y-o-y in 3Q18, to €594 million. EBIT for the unit in 3Q18 was €25 million, up 19% from €21 million for the same three-month period in 2017.
Higher revenues were a response to a more favorable pricing environment, which boosted cargo yields, and were the result of an increase in marketable cargo capacity across the Lufthansa Cargo network. Air cargo capacity, measured in available cargo-tonne-kilometers (AFTKs) rose 5% year-over-year in the first nine months of 2018, in part. In May 2018, Lufthansa Cargo and United Airlines also launched their long-awaited joint venture, which has boosted trans-Atlantic traffic.
Although 3Q was a decent quarter overall, in terms of traffic and financial performance, the unit’s most recent traffic release, for the month of September, indicated signs of a slowdown. Group cargo traffic fell 1.6% y-o-y in September, as capacity grew by 6.2% y-o-y. Load factors for the month fell by 5.0%, to 63.4 percent.
Turning now to a region-by-region analysis for the first nine months of the year, Asia-Pacific and North America were the two fastest-growing regions in terms of traffic and revenue for Lufthansa Cargo. Asia-Pacific cargo revenues swelled 17% y-o-y as traffic rose by 3% during the same nine-month period. Similarly, revenues related to the region America grew by 13%, on traffic that was 2% higher.
As has been the trend in recent quarters, results from the Middle East-Africa region for the first three quarters of the year were significantly weaker than other regions served by Lufthansa Cargo. This comes as somewhat of a surprise, however, given the Africa-heavy focus of the Brussels Airlines network. Traffic for the region was down by 15%, dragging revenues from the region down by 6%;capacity was reduced by 11%.
Returning to the unit’s financial performance for the first nine months of the year, LH Cargo revenues (excluding other logistics revenues) were 12% higher at €1.84 billion, while overall profit for the logistics unit was €150 million, up 43% y-o-y from the same period in 2017, on revenue growth that outpaced operating expenses. Adjusted for one-off integration expenses at Eurowings, EBIT was up 56.1% to €153 million.
Commenting on the year-to-date results, Peter Gerber, CEO, Lufthansa Cargo, said, “This enables us to make new investments that will put us in an even better position for our customers in the future. This result is also a tailwind to push digitization in our industry forward in full vigor to make air freight even better.”
Concrete investments in the renewal of the group’s freighter fleet have already been confirmed. As previously announced, Lufthansa Cargo will take delivery of two 777Fs in spring 2019. Early next year, the Group’s subsidiary carrier, Aerologic, will also add an additional 777F on an operational lease.