Podcast: Cargolux CEO Forson pursuing operational changes to fly 777s with 747s

Jeff Lee
Hello and welcome to this episode of cargo facts connect, the podcast of cargo facts, the newsletter of record for the air cargo and freighter aircraft industries for over 40 years. I’m Jeff Lee, editor of cargo facts and it’s Friday, the 20th of June. Boeing’s new 777-8F is still a few years away from entering into service, but behind the scenes, its future operators are already planning ahead. Cargolux was the first airline to order the 777-8F as a 747-400F replacement, with at least ten on order and options for six. At this month’s Air Cargo Europe exhibition in Munich, I caught up with Cargolux CEO and President Richard Forson to talk about integrating the new freighter type into his fleet and got his view on the widebody market, global trade and more.

Jeff Lee
Richard, I think the last time we met was at this show, but in 2019. It’s been a while, and the world is looking very different and there’s a lot of uncertainty and volatility in the market. But for you, at an airline like cargolux, how are you dealing with and kind of overcoming all this instability in the market?

Richard Forson
Well, I think it takes constant, How can I say, cognizance of what’s actually happening in the market and being able to be to react quickly. So the agility and the flexibility of cargolux comes to the fore, in that respect, However, we don’t want to take rash decisions. You know. I mean, yes, the tariffs are there, but there’s also so much uncertainty that you don’t want to do changes to your network based on unknowns, because it changes from week to week what the position is. So our core network still remains in place. Yes, the level of E commerce specifically to the US has declined significantly, but we’ve managed to redeploy that capacity elsewhere. So overall, it’s managed ready, I think, on a short term basis, but also taking account what the long term potential impact could be. So different scenarios is what we go through at the end of the day as each scenario plays out, or if a specific scenario plays out, then we will adjust, then we will use the plan that we’ve got for that scenario versus the others. That’s the only way you can do it, right? Because there’s nothing definite out there at this stage.

Jeff Lee
Right, I can’t imagine how challenging it is, how frequently you have to change your scenarios, your planning and all that. Yeah, and, but some people have, I would say, over reacted, I think, and like you said, I think it’s important to stick to what you can do. So you said you’ve already redeployed some capacity. How much? Roughly?

Richard Forson
Well, we’ve a lot of our capacity at this stage, some of it has switched on to Asia Europe. It seems to be really increasing demand for Asia Europe at the end of the day, as well as Southeast Asia as well. So we’ve managed to, I mean, at this stage, I’ve got the full fleet flying, because I also do maintenance now, during the so called quiet period before the peak season. So I’ve couple of their, one aircraft in C Check, one aircraft and D check, so yeah, so there will be a month in check. So at that stage, it’s a natural removal of capacity that comes back in as we get towards the peak season. So that also assists in dealing with this current situation. And with the various announcements, the other opportunity is you get surges and all of a sudden capacity is required, then we make it available. So I think one thing that stands in good stead with cargolux is the level of utilization we get on our out of our aircraft. You know, between 14 to 15 hours a day those aircraft in the air and so you’re able to keep things moving along nicely.

Jeff Lee
So the next six months, what’s really top of the agenda for you?

Richard Forson
Top of the agenda for myself over the next six months is being able to adapt to any new trade agreements, it’s really to see what the trade deals in detail are, and to take action based on that. Otherwise, we continue the same basis that we’re doing our monitoring situation on the content on a continuous basis, and conducting operations there too, and if there should be a specific trade deal that comes out. So obviously, we analyze what the impact is likely to be and adjust accordingly.

Jeff Lee
Yeah. So talking about the fleet, your fleet has remained relatively stable, well basically stable for the past five years. It’s, you know, we can we expect any changes until the delayed triple seven dash eights?

Richard Forson
Well, I’m not going to expand just for the sake of getting bigger.

Jeff Lee
Yeah.

Richard Forson
You know, I just want I’m not going to be the biggest out there at the end of the day. My focus, is that cargolux will always remain a relevant player for our customers in the market, especially the big forwarders at the end of the day. So we have 30 aircraft in our fleet now. Yes, we are all experiencing relatively good times, and maybe even attracts more people into the cargo market. But past history has always shown that it’s never, always at this level, that there will be a downturn that comes in. And so my philosophy is I’d rather be short on capacity than long. Because short on capacity, I can always make money during the good times, and when the bad times come along, then obviously have a lot less exposure to downturns in the market. And the good years has helped us to build up the resilience of the airline so our balance sheet is strong and we’ve kept a lot of liquidity. So in expectation of any downturn in the market, and it could very well come if the trade deals are unfavorable at the end of the day, the market goes into a slump.

Jeff Lee
So at the moment, you’re not seeing a huge need to expand the fleet?

Richard Forson
No, not at a time like this, when things are priced at a premium.

Jeff Lee
Yeah.

Richard Forson
I’m not going to be buying or leasing at these times.

Jeff Lee
Yeah. What about the other way? Is that? Like, do you foresee a need to kind of slim down?

Richard Forson
No, I don’t think there’s a need to slim down. I think we have operated a fleet of thirty aircraft now for quite a while. Yeah, so we’ve got a good network going, presence in lot of markets. So I don’t think at this point in time do I see any need to slim down.

Jeff Lee
And so going to the triple seven, dash eight this, I think you This was two or three years, three years ago. How much of that selection was, was purely the Boeing factor?

Richard Forson
No, I mean, we looked obviously at both aircraft at the end of the day. And we believe that we chose, we chose the freighter that for the future will be the optimum one for cargolux, it’s not because we bought Boeing before we’re buying Boeing again. I mean, each aircraft has to go through analysis, before it comes on to before we’ll take the selection.

Jeff Lee
There is, I guess there is a, they did have an advantage.

Richard Forson
Well, they’ve got a very good pedigree in building freighters, you know, I mean, they’ve got the 747 Yeah, they’ve got the 767 they got the triple seven classic. So there’s a lot of experience in there, and we work closely together with them in terms of being a utilize an airline that uses freighters intensively. So we also give them what our requirements are, and they take it into account. Not all customers might have our requirements, but certainly we try and get our point across. They finalize the design. I know they’ve been in the news for the wrong reasons in the past, but it seems they’ve turned the corner, and hopefully they continue doing so and we remain in close contact with them, obviously, on their triple seven dash eight program.

Jeff Lee
What were some of the factors that you think were specific to cargolux that you wanted on the on the freighter?

Richard Forson
Well, it’s loadability of the cargo. It’s number one, reliability, the environmental control systems, the cooling capacity, heating capacity, etc. All of those play into part and obviously freighters, they really do take a hammering at the end of the day, yeah, not like passenger aircraft at the gate, so a fully composite aircraft, I don’t think, has been exposed to that kind of treatment at this stage. Now, obviously Airbus might argue differently, but from our side, doing repairs quickly and efficiently, etc, to get the aircraft back in service. These are of prime importance for us at the end of the day. So yeah, and that’s just because of the way we fly. And yeah, they the aircraft, as I said previously, they do take a fair amount of knocks, being loaded and offloaded, etc.

Jeff Lee
Yeah I was gonna say abuse, but maybe that’s a bit too strong.

Richard Forson
Yeah, abuse is a bit too strong, maybe. But they do take quite a beating as they do their rounds, because it’s not passenger aircraft, with fancy seats inside. It’s a flying truck, for want of a better word. The biggest change for us, obviously, is going to go to twin engine aircraft, from being a four engine operator, we’re now twin engine. So that brings into account etops. So from a maintenance perspective, there’s a lot of work to be done, and the guys have started already when we placed the order in planning it out, so yeah.

Jeff Lee
Now the delay. Hopefully we don’t see any more delays. But how much does that delay affect your your fleet planning in terms of maybe extending the life of the 400s?

Richard Forson
Well, in doing our original fleet plan, we had built buffers in, okay, because typically when a new aircraft comes online, it’s always going to be delayed. So we built some some leeway in at the end of the day, the A 350 is a very good freighter, but it just didn’t suit our purposes at the end. So I’m not saying it’s a bad airplane. I think it’s, airlines have ordered the a350 it’s a good airplane. But for us, the Boeing one just had the edge over the Airbus aircraft.

Jeff Lee
So just back to the you know, your existing fleet. How are you already thinking about how you when the triple seven dash eights come in, how they they will kind of potentially replace the your older four hundreds.

Richard Forson
Yeah, I mean, at the end of the day, we have a phase out plan for the 400 fleet to be replaced with the 10 dash eight Fs. And then we have another six options for when we phase out the erfs which are of a more younger vintage than the 400s and the 14 747-8fs will probably fly into the 2040s for us so and I think the fact that we do have the 747 dash eight in our Fleet brings comfort to quite a few customers of ours, because with the nose cargo door, I mean, there are certain items you’re just not going to fit in to a twin engine freighter.

Jeff Lee
And you do fly quite a few of those types of,

Richard Forson
Yeah. I mean, we do quite a bit of outsize flying at the end of the day, and those typically are long, narrow items that go through the nose door and also from an efficiency perspective, you can offload and onload at the same time. Obviously, you got to be careful that it remains in balance, so the aircraft doesn’t tilt. But yeah, we lose a bit of that efficiency at the end of the day as well. So it will be a sad day when the last 747, actually stops flying. But it’s a 19 it was designed in 1967 if I’m not mistaken. It was originally designed as a freighter, but then put into service as a passenger and then came back again as a freighter, and it proved to be extremely successful. Yeah, if not the most successful freighter to date. I think the only one that can match it is in terms of longevity, is probably the triple seven classic, and then we’ll wait to see how the new ones perform going forward.

Jeff Lee
It’ll be interesting having a mixed fleet.

Richard Forson
Yeah.

Jeff Lee
It’s, are you? I mean, maybe it’s too early, but are you thinking about how you will distinguish between the two and your in your kind of deployment?

Richard Forson
Yeah. I mean, obviously we look at the routes out of Asia, for example. If I have to base it on today’s volumes and etc. That’s where the 747s will be deployed, and the triple sevens on other routes, maybe transatlantic, down to South America, etc. Maybe they probably do rotations into Asia as well. But where the loads are not as dense or as high, than what we traditionally carry so I think that it’s going to be it will have an operational impact, having two types in the fleet as well at the end of the day, but I think 16 14, it’s a balanced fleet at the end of the day. So I think we can make it work, but it will take more more managing. I think it will take more time, more thinking in advance as to where these aircraft would be deployed at the end of the day, because the last thing I want to be doing is having to break pallets down to rebuild, to put onto another aircraft. That is not really something we want to get involved with just because we are swapping aircraft. It’s got to be a natural process, because if we’ve got to bring down pallets anyway. So that’s fine. We can build it up to the spec, but if I have an issue on one aircraft, I’ll probably replace it with the same type within the fleet rather than so I still, I we would still have that flexibility. It doesn’t disappear completely because of the dash eights that remain in the fleet.

Jeff Lee
Do you foresee putting any of those on the Italia AOC?

Richard Forson
No, I mean Italia AOC has got four. At this stage, we would have four. This is in terms of our agreement with the unions. We will leave it at four aircraft.

Jeff Lee
But in the meantime, it’s getting more expensive to maintain aircraft, like the 400 for the engines other parts. Are you? How are you overcoming these cost increases, etc? Also just waiting times for maintenance visits and stuff like that.

Richard Forson
Well, I mean, from a maintenance perspective, we’ve built up quite good inventories of spares, etc, so the cost is not really that significant. We also bought up a lot of green time engines, so we’re not sending engines for overhaul, etc, so we’re keeping maintenance costs under control. Yes, I mean, when they go through their third D check there is an SSID, which is an aging aircraft check, so it takes a bit longer, two weeks longer, to complete the D check at the end of the day. But up to now, we have not discovered any issues with the airframe and our engines. As I said, we bought up a lot of engines when the BA when BA retired their passenger fleet. That gives us the flexibility to continue. And when I gave instructions to my maintenance team to hey, go out there and buy whatever spares you need. Don’t wait for something. Be proactive and get it.

Jeff Lee
So overall, I would say that the cargolux business is very mature. What more do you think you can do to, small things, maybe to improve, whether it’s your products or the overall operations?

Richard Forson
Yeah well that’s always, constantly being looked at at the end of the day, but that remains invisible from the general public etc. On the we are heavily now into digital sales and providing more of a seamless service to our customers, we focus a lot more, or we’ve really focused on training our staff, especially on the sales side, in order to work in a new way, where it’s more digital, but there’s always some person that people can go to. So we’ve also been investing a lot in IT and in replacing legacy systems, bringing new platforms on board at the end of the day, and really improving in whatever areas we can, processes we’re looking at so we’ve been pretty busy over the last, I would probably say over the last five years, replacing significant platforms in the business, which take two to three years to implement before they come on stream online. So the big one we did was shifting, shutting down E champ and moving on to I cargo. We’ve got our own in house portal where people can do we’ve also subscribed to other digital platforms. We’ve redone our ERP platform in the organization. We’re busy now on the warehousing side of implementing new management system for the warehouse, although that’s under our subsidiary of Lux cargo handling, our
handling company. So yeah, and making sure that we are in alignment with the customs authorities around the world, especially at this time when more and more information is being requested by customs authorities. A good example is the USA, when they came out with all the additional data requirements. So from a digital perspective, the big thing, the buzz word now is AI Artificial Intelligence. I still think that AI has got a lot of mature it’s still going to mature quite a bit as we go forward into the future, and that we are, we have certain AI applications embedded into our systems. But the big thing is, what changes are there going to be in AI? It’s only starting out now. There’s a lot of money putting into the equipment, and once it’s mature, if it ever matures, let’s put it this way.

Jeff Lee
I mean, yeah, I agree. People like to throw around that word a lot, but it’s

Richard Forson
You got to understand what you’re putting into play. Yeah, I just read this morning in the FT that the big accountancy firms now are trying to start a new line of business where they’ll come in and audit your AI functionality and say there’s risk there that you’re not aware of. So yeah.

Jeff Lee
Good well, we’ll see how that develops. We’ll see what happens with global trade. But

Richard Forson
I think that’s the most important thing, is what is going to happen to global trade? Because if global trade gets impacted by tariffs that are being applied by countries around the world, it will definitely slow down global trade, and obviously the consequences in shipping, air, rail, road, etc, if people start to source from within their own countries. But there’s also opportunities of other countries now being built up to provide additional diversification, sourcing of components, etc, for industries.

Jeff Lee
Well, good luck to you as you navigate these challenges and capitalize on these opportunities.

Richard Forson
Yeah.

Jeff Lee
Great. Thank you so much. Richard.

Richard Forson
Okay, Thanks, Jeff.

Jeff Lee
That was Cargolux President and CEO Richard Forson talking with me at Air Cargo Europe 2025 in Munich earlier this month. And that’s all the time we have today. For more coverage of the freighter aircraft and AAM market, visit cargofacts.com. Thank you very much for tuning in, and join us again next time.