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After bumpy year, Lufthansa expects growth in 2014

By Staff Reports on March 25, 2014

Lufthansa Cargo’s operating profit in 2013 fell by more than a quarter compared to 2012.

Lufthansa Cargo had an operating profit of 77 million euros (US$106.3 million) in 2013, a decrease of 26.6 percent from the previous year. The company achieved a total revenue of 2.4 billion euros, a decline of 9 percent over the previous year.

The airline expects a higher result in 2014.

“We have set ourselves ambitious targets,” Karl Ulrich Garnadt, Lufthansa Cargo chairman and CEO, said at the annual press conference in Frankfurt. “We want to grow our tonnage by around 5 percent and plan to significantly increase the operating profit.”

Garnadt will take over at the helm of Lufthansa passenger airline on May 1.

Demand in global airfreight markets remained below expectations in 2013. Signs of the upturn predicted for the middle of the year only appeared toward the end of the year, with positive developments on Far Eastern routes in particular.

Lufthansa Cargo boosted capacity utilization, even though tonnage levels fell slightly. On an annual average basis, the cargo load factor increased to 69.9 percent. However, there was continued pressure on average yields due to poor demand.

Lufthansa said strict cost management has reduced the company’s expenditures below the previous year’s level. The Group-wide SCORE earnings improvement program in particular has delivered results, with Lufthansa Cargo improving earnings by 73 million euros (US$100.8 million).

Measures to increase earnings have included Product Push, a project to more intensively market special transports.

“Implementing our big modernization projects and being disciplined on the expenditure side are still top priorities,” said Martin Schmitt, board member finance and human resources at Lufthansa Cargo. “New aircraft, new cargo center, new IT. We are investing a 10-figure sum of euros in securing the future of our company through the Lufthansa Cargo 2020 program. If we want to implement our ambitious program without cuts, however, we are going to need higher operating results again to finance it.”

The airline expects to benefit in 2014 from the three B777 freighters to be deployed on North Atlantic routes and to Shanghai. Another 777 will be delivered in June. Because of the new arrivals, Lufthansa Cargo is planning to fly just 14 of its 18 MD-11 freighters.

Other Lufthansa Cargo 2020 projects include modernization of the IT landscape, which should largely be completed by the end of 2014, and the finalizing of plans for the new logistics center in Frankfurt. Preparations for the construction of the cargo center (project name “LCCneo”) are already in full swing.

The 2020 Cooperations project is transitioning from the planning phase to implementation; the first partnership with an airline outside of the Lufthansa Group should be sealed by the middle of the year.

“Lufthansa Cargo 2020 is not a simple program. We are pursuing lots of ambitious and complex future projects in parallel. But we are right on track thanks to our outstanding team,” Garnadt said. “Our company is being readied for the next generation.”