In the game of chess, the key to victory is the ability to stay several moves ahead of your opponent. With proper planning, an adroit chess player who may seem to be backed into a corner can make the precise moves to flip the momentum of the game.
By the third quarter of 2016, Lufthansa Cargo was seemingly in a tight spot on the air cargo chessboard. With losses of €63 million in the first nine months of 2016 and competition from Gulf-based carriers raging across Europe, the German carrier could not seem to find a way out of its deepening hole.
The carrier was still smarting from a decision to postpone the construction of its high-tech Lufthansa Cargo Center “neo” facility in Frankfurt due to cost considerations, as well as a series of nagging strikes by the union representing its pilots, which ended up costing Lufthansa an estimated €30 million.
Then, as the fourth quarter of 2016 rolled around, Lufthansa began to see a way out, led by an unexpectedly strong peak season that drove up airfreight demand for the entire industry. A cost-cutting and management restructuring program that had been ushered in by Peter Gerber, CEO of Lufthansa’s Cargo division in May 2014, had begun showing modest results that helped stanch the losses.
As the calendar turned to 2017 and air cargo demand surprised nearly everyone by continuing to rise for the rest of the year, Lufthansa Cargo seemed reborn.
By Q3 of 2017, revenues from Lufthansa’s Logistics business segment shot up 17.4 percent, year-over-year, to €594 million. For the first three quarters of 2017, Lufthansa’s cargo traffic was up 8 percent to just under 8 billion RTKs, while overall profit for the Logistics unit was €105 million, up €168 million from the €63 million loss from the previous nine-month period. The Q3 number represented the third consecutive quarter of profits for the carrier’s Logistics business, following a run of seven straight quarters of losses.
By any account, it was a checkmate by LH Cargo CEO Peter Gerber. However, he demurred, saying that most of the success came from being “lucky” that Lufthansa’s comprehensive cost-cutting plan began far enough ahead of the market downturn in 2016 to make a difference right when the 2017 rebound began.
Regardless of whether it was luck or a chess-master’s skill, Air Cargo World has named Peter Gerber as the 2017 Air Cargo Executive of the Year, for his contributions in turning around the fortunes for Lufthansa Cargo, and for his bold vision for a streamlined, more nimble cargo operation in the coming years.7 - Readers Like This Post