IAG Cargo, the cargo arm of International Airlines Group, showed respectable growth in revenues in its third quarter 2018 results, but parent company IAG showed more modest growth in profit margins. Cargo revenue rose from €271 to €290 million, year-over-year, in Q3, for a 7 percent increase.
For parent company IAG, operating profit rose slightly from €1.45 billion to €1.46 billion, for a y-o-y increase of only 0.7 percent, due mostly to increased costs. Fuel costs, in particular, increased by a significant 22 percent y-o-y for the quarter. IAG attributed growth in its cargo sector to strong demand in the Asia-Pacific region and for its constant climate and time-critical services, which target shippers of perishables like produce and pharmaceuticals.
This year, IAG also added a cargo-specific category to its annual Hangar 51 innovation program. “We are collaborating with several highly innovative start-ups over the coming months and discovering how they can help us to advance the cargo industry,” said Lynne Embleton, CEO at IAG Cargo.
IAG Cargo joins the ranks of other industry members hit by increased fuel prices. The Association of Asia Pacific Airlines (AAPA) and American Airlines have both noted the impact of the hike in fuel prices in their financial updates this week.
Cargo volume did not quite keep up with increases in capacity during Q3. Sold tonnes and traffic were down slightly, by 0.5 percent and 1 percent, respectively, while capacity rose by 3.9 percent compared to the same period last year.