Canadian Shipper

News

Lufthansa Cargo to implement savings program, product innovations


FRANKFURT, Ger.–Lufthansa Cargo is implementing a comprehensive range of measures to counter the decline in the 2015 annual results. Besides an ambitious cost-cutting program, the airline has announced further product innovations, it said in a release. The company is also pressing ahead with initiatives from the Lufthansa Cargo 2020 future programme, including close partnerships with other airlines.

“We will still be operating in an extremely challenging market environment in the years ahead”, commented Lufthansa Cargo Chairman and CEO Peter Gerber at the presentation of the 2015 annual results. “But we have a clear strategy that has been set up to facilitate sustainable and profitable growth again. With innovative products, superb service and competitive cost structures, we will make the most of the advantages offered by our Frankfurt base.”

In 2015, Lufthansa Cargo achieved an adjusted EBIT of 74 million euros (down 40 per cent on the previous year). After a strong first quarter, demand on the global air cargo markets weakened steadily. On top of this, there was turbulence in the Chinese market and a very strong US dollar, which affected export-driven industries in the US in particular. The numerous strikes of the Vereinigung Cockpit (VC) pilots’ union and Unabhängige Flugbegleiterorganisation (UFO) cabin attendants’ union led to further reductions in transported cargo volumes and revenues. With an impairment for the LCCneo project (with the construction of a new logistics centre in Frankfurt having been postponed in spring 2015 for two years initially), the EBIT (earnings before interest and taxes) fell even more considerably to 3 million euros (2014: 123 million euros).

Chairman and CEO Peter Gerber stressed that the company would stick with the Lufthansa Cargo 2020 future strategy in spite of the decline in profits: “We have set the right course, and the first plants of Lufthansa Cargo 2020 are starting to bear fruit”, said Mr Gerber. “With our new Boeing 777Fs, we are flying more efficiently and saving more fuel than ever before in our company’s history. The cooperation with ANA has gotten off to a superb start and we will be working very closely with another strong airline, United Airlines, in the future. We are also marketing the cargo capacities of Eurowings long-haul flights, which makes our network even more appealing.”

The Chairman and CEO also emphasised the successful, global renewal of the IT landscape: “This has been an important requirement to getting us working efficiently and successfully. This step has also been a milestone in our efforts towards achieving a fully digitised air cargo business.”

In order to open up new growth areas, Lufthansa Cargo is also focusing on offering an innovative product range. Besides enhancing the product portfolio (including in the hotly contested standard freight market), the company will also address a completely new market segment and consider the transport needs of private travellers, especially Lufthansa passengers. Through the myAirCargo product, passengers and private individuals will now be able to send any kind of personal item via air freight, quickly, simply and cost-effectively. “Lufthansa Cargo has often been a pioneer in the past when it comes to developing and launching new products and services”, said Mr Gerber. “We want to live up to this again with myAirCargo.”

Lufthansa’s Cargo Board already initiated the C40 cost-cutting programme in the autumn of last year. It shall reduce annual costs by at least 40 million euros by 2018 through this. The focus is on staff and service provider costs. “We clearly have to further strengthen our competitiveness on the cost side as well if we are to be in a position to grow profitably again in our core business”, said Dr. Martin Schmitt, Board Member Finance and Human Resources. “This is how we will generate the profits we need to fund investment in the future of our company.”

“We have a superb base in Frankfurt Airport. Nowhere else on our continent are air cargo volumes higher than here in the heart of Europe”, said Chairman and CEO Mr Gerber. “This is an opportunity we aim to and will exploit,” he said.

 

In related news, Lufthansa Cargo announced it has appointed new area managers for the regions Europe & Africa and the Americas as well a new Head of Global Handling Management.

As of June 1 2016, Achim Martinka will be in charge of sales and handling in the region Europe & Africa. Another seasoned Lufthansa Cargo manager, Bernhard Kindelbacher, will move to Atlanta to take over as Head of Area Management The Americas as of  June 12016.

Effective April 1 2016, Dr Jan-Wilhelm Breithaupt will be the cargo airline’s new Director of Global Handling Management. The holder of a doctorate in engineering has been with Lufthansa Cargo since July 2010 and is currently in charge of Global Handling Development & Solutions.

“We are very happy to be able to fill these key positions with highly experienced and successful managers from our own company”, said Peter Gerber, CEO and Chairman of the Executive Board of Lufthansa Cargo. “They are reliable partners for our customers and will continue to drive our company forward despite a very challenging market environment.“