Lufthansa Cargo operating profit down a quarter in 2013

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Lufthansa Cargo’s operating profit fell more than a quarter to €77 million ($107 million) in 2013 as revenue fell 9% to €2.44 billion compared with the previous year.

While the airline had expected the air freight market to improve during the second half of the year, that upswing did not occur, said Lufthansa finance chief Simone Menne during a results briefing. Demand improved only toward the end of 2013, the airline says.

Total freight volume declined 1% to 1.7 million tons, while capacity was cut by 0.3%. Load factors improved 0.2 percentage points to 69.9%, but average yields fell overall by 7.8%.

The sharpest decline in freight volume was registered in the Americas, where tonnage fell 1.9% to 512,000t. Capacity increased 2.6%, while traffic declined 0.3%.

In both Europe and Asia Pacific, capacity was cut by 3%. But while cargo volume slightly increased by 0.1% to 468,000t in Asia Pacific, European tonnage fell 1.2% to 595,000t. Traffic increased 1.1% in Asia Pacific and 1.2% in Europe.

In Africa and the Middle East, freight volume fell 0.7% to 140,000t. Capacity was cut by 0.5%, but traffic declined nearly 5%.

Under Lufthansa’s Score efficiency programme, the cargo division undertook measures to cut costs and improve sales by around €73 million in 2013. That raised the division’s total savings volume to “more than €100 million” since Score began in2012, says Lufthansa Cargo. It adds, however, that the savings are “not directly visible” in the net result due to “persistently negative market trends”.

Nevertheless, Lufthansa Cargo aims to “significantly” raise its operating profit in the current year, market says Menne. This would depend on favourable market conditions, she says. But if the environment does not improve, the airline expects to at least maintain last year’s operating profit level for 2014.