Lufthansa Cargo operating profit up 26.6% in 2014

Lufthansa Cargo Boeing 777-FBT (41675/1158) D-ALFB departs Los Angeles International Airport (LAX/KLAX) on October 22, 2014.

(Photo by Michael Carter)

Lufthansa Cargo reported an annual operating profit of €100 million ($106 million) for 2014, up 26.6% compared to an operating profit of €79 million for 2013.

“We achieved a good result in challenging conditions,” CEO Peter Gerber told analysts and reporters in Frankfurt. “A strong focus on top quality, high-performance products and flexible capacity management played a key role in this, along with Lufthansa Cargo’s strength in sales.”

Revenue rose 0.3% to €2.45 billion, producing an operating margin of 4.1%, up 0.9 percentage points over the prior-year period.

AFTKs fell 1.1% to 12.3 billion on a 1.4% decrease of FTKs to 8.6 billion, producing a load factor of 69.9%.

Gerber expects air freight will continue to be a growth market, despite slightly slower growth rates.

Gerber told ATW in Tokyo the carrier continues to invest in its Frankfurt hub even though the night-flight ban, which went into effect in 2012, has affected business. “The night-flight ban is still very painful and creates about €40 million less in revenue. But what London Heathrow is in terms of passenger traffic for Europe, that is Frankfurt in terms of cargo business,” he said.

Despite its geographical location, Gerber said Frankfurt is the epicenter of Europe’s industrial sector. “They have their main consolidation centers in Frankfurt,” he told ATW.

The cargo carrier continues to systematically implement its “Lufthansa Cargo 2020” future program, which includes the new Boeing 777F fleet; the carrier recently took delivery of its fifth of the type.

Lufthansa Cargo is also in the process of implementing a modern IT system for freight handling, which is based on a well-proven industry solution. The roll-out is scheduled for completion by fall.

The eCargo project, which involves the digitalization of all of the company’s main processes, is also picking up pace. Preparations for the new construction of the air freight terminal at Frankfurt continue. Construction work could start by the end of 2015.

The SCORE profit improvement program was a major factor behind the airline reviewing its earnings situation last year, which contributed €116 million of earnings in total (for 2014). “We will continue to work hard on our cost structure and find ways to increase revenue,” CFO Martin Schmitt said.

Lufthansa Cargo expects profits to increase in 2015 and should be up slightly on 2014 in an environment with solid growth rates.

(Kurt Hofmann - ATWOnline News)