AF-KL Cargo Remains in a Slump

The traffic figures for May 2015 are in line with the disappointing results in the months prior. Aviation experts see no light at the end of the tunnel for a financial turnaround of the French-Dutch carrier’s freight business.

AF-KL’s share price is declining steadily  /  source: Traffic Results AF-KL
AF-KL’s share price is declining steadily / source: Traffic Results AF-KL

The glass is mostly half full for optimistic Bram Graeber. “We will be profitable by 2017,” assured AF-KL-MP’s head of cargo recently at a gathering in Paris. He made this statement before the latest traffic figures were published. They are disappointing from the air freight division perspective, to say the least. 
In contrast to the airline’s moderate passenger growth in May (+3.2 percent) the cargo biz continued to lose ground.

Downward trend continues
A negative development that’s clearly seen by the load factor going down 4.6 percent in May compared to the same time last year, dropping to a critical monthly low of only 59.4 percent year to date.
This is all the more surprising in light of the carrier’s cargo restructuring efforts that resulted in a sharp cut in freighter capacity, decreasing 25 percent in comparison to May 2014.
How severe AF-KL-MP’s cargo problems are is clearly shown by the two figures mentioned above: Despite management’s decision to take off one quarter (!!) of its entire transport capacity in total, the load factor kept going south. Concurrently, the unit revenue per available ton kilometer (RATK) is clearly down 14% compared to April-May of last year, further exacerbating the cargo unit’s financial woes. 

Is there an end in sight?
It is an open and heavily debated question without any convincing answers from the airline’s executives up to now.
Stepping out of cargo activities entirely; handing over the capacity to a general sales agent to fill the holds of the passenger fleet and main decks of the remaining freighters operated by the trio or even partnering with another cargo carrier? It seems that almost anything goes nowadays, should AF-KL-MP Cargo’s traffic figures not get much better soon, paving the way for a much needed turnaround, which MD Bram Graeber is sure of. 
Showing how dramatic things have become in the meantime: When AF Cargo received its first Boeing 777 freighter in February 2009, the management at that time loudly trumpeted its strategy to build the world’s leading cargo carrier, hoping to operate a fleet of 30 freighters.
It is disheartening to see what has become of those ambitious plans.

Heiner Siegmund  /  Michael Taweel

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