Leisure Cargo Not Impacted by AB Insolvency Process

Air Berlin is broke. Their remaining assets are rumoured be taken over by Lufthansa, easyjet or others. CargoForwarder Global spoke with AB’s subsidiary (100%) Leisure Cargo about possible impacts caused by the insolvency of their parent company for their own freight business. Besides losing AB as one of their mandate airlines the consequences are none, assures the LC top deck.

Leisure Cargo MD Thilo Schaefer  -  pic: LC
Leisure Cargo MD Thilo Schaefer - pic: LC

Managing Director Thilo Schaefer talks straight: “Our operations are not impacted by the insolvency procedures involving our parent,” he emphasizes. A necessary clarification and unequivocal signal to the market sent out by LC which is registered as Limited Liability Company, thus being an independent legal entity. According to Herr Schaefer, there weren’t negative reactions by any of LC’s many mandate airlines following Air Berlin’s financial crash.
There are two main reasons explaining why Leisure has got nothing to do with the financial woes of their owner: Firstly, because LC is in a much more comfortable pecuniary position compared to their lone stakeholder AB. Second reason is that German law demands that bankruptcy must be declared individually by any corporate entity. 

Restructuring the business
Under its new management, the sales agent has undergone a stiff reorganization phase to streamline the business, a process that was terminated in the spring of this year. It was a long overdue and even vital step after the agent slipped into the red, leading to the ousting of the former management. By leaving no stone unturned, Leisure kicked out a number of former agents, replacing them with new local business partners. This was the case, for instance, in the U.S. and Canada where Jens Tubbesing-headed and New-York-based Airline Network Services (ANS) as new cargo sales agent was contracted by the Dusseldorf, Germany firm for granting Leisure’s mandate airlines like Canadian carrier Air Transat their full service package labeled “total cargo management.”
After most of the restructuring work has been accomplished and problems from the past were rigorously cleaned up, the new LC leaders finally see bright light at the end of the tunnel.

On the upswing again
This includes, most importantly, LC’s financial turnaround, increasing earnings and upping transported volumes considerably, confirms Thilo. “Our worldwide tonnage grew by a remarkable 20 percent during the first seven months of 2017 in a year-year comparison.” Should the positive trend last until December, he expects turning over volumes exceeding 120,000 tons in 2017, surpassing clearly last year’s 100,000 tons.  

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Balanced customer portfolio
Currently, the 1999 incepted sales and service agent is running the entire cargo business from A to Z on behalf of 14 mandate airlines. The most prominent are the members of the Thomas Cook and TUI Group and Spanish carrier Air Europa, while Air Berlin will drop out soon, as things stand. Surely a loss, nevertheless it remains being a very broad and balanced customer portfolio, reducing the risk of harmful one-sided dependence.
Market experts estimate that Air Berlin contributes less than 25 percent to Leisure Cargo’s turnover. They point out that AB stakeholder Etihad (29.2 percent) had taken over responsibilities for the freight business on a number of international routes, served by the German carrier. This together with Leisure’s grown number of mandate airlines has gradually reduced Air Berlin’s contribution to the freight volumes flown on behalf of their daughter Leisure Cargo.
So there is good reason that daughter Leisure will survive its mother company, insolvent Air Berlin.

Heiner Siegmund

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