LH Cargo Achieves Financial Turnaround

Remarkable turnaround
Peter Gerber was thankfully proven wrong. Exactly a year ago, while presenting the carrier’s 2016 financial results with a straight face, LH Cargo’s CEO spoke of dire times his airline is going through, ending only in 2019, when the next profit would be achieved.

Predictions that are all old hat now! Thanks to internal restructuring measures, which include the axing of 800 positions, and an extremely strong market demand, Lufthansa Cargo achieved a remarkable financial turnaround, evidenced by an Adjusted 2017 EBIT amounting to €242 million.

“Adjusted Ebit” could be a stumbling block
And the rally doesn’t seem to be over yet, as indicated by the carrier’s head of Sales and Product Alexis von Hoensbroech during the “Cargovention” meeting held in Frankfurt some days ago: The manager stated: “We would be able to up our earnings further if we could add a handful of freighter aircraft to our fleet.” Currently, LH Cargo operates 12 MD-11Fs and five B777Fs, while further utilizing the capacity of eight B777Fs on weekends that are flying in the AeroLogic colors, a 50/50 percent DHL Express – Lufthansa Cargo joint venture.
However, regarding the presented profit that put a gleam in the manager’s eyes, some questions remain. This, because “Adjusted Ebit” is a term that normally includes pending transactions deducted from the officially published financial result. Which hidden costs this might include in the case of the German freight crane, remains subject of speculation. One contingency reserve for unforeseen expenditure arising during the current budget period could be accruals covering compensation payments demanded by DB Schenker parent Deutsche Bahn for price collusion. However, a court ruling is still pending. This issue will hopefully be clarified on March 22, when the management presents the annual result officially.  

World trade enabler
During the carrier’s recent “Cargovention” event held in Frankfurt and headlined “Be bold for logistic innovation” CEO Peter Gerber exclaimed that LH Cargo will put its core focus on digitalization. The electronic data exchange enhances customer-supplier relations, supports processes to be further automized, minimizes errors and forms the starting point for new business models, he said. Overall, it will lead to a new work ethic within enterprises and create an innovative environment.
Pointing out that Lufthansa Cargo is an enabler of world trade by offering the economy an extensive network and abundant transport capacity, the manager vigorously turned against protectionism “which will not prevail,” he predicted, applauded by the 250 attendees from across the industry. Open markets, technological change and communication at the speed of light are crucial for success, sharply contrasting attempts of erecting artificial tariff barriers to harm competitors.  

Fully in line with their “Cargovention” event, Lufthansa Cargo announced offering their customers direct access to capacity and rate data through the new Apps ‘Get Capacity’ and ‘GetRates.’ The new applications complement the already established ‘Tracking’ and ‘GetRoutes’ interfaces.
Thanks to the new web services, LH Cargo is further enlarging its existing digital product range on offer, therefore not only improving connectivity to its own customers but also defining new digital standards for the entire air freight industry. And more intelligent web services are to come, announces the carrier.

Heiner Siegmund