Beginning September, the freight division of Brussels Airlines (Code:SN) will become part of Lufthansa Cargo. From then on, the entire freight business of the Belgian carrier will be managed by Lufthansa Cargo’s Frankfurt headquarters in close cooperation with the Brussels office and local general sales agents, CEO Peter Gerber told CargoForwarder Global in a one-to-one meeting. And he had more to tell.
So far, the African continent hasn’t really been a hot spot for Lufthansa Cargo’s global business measured by volumes transported between markets located on the northern hemisphere. However, this
will partially change next month, with Lufthansa Cargo’s upcoming integration of Brussels Airlines Cargo. From 1 September, 15 African stations will be added to the freight crane‘s global
network, mostly served by the A330 passenger fleet of Brussels Airlines.
AWB 082 to disappear
“All processes will be steered and monitored by our team in Frankfurt, in close coordination with colleagues based at Brussels Airport and our organization worldwide,” Peter Gerber says. This change of responsibilities also implies that SN’s air waybill number 082 will cease and be replaced by LH Cargo’s AWB 020.
Gerber assures that the entire staff at SN Cargo will be taken over by Lufthansa Cargo, provided they accept the switch of employer. “Almost all will do,” confirms Alban Francois, head of Brussels Airlines Cargo, speaking of 18 working in Brussels and 20 at different African stations.
Although next to Europe, Africa has always been Brussels Airlines’ core market. The carrier also serves three destinations in North America and one in India. The lower deck capacity of SN’s A330 passenger jetliners flying these routes will soon also be managed by Lufthansa Cargo.
Growing both platforms
Speaking of the cargo crane’s freighter fleet that will be upped by two Boeing 777Fs in Q1 of 2019, making it seven Triple Sevens altogether, Gerber points out that these new production freighters are roll-over aircraft, replacing MD-11F capacity at a given time. He adds to this however, that “we intend keeping our 12 MD-11Fs, which are all fully depreciated by 2020 latest, as long as their operation is commercially viable.” But should market conditions deteriorate, “one or more MD-11Fs will be phased out.”
Maintaining the current all-cargo fleet and adding two Triple Seven Fs also means that the carrier ups its total freighter transport capacity of currently 1,600 tons by another 200 tons. A clear signal to the market and the competition that Gerber and his management are setting the course for further growth.
“Our aim is to grow our business on both production platforms, our own and that of JV partner AeroLogic,” Mr Gerber notes. AeroLogic is a Leipzig, Germany-based 50/50% JV of DHL Express and LH Cargo, operating eight B777Fs jointly within the partner’s individual networks and two B777Fs solely on behalf of DHL.
JVs pay dividends
To achieve this goal the alliances formed with ANA Cargo, United Cargo and Cathay Pacific Cargo are another cornerstone, contributing increasingly to earnings, he confirms. Particularly the cross-booking of capacity on Lufthansa Cargo and United flights, offered customers since last May, got off to a very good start, the CEO recaps. Thanks to the tight network offered by both carriers on routes between Europe and North America, customer choice as well as recovery options of shipments have been bettered, reducing transport times and increasing the overall performance and transport reliability.
When rounding the alliance issue off, the Lufthansa Cargo helmsman says that the ANA-LH Cargo pact is being enlarged, adding new products such as Fresh to General Cargo and Express which are bookable now.
As to Lufthansa Cargo and Cathay, Gerber announced that it is planned for late fall that both carriers will start to offer the market metal neutral carriage of freight on eastbound routes, following transports from Hong Kong to Europe which are bookable since January 2017.
Currently, there are no plans on his table for similar pacts with other carriers. He admits however, that additional partnerships in China or Latin America could make sense seen from Lufthansa Cargo’s network coverage and market interests.
Another project that lies on his table is an own E-Commerce product. “We continue to work on this topic, although we are not ready yet. But “I can confirm that something in this direction will come.”
The CEO is optimistic concerning LHC’s 2018 business performance. “Globalization is picking up again, in spite of the current political developments.” There is a lot of venture capital flowing into the logistics market and global trade keeps on growing. These and other important sourcing factors drive demand for air freight further up as evidenced by statistics and data, Mr Gerber tells.
However, with regard to his company's record sales in 2017, driven by a number of exceptional factors, Mr Gerber excludes achieving similar results in fiscal 2018. “We expect a satisfying second half-year provided there won’t be major political disturbances impeding or even torpedoing global trade. But available forecasts tell us that sales won’t go through the roof as seen in Q4 of last year.”
During the first six months of 2018, LHC achieved an Adjusted EBIT totaling 125 million euros, up 60.3 percent on the previous year (Cargo Forwarder Global, 31 July).
Sales up, costs down
A major contributor to satisfying financial annual figures, besides the carrier’s profitable daily business, is its savings program C40 which first came into effect in 2017. Its main goal is to reduce costs of €80 million annually, for instance by cutting jobs and reducing staff. Today, Mr Gerber concludes that “the provisions of our restructuring program have by and large been achieved.”