Following disappointing traffic figures and many changes at the top management level, the Board of Directors decided to overhaul the group member airlines’ business. The efforts concentrate on quality enhancements, cost reductions and the launch of specialized services. More details were not revealed because the “restructuring plan is still in progress,” as a leading executive told CargoForwarder Global.
The group’s move, aired last Friday, doesn’t come unexpected. Since weeks there have been strong rumors forecasting a substantial decline in revenues caused by poor cargo figures in 1H 2019.
Tonnage and revenues went south in 1H of 2019
Now, this has been officially confirmed by the Moscow-based management. According to the release, all three group members – AirBridgeCargo Airlines (ABC), Volga-Dnepr Airlines (V-D), and ATRAN Airlines (ATRAN) – suffered a severe decline in volumes during the first half year 2019, totaling 2,586,382 tons, down 6 percent y-o-y.
What’s even more severe: the half-year result is 20 percent below the original forecast and the management’s pre-determined budget.
What exactly will be the outcome of the restructuring process remains to be seen since the group’s joint press release does not mention any details. Several attempts to reach the communications department in Moscow's headquarters to find out more and get first-hand information explaining and specifying the intended overhaul of the group’s business were fruitless. This leaves room for further interpretations and speculations. All the group says in their release is that “the restructuring is focused on keeping the high level of service quality for the customers worldwide.” Similarly, they announce that “quality enhancements” are a main target of the intended reform. An astounding ambiguous message.
Unknown effects on fleet
Currently, the three group airlines operate a fleet of 41 freighter aircraft, consisting of eighteen B747-400 and -8Fs, five B737Fs, five-IL-76TD-90VDs, and twelve AN-124-100Fs. At present, however, some of the AN-124s are grounded and parked at different airports, including – among others – RA-82068, stored at Ulyanovsk since November 2018, RA-82045, sidelined at Leipzig/Halle since last January, and RA-82046, stored at Tunis since June 2018.
At last year’s UK-held Farnborough Airshow, the V-D group signed a not binding letter of intent (LOI) for the purchase of twenty-nine Boeing 777 freighters together with a firm order for five B747-8Fs. In the meantime, V-D has confirmed the purchase of nine B777F, with three of the aircraft operated on a sale-and-leaseback deal signed with Dubai-based investor DAE Capital.
It remains to be seen if the announced restructuring process in combination with the latest setbacks caused by the contracting cargo market will have any effect on the group’s fleet policy, particularly the LOI agreed with Boeing in July 2018.
Exodus of high-ranking executives
The Group’s current crisis became first visible, when leading managers were fired or told to look for a new job. This includes UK-based CargoLogicAir’s former boss David Kerr, V-D’s VP sales and marketing Robert van de Weg, ABC helmsman Sergey Lazarev, and Oleg Demidov, so far responsible for V-D Group’s external relations and political affairs. The exit of these presumably well-paid managers within a very short time reduces expenditures on the one hand, but leaves a vacuum at the same time, causing a great loss of skills and experiences at V-D Group’s upper managerial level.
Meanwhile, there was also a new hiring as part of the restructuring process: Nikolay Glushnev has been appointed as General Director of AirBridgeCargo. He has more than 14 years of experience in the air cargo sector and held various positions within ABC up till Director Operations. His key focus will be to restore ABC customers’ confidence which has probably suffered in recent times, as indirectly indicated in the media release.