Many indicators suggest that Lufthansa's cargo subsidiary is cruising through the Corona crisis without much turbulence. All freighters are operating, partly according to a special flight schedule, and none of the remaining 6 MD-11Fs will be taken out of service before the end of December, as previously considered by Lufthansa Cargo’s management.
Quite a surprise: Some months ago, probably no manager at Lufthansa Cargo would have thought that the remaining fleet of MD-11Fs could again play a central role for the freight carrier and the
entire Group, before this long-time workhorse finally terminates its lifespan in Lufthansa Cargo colors on December 31, 2020.
MD-11Fs compensate for lower-deck shortage
However, the corona pandemic has reshuffled the cards. Meanwhile, Lufthansa Cargo is happy to still have the “Elevens” in their fleet, utilizing the Long Beach, California manufactured aircraft to partly compensate for the loss of belly capacity following the parent company’s announcement last Wednesday (11MAR20) to cut 23,000 passenger flights on short-haul, medium and long-haul routes between 29 March and 24 April. A reaction to poor passenger bookings caused by the corona pandemic. The situation is aggravated by Trump’s decision of a 30-day-lasting shutdown of the U.S. borders, keeping all EU passport holders out of the U.S., except UK nationals, beginning March 14, 11:59 pm EST. A step, Trump argues, to block the entry of any possibly coronavirus infected travelers into the States, thus preventing the further spread of the pandemic within the U.S.
Trump’s EU travel ban hits airlines hard
For transatlantic air traffic, his one-sided border closure has devastating consequences. Airlines serving routes between continental Europe and the USA, are facing a virtual standstill of their operations across the big pond in the coming weeks, coupled with enormous income losses.
In addition, the cargo industry will also be hit extremely hard, as the belly capacity of passenger aircraft for transporting air freight will fall away due to massive flight cancellations. To
circumvent the threatening deadlock, at least partially, Lufthansa Cargo is considering to up MD-11F ops substantially on routes to/from the U.S. in order to fill the supply gap, CargoForwarder
Global has learned. At present, the “Elevens” service ORD, JFK and ATL according to schedule, while the carrier’s sub-fleet of B777Fs complement the U.S. network.
The revitalized MD-11F appreciation is proven by an internal memo from Marketing Director, Dorothea von Boxberg, that reads: “The board has decided (…) to not accelerate the phaseout of the MD11, but to stick to the plan to keep flying MD11 until the end of the year.”
Mrs. von Boxberg also reveals in her message why the management advocates this solution: “This should allow us to sell capacity in those marketsthat have reduced belly capacities."
Her letter ends with an appeal to the sales force: “This should allow us to sell capacity in those marketsthat have reduced belly capacities." Please do your best to sell on these flights and
to support the Lufthansa Group a little with our contribution.”
Operating a mixed pax/freighter fleet pays off
In a first reaction to her fleet announcement and sales appeal, a Lufthansa Cargo manager said this: "What we are currently experiencing is a renewed appreciation of our cargo aircraft by the top executives." He went on to say that thanks to the deployment of the 15 strong freighter fleet, including the remaining 6 “Elevens”***, the slump in volume caused by the loss of belly capacity in the passenger fleet can be compensated to some extent, allowing Lufthansa Cargo to comply with long-term transport contracts agreed with major forwarders.
What the financial consequences of the unrestricted operations of the 15 freighters will have, is not commented by Lufthansa Cargo. It refers to the annual press conference planned to take place on 26 March in Frankfurt, where performance figures will be presented.
In contrast to the carrier’s policy of silence, market observers are convinced that Lufthansa Cargo continues earning money with their freighter fleet despite low volumes. They point to high demand and limited capacity, leading to “a healthy rate structure” particularly on routes to and from China.
The worst will be over in summer… but will it?
According to freight forwarders, the German crane charges an average of around €3.00 for flying one kilogram from Europe to China. In contrast, spot market rates are significantly lower, fluctuating between €1.00 and €1.30 on China routes.
Forwarding agents asked by CargoForwarder Global, expect the volatility to last until next June and level out in summer. From then on, market observers expect the beginning of a catch-up effect, which should partially compensate for losses in the cargo industry in the first half-year. However, much will depend on the further development of the COVID-19 pandemic.
***Addendum: Lufthansa Cargo’s seventh MD-11 - D-ALCH - was sold to Boeing already some time ago. It is scheduled to fly from Frankfurt to Victorville, California on March 19. Once there, it will serve plane maker Boeing as a spare parts depot for keeping sister aircraft of this impressive freighter variant in the air for years to come.
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