Lufthansa Cargo

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Contact info Expand

Senior Management Expand

 Chairman & Chief Executive Officer - Lufthansa Group  Christoph Franz
 Chief Financial Officer - Lufthansa Group  Simone Menne
 Chairman & CEO - Lufthansa Cargo  Karl Urlich Garnadt

Ownership Expand

Lufthansa Cargo is a wholly owned subsidiary of Deutsche Lufthansa AG.

Brief Profile Expand

Lufthansa Cargo is the Logistics division of the Lufthansa Group. As well as offering air freight services, Lufthansa Cargo provides additional logistics services including the arrangement of ground transportation for customers' air freight.

In addition to its own freighter services, the company manages the cargo capacity of its parent's passenger aircraft. It also has equity investments in a number of other airlines which it can transport cargo on. 

Lufthansa Cargo operates from its main hub in Frankfurt, while Munich, Leipzig-Halle and Vienna are also important hubs. In 2012, Lufthansa Cargo reported revenues of €2.7bn while the Lufthansa Group recorded revenues of €30.1bn.

Strategic Analysis Expand

In 2012 Lufthansa Cargo continued to pursue its Lufthansa Cargo 2020 programme which began in 2011.

During the year the business launched its project to modernise the IT environment, as well as completing preliminary work for the capital expenditure on the construction of a Lufthansa Cargo Center in Frankfurt.

Progress was also made as part of its fleet development programme, two of the five Boeing 777 freighters were ordered and were expected to be delivered and put into service in the company’s own operations in late 2013.

Lufthansa is yet to decide whether to use the deliveries as additional or replacement aircraft will be taken at a later date.

© 2013 Transport Intelligence
Lufthansa Cargo 2020 Strategy

Lufthansa Cargo's 2020 strategy identifies six key points that are necessary for the company to achieve profitable growth in the years ahead:

Fleet Development: In 2011, Lufthansa Cargo ordered five new Boeing 777 freighters which were planned to be delivered between 2013 and 2015. The order would cover anticipated growth and their fuel efficiency would deliver cost advantages.

Modernisation of IT: Replacemnet of the old IT system to bring the new network up to industry standards.

Frankfurt Cargo Hub: The development of a new logistics centre in Frankfurt to replace Lufthansa Cargo's existing 30 year-old facility.

eCargo: The exchange of information between Lufthansa Cargo and customers would become inceasingly digitalised, reducing costs.

Quality/Lean Logistics: Lufthansa Cargo aimed to use more lean management methods. This philosophy had already been established at stations in Dusseldorf, Johannesburg and New York where productivity was increased substantially.

Cooperation: Lufthansa Cargo wanted to arrange more agreements with airline partners, giving the company access on strategically attractive traffic flows. Agreements would also extend the range of products on offer to customers.

Lufthansa Cargo CEO Karl Ulrich Garnadt summed up the 2020 strategy in a nutshell. "With the 'Lufthansa Cargo 2020' programme launched last year (2011), the company has clearly defined its long-term strategy, explained the Chairman. With orders for new Boeing 777 freighters, the upgrading of the IT platform, plans for a new logistics centre in Frankfurt to replace the existing 30 year-old facility as well as other long-term projects, the key markers are in place to ensure that the company remains industry leader also in 2020."

Financial Targets

In Lufthansa Cargo's 2011 results press release, Peter Gerber, Lufthansa Cargo Board Member Finance and Human Resources, pointed out some of Lufthansa Cargo's main financial targets in the short and medium term.

He declared that it was the company's aim to "raise earnings by a minimum of €70m euros yearly from 2015.

The company also revealed that for 2012, it expected its business to develop on a positive note, and was again anticipating an operating result in the region of three-digit millions. However, it also expected that it would not replicate the results attained in 2011.

Jade Cargo International Withdrawal

In March 2012, Jade Cargo International, a Lufthansa Cargo/Shenzhen Airlines joint venture that temporarily suspended operations earlier in the month, signed a letter of intent with China’s UniTop Group to restructure the company. The sale was expected to take two months to complete, and would completely divest Lufthansa Cargo of its 25% stake in the company.

Frankfurt Airport Night-Flight Ban

Lufthansa Cargo CEO Karl-Ulrich Garnadt  revealed that the ban imposed on night-flights at Frankfurt airport in cotober 2011 would alter the company's fleet development plans.

He said Lufthansa Cargo had planned to lease two more freighters for the coming summer schedule but had “axed” those plans. “If this scenario continues to go in the wrong direction, then we will start to replace some MD-11Fs with the first 777s instead of expanding our fleet."

Garnadt said that if the court reverses the ban, the carrier will “switch some important night flights back to Frankfurt from July.”

© 2012 Transport Intelligence
Strategy: 2012 News

2012

April - Lufthansa completed the sale of British Midland Ltd. (bmi) to International Airlines Group (IAG), the parent company of British Airways. The completion of the sale took place after close of business on April 19, 2012. The purchase price amounted to £172.5m (€207m).

As price adjustments were agreed as part of the transaction structure, the net purchase price would be determined at the end of the second quarter 2012, at which point the final amount would be transferred. It was expected that the net purchase price would be negative. However, the costs of the transaction for Lufthansa would amortise within one year. The gross purchase price was expected to be reduced by a number of items including agreed deductions for not selling bmi regional and bmibaby prior to the completion of the transaction.

bmi’s underfunded Pension Scheme was to be transferred to the UK Pension Protection Fund. The pension shortfall for the members of the bmi Pension Scheme would be offset to a large extent by a one-off contribution from Lufthansa of £84m to a supplementary pension scheme.

On November 4, 2011, Lufthansa and IAG agreed in principle to the sale of bmi to IAG, prior to a legally binding purchase agreement being signed by both parties on December 22, 2011. The validity of this contract was subject to regulatory approval by the European Commission, which was received on March 30, 2012. By carrying out the transaction, Lufthansa sold a consistently loss-making company.

March - Jade Cargo International, a Lufthansa Cargo/Shenzhen Airlines joint venture that temporarily suspended operations earlier in the month, signed a letter of intent with China’s UniTop Group to restructure the company.

The sale was expected to take two months to complete, and would completely divest Lufthansa Cargo of its 25% stake in the company.
March - Lufthansa would most likely not buy the remaining 55% of Brussels Airlines this year, chairman and CEO Christoph Franz revealed.

Franz said, “Our strategic commitment is clear, but we are not in a hurry to exercise our call option. We still have another two years to do so. At this point of time the priority is on our bottom line.”

In September 2008, Lufthansa bought 45% of Brussels Airlines parent company, SN Airholding for €65m via a capital increase. As part of the agreement, Lufthansa has an option of acquiring the remaining 55% from 2011. The option could be exercised during three weeks in April. 

Franz also confirmed that “if necessary we will offload more loss-making airlines in our portfolio. We started to offload loss-making carriers last year, with the sale of bmi to IAG, we closed Lufthansa Italia and withdrew from Jade Cargo.”

January - Lufthansa Cargo was considering replacing its fleet of 18 Boeing MD-11Fs and would decide by 2014 which aircraft to go with, according to chairman and CEO Karl-Ulrich Garnadt.

“We know we have to order more [Boeing] 777Fs and there is no other option,” Garnadt said. Lufthansa Cargo finalised an order for five 777 freighters valued at $1.35bn last spring.
January - Lufthansa Cargo revealed some of its expectations for the year ahead. CEO Karl-Ulrich Garnadt said that he expected no growth in 2012. "Currently we are 10% down compared to last year. The demand is much weaker,” he said.

The company's outlook was much more positive until last October, when it was announced that night flights would be banned at Frankfurt Airport. The ban removed 17 night-flights at the airport, 10 of which were Lufthansa Cargo's, costing the company €20m in profit in 2011. If the ban was contiually upheld in 2011, Lufthansa Cargo anticipated it would lose €40m in profit and a three digit figure in revenue.

Garnadt also remarked that the ban would alter the company's fleet development plans. He said Lufthansa Cargo had planned to lease two more freighters for the coming summer schedule but had “axed” those plans. “If this scenario continues to go in the wrong direction, then we will start to replace some MD-11Fs with the first 777s instead of expanding our fleet."

Garnadt said that if the court reverses the ban, the carrier will “switch some important night flights back to Frankfurt from July.” He said that 50% of Lufthansa Cargo's business was high-value express cargo.
Strategy: 2011 News

2011

September - Lufthansa's fleet modernisation was continued in with the ordering of
a further twelve aircraft (two Airbus A380s, one A330-300, four A320s, five Embraer 195s).

March - Lufthansa's Supervisory Board approved an order for 35 aircraft.

The order included 30 aircraft from the Airbus A320neo family and five Boeing 777 freighters. The passenger planes were planned to be delivered in 2016 and the freighters from as early as 2013.
Strategy: 2009 News

2009

September - Lufthansa was threatening to close its fleet of freighter aircraft if restrictions on night flights were imposed on its hub at Frankfurt. The CEO of Lufthansa Cargo was quoted commenting to Reuter's journalists just before the weekend that it might no longer pay to have its own cargo fleet. He was responding to a German court judgement on the service limitations around the expansion of Frankfurt airport. In order to calm opposition to the growth of the airport, politicians in the State of Hesse agreed to limit the number of night flights to just 17. Lufthansa challenged this condition, but the court rejected the airline's objection stating that the local politicians had the right to agree to such limitations.

The problem for Lufthansa cargo specifically was that it would receive few if any of the allotted 17 slots, with passenger services invariably being higher up the queue. This would severely curtail the viability of Lufthansa's freight hub at Frankfurt and therefore Lufthansa's freighter fleet.

Lufthansa had been unusual amongst major airlines in its commitment to cargo services but also in the degree of reliance it placed in cargo aircraft. Almost half of its capacity was in its fleet of 19 freighters with the rest in belly-freight. Therefore any move away from freighters would be a significant change in corporate strategy as well as having a sizeable impact on the air freight market. This suggested that its comments may in part be a threat designed to sway the politicians of Hesse as a much as a real assessment of Lufthansa's future fleet options.  

It was unclear what implications any reduction in the freighter fleet would have on Lufthansa's other freight operations, such as AeroLogic, its joint venture with DHL which also operated its own aircraft but whose hub was based in Leipzig, in eastern Germany.
Strategy: 2005-2011 Archive

Lufthansa Cargo concentrates on its core competencies. Business activities which are not part of its core business and require smaller, flexible organisational structures are spun off into independent companies.

Lufthansa Cargo's strategy aims for growth in the major global centres of production and consumption and is based on collecting freight flows where they arise. In the growth market China, Lufthansa Cargo has a strong position thanks to its equity investments and joint ventures. The investments in Shanghai Pudong International Airport Cargo Terminal, the International Cargo Center Shenzhen, Tianjin Aircargo Terminal Ltd. and Jade Cargo International represent key pillars of the China strategy.

Lufthansa Cargo's strategy focuses also on profitable growth in every traffic region. The company derives almost 40% of its capacity from its MD-11 fleet.

© 2011 Transport Intelligence
Lufthansa Cargo is cautiously optimistic for 2010. It expects sales to improve as a result of slightly increased freight volumes and a further industry-wide recovery in freight rates. The volume is expected from Asia and, in particular, from China. 

With "Lean Lufthansa Cargo 2010ff"* strategy, the company wants to use of 2010 and the following years to return profitable growth levels from before 2009 and to develop Lufthansa Cargo from as a leaner company. Following its new strategy, the company intends to:

  • increase revenues by 20% and to reduce the unit costs by 10% per sold freight tonne km
  • cut the material cost budgets in the administrative area by 20% in 2010, and in the operative areas by 10%
  • reduce 10% in personnel and the administrative areas, as well as in the operative. The short-time working quota for the ground staff of Lufthansa Cargo in Germany was reduced from 25% to 20% as of 1 March 2010. As a result of signed agreements, Lufthansa Cargo can continue to flexibly adapt its personnel capacities to reductions in demand in the airfreight business due to the economic situation.

In 2010, Lufthansa Cargo will concentrate its project portfolio on operationally necessary projects. Overall, the company will continue its restrictive investment policy.

With the "Lean Lufthansa Cargo 2010ff", programme, Lufthansa Cargo expects to improve its operating result.

*ff - following

 Crisis management in 2009 and future orientation in 2010ff.
 Source: Lufthansa Cargo
© 2010 Transport Intelligence
The strategy at Lufthansa Cargo remained based on growing in the major global growth markets and on collecting freight flows wherever they arise. The company continued to have a foothold in China with an equity investment in the Shanghai Pudong International Airport Cargo Terminal (PACTL).

In addition, the company was well positioned in the Pearl River Delta as it had a stake in the International Cargo Center Shenzhen (ICCS) as well as shares in the cargo airline Jade Cargo International which connects centres worldwide and is based in Shenzhen.

From the start of 2008 it also has operations in the Chinese region on the Yellow River Delta where it had another equity investment in the handling company Tianjin Airport Hua Yu Air Cargo Terminal Co. Ltd. (HYACT) at the emerging cargo hub in Tianjin.

This strategic involvement in China gave the company a good platform from which to benefit from future economic growth as well as service traffic flows from Asia to other regions.

Deutsche Lufthansa AG's cargo unit planned to build its own freight alliance combining its Chinese unit Jade Cargo and Swiss World Cargo with Aerologic, which it owned along with Deutsche Post AG.  The new group, which was expected to be ready for operation in 2010, would have 36 airfreight planes and the use of freight space in 400 passenger planes.

Lufthansa Cargo wanted to grow asset-light so the joint foundation of a new cargo airline with the Deutsche Post World Net subsidiary DHL Express fitted into this approach. 

In October 2007, Lufthansa Cargo moved its freighter traffic from Cologne to Leipzig, where DHL Express had set up its European express hub.

The new company AeroLogic was set to commence operations from Leipzig in 2009, deploying 11 new Boeing B777-200LRF cargo aircraft.  This joint venture strengthened Lufthansa Cargo's position in the increasing competition between cargo companies and also with respect to integrators such as FedEx and UPS.

© 2008 Transport Intelligence
Lufthansa Cargo's aim is to generate average annual growth of five per cent in the next few years by expanding its partnerships and taking advantage of any expansion in the airfreight market.  Lufthansa Cargo's focus is on the Asian growth markets, first and foremost China and India.  The company had several aims for 2007:
  • Do its utmost to bring about a practicable nightflight ruling at Frankfurt Airport. 
  • Focus on standard cargo/BUPs (Bulk Unitization Programme), and express freight.
  • Continue modernisation of buildings and technologies at the Frankfurt location and work on improving infrastructure.
  • Increase the presence of Lufthansa Cargo at Frankfurt Airport's CargoCity Süd. 
  • On the international front, intensify partnerships.

In the 2007 financial year, Lufthansa Cargo anticipated an operating profit well in excess of earnings in 2006 which were depressed by non-recurring items. Operating earnings are to be boosted yet further at this higher level in 2008.

© 2007 Transport Intelligence
Strategic History

During the past decade Lufthansa has been transformed from a functionally structured monolithic airline company into an aviation group with several business segments.

 Lufthansa Portfolio Management
 
 Source: Lufthansa

The Passenger Transportation Business segment is the Group's central business segment in terms of both core competencies and size. The relevance of the other business segments depends on the extent to which they reinforce the competitiveness of the passenger business by providing supportive functions for essential production factors and infrastructures. This determines the course of development and their lasting affiliation to the Group.

 Focus on Passenger Business
 
 Source: Lufthansa

Lufthansa Cargo has focused its products and processes on the needs of the shippers and they have worked to reduce the complexity of the offer with fewer products, fewer product and process options and quick and easy to use booking systems.

The premium products have been expanded to include the fast-growing standard segment and the share of load units pre-constructed by the shipper has been increased considerably. This allows cost reductions with sustained increases in production quality.

As Europe's largest cargo airport, Frankfurt is to be expanded and developed further and Lufthansa Cargo still assumes practicable night-flight regulations for Frankfurt airport.

The freight company responded to the structural changes in the airfreight industry with a strategy entitled "Excellence + Growth" launched in early 2004. As a result extensive activities have been initiated, in particular the re-alignment of the company as a process-oriented organisation with pronounced customer orientation.  Within the framework of "Excellence + Growth", administration and management have been reduced. By the end of 2005, around 400 jobs had been cut.

The focus lies on cost reductions when purchasing services and on network optimisation, sales growth, improving revenues and pay settlements.

Customers

During 2005 Nippon Express Co. Ltd became a new member of the Lufthansa Cargo Global Programme.  Twelve worldwide active shippers belong to this customer loyalty programme with which Lufthansa cargo conducts around 45% of its business.

The companies included: ABX, DHL Global Forwarding, EGL, DHL Exel Supply Chain, Geologistics, Hellmann, Kuhne + Nagel, Nippon Express, Panalpina, Schenker, UPS, UTI.

The focus of this group is on growing together in the market, creating synergies in sales, reducing transaction costs and pushing important subjects such as automation of business processes.

© 2005 Transport Intelligence

Finances Expand

2014

January - Although Lufthansa Cargo was upbeat about last year's performance, its management appeared to be above all relieved that it managed its assets effectively in a weak market, rather than any significant increase in profits.

Objectively, the cargo volume performance was weak, with Lufthansa Cargo carrying 1.7m tonnes over the past 12 months. In the words of its CEO, "Tonnage almost equalled the previous year's level," although Lufthansa's annual figures report that in 2012 the airline carried 1.9m tonnes, itself a fall of 7% on 2011.

What appeared to underpin his optimism was that he had been able to fill his planes, effectively achieving a load factor of 69.9% up from 66.9% in 2012.This was certainly higher than the industry average which was in the low 40s percentage-wise.

It might be suggested that Lufthansa's cost base had also fallen due to lower fuel costs and more efficient aircraft. What also appeared to be the case was that Lufthansa's cargo fleet was shrinking disproportionately as its passenger fleet related belly freight continued to expand.

Indeed, compared to AirFrance KLM, Lufthansa had ridden the poor market conditions well. Last week AirFrance KLM announced that it was to continue to shrink its freighter fleet with the retirement of two B747Fs, whose costs had become unsustainable. Despite such continuing cuts, AirFrance KLM's Cargo business remained loss making in the third quarter, with a load factor of 61.8%.

Lufthansa would release its financial numbers in March but press reports quoted Lufthansa spokesmen as suggesting a "high double digit million euros'" of profit for the year. Overall it appeared that Lufthansa Cargo had remained profitable through the effectiveness of its operational management.

However the strategic issues around both the continuing low growth in the airfreight sector and the threat from Gulf based carriers remained significant barriers to Lufthansa Cargo in exploiting the weakness of others.


2013

In March 2014 Lufthansa Cargo reported that revenue fell for the financial year by 9.2% to €2.4bn. Profits were savaged, with operating profit falling by 26%, operating margin by 0.7% and EBITDA by 33.8% to €131m. This, despite fairly savage reductions in capacity with the cargo load factor falling by just 0.3%, suggested rates must have been very weak. Markets saw falling demand across the world, even in the previously strong Middle-East with the Asia-Pacific the only region to grow and this only by 0.1% in terms of tonnage carried.

Lufthansa Cargo expected 2013 to be some sort of nadir with demand either rising or steady through 2014.

Lufthansa Cargo Finances: Total

2012

Lufthansa Cargo closed 2012 with a profit, despite weaker demand and lower revenue. Revenue for the year was 8.7% lower than that reported in 2011 at €2,688m.

Operating profit for the year was down following the confirmation of the night-flight ban at Frankfurt Airport. The result for 2012 was 58.2% lower than the operating profit for 2011 at €104m.

In January Lufthansa Cargo announced that for the full year 2012 it transported 1.7m tonnes of freight and mail, approximately 8.5% below the year–earlier figure. The company stated that despite the decline, its utilisation levels remained stable.

The company believed the decrease in tonnage was attributable to restrained demand in all traffic regions, to which the company reacted by sharply scaling back capacity. All in all, the Lufthansa airfreight subsidiary trimmed capacity by more than 8%. The cuts enabled the cargo airline to hold utilisation levels stable, with a marginal increase to 69.6%.

"We had to contend with an extremely difficult market environment in 2012. So we focused firmly on capacity utilisation and the profitability of our freighter routes," emphasised Lufthansa Cargo Chairman and CEO. "Despite the necessary capacity cuts, we further developed our customer services and brought new destinations, such as Detroit, Montevideo or Tel Aviv, into the route network."
2011

Lufthansa Cargo described the year as being "dynamic", with its freight markets split between growing German and America markets and "cooling" demand in China and India. In the year, Lufthansa Cargo increasingly switched capacities from Asia to North America.  Revenue was up 5.3% at €2,943m, however profits were down sharply with EBIT (Earnings Before Interest and Tax) 25.6% lower at €244m.

Profits were also depressed by higher fuel costs, as its operating result fell from €310m to €249. Although this does represent a sharp fall in profits, 2010 represented a record high and margins remained strong in 2011 at over 9%.

In addition, operations were impacted by a temporary night flight ban which was imposed in October 2011, at Frankfurt Airport, which Lufthansa Cargo said had cost the company €20m in profit. “There is a real danger of Frankfurt losing its position as the best and most attractive air freight hub in Europe,” emphasised Karl Ulrich Garnadt, CEO of Lufthansa Cargo. The company estimated that a permanent night-flight ban would deprive Lufthansa Cargo alone of major express connections and cost the company €40m in profit in 2012, and a three-digit million euro number in turnover.

Around 50% of Lufthansa Cargo's business was high-value express cargo.
Lufthansa Cargo Finances: Total [€] Convert to
  2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Revenues 2165.40 m 2468.50 m 2752.50 m 2844.90 m 2736.10 m 2907.00 m 1951.00 m 2794.90 m 2943.00 m 2688.00 m
Operating Profit 36.00 m 52.00 m 108.00 m 81.50 m 135.60 m 164.00 m -171.00 m 310.10 m 249.00 m 104.00 m
Margin 1.66 % 2.11 % 3.92 % 2.88 % 4.96 % 5.64 % -8.76 % 11.10 % 8.46 % 3.87 %
Export to Excel      Source: Lufthansa Cargo,  Last update: 16/04/2013

Source: Lufthansa Cargo
Lufthansa Cargo Finances: Net Traffic Revenue by Geographic Segment % to Total

2012

Lufthansa Cargo revenues generated in Europe reported a 1.2% increase year over year to €248m. This was the only region that the company reported growth for.

The America and Middle East/ Africa regions saw decreases in repespective revenues of 3.4% and 1.4%, however the region to report the largest decrease in revenues for the cargo business was the Asia/ Pacific region of 16.0%. Despite this, it remained the largest contributing region, with €1,064m.
2011

Revenue from Europe reached €245m, a increase of €30m year on year.

While revenue from the Americas rose by 22.7% to €1,087m, revenue from the Asia Pacific region declined by 4.6% to €1,267. This was unsurprising as in the year, Lufthansa increasingly switched capacities from Asia to North America, on account of "cooling" demand in China and India and growing demand in American markets.

Revenue from the Africa/Middle East region was up by €13m to €218m.
Lufthansa Cargo Finances: Net Traffic Revenue by Geographic Segment % to Total [€] Convert to
  2010 2011 2012
Europe 215.00 m 245.00 m 248.00 m
Americas 886.00 m 1087.00 m 1050.00 m
Asia Pacific 1328.00 m 1267.00 m 1064.00 m
Africa/Middle East 205.00 m 218.00 m 215.00 m
Export to Excel      Source: Lufthansa Cargo,  Last update: 16/04/2013

Source: Lufthansa Cargo
Lufthansa Cargo Finances: Air Cargo Revenues and Volume

Note: Exchange rates are as follows:

  • 2004 €1=1.21
  • 2005-2006 €1=$1.4554
  • 2007 €1=$1.3633
  • 2008 €1=$1.3845
  • 2009 €1=$1.3626
  • 2010 €1=$1.41624
  • 2011 €1=$1.3924
  • 2011 €1 = $1.3128.
Lufthansa Cargo Finances: Air Cargo Revenues and Volume [US$] Convert to
  2004 2005 2006 2007 2008 2009 2010 2011 2012
Revenue 2986.89 m 4005.99 m 4140.47 m 3730.13 m 4024.74 m 2658.43 m 3958.25 m 4097.83 m 3529.08 m
Volume 7961.00 RTKm 7829.00 RTKm 8103.00 RTKm 8451.00 RTKm 8283.00 RTKm 7425.00 RTKm 8905.00 RTKm 9487.00 RTKm 8727.00 RTKm
Export to Excel      Source: Lufthansa,  Last update: 17/04/2013

Source: Lufthansa
Lufthansa Group Finances: Total

2012

For 2012, the Lufthansa Group reported that its revenues increased by 4.9% to €30.1bn.

The Passenger Airline Group segment's share of total revenue increased to 75.8% due to higher traffic volumes. Whilst the Logistics segment accounted for 8.8% of total revenue, Lufthansa Technik for 8.1%, Catering for 6.4% and IT Services for 0.9%.
2011

Group revenues increased 8.6% to €28.73bn in 2011 from the 2010 restated figure of €26.5bn.

Passenger transportation contributed 69.2% of the total revenue, while Lufthansa Cargo contributed 9.1%. The two divisions saw the most significant revenue increases across the company as passenger and cargo transport revenues increased by 6.6% and 5.3% respectively.
Note: 2010 revenue figure restated to €26.46bn.
Note: 2008 revenues, operating profit and margin restated from €24,870m, €1,354m and 5.44% respectively.
Lufthansa Group Finances: Total [€] Convert to
  2004 2005 2006 2007 2008 2009 2010 2011 2012
Revenue 16965.00 m 18065.00 m 19849.00 m 22420.00 m 24842.00 m 22283.00 m 26459.00 m 28734.00 m 30135.00 m
Operating Profit 383.00 m 577.00 m 845.00 m 1378.00 m 1280.00 m 130.00 m 1386.00 m 773.00 m 1311.00 m
Margin 2.26 % 3.19 % 4.25 % 6.14 % 5.15 % 0.58 % 5.24 % 2.69 % 4.35 %
Export to Excel      Source: Lufthansa,  Last update: 16/04/2013

Source: Lufthansa
Lufthansa Group Finances: Revenue by Business Segment % to Total (New Structure)
Lufthansa Group Finances: Revenue by Business Segment % to Total (New Structure) [€] Convert to
  2008 2009 2010 2011 2012
Passenger Transportation 18393.00 m 16798.00 m 20912.00 m 22290.00 m 23559.00 m
Logistics (Lufthansa Cargo) 2907.00 m 1951.00 m 2795.00 m 2943.00 m 2688.00 m
MRO 3717.00 m 3963.00 m 4018.00 m 4093.00 m 4013.00 m
Catering 2325.00 m 2102.00 m 2249.00 m 2299.00 m 2503.00 m
IT Services 657.00 m 605.00 m 595.00 m 599.00 m 609.00 m
Export to Excel      Source: Lufthansa,  Last update: 15/04/2013

Source: Lufthansa
Lufthansa Cargo Finances: 2004-2010 Archive

2010

Cargo Total

Lufthansa Cargo recorded an operating result of €310m for 2010. This corresponds to an increase of €481m compared with the previous year (2009: minus €171m). The operating margin rose as a result by 19.9 percentage points to 11.1%.

Revenue went up by 43.2% to €2.8bn (2009: €2.0bn).

The traffic revenue included in total revenue rose by 42.4% to €2.6bn (2009: €1.9bn). Charter revenue, a component of traffic revenue, fell by 54.3% to €71m. This was due to the charter partnership with DHL Express coming to an end and transports shifting to the joint venture AeroLogic in mid 2009.

Group Total

The Group's external revenue increased in total by 22.6% to €27.3bn*. The Passenger Airline Group's share of total revenue went up to 74.0%, largely due to the better course of business and changes in the group of consolidated companies. While the revenue share of the Logistics segment rose to 10.1%, the other segments' shares fell accordingly.
2009

Cargo Total

In 2009, Lufthansa Cargo achieved an operating result of minus €171m. This represented a decline of €335m in 2009 compared to the previous year (2008: €164m). As a consequence, the comparable operating margin decreased by 14.2 percentage points to minus 8%.

Revenues declined by 32.9% to €2.0bn (2008: €2.9bn). Traffic revenues contained in the sales revenues dropped by 33.2% to €1.9bn (2008: €2.8bn). Charter revenues as a component of traffic revenues dropped by 56.0% to €155.1m. The cause of this was the termination of the charter cooperation with DHL and the shift of the transport to the joint venture AeroLogic.

Group Total

Lufthansa's revenues declined by €2.56bn and posted an operating profit of €130m. The group earned about €1.2bn less than during the previous year. The past year's figures were burdened by economy-related weaker demand and the disproportionate decline in average yields in the passenger business segment, both consequences of the financial and economic crisis.

2008

Cargo Total

Lufthansa Cargo was able to improve its operating result. In 2008 it achieved an operating result of €164m, an increase of €28m. The comparable operating margin increased by 0.5 percentage points to 6.2%.

Sales revenues increased by 6.3% to €2.9bn (2007: €2.74bn). Traffic revenues once again accounted for the largest part of this figure in 2008, increasing by 6.7% to €2.8bn. Charter revenues, part of the sales revenues, increased by €37.8m to €352.1m, largely resulting from the cooperation with DHL.

Group Total

In March 2009 the Lufthansa Group announced that it had generated revenues totalling €24.9bn, a year-on-year increase of 10.9%. The traffic revenue rose by 13.8% to €20bn. Besides the full consolidation of SWISS in the first half of 2008, this was mainly due to the increased passenger figures with currency adjusted higher average revenues in the Passenger Transportation business segment. During the reporting period, the Group's operating income increased by altogether 12.1% to €27bn.

Operating expenses rose to €25.6bn during the past year, mainly as a result of the rise in fuel costs to €5.4bn. This was equivalent to an increase of 39.3%. This increase was due to price and quantity-related factors, as well as the change in the scope of consolidation with the full consolidation of SWISS in the first half of 2008.

The Group recorded an operating result of €1.35bn in 2008, €24m less in comparison with the record figure in 2007. The decline can mainly be attributed to the negative developments in the Passenger Transportation business segment. The Group posted a result of €599m. Last year this figure was at €1.7bn, however, it included €503m of profit from the sale of the shares in Thomas Cook, as well as book gains of €82m from the repurchase of own stock by WAM Acquisition S.A.

Lufthansa's capital expenditure during the reporting period totalled €2.2bn, of which €1.3bn were spent on the expansion and modernisation of the fleet and €214m were spent on the acquisition of a minority stake in the JetBlue Airways Corporation on 22 January 2008. Operating cash flow totalled €2.5bn.

2007

Cargo Total

In March 2008 one of the market's leading players, Lufthansa Cargo, still appeared optimistic about its own prospects, despite recent suggestions in some quarters of tougher times to come in 2008 for the international air cargo industry.

During a briefing held in Frankfurt, Germany, to discuss what the German carrier claimed were its generally strong 2007 operating results, senior executives suggested that Lufthansa Cargo was expecting to continue that "positive trend" in 2008. "In fiscal 2008, Lufthansa Cargo expects to build on the good operating results which it returned in 2007."

On the financial side, those "good operating" results for 2007 included a 66% jump in the organisation's operating profit, compared with the previous year, to €135.6m, even though revenue dropped by just under 4% to €2.74bn.

Traffic-wise, Lufthansa Cargo transported 1.8m tonnes of freight and mail in 2007, an increase of 2.6% on the previous year. The carrier's overall cargo load factor was up by 1.4 percentage points to 69.1%.

However, Lufthansa Cargo's senior management also referred, directly or indirectly, to a range of problems confronting the industry. Inevitably, there was mention of "uncertainty in the international finance markets and high oil prices". They also admitted that Asia's share in total traffic revenue was down "owing to declining yields".

One key element of Lufthansa Cargo's approach to dealing with such problems had been strict cost control - the workforce was trimmed again in 2007 and major efforts had been made to improve the fuel use efficiency of its 19 MD11 freighters.

Another was its strategy of combining capacity from several companies under one roof, including that of its own freighter operations, the bellyhold space on the 400 aircraft of parent passenger airline Lufthansa, Sino-German joint all-cargo carrier Jade Cargo International and the recently-formed AeroLogic joint venture (with DHL Express) cargo carrier. Such a set-up, claimed Lufthansa Cargo, provided the organisation with great flexibility when it came to matching capacity with demand.

The big question, of course, was if the general air freight market did suffer the sort of slowdown recently suggested by the International Air Transport Association for example, would such strategies be sufficient to enable Lufthansa Cargo to buck the trend?

Group Total

In March 2008 the Lufthansa Group reported revenues for 2007 €22.4bn representing growth of 13%. Traffic revenue increased by 14.4% to €17.6bn. As of the third quarter of 2007, the figures also included the first time consolidation in the Group accounts of SWISS International Air Lines for the July to December period.

Lufthansa posted an operating result of €1.4bn for 2007. This represented an increase of 63.1%. The increase by two percentage points in comparison with the previous year reflects the good performance in all the business segments.

The Group posted book gains of about €503m from the sale of its shares in Thomas Cook AG. The Group result consequently rose to €1.7bn (€803m).

Lufthansa invested a total of €1.4bn in 2007, of which more than €1.1bn were invested in the purchase of new aircraft.

2006

Cargo Total

In March 2007 Lufthansa Cargo reported that in 2006 revenue increased 3.4% to €2.8bn and traffic revenue by 3.6% to €2.7bn. Adjusted for exchange rate effects, revenue growth was 3.8% due mainly to positive volume trends. Average yields were down slightly on the year (-0.4%).

Other operating income was unchanged at €131m and included book gains of €29m from the sale of shares in time:matters GmbH.

Lufthansa Cargo was able to increase its cargo business by 1.3% to 1.76m tonnes of freight and mail. Sales rose by 3.5% to 8.1bn tonne-km. The cargo load factor improved by 2.7 percentage points.

Group Total

In March 2007 the Lufthansa Group reported revenues of €19.8bn in 2006, representing growth of 9.9%. Traffic revenue increased by 10.4% to €15.4bn. There was a significant rise in the average yields during the reporting period. An increase of 5.2% was registered across the board for all traffic segments.

Other operating income dropped by 9.4% to €1.4bn, in comparison to last year, when higher book gains of around €245m were included, mainly due to the sale of shares in Amadeus and Loyalty Partner.

Operating expenses rose by 6.9% to €20.3bn with the significantly higher cost of kerosene again a major cost factor. A total of €3.4bn was spent on fuel during the reporting period, equivalent to a year-on-year rise of 26% or €693m.

The Lufthansa Group improved its operating profit for 2006 by 46.4% to €845m and the Group result after tax rose by 77.3% to a new record level of €803m. Investments increased to €1.9bn and, as during the previous years, could once again be financed entirely from cash flow.

2005

Cargo Total

In the 2005 financial year the Logistics segment (Lufthansa Cargo) was able to implement higher prices and thus stabilise average revenues. Revenues also increased due to fuel price surcharges that rose by 10.8%. As a result the logistics group increased traffic revenue by 10.2% at €2.6bn. Sales increased from €2.5bn to €2.8bn (+11.5%). Revenue from partial chartering to other airlines also grew to $54.6m.  Together with other segment income of €144m, total segment income grew to €2.9bn.

Segment costs grew disproportionately and increased by 6.9% to €2.7bn. Due to the extreme fuel price increases, material costs grew by 11.3% to €1.8bn. Charter costs also rose considerably because of the additional charter requirements for the DHL J/V.

Lufthansa Cargo also posted operating results of €108m which was a €74m improvement year on year. The measures for minimising costs in their "Excellence + Growth" strategy were critical to this result. The segment result of €152m was also considerably better than the previous year when only €59m was achieved.

Group Total

In March 2006 Lufthansa, Europe's second-largest airline, reported that operating profit was €577m in calendar year 2005, up 51% from €383m the previous year.

The German carrier credited strong passenger growth in Asia and a doubling of cargo earnings that outweighed soaring fuel prices. It expects this year's profit to match or exceed 2005 results.

2004

Cargo Total

In April 2005, Lufthansa Cargo reported an operating profit of €33.5m for its 2004 financial year, an improvement of €50m on 2003 when it made an operating loss of €16m. Turnover grew strongly by 14% to €2.47bn, tonnage rose 10.7% to 1.75m tonnes of cargo and mail, and volumes increased 12.3% to 7,961 freight tonne kilometres (FTKs). The cargo load factor also improved by 1.4 percentage points to 67%. Growth was driven by the recovering world economy, the DHL intercontinental joint venture launched last spring, the takeover of US Airways' freight capacity on ex-Europe flights, rising sales through the WOW alliance network and new cargo management contracts for several regional passenger airlines. But profits were hit by a 36% rise in fuel costs to €332m and the continued rise in the euro, in which the airline has 40% of its revenues but 62% of its costs. Moreover, average yields dropped as much as 10%.

For 2005, Lufthansa Cargo chairman Jean-Peter Jansen said growth would be lower than in 2004 due to the slow German air cargo market, rising fuel costs, the high euro exchange rate and continuing pressure on yields because of imbalanced traffic flows. CFO Stephan Gemkow said the airline hoped for improved profits and noted yields had been stabilised in recent months. The airline would focus this year on further revenue improvement and cost reduction measures under its Excellence + Growth programme that was designed to contribute €233m to the bottom line by the end of 2006. This included reducing staff levels by the equivalent of 480 full-time jobs by the end of 2006.

On plans for cargo cooperation with Swiss Worldcargo as part of the Swiss acquisition by Deutsche Lufthansa, Jansen said the two sides would seek the highest possible level of synergies but did not disclose any firm plans. The much smaller Swiss Worldcargo generated revenues of CHF442m in 2004. It transported 208,165 tonnes, generated traffic volume of about 1.14bn FTKs and achieved a load factor of 86.3%. In addition to marketing bellyhold capacity on Swiss passenger aircraft, it offers freighter capacity in cooperation with several international airlines, including Korean Air Cargo. Based on 2003 world air cargo market share figures, Lufthansa Cargo (7%) and Swiss Worldcargo (1.3%) would jointly still remain behind the Air France-KLM group, the new international air cargo market leader with a combined market share of about 8.8%.

Lufthansa Cargo also announced that the new Chinese airline Jade Cargo International, in which it owns 25%, would launch scheduled flights within China and to Asian destinations from its Shenzhen base this autumn with three freighter aircraft. The freighter type had not yet been decided. The planned launch in spring 2005 with charter flights had to be delayed due to changes to Chinese aviation laws.

Operational Analysis Expand

Operations: Overview
Lufthansa Cargo Global Network
Source: Lufthansa Cargo / Transport Intelligence 

Lufthansa Cargo is the service provider for the logistics business in the Lufthansa Group. Its operating hubs are located in Frankfurt, Munich, Leipzig-Halle and Vienna and it serves a global network of 300 destinations worldwide.

The company has 18 Boeing MD-11 freighters of its own, each with a maximum capacity of 534 cu m. This is supplemented by the freight capacities of the Lufthansa and Austrian Airlines passenger fleets as well as the equity investment AeroLogic.

The shareholders of AeroLogic GmbH are Lufthansa Cargo and DHL Express, which each hold
50%. The two companies are the sole users of the capacities of the eight Boeing 777F freighters, with Lufthansa Cargo mostly using capacity at weekends.

The freight capacities of Lufthansa subsidiary SWISS and stake Brussels Airlines are not marketed directly by Lufthansa Cargo, but the group nevertheless enjoys a close partnership with the
freight divisions of these airlines.

Lufthansa Cargo also has further airline cooperation agreements with SAS Cargo, Singapore Airlines Cargo, Japan Airlines Cargo, Air China Cargo, Eva Air Cargo, Lan Cargo and South African Airways Cargo.

The composition of Lufthansa's logistics capacity is around 50% freight on passenger aircraft, 40% on Lufthansa Cargo freighters, and around 10% on chartered freighters or on aircraft belonging to joint ventures.

Overview
Destinations 300
Countries 100
Fleet Size 18 MD-11 freighters, freight capacities of Lufthansa and Austrian Airlines passenger fleets, and fleet of AeroLogic.
Operating Hubs Frankfurt, Munich, Leipzig-Halle, Vienna
Source: Lufthansa
© 2013 Transport Intelligence
Operations: Traffic Volumes and Cargo Load Factor

2012

Available transport volumes decreased to 12,532m tonne-km in 2012, sales also decreased to 8,727m tonne-km. This led to a cargo load factor of 69.6% in the 2012 financial year (2011: 69.5%). The transported volumes of freight and mail decreased to 1.72m tonnes from 1.89m tonnes in 2011.

2011

Lufthansa Cargo volumes reached 9,487 RFTKs, a rise of 582 RFTKs or 6.5%. The amount of available space on flights also increased to 13,647 AFTKs, a rise of 1,083 RFTKs or 8.6%. As the amount of available space rose proportionally faster than the amount transported, the cargo load factor fell by 1.4 percentage points
Note: A Revenue Freight Tonne Kilometre (RFTK) denotes one tonne of cargo transported one kilometre.
Operations: Traffic Volumes and Cargo Load Factor []
  2008 2009 2010 2011 2012
Revenue Freight Tonne Kilometres 8283.00 m 7425.00 m 8905.00 m 9487.00 m 8727.00 m
Available Freight Tonne Kilometres 11681.00 m 12584.00 m 12564.00 m 13647.00 m 12532.00 m
Load Factor 65.80 % 63.60 % 70.90 % 69.50 % 69.60 %
Export to Excel      Source: Lufthansa,  Last update: 17/04/2013

Source: Lufthansa
Operations: Traffic Volumes by Geographic Location % to Total
Operations: Traffic Volumes by Geographic Location % to Total [RFT] Convert to
  2007 2008 2009 2010 2011 2012
Americas 3407.00 m 3398.00 m 2296.00 m 3676.00 m 4035.00 m 3774.00 m
Asia Pacific 3951.00 m 3808.00 m 3369.00 m 4169.00 m 4327.00 m 3879.00 m
Africa/Middle East 579.00 m 622.00 m 645.00 m 693.00 m 743.00 m 720.00 m
Europe 515.00 m 455.00 m 415.00 m 368.00 m 381.00 m 354.00 m
Export to Excel      Source: Lufthansa,  Last update: 16/04/2013

Source: Lufthansa
Operations: Cargo and Mail Volumes

2011

Lufthansa transported 1.89m tonnes of cargo and mail in the year, a rise of around 90,000 tonnes or 5.0%.
Operations: Cargo and Mail Volumes [] Convert to
  2008 2009 2010 2011 2012
Cargo and Mail (Tonnes) 1.70 m 1.52 m 1.80 m 1.89 m 1.72 m
Export to Excel      Source: Lufthansa,  Last update: 16/04/2013

Source: Lufthansa
Operations: Cargo and Mail Volumes by Geographic Location % to Total
Operations: Cargo and Mail Volumes by Geographic Location % to Total [ton] Convert to
  2006 2007 2008 2009 2010 2011
America 463000.00 501000.00 483000.00 420000.00 525000.00 520000.00
Asia Pacific 461000.00 477000.00 465000.00 418000.00 515000.00 466000.00
Africa/Middle East 108.00 103.00 114000.00 125000.00 139000.00 141000.00
Europe 727.00 724.00 634000.00 556000.00 616000.00 598000.00
Export to Excel      Source: Lufthansa,  Last update: 16/04/2013

Source: Lufthansa
Operations: 2013 News

2013

September - Lufthansa Cargo announced that it had introduced five new Boeing 777 freighters into its fleet to increase fuel efficiency and tonnage as well as reduce noise levels. The first three destinations scheduled for the aircraft were Atlanta, Chicago and New York in the US.

The Boeing 777F, list price US$270m, was able to remain in the air for ten and a half hours with a payload of 103 tons. During that time it could fly over 9,000 km non-stop. In addition, the company stated that the aircraft met the strictest noise protection standards in international civil aviation.

"Thanks to its outstanding technical performance and reliability, the freighter is entering new dimensions. It also marks a milestone on our ambitious path to lowering specific emissions by 25% until 2020", said the Board Member Operations Lufthansa Cargo AG. Modernising the fleet was just one of six projects of the Lufthansa Cargo 2020 future programme.


 

May - Lufthansa Cargo signed an agreement with IATA enabling electronic Air Waybills (eAWB) to be used more conveniently by its customers.

Following the new IATA multilateral electronic air waybill standard, forwarders needed to sign only one agreement with IATA to gain acceptance from multiple carriers for their eAWB. All signatory airlines were then automatically included in the accord.

The agreement spelt out clear rules on the usage of the eAWB and rendered complex bilateral eAWB agreements on legal aspects and interfaces between carriers and freight forwarders unnecessary.

Lufthansa Cargo had been a key influencer in pushing the initiative and had tested its practical viability in a trial run since last November. "This industry-wide agreement is a major milestone on the road towards a completely paperless air cargo transport," emphasised Lufthansa Cargo CEO and Chairman. "Both our customers and we as an airline will profit from easier utilisation of the eAWB as well as from more efficient and faster processes."

Lufthansa Cargo planned to switch entirely to the use of eAWB by 2015. In the course of this year, the eAWB was to become standard for transports from all German stations to all destinations in the global network of Lufthansa Cargo. More than 60 of the company's customers worldwide had already signed up to using the eAWB.


 

April - Lufthansa had been brought to a standstill by a strike of a large number of its German employees. Monday 22 April would see almost all flights in Europe cancelled as well as "massive flight cancellations and delays ….for long-haul flights beginning Sunday April, 21" according to a company press release.

Lufthansa Cargo would be severely affected by the strike with the division issuing a statement that said it "will only be able to guarantee emergency operations in both export and import" and asking customers to "re-schedule planned drop-offs and pick-ups to before or after the strike." The company also published a list of five cargo flights from Frankfurt to Johannesburg, Shanghai, Chicago, Guangzhou and Quito which were scheduled to take-place under a "special flight plan".

The industrial action was designed to be a "warning strike" by the Verdi trade union which included ground crew at Lufthansa cargo operations. They were demanding a 5.2% pay increase and an assurance of no compulsory job losses. The company criticised the action as being "out of proportion" at what it said was an early stage of negotiations.

This was taking place around a backdrop of restructuring at Lufthansa. In an attempt to reduce its cost base the airline was placing greater reliance on its subsidiaries based outside Germany which had more competitive manning levels and pay rates. Although Lufthansa remained profitable, it had shrunk its cargo fleet aggressively over the past year and a half in the face of a sharp downturn in demand. At a wider level, Lufthansa was threatened by a combination of low-cost airlines on routes within Europe and the Gulf-based carriers on inter-continental business.

Over the past year, Lufthansa had suffered from a series of strikes by both its ground crew and its pilots centred mainly around pay, which for certain groups of employees – such as pilots – was very high, even by the standards of the 'flag carrier' airlines.


 

March - Lufthansa Cargo announced it was adding new MD-11 freighter services to Guadalajara, Mexico beginning March 2013. The cargo airline would connect Mexico with its Frankfurt hub.

The twice-weekly flights would be from Frankfurt to Chicago and then to Mexico City and would be operated on Wednesdays and Saturdays. The return flights (also with a stopover in the US), were on Thursdays and Sundays.

According to Lufthansa Cargo, Guadalajara had evolved into a major business centre, especially for high-tech companies in the electronics and information technology sector. Over the past ten years, more than 600 companies from the high-tech sector had established bases in the region. The automotive industry had also found the region around Guadalajara an ideal location for production plants.

"Industry in the Guadalajara region has grown tremendously in the past few years," noted Lufthansa. "With the new services, we are strengthening our presence in the Mexican growth market and making our global route network even more attractive to our customers."
January - Lufthansa Cargo had announced that for the full year 2012 it transported 1.7m tonnes of freight and mail, approximately 8.5% below the year-earlier figure. The company stated that despite the decline, its utilisation levels remained stable.

The company believed the decrease in tonnage was attributable to restrained demand in all traffic regions, to which the company reacted by sharply scaling back capacity. All in all, the Lufthansa airfreight subsidiary trimmed capacity by more than 8%. The cuts enabled the cargo airline to hold utilisation levels stable, with a marginal increase to 69.6%.

"We had to contend with an extremely difficult market environment in 2012. So we focused firmly on capacity utilisation and the profitability of our freighter routes," emphasised Lufthansa Cargo Chairman and CEO. "Despite the necessary capacity cuts, we further developed our customer services and brought new destinations, such as Detroit, Montevideo or Tel Aviv, into the route network."

In the autumn of 2013, Lufthansa Cargo was awaiting delivery of the first two of five new Boeing 777 freighters on order. The company stated that the world's most efficient freighter aircraft of its class was integral to its "Lufthansa Cargo 2020" innovation strategy.
Operations: 2012 News

2012

September - Lufthansa announced plans to build a new logistics centre at Frankfurt Airport. The building, which would replace the existing 30-year-old Lufthansa Cargo Centre, was due to go into operation in 2018.

"We are investing in the future and in our Frankfurt base," Lufthansa's CEO and Chairman stressed. Frankfurt would remain the central hub for the Lufthansa Group's cargo business, despite the night-flight ban. However, the night-flight ban meant considerably adjusting the original plans.

The new logistics centre would be built mainly on Lufthansa Cargo's existing site in the northern part of Frankfurt Airport, with new technological infrastructure guaranteeing faster turnaround times for shipments. "Building a new logistics centre is a major component of our 'Lufthansa Cargo 2020' strategy," Lufthansa Cargo's CEO and Chairman emphasised. "The new facility will enable us to take a quantum leap in the logistics process and will make the company fit for the challenges of the future."

Construction of the main building was scheduled to begin in 2014. Since the air cargo terminal would be built on the existing site, the area would have to be cleared and prepared over the coming months. Some processes would be relocated to other areas. However, the company stated operations would continue while construction work on the new building was in progress.

April - A German court in Leipzig upheld a night-flight ban at Frankfurt Airport between 11 p.m. and 5 a.m. local time.

The ruling came after a Hessen court ruled in October 2011 that 17 night-flights would be banned when FRA’s fourth runway opened in the same month following resident complaints of aircraft noise from nearby Russelsheim and Offenbach. Lufthansa Cargo operated 10 of those scheduled nighttime slots.
March - Lufthansa Cargo offered a new worldwide express service for urgent shipments. The new "Courier. Solutions" service provided the fastest transit and shortest delivery times in the Lufthansa Cargo. The company announced that the service had has no weight limits.

Lufthansa Cargo was offering this new product in cooperation with time:matters, a Lufthansa Cargo Group company that specialised in express logistics services. Customers could drop off their shipment at Frankfurt Airport up to 90 minutes before departure. At various other airports, the minimum drop-off time was one hour before departure. At Frankfurt, the transit time was 60 minutes, while the transfer time at Munich was 50 minutes.

The Vice President Product Management at Lufthansa Cargo said "with the shortest handling times, personal courier accompaniment during transit and round-the-clock, proactive shipment surveillance we can offer the speediest assistance when trade fair items or medicines, for example, are urgently needed on the other side of the world."
March - Lufthansa Cargo announced it was adding a route to Chongqing, China when its summer flight schedule began on March 25. The company was offering flights to 303 destinations in 99 countries.

Chongqing would be served with four flights weekly, operated by Lufthansa Cargo's MD-11 freighters. Other newcomers in the timetable - also thanks to the expansion of the network of Lufthansa passenger services - were Shenyang in northeastern China and Qingdao (Tsingtao) in Shandong province.

Flights to Detroit, US were to be increased to twice-weekly connections. Services to Detroit commenced initially in January with a once-weekly flight in the Lufthansa Cargo freighter network.

In South America, the company was adding twice-weekly MD-11 flights from Frankfurt to Montevideo, Uruguay.

Back in the timetable was Kolkata, India. Flights were operated to the Indian city last summer, but were discontinued in recent months. Once-weekly direct flights from Frankfurt were now available again in the summer flight schedules.

"We have selectively extended our route network and brought new and attractive growth markets into the timetable," noted a Lufthansa Board Member for Product and Sales. "We are expanding our presence in China, the world's biggest air freight market, and now laying on freighter connections to a total of six Chinese destinations."
January - Lufthansa Cargo announced that it had started operating its first ever flights between Frankfurt and Detroit, Michigan (US). The route connects Germany with the centre of the US automotive industry every Monday (after the beginning of the summer schedule: each Sunday) by an MD–11 freighter in the cargo carrier's fleet. The subsequent return flight would stop off in New York on the way back to Frankfurt.

"The new freighter connection supplements the daily flights operated by Lufthansa passenger aircraft, and offers our customers more capacity and greater flexibility," said Achim Martinka, Lufthansa Cargo Vice President The Americas. "The automotive and pharmaceuticals industries, especially, are fuelling the growing demand for fast and reliable transports to and from Detroit."

Starting in March, Lufthansa Cargo planned to expand its Detroit operations to twice per week. This new connection was the seventh destination served by the cargo airline's freighter network in the US. Along with the services operated by the Lufthansa passenger business, direct flights were now available to 17 airports in the US.
January - Lufthansa Cargo boosted tonnage to record levels in 2011. The cargo airline carried approximately 1.9m tonnes of freight and mail in 2011, an increase of 5% compared to 2010.

The airline raised capacity over the twelve months by 8.6%. The company attributed the increase was to the integration, since the second half of 2010, of the capacities of aircraft in the fleet of Austrian Airlines and the expansion to eight Boeing 777 freighters in the fleet of the AeroLogic joint venture. In an increasingly difficult market environment, Lufthansa Cargo lifted sales of revenue freight-tonne km by 6.5%, so that capacity utilisation reached 69.5%; a slight decline from 70.9% in 2010.

"Especially in our German home market, we made full use of strong export demand to gain market shares. On the other hand, the economic climate in the important Asian airfreight market became increasingly bleak over the course of the year and led to over-capacities and increased competition for all airlines in the airfreight industry," observed the Lufthansa Cargo CEO and Chairman.

"Lufthansa Cargo is excellently positioned in all growth markets. We will stay on our successful course and adjust our capacities flexibly in line with demand," commented Garnadt. Of crucial importance for the company's future, however, is the impending ruling by the highest Federal Administrative Court in Leipzig on the number of permissible night flights in Frankfurt. "Germany profits from a strong and successful airfreight industry, which must not be decoupled for several hours, daily, from global trade flows. A night-flight ban would deal a severe blow to the entire industry and threaten thousands of jobs in Germany, not only in the logistics industry" he concluded.
Operations: 2011 News

2011

December - Lufthansa Cargo begun operations at its new facility for temperature-sensitive freight in Frankfurt, Germany. The Lufthansa Cargo Cool Centre was built in the space of just six months.

The facility was equipped with four cool storage rooms for four different temperature ranges as well as a deep-freezer cell on an area of 4,500 sq m. From now on, all temperature-controlled shipments carried by the airline in Frankfurt would pass through the new facility.

The Board Member Product and Sales, said: "Our Cool/td product is assuming ever-increasing importance for Lufthansa Cargo thanks to growth rates of 15%. The Lufthansa Cargo Cool Center will enable us to ship temperature-controlled freight faster, more reliably and more efficiently at our Frankfurt hub, and further expand our position as a leading provider of cool transports."

Lufthansa Cargo earmarked substantial capital expenditure last year in the Cool/td product. Besides investing in the development of the Opticooler, the industry's most efficient cooling container, the cargo carrier commenced operations at its first international pharmaceutical hub at Hyderabad in India.
October - Lufthansa Cargo underlined its fears regarding the consequences ensuing for the international logistics industry from the provisional night-flight ban placed upon Frankfurt Airport from October 30, 2011 by a regional court.

Following the ruling from the administrative court in Hesse, issued a few days before the introduction of Lufthansa's winter flight schedules, the company had put together an emergency timetable for the period after October 30. A number of flights had had to be relocated to daytime slots or to the early and late hours of the day.

Individual connections – to China, for example – had been cancelled entirely. Other flights bound for China would have to stop over at Cologne/Bonn Airport for several hours after an evening departure from Frankfurt so as to fly on, as originally planned, at night-time in the direction of the Far East. "We will be operating in future with unnecessary take-offs and landings, which will lead to more noise, higher fuel consumption and more costs running into millions," commented Lufthansa Cargo Chairman.

Furthermore from January, at least one MD-11 freighter was to be transferred from Frankfurt to Cologne/Bonn Airport. The freighter would operate the overnight flights for the German logistics industry to North America, which could no longer be guaranteed from Frankfurt because of the night-flight ban.

Lufthansa Cargo believed the provisional night-flight ban in Frankfurt was a drastic signal for the German logistics industry. He emphasised: "As export world champion, Germany is reliant on dependable connections to ship air freight to destinations around the globe. Frankfurt Airport plays in that respect a highly important role, since around 40% of German exports is transported by air."

The company said that it was hoping that the Federal Administrative Court in Leipzig (the supreme court of appeal) would allow a minimum of necessary night flights in its final ruling.
October - The fourth runway at Frankfurt airport was opened, yet what Frankfurt’s owners and customers had hoped to be a useful improvement to capacity had ballooned into a major crisis for the airport’s cargo operations. At 2.8 km the new runway would be shorter than the existing facilities and was designed to serve smaller short-haul traffic. Part of the 'Expansion 2020 program', it was the first major part of a development that would also see a new terminal and new cargo handling facilities by 2016. The taxi-ways to the new runways would also include a bridge over the neighbouring motorway and another over a high-speed railway.

In order to get this programme past protesting local residents and environmental pressure groups, Fraport, the airport's owner, agreed to certain conditions including greater restrictions on night-flights. The residents and pressure groups who continued to dispute the airport expansion had now won a court order banning all night-flights from Frankfurt citing this agreement. The court judgement enacting a ban, which was issued on the 11th October was temporary until the case could be concluded in a higher court in 2012. In the meantime all flights between 23.00 and 05.00hrs would be prohibited from the 30thOctober.

The immediacy of this decision had dealt a blow to Lufthansa Cargo in particular. It had been forced to adopt emergency winter schedules including scrapping two flights a week to China and even flying freighters to neighbouring, less regulated German airports during the day in order for them to take off for their final destinations during the night. Such had been the disruption that Lufthansa's CEO had even suggested that the new runway should not be opened, circumventing the ban on night flights.

It was unclear what effect this ban would have on air cargo traffic in Europe. Frankfurt was Europe's largest air cargo hub, although belly freight operations would be affected less as there was no restriction on day-time flights. Presumably it would be the freighters and particularly those operating to China and Central Asia that would be affected most. This was all the more painful for Lufthansa as this was a route which they had made particular efforts on. There would be those who benefit from what was likely to be a major – if presumably temporary – restructuring of air freight logistics in Europe. Neighbouring airports in France, the Netherlands but also possibly the new Leipzig-Halle facility which was home to the AeroLogic Lufthansa - DHL joint venture, could see more business. Of even greater threat was the ability of Dubai and the smaller Gulf airports to jump in and grab some trans-shipment business from Frankfurt.

October - Lufthansa Cargo resumed MD-11 freighter to Singapore.

On Tuesdays, the MD-11 freighters would stop off in Mumbai before flying on to Singapore. On the return flight to Frankfurt, they would call at Dhaka in Bangladesh and again in India - this time in Delhi. On Fridays, the flight from Frankfurt stops off in Cairo, Egypt, and in Sharjah, the United Arab Emirates. On Sunday, the way leads back over Dhaka and Delhi to Frankfurt.
September - Lufthansa's fleet modernisation was continued in with the ordering of
a further twelve aircraft (two Airbus A380s, one A330-300, four A320s, five Embraer 195s).
July - Lufthansa Cargo announced a tonnage increase of 14.8% in the first six months of 2011.

Capacity was up appreciably year on year. Overall, Lufthansa Cargo raised capacity by 19.7%. The increase was, among others, attributable to reactivation of freighters grounded temporarily in the crisis, expansion of the AeroLogic fleet to a total of eight aircraft and the carrier's marketing since July 1, 2010 of the freight capacities at Austrian Airlines.

Almost all the substantially increased capacity was sold in the market so that the load factor ended the first half at 69.1%. Growth was particularly pronounced in the Americas, where tonnage climbed by 19.5%.

"Lufthansa Cargo has harnessed the robust development of the global economy and sustained the growth momentum from the previous year," said the Lufthansa Cargo Chairman and CEO. "We have made our network even more attractive with the addition of new desti-nations and invested to good purpose in the ongoing development of our products. We posted gains especially in the special services we offer customers to meet their specific needs."
June - Lufthansa Cargo began operating twice weekly MD-11 freighter flights (Thursday and Saturday) to Houston, USA from its hub in Frankfurt, Germany.
April - Lufthansa Cargo was expanding its route network in Asia and offering its customers a new service to Bangladesh; connecting Frankfurt with once-weekly flights to Dhaka. The flights to the capital of Bangladesh, on Wednesdays, would be operated by a Lufthansa Cargo MD-11 freighter.

"Bangladesh has assumed growing importance as a production base for the international fashion industry. Our direct flights to and from Dhaka will shorten the transport time for customers and link them into Lufthansa Cargo's global network," noted the Regional Director South Asia and Middle East of Lufthansa Cargo.

The flight would leave Frankfurt on Wednesdays at 0140 hours, arriving in Dhaka at 1910 hours after a stopover in Mumbai. The return flight from Dhaka would leave on Wednesdays at 2215 hours and was scheduled to land in Frankfurt at 0600 hours on Thursdays after a brief stop in Delhi.

March - Lufthansa's Supervisory Board approved an order for 35 aircraft.

The order included 30 aircraft from the Airbus A320neo family and five Boeing 777 freighters. The passenger planes were planned to be delivered in 2016 and the freighters from as early as 2013.

Employees Expand

Employees    
2011 4,624
2010 4,517

Products And Services Expand

Express

  • time definite
  • capacity guarantee
  • quality assurance/proactive communication
  • tracking
  • electronic booking channels
  • BUP (Bulk Utilisation Programme) shipping
  • road feeder service.

Fresh Service

  • for shipments requiring some degree of temperature control: fruits and vegetables, flowers, plants, fish, seafood, meat and dairy products
  • transit-storage in a protected and temperature-controlled environment: Perishable Centres are located at large hubs including Frankfurt, Miami, Nairobi and Cairo
  • temperature-controlled air transportation
  • fresh-to-Door transportation: cool trucks operate from the company's transit hub at Frankfurt to destinations across Europe.

AirShip Service

  • 'one-stop' international air-sea freight service from Europe to Australia operated in partnership with Hamburg Sud
  • direct and daily connections to the company's hubs in Shenzhen and Hong Kong which are in turn linked to the largest Australian seaports of Melbourne, Sydney and Brisbane.

Special Services

  • td.Flash - highest speed and priority service available, no weight limits, guaranteed capacity
  • td.Pro - economical, reliable service for standard freight, regardless of size or weight
  • Care/td - for all hazardous goods shipments
  • Cool/td - for temperature sensitive goods
  • Fresh/td - for goods that need to be kept fresh
  • Safe/td 1 - security transport for valuable freight
  • Safe/td 2 - secure transport for theft-endangered goods
  • Live/td - for the transportation of animals
  • cd.Solutions - the option to have a standard forwarding solution for direct delivered within Germany and Europe developed.
  • Courier.Solutions - for time critical, high value freight, comes with personal supervision on the ground, maximum speed and short-term capacity access
  • Airmail
  • Charter.

Mergers Acquisitions Expand

Mergers Acquisitions: 2012 News

2012

April - Lufthansa completed the sale of British Midland Ltd. (bmi) to International Airlines Group (IAG), the parent company of British Airways. The completion of the sale took place after close of business on April 19, 2012. The purchase price amounted to £172.5m (€207m).

As price adjustments were agreed as part of the transaction structure, the net purchase price would be determined at the end of the second quarter 2012, at which point the final amount would be transferred. It was expected that the net purchase price would be negative. However, the costs of the transaction for Lufthansa would amortise within one year. The gross purchase price was expected to be reduced by a number of items including agreed deductions for not selling bmi regional and bmibaby prior to the completion of the transaction.

bmi’s underfunded Pension Scheme was to be transferred to the UK Pension Protection Fund. The pension shortfall for the members of the bmi Pension Scheme would be offset to a large extent by a one-off contribution from Lufthansa of £84m to a supplementary pension scheme.

On November 4, 2011, Lufthansa and IAG agreed in principle to the sale of bmi to IAG, prior to a legally binding purchase agreement being signed by both parties on December 22, 2011. The validity of this contract was subject to regulatory approval by the European Commission, which was received on March 30, 2012. By carrying out the transaction, Lufthansa sold a consistently loss-making company.

March - Jade Cargo International, a Lufthansa Cargo/Shenzhen Airlines joint venture that temporarily suspended operations of its fleet of six Boeing 747-400Fs earlier in the month, signed a letter of intent with China’s UniTop Group to restructure the company.

The sale was expected to take two months to complete, and would completely divest Lufthansa Cargo of its 25% stake in the company.
Mergers Acquisitions: 2011 News

2011

September - DHL Global Forwarding acquired Lufthansa's 50% ownership in joint venture company LifeConEx. The end–to–end life sciences cold chain logistics provider was now a 100% DHL subsidiary.

"After running the innovative specialised logistics service together for six years, DHL Global Forwarding and Lufthansa Cargo agreed that a change in ownership would best prepare LifeConEx to further grow its market position" stated Roger Crook, CEO of DHL Global Forwarding and Freight, and Deutsche Post DHL Board Member sponsor for the Life Sciences & Healthcare Sector.

Established in 2005, the joint venture became the global leader in its niche market. DHL would utilise its global presence to leverage LifeConEx's capabilities and expand its cold chain services. While furthering its cooperation with Lufthansa, DHL would also maintain LifeConEx's neutrality in carriers, forwarders and packaging providers. This investment also supported Deutsche Post DHL's 2015 group and Life Sciences sector strategy.

David Bang, CEO of LifeConEx would continue to lead the company and was committed to overseeing the ownership transition for continued development and success.
June - Following approval from the Japanese antitrust authorities, All Nippon Airways (ANA) and Lufthansa launched a strategic joint venture on Japan-Europe routes.
Mergers Acquisitions: 2010 News

2010

July - Vienna-based Austrian Lufthansa Cargo is a result of cooperation between Austrian Airlines and Lufthansa Cargo, which began its operation on July 1, 2009.

The new company is marketing all freight capacities of both airlines in Austria. Freight activities in all other countries have been amalgamated under the management of Lufthansa Cargo.

Lufthansa Cargo stated: "Through the successful integration of Austrian Cargo, our joint customers will profit from extensive connections in the eastern Europe growth region as well as access to the entire product portfolio and electronic booking channels of Lufthansa Cargo. (...) The airport shall become a centre of operations in future between eastern and western Europe."

Managing Directors of  Austrian Lufthansa Cargo GmbH are Franz Zöchbauer and Hasso Schmidt. Lufthansa Cargo has a 74% stake in the new company, Austrian Airlines holds 26%. The company employs around 120 people.
February - Lufthansa Cargo and Austrian Airlines had agreed to step up cooperation between their two companies in the airfreight sector. Under the new agreement, the flow of cargo traffic through the hubs at Frankfurt, Munich and Vienna would be optimised. Both companies' global distribution activities would be merged and their product portfolios and production processes harmonised.

In future, the two companies would jointly route their cargo traffic through the Vienna hub which would boost freight flows. Lufthansa Cargo and Austrian Cargo would also integrate their freight handling and distribution activities in Austria. In all other countries worldwide, freight activities would in future be amalgamated under the aegis of Lufthansa Cargo.

The CEO and Chairman of Lufthansa Cargo, commented: "Vienna Schwechat will become a central European hub for Lufthansa Cargo - comparable to our German hubs at Frankfurt and Munich. Thanks to Austrian's excellent route network, Lufthansa Cargo customers will also be able to take advantage of direct flights to destinations in all corners of the globe."

The Chief Commercial Officer Austrian Airlines, noted: "This marks a further step in the reorganisation of Austrian Airlines. Our cargo business will benefit from the new structure. We will lower our costs and improve our product portfolio. At the same time, we will be able in future to provide our customers with a globe-spanning network and the extensive product portfolio of the world's largest air cargo alliance."

The measures will take effect on July 1, 2010.
Mergers Acquisitions: 2009 News

2009

June - time:matters formed a partnership with LOT Polish Airlines. The new partnership would enable time:matters to access additional flights for the transport of same day shipments to Poland. Presently it could access just under twenty connections per day to and from Poland whilst following the agreement the amount of possible flights has doubled. Already this year time:matters had forged agreements with Brussels Airlines and Cebu Pacific Cargo.

The expansion of the time:matters' same day route would benefit companies based in Poland and in the Baltic states as well as international corporate clients that maintain business relations in these regions. The expanded use of Polish airports for the transport of European same day shipments reduces transport times to and from Poland and to cross-border destinations. It also created more flexible cut-off times and led to the partial or in some cases even complete elimination of transit flights via Frankfurt or Munich that were once necessary.

"The cooperation with LOT Polish Airlines offers our customers greater flexibility as well as an increased frequency for flights to and from Poland," says the Country Manager of time:matters Poland. "The new partnership provides us with a considerable advantage in terms of time and enables significantly later cut-off times, which is highly beneficial for our customers," he adds.

The Director of Cargo and Mail at LOT Polish Airlines, emphasises: "We are pleased to have gained a partner such as time:matters, which specializes in same day services. This addition to our portfolio represents a considerable added value for our customers."
Mergers Acquisitions: 2008 News

2008

December - German airline group Lufthansa made significant progress with its move to acquire European scheduled carrier Austrian Airlines. On the cargo front, both carriers were major players in Central and Eastern Europe markets among others.

The supervisory boards of the two airlines had approved Lufthansa's plans to initially acquire the 41.56% share in Austrian Airlines AG held by Österreichische Industrieholding AG (ÖIAG).

"This share package is to be acquired at a price of €366,000," stated Lufthansa. "In addition, a debtor warrant will be arranged, of which Lufthansa will pay a sum of up to €163m depending on Austrian Airlines' economic performance and the Lufthansa share outperforming its competitors."

Lufthansa said that in the course of the period specified by Austrian takeover law, it would also make a public takeover bid to Austrian Airlines' free float shareholders. The company was applying to the Austrian Takeover Commission for an extension of the notification period to the longest permissible time.

"The bid price will correspond to the average weighted market price of the Austrian Airlines share over the six months preceding this announcement. Subject to an examination by the Takeover Commission, this figure will be €4.44 per share. In total, some €215m will be offered to private and institutional free float shareholders as part of the takeover bid."

Lufthansa pointed out that execution of those contracts was subject, inter alia, to the conditions precedent of anti-trust approval and the approval of a €500m restructuring grant to be made by the Republic of Austria, both of which must be granted by the EC (European Commission). "Furthermore, Lufthansa must hold 75% of the shares in Austrian Airlines - including those transferred by ÖIAG - after the end of the regular acceptance period for the public takeover bid."

Lufthansa said that following acquisition, Austrian Airlines would remain a "broadly independent" airline with its head office in Austria, its own brand, fleet and crew, and would be managed as a profit centre in the Lufthansa Group. "Lufthansa has agreed to maintain Austrian air traffic infrastructure to the greatest possible extent, taking into consideration the needs of Vienna as a business location," it added.

 

Alliances

Sister Concerns

Other sister concerns

Major Contracts Listing Expand

Major Contracts: 2014 News

2014

March - Jan de Rijk Logistics announced that it had signed a prolongation agreement for road feeder services with Lufthansa Cargo. Under the contract Jan de Rijk Logistics would continue to provide European trucking services to Lufthansa Cargo as selected supplier at their main European hub at Frankfurt Airport, Germany.

Lufthansa Cargo's focus was on airport to airport cargo services. The network currently contained more than 300 destinations in approximately 100 countries served by freighters, the combined cargo capacity offered by the Lufthansa and Austrian Airlines passenger aircraft or road feeder services. The majority of cargo was transferred via the airport of Frankfurt am Main. Jan de Rijk Logistics would make use of its fleet of 600 vehicles across Europe to serve the contract.


 

Information Systems

  • ASTRIT
    Name: ASTRIT
    Vendor:
    Description:
    Allows the customer to check on the status of shipments and any td.Services that have been booked with a phone call - via ASTRIT,  a computerised telephone information service.  An e-mail or fax – whichever is preferred – with an up-to-the-minute status report.
    Capabilities: 
  • information about shipment and td.Services
  • additional menu options (repeat function, request for booking information)
  • possibility to authorise and thus make bundled inquiries concerning individual AWB lists
  • automatic forwarding of lists to e-mail address or fax number
  • TrackIT
    Name: TrackIT
    Vendor:
    Description:

    Technology to enable tracking of shipments.

    Capabilities: 
    • enter AWB number for immediate access to standard information.
    • personalised tracking via myCargo provides further information to help with subsequent planning.

Regions

Vertical Sectors

  • Consumer/ Retail

    Consumer/Retail: 2009 News

    2009

    October - Lufthansa Cargo and Hermes Transport Logistics announced that they were increasing their level of cooperation. Since early August, Lufthansa had handled the logistics of all incoming shipments arriving at Leipzig Airport for the wholly-owned subsidiary of the otto group. Aside from handling all imports, Lufthansa Cargo was responsible for arranging and loading truck transports to the Hermes bases at Haldensleben und Altenkunstadt. In future, the freight would be flown direct to Leipzig/Halle by Boeing 777 freighters in the fleet of Lufthansa Cargo's AeroLogic joint venture or be trucked by road from Frankfurt to the Hermes bases.

    "Our extreme flexibility and deployment of low-emission Boeing 777 freighters make a convincing case," said the Lufthansa Cargo Vice President Handling Germany. "Our network, customised to our customers' requirements, guarantees the fastest connections, high cost-efficiency and a host of synergy effects." Eckhardt Fechtner, General Manager Hermes Transport Logistics, added: "Shorter transit time for shipments and the environmental benefits resulting, among others, from fewer road service transports within Germany are major competitive gains for Hermes Transport Logistics. We are delighted to cooperate with Lufthansa Cargo at our most important distribution centre in Germany."

    Hermes Transport Logistics imported more than 14,000 tonnes of airfreight to Germany annually, principally from the Far East. The shipments consist largely of textiles.

  • Healthcare/ Pharmaceutical

    Healthcare/ Pharmaceutical: 2011 News

    2011

    September - DHL Global Forwarding acquired Lufthansa's 50% ownership in joint venture company LifeConEx. The end–to–end life sciences cold chain logistics provider was now a 100% DHL subsidiary.

    "After running the innovative specialised logistics service together for six years, DHL Global Forwarding and Lufthansa Cargo agreed that a change in ownership would best prepare LifeConEx to further grow its market position" stated Roger Crook, CEO of DHL Global Forwarding and Freight, and Deutsche Post DHL Board Member sponsor for the Life Sciences & Healthcare Sector.

    Established in 2005, the joint venture became the global leader in its niche market. DHL would utilise its global presence to leverage LifeConEx's capabilities and expand its cold chain services. While furthering its cooperation with Lufthansa, DHL would also maintain LifeConEx's neutrality in carriers, forwarders and packaging providers. This investment also supported Deutsche Post DHL's 2015 group and Life Sciences sector strategy.

    David Bang, CEO of LifeConEx would continue to lead the company and was committed to overseeing the ownership transition for continued development and success.

Other related vertical sectors

Logistics markets

  • Air Freight

    Air Freight: 2014 News

    2014

    January - Although Lufthansa Cargo was upbeat about last year's performance, its management appeared to be above all relieved that it managed its assets effectively in a weak market, rather than any significant increase in profits.

    Objectively, the cargo volume performance was weak, with Lufthansa Cargo carrying 1.7m tonnes over the past 12 months. In the words of its CEO, "Tonnage almost equalled the previous year's level," although Lufthansa's annual figures report that in 2012 the airline carried 1.9m tonnes, itself a fall of 7% on 2011.

    What appeared to underpin his optimism was that he had been able to fill his planes, effectively achieving a load factor of 69.9% up from 66.9% in 2012.This was certainly higher than the industry average which was in the low 40s percentage-wise.

    It might be suggested that Lufthansa's cost base had also fallen due to lower fuel costs and more efficient aircraft. What also appeared to be the case was that Lufthansa's cargo fleet was shrinking disproportionately as its passenger fleet related belly freight continued to expand.

    Indeed, compared to AirFrance KLM, Lufthansa had ridden the poor market conditions well. Last week AirFrance KLM announced that it was to continue to shrink its freighter fleet with the retirement of two B747Fs, whose costs had become unsustainable. Despite such continuing cuts, AirFrance KLM's Cargo business remained loss making in the third quarter, with a load factor of 61.8%.

    Lufthansa would release its financial numbers in March but press reports quoted Lufthansa spokesmen as suggesting a "high double digit million euros'" of profit for the year. Overall it appeared that Lufthansa Cargo had remained profitable through the effectiveness of its operational management.

    However the strategic issues around both the continuing low growth in the airfreight sector and the threat from Gulf based carriers remained significant barriers to Lufthansa Cargo in exploiting the weakness of others.

    Air Freight: 2012 News

    2012

    April - A German court in Leipzig upheld a night-flight ban at Frankfurt Airport between 11 p.m. and 5 a.m. local time.

    The ruling came after a Hessen court ruled in October 2011 that 17 night-flights would be banned when FRA’s fourth runway opened in the same month following resident complaints of aircraft noise from nearby Russelsheim and Offenbach. Lufthansa Cargo operated 10 of those scheduled nighttime slots.


    April - Lufthansa completed the sale of British Midland Ltd. (bmi) to International Airlines Group (IAG), the parent company of British Airways. The completion of the sale took place after close of business on April 19, 2012. The purchase price amounted to £172.5m (€207m).

    As price adjustments were agreed as part of the transaction structure, the net purchase price would be determined at the end of the second quarter 2012, at which point the final amount would be transferred. It was expected that the net purchase price would be negative. However, the costs of the transaction for Lufthansa would amortise within one year. The gross purchase price was expected to be reduced by a number of items including agreed deductions for not selling bmi regional and bmibaby prior to the completion of the transaction.

    bmi’s underfunded Pension Scheme was to be transferred to the UK Pension Protection Fund. The pension shortfall for the members of the bmi Pension Scheme would be offset to a large extent by a one-off contribution from Lufthansa of £84m to a supplementary pension scheme.

    On November 4, 2011, Lufthansa and IAG agreed in principle to the sale of bmi to IAG, prior to a legally binding purchase agreement being signed by both parties on December 22, 2011. The validity of this contract was subject to regulatory approval by the European Commission, which was received on March 30, 2012. By carrying out the transaction, Lufthansa sold a consistently loss-making company.


    March - Jade Cargo International, a Lufthansa Cargo/Shenzhen Airlines joint venture that temporarily suspended operations of its fleet of six Boeing 747-400Fs earlier in the month, signed a letter of intent with China’s UniTop Group to restructure the company.

    The sale was expected to take two months to complete, and would completely divest Lufthansa Cargo of its 25% stake in the company.


    March - Lufthansa would most likely not buy the remaining 55% of Brussels Airlines this year, chairman and CEO Christoph Franz revealed.

    Franz said, “Our strategic commitment is clear, but we are not in a hurry to exercise our call option. We still have another two years to do so. At this point of time the priority is on our bottom line.”

    In September 2008, Lufthansa bought 45% of Brussels Airlines parent company, SN Airholding for €65m via a capital increase. As part of the agreement, Lufthansa has an option of acquiring the remaining 55% from 2011. The option could be exercised during three weeks in April. 

    Franz also confirmed that “if necessary we will offload more loss-making airlines in our portfolio. We started to offload loss-making carriers last year, with the sale of bmi to IAG, we closed Lufthansa Italia and withdrew from Jade Cargo.”


    March - Lufthansa Cargo offered a new worldwide express service for urgent shipments. The new "Courier. Solutions" service provided the fastest transit and shortest delivery times in the Lufthansa Cargo. The company announced that the service had has no weight limits.

    Lufthansa Cargo was offering this new product in cooperation with time:matters, a Lufthansa Cargo Group company that specialised in express logistics services. Customers could drop off their shipment at Frankfurt Airport up to 90 minutes before departure. At various other airports, the minimum drop-off time was one hour before departure. At Frankfurt, the transit time was 60 minutes, while the transfer time at Munich was 50 minutes.

    The Vice President Product Management at Lufthansa Cargo said "with the shortest handling times, personal courier accompaniment during transit and round-the-clock, proactive shipment surveillance we can offer the speediest assistance when trade fair items or medicines, for example, are urgently needed on the other side of the world."


    March - Lufthansa Cargo announced it was adding a route to Chongqing, China when its summer flight schedule began on March 25. The company was offering flights to 303 destinations in 99 countries.

    Chongqing would be served with four flights weekly, operated by Lufthansa Cargo's MD-11 freighters. Other newcomers in the timetable - also thanks to the expansion of the network of Lufthansa passenger services - were Shenyang in northeastern China and Qingdao (Tsingtao) in Shandong province.

    Flights to Detroit, US were to be increased to twice-weekly connections. Services to Detroit commenced initially in January with a once-weekly flight in the Lufthansa Cargo freighter network.

    In South America, the company was adding twice-weekly MD-11 flights from Frankfurt to Montevideo, Uruguay.

    Back in the timetable was Kolkata, India. Flights were operated to the Indian city last summer, but were discontinued in recent months. Once-weekly direct flights from Frankfurt were now available again in the summer flight schedules.

    "We have selectively extended our route network and brought new and attractive growth markets into the timetable," noted a Lufthansa Board Member for Product and Sales. "We are expanding our presence in China, the world's biggest airfreight market, and now laying on freighter connections to a total of six Chinese destinations."


    January - Lufthansa Cargo was considering replacing its fleet of 18 Boeing MD-11Fs and would decide by 2014 which aircraft to go with, according to chairman and CEO Karl-Ulrich Garnadt.

    “We know we have to order more [Boeing] 777Fs and there is no other option,” Garnadt said. Lufthansa Cargo finalised an order for five 777 freighters valued at $1.35bn last spring.


    January - Lufthansa Cargo revealed some of its expectations for the year ahead. CEO Karl-Ulrich Garnadt said that he expected no growth in 2012. "Currently we are 10% down compared to last year. The demand is much weaker,” he said.

    The company's outlook was much more positive until last October, when it was announced that night flights would be banned at Frankfurt Airport. The ban removed 17 night-flights at the airport, 10 of which were Lufthansa Cargo's, costing the company €20m in profit in 2011. If the ban was contiually upheld in 2011, Lufthansa Cargo anticipated it would lose €40m in profit and a three digit figure in revenue.

    Garnadt also remarked that the ban would alter the company's fleet development plans. He said Lufthansa Cargo had planned to lease two more freighters for the coming summer schedule but had “axed” those plans. “If this scenario continues to go in the wrong direction, then we will start to replace some MD-11Fs with the first 777s instead of expanding our fleet."

    Garnadt said that if the court reverses the ban, the carrier will “switch some important night flights back to Frankfurt from July.” He said that 50% of Lufthansa Cargo's business was high-value express cargo.


    January - Lufthansa Cargo announced it had started operating its first-ever flights between Frankfurt and Detroit, Michigan (US). The route connected Germany with the centre of the US automotive industry every Monday (after the beginning of the summer schedule: each Sunday) by an MD-11 freighter in the cargo carrier's fleet. The subsequent return flight would stop off in New York on the way back to Frankfurt.

    "The new freighter connection supplements the daily flights operated by Lufthansa passenger aircraft, and offers our customers more capacity and greater flexibility," said the Lufthansa Cargo Vice President The Americas. "The automotive and pharmaceuticals industries, especially, are fuelling the growing demand for fast and reliable transports to and from Detroit."

    Starting in March, Lufthansa Cargo planned to expand its Detroit operations to twice per week. This new connection was the seventh destination served by the cargo airline's freighter network in the US. Along with the services operated by the Lufthansa passenger business, direct flights were now available to 17 airports in the US.


    January - Lufthansa Cargo boosted tonnage to record levels in 2011. The cargo airline carried approximately 1.9m tonnes of freight and mail in 2011, an increase of 5% compared to 2010.

    The airline raised capacity over the twelve months by 8.6%. The company attributed the increase was to the integration, since the second half of 2010, of the capacities of aircraft in the fleet of Austrian Airlines and the expansion to eight Boeing 777 freighters in the fleet of the AeroLogic joint venture. In an increasingly difficult market environment, Lufthansa Cargo lifted sales of revenue freight-tonne km by 6.5%, so that capacity utilisation reached 69.5%; a slight decline from 70.9% in 2010.

    "Especially in our German home market, we made full use of strong export demand to gain market shares. On the other hand, the economic climate in the important Asian airfreight market became increasingly bleak over the course of the year and led to over-capacities and increased competition for all airlines in the airfreight industry," observed the Lufthansa Cargo CEO and Chairman.

    "Lufthansa Cargo is excellently positioned in all growth markets. We will stay on our successful course and adjust our capacities flexibly in line with demand," commented Garnadt. Of crucial importance for the company's future, however, is the impending ruling by the highest Federal Administrative Court in Leipzig on the number of permissible night flights in Frankfurt. "Germany profits from a strong and successful airfreight industry, which must not be decoupled for several hours, daily, from global trade flows. A night-flight ban would deal a severe blow to the entire industry and threaten thousands of jobs in Germany, not only in the logistics industry" he concluded.
    Air Freight: 2011 News

    2011

    December - Lufthansa Cargo begun operations at its new facility for temperature-sensitive freight in Frankfurt, Germany. The Lufthansa Cargo Cool Centre was built in the space of just six months.

    The facility was equipped with four cool storage rooms for four different temperature ranges as well as a deep-freezer cell on an area of 4,500 sq m. From now on, all temperature-controlled shipments carried by the airline in Frankfurt would pass through the new facility.

    The Board Member Product and Sales, said: "Our Cool/td product is assuming ever-increasing importance for Lufthansa Cargo thanks to growth rates of 15%. The Lufthansa Cargo Cool Center will enable us to ship temperature-controlled freight faster, more reliably and more efficiently at our Frankfurt hub, and further expand our position as a leading provider of cool transports."

    Lufthansa Cargo earmarked substantial capital expenditure last year in the Cool/td product. Besides investing in the development of the Opticooler, the industry's most efficient cooling container, the cargo carrier commenced operations at its first international pharmaceutical hub at Hyderabad in India.


    October - Lufthansa Cargo resumed MD-11 freighter to Singapore.

    On Tuesdays, the MD-11 freighters would stop off in Mumbai before flying on to Singapore. On the return flight to Frankfurt, they would call at Dhaka in Bangladesh and again in India - this time in Delhi. On Fridays, the flight from Frankfurt stops off in Cairo, Egypt, and in Sharjah, the United Arab Emirates. On Sunday, the way leads back over Dhaka and Delhi to Frankfurt.


    October - Lufthansa Cargo underlined its fears regarding the consequences ensuing for the international logistics industry from the provisional night-flight ban placed upon Frankfurt Airport from October 30, 2011 by a regional court.

    Following the ruling from the administrative court in Hesse, issued a few days before the introduction of Lufthansa's winter flight schedules, the company had put together an emergency timetable for the period after October 30. A number of flights had had to be relocated to daytime slots or to the early and late hours of the day.

    Individual connections – to China, for example – had been cancelled entirely. Other flights bound for China would have to stop over at Cologne/Bonn Airport for several hours after an evening departure from Frankfurt so as to fly on, as originally planned, at night-time in the direction of the Far East. "We will be operating in future with unnecessary take-offs and landings, which will lead to more noise, higher fuel consumption and more costs running into millions," commented Lufthansa Cargo Chairman.

    Furthermore from January, at least one MD-11 freighter was to be transferred from Frankfurt to Cologne/Bonn Airport. The freighter would operate the overnight flights for the German logistics industry to North America, which could no longer be guaranteed from Frankfurt because of the night-flight ban.

    Lufthansa Cargo believed the provisional night-flight ban in Frankfurt was a drastic signal for the German logistics industry. He emphasised: "As export world champion, Germany is reliant on dependable connections to ship air freight to destinations around the globe. Frankfurt Airport plays in that respect a highly important role, since around 40% of German exports is transported by air."

    The company said that it was hoping that the Federal Administrative Court in Leipzig (the supreme court of appeal) would allow a minimum of necessary night flights in its final ruling.


    October - The fourth runway at Frankfurt airport was opened, yet what Frankfurt’s owners and customers had hoped to be a useful improvement to capacity had ballooned into a major crisis for the airport’s cargo operations. At 2.8 km the new runway would be shorter than the existing facilities and was designed to serve smaller short-haul traffic. Part of the 'Expansion 2020 program', it was the first major part of a development that would also see a new terminal and new cargo handling facilities by 2016. The taxi-ways to the new runways would also include a bridge over the neighbouring motorway and another over a high-speed railway.

    In order to get this programme past protesting local residents and environmental pressure groups, Fraport, the airport's owner, agreed to certain conditions including greater restrictions on night-flights. The residents and pressure groups who continued to dispute the airport expansion had now won a court order banning all night-flights from Frankfurt citing this agreement. The court judgement enacting a ban, which was issued on the 11th October was temporary until the case could be concluded in a higher court in 2012. In the meantime all flights between 23.00 and 05.00hrs would be prohibited from the 30thOctober.

    The immediacy of this decision had dealt a blow to Lufthansa Cargo in particular. It had been forced to adopt emergency winter schedules including scrapping two flights a week to China and even flying freighters to neighbouring, less regulated German airports during the day in order for them to take off for their final destinations during the night. Such had been the disruption that Lufthansa's CEO had even suggested that the new runway should not be opened, circumventing the ban on night flights.

    It was unclear what effect this ban would have on air cargo traffic in Europe. Frankfurt was Europe's largest air cargo hub, although belly freight operations would be affected less as there was no restriction on day-time flights. Presumably it would be the freighters and particularly those operating to China and Central Asia that would be affected most. This was all the more painful for Lufthansa as this was a route which they had made particular efforts on. There would be those who benefit from what was likely to be a major – if presumably temporary – restructuring of air freight logistics in Europe. Neighbouring airports in France, the Netherlands but also possibly the new Leipzig-Halle facility which was home to the AeroLogic Lufthansa - DHL joint venture, could see more business. Of even greater threat was the ability of Dubai and the smaller Gulf airports to jump in and grab some trans-shipment business from Frankfurt.


    October - Lufthansa Cargo resumed MD-11 freighter to Singapore.

    On Tuesdays, the MD-11 freighters would stop off in Mumbai before flying on to Singapore. On the return flight to Frankfurt, they would call at Dhaka in Bangladesh and again in India - this time in Delhi. On Fridays, the flight from Frankfurt stops off in Cairo, Egypt, and in Sharjah, the United Arab Emirates. On Sunday, the way leads back over Dhaka and Delhi to Frankfurt.


    September - Lufthansa's fleet modernisation was continued in with the ordering of
    a further twelve aircraft (two Airbus A380s, one A330-300, four A320s, five Embraer 195s).


    July - Lufthansa Cargo announced a tonnage increase of 14.8% in the first six months of 2011.

    Capacity was up appreciably year on year. Overall, Lufthansa Cargo raised capacity by 19.7%. The increase was, among others, attributable to reactivation of freighters grounded temporarily in the crisis, expansion of the AeroLogic fleet to a total of eight aircraft and the carrier's marketing since July 1, 2010 of the freight capacities at Austrian Airlines.

    Almost all the substantially increased capacity was sold in the market so that the load factor ended the first half at 69.1%. Growth was particularly pronounced in the Americas, where tonnage climbed by 19.5%.

    "Lufthansa Cargo has harnessed the robust development of the global economy and sustained the growth momentum from the previous year," said the Lufthansa Cargo Chairman and CEO. "We have made our network even more attractive with the addition of new desti-nations and invested to good purpose in the ongoing development of our products. We posted gains especially in the special services we offer customers to meet their specific needs."


    June - Lufthansa Cargo began operating twice weekly MD-11 freighter flights (Thursday and Saturday) to Houston, USA from its hub in Frankfurt, Germany.


    June - Lufthansa Cargo began operating twice weekly MD-11 freighter flights (Thursday and Saturday) to Houston, USA from its hub in Frankfurt, Germany.


    April - Lufthansa Cargo was expanding its route network in Asia and offering its customers a new service to Bangladesh; connecting Frankfurt with once-weekly flights to Dhaka. The flights to the capital of Bangladesh, on Wednesdays, would be operated by a Lufthansa Cargo MD-11 freighter.

    "Bangladesh has assumed growing importance as a production base for the international fashion industry. Our direct flights to and from Dhaka will shorten the transport time for customers and link them into Lufthansa Cargo's global network," noted the Regional Director South Asia and Middle East of Lufthansa Cargo.

    The flight would leave Frankfurt on Wednesdays at 0140 hours, arriving in Dhaka at 1910 hours after a stopover in Mumbai. The return flight from Dhaka would leave on Wednesdays at 2215 hours and was scheduled to land in Frankfurt at 0600 hours on Thursdays after a brief stop in Delhi.


    March - Lufthansa's Supervisory Board approved an order for 35 aircraft.

    The order included 30 aircraft from the Airbus A320neo family and five Boeing 777 freighters. The passenger planes were planned to be delivered in 2016 and the freighters from as early as 2013.
    Air Freight: 2010 News

    2010

    April - Lufthansa Cargo was the latest airline to report continuing growth in demand over the past few months. Its quarterly volume numbers, reported an increase of 19.3% compared to the same period in 2009, at 391,000 tonnes. Utilisation also climbed strongly with the cargo load factor increasing by 14.2 percentage points to 71.8%.

    The cargo trend indicated a general increase in business at the German airline, although passenger volumes grew by only 1.2% year-on-year, reflecting both the lesser nature of the fall in passenger volumes during the recession as well as the steepness of the recovery in air cargo. 

    BA World Cargo had also been reporting increasing volumes, with freight measured by cargo tonne kilometres rising by 6.4% year-on-year in March alone. British Airways suffered from a series on strikes during the period, although these did not seem to have affected adversely the quantities of cargo carried. Rather, it appeared that the lower available carrying capacity simply resulted in higher load factors. British Airways passenger business did suffer falls in volume as a result of its crews' industrial action so it was difficult to compare the behaviour of the two markets.

    Performance was not dissimilar at the third of the big European carriers, Air France-KLM. Here cargo volumes climbed by 2.1% in March as compared to the same period in 2009. In the intervening period Air France-KLM has stripped out 11.8% of its capacity and this had increased the load factor to 72.5%. Growth was fairly uniform across the airline's geographical markets.  It was a little surprising that Air France-KLM - which had not suffered from industrial action - was expanding its volumes more slowly than its two competitors which had had labour problems.   

    Although all of the airlines' cargo operations continued to be cautious in their forecasts, it was becoming fairly clear that the air freight market had recovered much of its activity and that the cargo operations of many of the larger carriers were back at economic levels of utilisation.


    February - Lufthansa Cargo was under threat from a four day strike by its own pilots and that of its parent company, Lufthansa. The German carrier, which was one of the world's largest air freight carriers, had weathered the recession better than many of its rivals, however the threatened industrial action could have been a significant blow to its business. It was also part of a wave of labour unrest hitting many of the established airlines as they attempted to restructure their cost base in the face of a severe recession in the sector.

    The pilots union, Vereinigung Cockpit, was threatening to bring all of its 4,500 members out on strike (Monday, 22 February), until Thursday of that week over a dispute concerning the use of non-German subsidiaries. These subsidiaries offered Lufthansa the option of cheaper wage costs and the union fears Lufthansa would increasingly use them instead of services operated by German staff. The pilots' union was demanding that all Lufthansa pilots were given the same pay and conditions, something which the company was not very willing to do. Instead it had offered its pilots in the German part of Lufthansa job security until 2012.

    The airline had said that the strike could cost it as much as €100m. It was also considering legal action to stop the strike going ahead. Lufthansa says that although subsidiaries such as Lufthansa Cargo would be affected, operations by its non-German companies would not, enabling a proportion of flights to operate as normal. 

    The impact of such as strike on the air freight market worldwide would be significant. Although certainly not occupying a dominant position, Lufthansa provided substantial capacity in many airfreight routes such as Europe to China. The effect of a sudden withdrawal of this capacity was likely to push-up rates aggressively. The beneficiaries of this would be other air freight carriers, although freight forwarders may be left scrambling for space.

    The direction of the market out of the Asia Pacific region had been uncertain after the big increases in volumes and rates prior to Christmas. The Lufthansa strike may have acted to continue driving up rates, if only in the short-term.
    Air Freight: 2009 News

    2009

    September - Lufthansa was threatening to close its fleet of freighter aircraft if restrictions on night flights were imposed on its hub at Frankfurt. The CEO of Lufthansa Cargo was quoted commenting to Reuter's journalists just before the weekend that it might no longer pay to have its own cargo fleet. He was responding to a German court judgement on the service limitations around the expansion of Frankfurt airport. In order to calm opposition to the growth of the airport, politicians in the State of Hesse agreed to limit the number of night flights to just 17. Lufthansa challenged this condition, but the court rejected the airline's objection stating that the local politicians had the right to agree to such limitations.

    The problem for Lufthansa cargo specifically was that it would receive few if any of the allotted 17 slots, with passenger services invariably being higher up the queue. This would severely curtail the viability of Lufthansa's freight hub at Frankfurt and therefore Lufthansa's freighter fleet.

    Lufthansa had been unusual amongst major airlines in its commitment to cargo services but also in the degree of reliance it placed in cargo aircraft. Almost half of its capacity was in its fleet of 19 freighters with the rest in belly-freight. Therefore any move away from freighters would be a significant change in corporate strategy as well as having a sizeable impact on the air freight market. This suggested that its comments may in part be a threat designed to sway the politicians of Hesse as a much as a real assessment of Lufthansa's future fleet options.  

    It was unclear what implications any reduction in the freighter fleet would have on Lufthansa's other freight operations, such as AeroLogic, its joint venture with DHL which also operated its own aircraft but whose hub was based in Leipzig, in eastern Germany.


    August - Lufthansa Cargo added a range of destinations in the USA and southern Europe to its network. The network extension included Athens, Greece and the airline had commenced a once-weekly flight on Thursdays ex Frankfurt using an MD-11F. From there, it will fly via Mumbai to Hong Kong.

    In addition, the routing Frankfurt - Istanbul - Frankfurt would be served five times a week after a short stoppage and on Saturdays, an additional stopover in Athens would be implemented. The A300F freighter used offered a capacity of 40 tonnes. As previously it would continue serving Athens with belly capacities on Lufthansa passenger aircraft and ad-hoc road services from Frankfurt and Munich Airports.

    From August, Lufthansa would launch twice-weekly flights out of Frankfurt to Seattle on the US West Coast on Thursdays and Saturdays. They would be routed through Seattle en-route to Los Angeles.

    Additionally Lufthansa Cargo was expanding its services to South America with a daily connection to Viracopos/Brazil. New flights on Mondays would also be available to Bogota/Colombia, raising the frequencies to the southern coast of South America to thrice-weekly. An additional second stopover weekly in Curitiba would come into the timetable from August.

    Finally Lufthansa Cargo would be offering a once a week connection to the Mexican city of Guadalajara (GDL). The flight would operate from Frankfurt via Dallas/Fort Worth (DFW) to Guadalajara and again via Dallas back to Frankfurt.

    "The newcomers to the network in Europe, the USA, South and Middle America will strengthen the position of Lufthansa Cargo in those markets and offer our customers attractive connections to strong growth regions," commented the Senior Vice President Network and Product Management at Lufthansa Cargo AG. "Moreover, they show how fast and flexibly we are harnessing opportunities in a difficult market environment so as to emerge from the crisis as a reliable and future-proof partner for our customers."


    January - Lufthansa Cargo confirmed previously-indicated plans to put many of its staff on short-time working.

    In a statement the German air cargo carrier said about 2,600 ground employees in Germany would be put on short-time working from March 1. It reported that a company agreement to that effect had been signed in Frankfurt on February 12 by the Lufthansa Cargo Executive Board and the Works Council. "The envisaged measures will enable the company to adapt its staffing capacities flexibly to accommodate declining demand in the air cargo business," it stated.

    Lufthansa Cargo said that under the terms of the agreement, which had been concluded for an initial period of 12 months until February 28, 2010, working hours for all ground staff (including non-pay-scale employees) would be reduced by 20%. Staff on short-time working would be guaranteed 90% of their last net pay.

    The Lufthansa Cargo Executive Board Member Finance and Human Resources, commented: "As soon as the air cargo market picks up again, we can relax the measures. If, however, the demand situation becomes more acute, we can adjust the short-term working measures upwards."

    Lufthansa Cargo said corresponding negotiations were currently being conducted with representatives of the carrier's cockpit staff. In addition, senior executives and members of the Executive Board would take a voluntary pay cut with the introduction of short-term working.


    January - Lufthansa Cargo was set to introduce short-time working in response to the global slump in that traffic and resulting cutbacks in its own freighter service operations.

    In a statement issued the German air cargo carrier said its Executive Board had reached an agreement on that move with the company's Works Council. The details of a corresponding company accord were to be hammered out by a negotiating commission "as soon as possible".

    The Lufthansa Cargo Chairman, stated: "Short-time would affect around 2,600 employees of the Lufthansa cargo carrier in Germany. The envisaged measures will allow the company to adapt staffing capacities flexibly to accommodate declining demand.

    "Demand for air freight capacities has fallen sharply, worldwide. The production halt in diverse industries has hit the entire international logistics business - and especially the air cargo industry.

    "After scaling back our freighter capacities, flexible adjustment of staffing capacities has become inevitable in the company's present situation. We are nevertheless confident that we will be able to safeguard all jobs at Lufthansa Cargo."

    Lufthansa Cargo pointed out that its freight tonnage had "plummeted" by 21.4% in December compared with December 2007. "Demand was still at a low level after the turn of the year owing to longer works holidays over Christmas, production cutbacks and short-time work in an array of industries."

  • Cold Chain Logistics

    Cold Chain Logistics: 2011 News

    2011

    December - Lufthansa Cargo begun operations at its new facility for temperature-sensitive freight in Frankfurt, Germany. The Lufthansa Cargo Cool Centre was built in the space of just six months.

    The facility was equipped with four cool storage rooms for four different temperature ranges as well as a deep-freezer cell on an area of 4,500 sq m. From now on, all temperature-controlled shipments carried by the airline in Frankfurt would pass through the new facility.

    The Board Member Product and Sales, said: "Our Cool/td product is assuming ever-increasing importance for Lufthansa Cargo thanks to growth rates of 15%. The Lufthansa Cargo Cool Center will enable us to ship temperature-controlled freight faster, more reliably and more efficiently at our Frankfurt hub, and further expand our position as a leading provider of cool transports."

    Lufthansa Cargo earmarked substantial capital expenditure last year in the Cool/td product. Besides investing in the development of the Opticooler, the industry's most efficient cooling container, the cargo carrier commenced operations at its first international pharmaceutical hub at Hyderabad in India.


    September - DHL Global Forwarding acquired Lufthansa's 50% ownership in joint venture company LifeConEx. The end–to–end life sciences cold chain logistics provider was now a 100% DHL subsidiary.

    "After running the innovative specialised logistics service together for six years, DHL Global Forwarding and Lufthansa Cargo agreed that a change in ownership would best prepare LifeConEx to further grow its market position" stated Roger Crook, CEO of DHL Global Forwarding and Freight, and Deutsche Post DHL Board Member sponsor for the Life Sciences & Healthcare Sector.

    Established in 2005, the joint venture became the global leader in its niche market. DHL would utilise its global presence to leverage LifeConEx's capabilities and expand its cold chain services. While furthering its cooperation with Lufthansa, DHL would also maintain LifeConEx's neutrality in carriers, forwarders and packaging providers. This investment also supported Deutsche Post DHL's 2015 group and Life Sciences sector strategy.

    David Bang, CEO of LifeConEx would continue to lead the company and was committed to overseeing the ownership transition for continued development and success.


    May - Lufthansa Cargo announced that its pharmaceutical hub for temperature-sensitive airfreight had begun operations at Hyderabad Airport in India.

    "With the certification of the key stations for cold-chain transport in our network we are strengthening our commitment to transporting temperature-sensitive shipments," said the Senior Manager Global Key Accounts Temperature Control at Lufthansa Cargo. "In parallel to the certification process, we are further expanding our own fleet of cold-chain containers in Hyderabad."

    In December last year, Lufthansa Cargo and the operator of Hyderabad Airport, the GMR Group, announced plans to jointly develop the airport into the key hub in South Asia for the transport of temperature-sensitive pharmaceuticals.

    The first two cold-chain transports from Lufthansa Cargo's new pharmaceutical hub in Hyderabad carried consignments from the Dr. Reddy and Gland Pharma pharmaceutical groups. The temperature-sensitive medicines were transported to Philadelphia and Chicago and via Frankfurt aboard a Lufthansa Cargo MD-11.
    Cold Chain Logistics: 2010 News

    2010

    August - Lufthansa Cargo is offering customers more options for the transport of temperature-sensitive airfreight, adding to its portfolio, the latest generation of cooling containers - opticooler.

    "Business with temperature-sensitive freight has grown strongly in defiance even of the global economic crisis in 2009," said Lufthansa Cargo. "We aim to continue that growth trend and increase our market shares. We have for that very reason invested in new technologies."

    Transportation of temperature-sensitive cargo is a demanding operation for cargo airlines. With outside temperatures at airports they serve ranging from minus 30 to plus 40 degrees Celsius, they need to be equipped with containers in which temperatures fluctuate only marginally so as to avert any damage to sensitive freight. The new opticooler offers greater reliability than other models.

    Lufthansa Cargo completed the test phase with the innovative container in August. Opticoolers are used on all routes in the cargo carrier's global network.

  • Green Logistics

    Green Logistics: 2010 News

    2010

    March - Lufthansa Cargo and Jettainer concluded trials of lightweight containers that will allow lower fuel burn and thus lower CO2 emissions.

    Jettainer, the outsourced ULD (Unit Load Device) management company partly owned by Lufthansa Cargo, provided 1,000 containers made of fiberglass, Kevlar fiber or Dyneema for a total of approximately 120,000 trial runs on Lufthansa flights over six months. The containers are 20% lighter than aluminum containers.

    "Lufthansa Cargo stands by its ecological commitment. By 2020, we aim to reduce our specific fuel consumption by 25%," said Lufthansa Cargo. "The successful tests with lightweight containers constitute a significant step in that direction."

  • Humanitarian Logistics

    Humanitarian Logistics: 2010 News

    2010

    September - Lufthansa Cargo is sending a further relief flight to Pakistan. On board the MD-11 freighter are around 23 tonnes of Oral Rehydration Salts for children suffering from diarrhoeal diseases after the disastrous floods. Lufthansa Cargo is making the freighter's capacity available free of charge to UNICEF. Flight LH8456, routed from Frankfurt to Hong Kong, will make an unscheduled stopover in Karachi to off-load the relief supplies. The cargo carrier organised the special flight for UNICEF in cooperation with its Lufthansa Cargo Charter subsidiary, which specialises in ad-hoc transports.

    At the end of August, Lufthansa Cargo and its Charter subsidiary sent around 50 tonnes of medical supplies to Pakistan for the United Nations Population Fund (UNFPA). Lufthansa Cargo and UNICEF are planning a further relief flight to Karachi.

  • Intermodal Transport

    Intermodal Transport: 2014 News

    2014

    March - Jan de Rijk Logistics announced that it had signed a prolongation agreement for road feeder services with Lufthansa Cargo. Under the contract Jan de Rijk Logistics would continue to provide European trucking services to Lufthansa Cargo as selected supplier at their main European hub at Frankfurt Airport, Germany.

    Lufthansa Cargo's focus was on airport to airport cargo services. The network currently contained more than 300 destinations in approximately 100 countries served by freighters, the combined cargo capacity offered by the Lufthansa and Austrian Airlines passenger aircraft or road feeder services. The majority of cargo was transferred via the airport of Frankfurt am Main. Jan de Rijk Logistics would make use of its fleet of 600 vehicles across Europe to serve the contract.


  • Rail Transport

    Rail Transport: 2013 News

    2013

    September - time:matters launched a new rail service out of Germany to Amsterdam, in partnership with Deutsche Bahn. The company, which was 49% owned by Lufthansa Cargo, stated that the extension of its ic:courier rail service would allow for same day delivery into the Netherlands.

    The rail route, which ran from Frankfurt to Amsterdam Centraal station four times a day, joined the ic:courier service's international destinations along with Basel, Paris and Vienna, as well as the 140 German train stations served.

    The time:matters chief executive, said, "The cooperation with Deutsche Bahn offers our customers greater flexibility as well as a higher frequency of transport options to Amsterdam."

    The company handled about 666,000 items a year, and operates its own courier terminal at Frankfurt Airport.


  • Service Parts Logistics

    Service Parts Logistics: 2008 News

    2008

    August - time:matters announced that it had gained Siemens Healthcare (Erlangen, Germany), a business unit of Siemens AG, as a customer for the time-critical spare parts logistics segment. The logistics provider said it had entered into a cooperation agreement with retroactive effect from April 1, 2008.

    As part of that agreement, time:matters had taken on spare parts supply in Scandinavian countries as well as in Italy for Siemens Healthcare, one of the world's largest suppliers to the healthcare industry. "Siemens Healthcare manufactures and distributes a wide range of life-saving and vital high-tech equipment for clinics and doctors' offices - such as diagnostic systems and therapy equipment, but also complete IT solutions," explained time:matters.

    The logistics company said that following Fujitsu Siemens Computers, time:matters had within a short time been able to gain another corporate customer from the Siemens Group for its logistics services. "For instance, time:matters maintains a special 'in-night network' for Siemens Healthcare which ensures that spare parts for sensitive medical equipment can be transported overnight from the spare parts warehouse to the place that they are needed - within 12 to 14 hours," it stated.

    "Therefore, it is, for example, possible to ensure that a component, which is urgently needed for the repair of a defective magnetic resonance tomograph, is picked up at the spare parts warehouse at 1830 hours and is already at the respective clinic's disposal at 0800 hours the next morning. In addition to the 'in-night service', other services can also be implemented and are selected according to the individual needs of each specific case of application."

Other related logistic markets

News

  • 27/03/2014 Lufthansa Cargo signs contract extension with Jan de Rijk Logistics
    27/03/2014

    Jan de Rijk Logistics announced that it has signed a prolongation agreement for road feeder services with Lufthansa Cargo. Under the contract Jan de Rijk Logistics will continue to provide European trucking services to Lufthansa Cargo as selected supplier at their main European hub at Frankfurt Airport, Germany.

    Lufthansa Cargo's focus is on airport to airport cargo services. The network currently contains more than 300 destinations in approximately 100 countries served by freighters, the combined cargo capacity offered by the Lufthansa and Austrian Airlines passenger aircraft or road feeder services. The majority of cargo is transferred via the airport of Frankfurt am Main. Jan de Rijk Logistics will make use of its fleet of 600 vehicles across Europe to serve the contract.

  • 05/12/2013 Hunt & Palmer targets American air cargo market
    05/12/2013

    Hunt & Palmer Cargo Charters Ltd, the cargo division of UK–based Hunt & Palmer PLC, an international air charter company specialising in passenger flights, has announced its expansion into North America with the appointment of Platinum Cargo as their general sales agent in the country.

    Hunt and Palmer's Director Jamie Peters commented, "The Hunt & Palmer brand is already well established in the USA for its passenger focused private jet charters, however the American markets also have considerable potential for our cargo services and the appointment of Platinum Cargo will enable us to capitalise on that."

    Platinum Cargo, formerly the US general sales agent for Lufthansa Cargo Charter, will actively market and sell Hunt & Palmer's cargo charter brokerage service in all ten of its gateway cities. Timothy Pfeil, Vice President of sales and airline relations at Platinum said, "Through our relationship with Lufthansa, we have proved that this type of arrangement can bring huge results. We are keen to maintain and expand our focus on this segment of our business and believe that this new deal with Hunt & Palmer will bring considerable benefit to both companies."
  • 03/10/2013 Lufthansa Cargo expands its South America services
    03/10/2013

    Lufthansa Cargo has announced plans to expand its operations in South America by adding routes and additional services.

    Towards the end of October, 2013 it plans to add Lima, Peru to its global network which will be flown twice a week with MD–11 freighters. The outbound flight will be via Dakar, Senegal and Manaus, Brazil to Peru. The return journey to Frankfurt will include stops in Quito, capital of Ecuador, as well as in Aguadilla in Puerto Rico.

    The addition of the routes follows the economic growth seen in Peru which has been boosted by numerous free trade agreements. The main exports of the country are fruit and vegetables, however volumes of numerous non–perishable goods can be expected to rise.
  • 20/09/2013 Lufthansa Cargo adds new Boeing 777 freighters to its fleet
    20/09/2013

    Lufthansa Cargo announced that it has introduced five new Boeing 777 freighters into its fleet to increase fuel efficiency and tonnage as well as reduce noise levels. The first three destinations scheduled for the aircraft are Atlanta, Chicago and New York in the US.

    The Boeing 777F, list price US$270m, is able to remain in the air for ten and a half hours with a payload of 103 tons. During that time it can fly over 9,000 km non–stop. In addition, the company stated that the aircraft meets the strictest noise protection standards in international civil aviation.

    "Thanks to its outstanding technical performance and reliability, the freighter is entering new dimensions. It also marks a milestone on our ambitious path to lowering specific emissions by 25% until 2020", said Karl–Rudolf Rupprecht, Board Member Operations Lufthansa Cargo AG. Modernising the fleet is just one of six projects of the Lufthansa Cargo 2020 future programme.

Briefs

  • 25/03/2014 Conflict with Russia will curtail major logistics markets
    25/03/2014

    The crisis around the Russian annexation of the Crimean appears to be of such magnitude that it is likely to have a profound effect on the economies across Central and Eastern Europe. As ever logistics will be a primary focus.

    An obvious problem area will be trade both in the Black Sea region and the Baltic Sea. The consumer boom that Russia has experienced over the past decade has overstretched its port’s capacity to handle imports resulting in the growth of trans–shipment ports in Turkey and Romania, handling not just containers but also ro–ro cargoes such as cars. Presumably this traffic will be hit badly.

    The Baltic trade has also grown vigorously recently. Not just ports in Northern Germany, Poland and the Baltic States but shipping providers such as DFDS, Unifeeder and Grimaldi have significant business into Russia. Of course within this trade Finland occupies a special position. Its efficient, reliable ports are a major access point into Russia and even just a recession in Russia will directly affect such businesses.

    One group that can hardly be surprised at events are road freight operators between Russia and Central Europe. For example there have been a series of conflicts between the Russian authorities and the Baltic States over strange issues to do with cargo insurance and TIR agreements. It is tempting to believe that these owed as much to do with the political environment in Moscow than any objective problems to do with the regulation of freight movement. The opportunity for further problems here seems considerable.

    There must also be effects on Russian investments in logistics outside the country. Prominent amongst these is GEFCO which is now 70% owned by the Russian State Railway company– RZD– whose head is Vladimir Yakunin, a close associate of Vladimir Putin and who has been named as a target for sanctions by a number of western Governments including France. Bearing in–mind it appears that part of the logic for the investment in GEFCO was to attract western European cargoes onto Russian railways it raises questions about the future strategy of GEFCO and possibly the viability of the whole ownership of GEFCO.

    Deutsche Bahn Schenker has also developed rail services across Russia through Central Asia to China. These must be seen as vulnerable to political interference whilst the termination of DB Schenker’s rail service across Kazakstan and through Russia carrying German, American and British military equipment back from Afghanistan must surely be likely, although alternatives are available not least air/land services through Dubai.

    A further aspect is the implications for Russian companies such as Global Ports that have raised capital in London for investment in their business. Such firms would appear to be prime targets for some sort of action not least as they are often controlled by persons close to political power in Moscow.

    Another potential area is overfly rights from Russia. In the recent past Russia has not been shy about manipulating these in a characteristic cynical manner. For example it used the threat to withdraw overfly rights from Lufthansa as part of its attempts to get the German airline to use a Siberian airport as a cargo hub. The possibility that it will use this tool in its conflict with western states must be high.

    So the list of potential disruption to logistics in Europe is very long.

    Yet a more profound trend will be the re–orientation of trade form Western and Central away from Russia. Not just in the energy sector but many businesses such as the automotive sector, chemicals and luxury goods will experience a considerable change of direction as a market of not inconsiderable size is effectively shut–down.

  • 20/03/2014 Lufthansa describes a terrible year but FedEx implies a recovery
    20/03/2014

    For Lufthansa Cargo revenue fell for the financial year by 9.2% to €2.4bn. Profits were savaged, with operating profit falling by 26%, operating margin by 0.7% and EBITDA by 33.8% to €131m. This, despite fairly savage reductions in capacity with the cargo load factor falling by just 0.3%, suggested rates must have been very weak. Markets saw falling demand across the world, even in the previously strong Middle–East with the Asia–Pacific the only region to grow and this only by 0.1% in terms of tonnage carried.

    Lufthansa Cargo expect 2013 to be some sort of nadir with demand either rising or steady through 2014.

    In contrast FedEx’s biggest problem over the past quarter was the weather, with heavy snow interrupting services. Although the group’s revenue and profits both increased, its core Air Express business saw revenue decline very slightly, although operating profits increased 14% year–on–year to $135m.

    Despite the bad weather domestic volumes increased marginally whilst ‘International Economy’ traffic increased 8%, admittedly whilst the more expensive ‘International Premium’ service fell by 5%. Fred Smith, FedEx’s Chairman and CEO commented that "On days when the weather was closer to normal seasonal conditions, our volumes were solid and service levels were high.”. The ‘Ground’ and ‘Freight’ business at FedEx saw solid growth in volumes of 8% and 9% year–on–year, aided as ever by internet–shopping demand.

    These FedEx numbers suggest that underlying freight demand in the US and beyond is recovering and that the sort of market conditions described by Lufthansa may be ending. Although wider economic conditions in parts of Europe are still poor and markets such as Asia are slowing appreciably, US demand is apparently well on the way to recovery and this surely will have some implications for the air freight market despite loss of market share to sea freight.

  • 16/01/2014 Lufthansa manages a weak market
    16/01/2014

    Although Lufthansa Cargo is upbeat about last year's performance, its management appears to be above all relieved that it managed its assets effectively in a weak market, rather than any significant increase in profits.

    Objectively, the cargo volume performance was weak, with Lufthansa Cargo carrying 1.7m tonnes over the past 12 months. In the words of CEO Karl Ulrich Garnadt, "Tonnage almost equalled the previous year's level," although Lufthansa's annual figures report that in 2012 the airline carried 1.9m tonnes, itself a fall of 7% on 2011.

    What appears to underpin Mr Garnadt's optimism is that he has been able to fill his planes, effectively achieving a load factor of 69.9% up from 66.9% in 2012.This is certainly higher than the industry average which is in the low 40s percentage–wise.

    It might be suggested that Lufthansa's cost base has also fallen due to lower fuel costs and more efficient aircraft. What also appears to be the case is that Lufthansa's cargo fleet is shrinking disproportionately as its passenger fleet related belly freight continues to expand.

    Indeed, compared to AirFrance KLM, Lufthansa has ridden the poor market conditions well. Last week AirFrance KLM announced that it was to continue to shrink its freighter fleet with the retirement of two B747Fs, whose costs had become unsustainable. Despite such continuing cuts, AirFrance KLM's Cargo business remained loss making in the third quarter, with a load factor of 61.8%.

    Lufthansa will release its financial numbers in March but press reports quote Lufthansa spokesmen as suggesting a "high double digit million euros'" of profit for the year. Overall it appears that Lufthansa Cargo has remained profitable through the effectiveness of its operational management. However the strategic issues around both the continuing low growth in the airfreight sector and the threat from Gulf based carriers remain significant barriers to Lufthansa Cargo in exploiting the weakness of others.
  • 02/10/2013 Logistics providers to benefit from the Shanghai Free Trade Zone
    02/10/2013

    The Shanghai Free Trade Zone (FTZ) opened this week with much fanfare. Expectations are high for this FTZ as China tests opening its markets further to global competition. China's State Council indicated it would open its mostly sheltered services sector to foreign competition along with financial reforms that include a convertible yuan and liberalised interest rates. However, uncertainty on just how far the Chinese government will take this "experiment" to open its financial industry and international trade remains to be seen.

    The FTZ spans almost 29 sq km in Shanghai's Pudong New Area including the Waigaoqiao duty–free zone and the Yangshan Port. It is believed it may eventually expand to cover the entire Pudong district which covers 1,210.4 sq km of land.

    In all, 18 industries are to be liberalised. The government has grouped these industries into six focus areas for the FTZ:

    1. Financial industry
    2. Shipping and logistics
    3. Commercial trade
    4. Professional services such as law and construction
    5. Culture and entertainment
    6. Social services including education and healthcare

    According to various sources, China's Ministry of Culture also plans to remove a 13–year old ban on video game console manufacturing and sale for companies registered in the zone. Microsoft has noted great interest in this opportunity.

    For the logistics and transportation market, the FTZ is supposed to relax the proportion of foreign companies in joint ventures within international shipping enterprises and also allow for wholly foreign–owned shipping management enterprises to be established within the zone.

    Another interesting prospect was noted in a recent article from the 'South China Morning Post'. The newspaper interviewed the chairman of China Eastern Airlines which is based in Shanghai. The airline hopes to obtain approval for a cross–border e–commerce business in the FTZ. The tax breaks offered within the FTZ, mean that the airline anticipates an increase in purchases by consumers for foreign products. According to the chairman, "We have plans to take advantage of the FTZ to bolster our logistics business. With the establishment of the zone, airfreight will become one link in the chain of our comprehensive logistics business."

    Within the FTZ is Pudong International Airport. Much like other Chinese airports, Pudong has witnessed declines in cargo. However, the benefits of such an economic area could be beneficial to not only the airport but also to such air cargo providers as China Cargo Airlines, Lufthansa Cargo and UPS, all who operate independent terminals at the airport.

    Sea shipments also will likely benefit as well. Waigaoqian and the Yangshan deep water port, part of the Port of Shanghai operations, are also included in this zone.

    While critics of the Shanghai FTZ note a certain vagueness of thes "liberalisation" rules, others have made comparisons to a new "Hong Kong". Regardless, the potential for this zone may allow for further expansion plans to other locations such as the economic zone in Qianhai, Shenzhen.

    *Image courtesy of Clifford Chance The Wall Street Journal