Lufthansa Cargo generated earnings of €446 million in the first 9 months of this year, contrasting incurred losses of €33 million in a y-o-y comparison. The freight subsidiary thus proved
to be one of the few members of the Lufthansa Group that is profitable. Special conditions such as the operation of ‘preighters’ in addition to its own fleet of 19 all-cargo aircraft contributed
to the positive nine-month result.

The logistics division, headed by Lufthansa Cargo, stands out as the only member of the Group which Lufthansa’s Captain Carsten Spohr and his top management level colleagues are currently pleased
with.
This is because of the outstanding performance leading to a paramount financial result of the Cargo subsidiary presented today (5NOV20). Despite a 36% capacity decline, triggered by the loss of
Lufthansa’s passenger fleet bellies, Lufthansa Cargo’s revenue rose by 4% in the first nine months.
The key factor in this positive development was the deployment of one of the largest and most modern freighter fleets, comprising 13 Boeing B777Fs (incl. AeroLogic) and complemented by 6 aging
MD-11Fs, due to leave the fleet sometime during the course of next year. Another contributing factor was the significant increase in average revenues, which is attributable to the global loss of
cargo capacity in passenger aircraft. Hence, the gap between supply and demand pushed rates through the roof.

Peter Gerber is no true Uncle Scrooge
To put it simply: Within the airline group, the logistics subsidiary now plays a similar role to billionaire Uncle Scrooge McDuck’s within the famous Duck Family. However, the tiny difference is
that Cargo boss Peter Gerber’s profits do not flow into a large money bin but instead serve to reduce the enormous losses of the parent company.
And these look bleaker than expected by analysts and market observers. From JAN20-SEP20, a loss of €5.6 billion was incurred, compared to a profit of €1.04 billion in the previous year. In Q3,
Lufthansa slipped even deeper into the red than initially forecasted due to the COVID-19 pandemic. From JUL20-SEP20, worldwide travel restrictions and decommissioned aircraft of the airline
caused a net loss of €1.97 billion, after a profit of €1.15 billion in the previous year. Analysts had only expected losses in the region of €1.2 billion. At the same time, sales slumped by three
quarters to €2.7 billion. This was also considerably less than the estimated €3.4 billion.
In view of the worst crisis in the industry since WW2, the Group had reduced its flight offerings around the core brand Lufthansa and its subsidiaries Eurowings, Austrian, and Brussels Airlines
in the third quarter to one-fifth of the usual offering at this time of year, which is normally the strongest and most profitable. Despite these cuts, the load factor reached only 53% vs. 86%
last year.

Lufthansa goes into hibernation
Currently, Lufthansa is still burning €500,000 per hour, down 50% compared to MAY20 and JUN20, but still a disturbing amount. “With strict cost-cutting measures and the expansion of our
flight program, we were able to significantly reduce operating cash outflows in the third quarter compared with the same quarter last year,” Lufthansa CEO Carsten Spohr stated. He announced
that in Q4 no more than 25% of last year’s passenger capacity would be offered to the market.
In order to further curb the outflow of funds, the company intends to cut around 27,000 jobs and to decommission more aircraft over the winter months than initially planned. Further, the group’s
headquarters at Frankfurt will be closed between December and February. In other words, CEO Spohr will be sending the airline control center into hibernation.

Heiner Siegmund

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