Lufthansa Cargo cruises on cloud 9

Lufthansa’s logistics subsidiary reports an adjusted EBIT of 772 million euros in fiscal 2020, compared to just 1 million euros in 2019.  This is a record result in the 26-year
history of the crane airline’s cargo daughter, resulting from global capacity scarcity and high air freight rates in Covid-19 times. Lufthansa CEO, Carsten Spohr delivered these figures today
(04MAR21) during a virtual presentation of the aviation group’s 2020 annual results.

In his presentation, Mr. Spohr stressed that Lufthansa Cargo’s result is even more remarkable because it was mainly contributed by the company’s own freighter fleet in combination with freighters
operated by AeroLogic, a DHL-Lufthansa Cargo jointly managed carrier. Conversely, lower deck capacity of passenger aircraft was hardly available, as about 2/3 of the Lufthansa Group’s passenger
fleet was grounded during the pandemic.

Expected results
Market observers are not surprised by the positive figures. One analyst pointed to 3 key reasons explaining the results: the axing of costs as part of the Group-wide “Renew Program”, the
continuous high demand for air freight capacity during the Covid-19 pandemic which led to a – third reason – explosion of air freight rates on a global scale. The combination of these 3 factors
has proved extremely beneficial for Lufthansa Cargo, he concluded.
In addition, there are some other points that have contributed to the positive outcome which must be mentioned. Above all, the fleet conversion from MD-11F to B777F, which saved money and
enhanced transport capacity, the management’s flexible response to changing market conditions through swift flight schedule adjustments, and the early introduction of short-time working for a
large number of employees, which has significantly contributed to reducing the carrier’s overall costs.  
In a nutshell, it can be expected that Lufthansa Cargo’s new CEO, Dorothea von Boxberg is looking forward to tomorrow (05MAR21), Friday, when she will present and comment the annual figures
achieved by Lufthansa Cargo in 2020 in detail.


LH CEO Carsten Spohr presented an annual report with mixed results – courtesy LH
LH CEO Carsten Spohr presented an annual report with mixed results – courtesy LH

Changed focus – from business to leisure
Back to Lufthansa and CEO Carsten Spohr: For fiscal 2020, the executive reports Group losses amounting to 6.7 billion euros. Flight activities had to be reduced by 70%, and 20% of staff lost
their jobs as a result of the cost-savings program, despite short-time working measures to keep as many staff and their knowhow on board as possible since they will be needed post-Corona.
Lufthansa intends to introduce leaner structures and change its focus from global corporate travel to leisure flights, leading to network adjustments and product changes as far as the Corona
crisis allows.
Despite the Group’s meager financial result, with the exception of the logistics unit, Mr Spohr stressed that the current crisis is a one-time chance for the entire Lufthansa Group to kick off a
much-needed transformation.  

LH reinvents itself
These are the main targets Spohr mentioned: getting rid of all aircraft older than 25 years, limiting the global workforce to 100,000 staff, reducing fleet complexity by concentrating on 4 types
of aircraft thus leading to a unit cost reduction of 10%, investing in new eco-efficient aircraft resulting in a greener CO2 footprint, and – last but not least – fostering intermodal transport
solutions. “We need to make the entire transport chain from source to destination more sustainable,” he exclaimed.  
In this context, he announced a joint product between Lufthansa and rail company Deutsche Bahn. Details will be announced before the end of the year.

Heiner Siegmund

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Source: Cargoforwarder

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