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Issue #583 | Forest Products

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2014 Media Kit
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Lufthansa Cargo says cargo demand rising steeply

By: | at 08:00 PM | Channel(s): Air Cargo  

Demand for air freight—a bellwether of the global economy—is rising steeply as the global economy starts to recover from the worst crisis in decades, Lufthansa Cargo’s chief executive said.

“We are experiencing a market upswing, especially in Asia,” Carsten Spohr told a news conference.

Demand for cargo transport to and from China is particularly strong at the moment, he said, adding any industry recovery will also depend on freight companies’ discipline in returning capacity to the market no faster than demand rises.

Shares of German flagship carrier Lufthansa rose after Spohr’s statements and were 1.6 percent higher at 12.29 euros by 1048 GMT, while the STOXX Europe 600 Travel & Leisure index was up 0.6 percent.

Air cargo companies were buffeted last year as companies reined in their spending to weather the global economic crisis. Global cargo demand fell by 11 percent in 2009, according to industry body International Air Transport Association (IATA).

As the global economy starts to recover, more goods are being shipped around the world and cargo planes are filling up again. IATA said last week it sees 2010 cargo demand growing by 12 percent, more than making up for last year’s slump.

Lufthansa Cargo—the world’s fifth-biggest freight carrier and Europe’s No. 1—posted a record loss of 171 million euros ($233.6 million) for 2009 but expects to return to an operating profit by next year.

“If the dynamics of the market continue, then we could already reach that target in 2010,” Spohr said.

Reactivating Planes

Lufthansa Cargo joined other carriers last year in parking aircraft in a plane boneyard in the desert at Victorville, California, that is still cluttered with about 180 wide-body planes. As demand picks up, Lufthansa Cargo is preparing to reactivate two of four grounded MD-11 freighters.

“The other two are still packed up more tightly, but not so tightly that we can’t unpack them again. Our goal is to eventually fly with a full fleet of 19 planes again,” said Spohr, who is a trained Airbus pilot himself.

The world’s biggest air cargo company, U.S.-based FedEx Corp , is due to report third-quarter earnings later on Thursday, which are seen sharply up from a year ago.

A third of world trade by value is in goods sent by air, so any uptick in air cargo volumes around the world indicates that the global economy is doing better.

Germany’s BGA exporters’ group said last week that it expects German exports to rise by 9 percent this year after a weak 2009, boosted by demand from emerging economies such as China and Brazil but also the United States.

Lufthansa Cargo last year introduced shortened working hours for its workers as it cut costs and capacity. It said on Thursday it would discontinue the programme in April and May and end it for good in September, after the traditionally weaker summer months. (Reuters)