Lufthansa Cargo: Adjusted EBIT tumbled in 2023

In fiscal 2023, the freight arm of the Lufthansa Group generated an adjusted EBIT of 219 million euros, compared to 1.6 billion euros in the year before. The carrier explains the significant slump by the exceptionally high demand for air freight during 2020 to 2022, combined with skyrocketing rates. Despite the sharp decline in EBIT, the financial and traffic results in 2023 are very encouraging when measured against the figures from the pre-Covid year 2019, says management.

Lufthansa Cargo operates 17 B777F, soon it will be 18.  –  courtesy: LHC

In summary, Lufthansa Cargo speaks of a normalization of the rate structure in 2023, following the cargo hype in the corona period. That said, the cargo airline’s management is content with the results achieved.

Thumbs up or down. It’s a matter of interpretation
However, measured against 2022, the figures look rather sober: Revenue fell by 36% to 2.98 billion euros (previous year: 4.6 billion euros). The average load factor decreased 1.9 percentage points year-on-year to 59.2%. The sharp slump in EBIT is already mentioned above. On the positive side of the balance sheet are sales that were slightly higher year-on-year, reaching 7.5 billion euros vs 7.2 billion in 2022, while the capacity offered to the market increased by 7% to 12.6 billion available freight ton-kilometers. The flooding of the global markets with main deck and belly capacity did not harm Lufthansa Cargo’s yields which significantly increased compared to pre-pandemic times.

Consolidating its leading role
Rounding things off, CEO Ashwin Bhat speaks of a challenging market environment in which Lufthansa Cargo managed to cement its leading role: “Despite a volatile business environment which was influenced by global tensions last year, Lufthansa Cargo was able to successfully maintain its position. We owe this above all to the trust of our customers, and to our employees, who mastered the year with great commitment and determination. However, the development also shows that we must not slow down. We need to continuously work on improving our quality, our network, and our service promise to remain attractive,” the Lufthansa Cargo helmsman declared.

Three main fields of activity
The carrier’s to-do list for 2024 includes fleet expansion, the modernization of the Cargo Center at FRA, and increased efforts to reduce greenhouse gas emissions. As Lufthansa Cargo announces, an eighteenth B777F will be added to the freighter fleet. This will allow the carrier to operate 87 global routes and service 300+ destinations during the course of the summer flight schedule. In addition, the freight carrier manages the lower deck capacity of parent Lufthansa Airlines, Austrian Airlines, Brussels Airlines, Discover Airlines, and SunExpress. No changes are planned to the A321F sub-fleet, consisting of four units, which covers short and medium-haul routes in Europe, North Africa, and the Middle East.

Upgrading Lufthansa Cargo’s ground infrastructure at FRA
Another focus will be put on modernizing the Cargo Center at Rhine-Main Airport. CEO Ashwin Bhat explains: “Around 80% of our global freight traffic is handled in Frankfurt. In order to continue to meet the needs of our customers in the future, we are investing in the modernization of our Cargo Center at our FRA hub in 2024.” The price tag for this major project is 500 million euros. Once accomplished, the freight terminal will enable higher handling speeds, smooth transport processes and an improvement in service quality, thanks to state-of-the-art technologies in the infrastructure.

Reducing kerosene burn
As far as environmental enhancements are concerned, the focus is on AeroSHARK technology. It is a surface film inspired by the skin of a shark, that reduces the frictional resistance of the aircraft in the air and thus lowers kerosene burn. It is successively being applied to the entire freighter fleet until the end of 2027, reads the Lufthansa Cargo press release. Other initiatives listed on the 2024 schedule include the increased use of sustainable aviation fuel, in consultation with shippers and their logistics service providers.

Slight growth expected
As far as market development is concerned, Lufthansa Cargo expects demand to grow slightly in 2024. Adjusted EBIT will presumably reach the previous year’s level. However, this forecast is tainted with insecurities. Frank Bauer, CFO and Labor Director of Lufthansa Cargo, sums up: “We are making ambitious investments in our future – for this, we need a solid, long-term earnings base. This also includes anticipating the development of our market at an early stage, enabling us to making short-term adjustments to our network and services in order to meet our customers’ needs.”

Lufthansa Group generated stark 2023 figures
Together with its cargo unit, the Lufthansa Group published its annual results. According to the figures, the Group generated an operating profit of 2.7 billion euros; the third best result in the history of the Lufthansa Group. Revenues increased by 15%, totaling 35.4 billion euros, whilePassenger numbers increased significantly by 20% to over 120 million travelers.

The 2024 operating result is expected to be at the level of 2023, forecasts management, adding that the internationalization of the Group will be accelerated.

spot_img
spot_img

LEAVE A REPLY

Please enter your comment!
Please enter your name here

See Also