Product innovations and savings programme for Lufthansa Cargo

Lufthansa Cargo sets the course for future growth; new market segment considering the transport needs of private travellers

Product innovations and savings programme for Lufthansa Cargo

In 2015, Lufthansa Cargo achieved an adjusted EBIT of EUR 74 million (down 40 per cent on the previous year). After a strong first quarter, demand on the global air cargo markets weakened. On top of this, there was turbulence in the Chinese market and a very strong US dollar, which affected export-driven industries in the US in particular.

The numerous strikes of the Vereinigung Cockpit (VC) pilots’ union and Unabhängige Flugbegleiterorganisation (UFO) cabin attendants’ union led to further reductions in transported cargo volumes and revenues. With an impairment for the LCCneo project (with the construction of a new logistics centre in Frankfurt having been postponed in spring 2015 for two years initially), the EBIT (earnings before interest and taxes) fell even more considerably to EUR 3 million (2014: EUR 123 million).

“We will still be operating in an extremely challenging market environment in the years ahead”, commented Lufthansa Cargo Chairman and CEO Peter Gerber at the presentation of the 2015 annual results. “But we have a clear strategy that has been set up to facilitate sustainable and profitable growth again. With innovative products, superb service and competitive cost structures, we will make the most of the advantages offered by our Frankfurt base.”

In order to remain competitive, the Lufthansa Cargo Board already initiated the C40 cost-cutting programme in the autumn of last year. It shall reduce annual costs by at least EUR 40 million by 2018 through this. The focus is on staff and service provider costs. “We clearly have to further strengthen our competitiveness on the cost side as well if we are to be in a position to grow profitably again in our core business”, said Dr. Martin Schmitt, Board Member Finance and Human Resources. “This is how we will generate the profits we need to fund investment in the future of our company.” The company is also pressing ahead with initiatives from the Lufthansa Cargo 2020 future programme, including close partnerships with other airlines like Japan’s ANA or United Airlines.

Besides enhancing the product portfolio (including in the hotly contested standard freight market), Lufthansa’s cargo arm will also address a completely new market segment and consider the transport needs of private travellers, especially Lufthansa passengers. Through the myAirCargo product, passengers and private individuals will now be able to send any kind of personal item via air freight, quickly, simply and cost-effectively. “Lufthansa Cargo has often been a pioneer in the past when it comes to developing and launching new products and services”, said Mr Gerber. “We want to live up to this again with myAirCargo.”