How to carry to a billionaire
Cargolux looks back at 2021 and assesses its outlook.
The Luxembourg-based cargo carrier, ranked fifth by Iata in terms of its international ftk volumes, rates the past year as even more challenging than 2020. It nevertheless managed to improve its result. It’s very uncertain whether it will attain this again in 2022.
Cargolux Airlines, set up in 1970, eclipsed the record result it set in its 50th anniversary year (see also page 14 of ITJ 21-22 / 2021). Its total turnover of USD 4.429 billion represents a 40% increase over 2020. It is nevertheless the lowest of four key figures.
The airline’s ebit growth rate was +73% (to USD 1.718 billion), whilst its profits before tax (USD 1.688 billion) approximately doubled (+94%). The bottom line was an ebitda of USD 1.295 billion (+68%) – or more than EUR 1 billion for the first time (EUR 1.212 billion, to be precise). Word from Luxembourg in April had it that this significantly improved financial performance was driven both by an increase in tonnage, +12.2% to 1.242 million t of goods, and by and higher yields.
The strong yields recorded in 2020 continued throughout the following year. Congestion in the global supply chain, particularly capacity constraints for maritime cargo, led to continued demand for airfreight services throughout 2021, to which Cargolux responded by deploying 30 Boeing B747 freighters.
Cargolux’s fleet includes 16 B747-400s (ten B747-400Fs and six B747-400ERFs) and 14 B747-8Fs with nose cargo doors; these units enabled the airline to respond flexibly as well as promptly to today’s changing market conditions.
...is still challenged
The carrier has left its options open concerning how and when it will react to the fact that production of the B747 will cease before the end of the year (see also page 37). In any case, Cargolux is not one of the launch customers for the B777-8F or the Airbus A350F.
Quarantine measures introduced in a series of countries, the occasional forced confinement of some crews to hotels, and a lack of qualified personnel and infrastructure, especially in the USA – all of these factors, exacerbated by full warehouses and scarce truck services, resulted in operational conditions being even more challenging in 2021 than in 2020.
The temporary closure of the Suez Canal also meant that shippers and freight forwarders continued to rely on air transport, which added to the already huge pressure on airfreight capacity – but at the same time gave Cargolux high volumes and strong full-year earnings.
Political tension brings uncertainties
The remainder of the year continues to be fraught with uncertainties. Global supply chains faced ongoing significant stress, “probably even more than in 2021”, according to Cargolux, which doesn’t expect capacity to return to pre-pandemic levels yet over the coming months.
Unprecedented geopolitical tension thus comes on top of sanitary measures, most noticeably in Asia. The sudden lack of Russian airlines is a further strain on airfreight capacity, whilst longer routes between Europe and the Far East are causing greater outlays, due to higher fuel costs. Cargolux intends to face all of these challenges with its flexible and agile approach.