The German airline group’s logistics division reported a loss before interest and tax (EBIT) of 27 million euros in second quarter 2016 compared with a 68 million euro loss the previous year, according to the company’s most recent financial statements.
Lufthansa Cargo reported a net loss before interest and tax (EBIT) of 27 million euros (U.S. $30 million) in second quarter 2016 compared with a 68 million euro loss the previous year, the division’s fifth in as many quarters, according to the company’s most recent financial statements.
Revenues at the German airline group’s airfreight and logistics division fell 16.4 percent to 496 million euros for the quarter.
For the first six months of 2016, Lufthansa Cargo posted an EBIT loss of 46 million euros compared with a 16 million euro loss in the same 2015 period.
The company attributed the sustained losses primarily to “intense” competition in the global airfreight market.
“Airlines from the Gulf and Bosporus region, in particular, are increasing their freight capacities, especially due to their many new passenger aircraft,” Lufthansa said in its interim financial report. “Global airfreight capacity is growing faster than demand. This has recently resulted in significant overcapacities, which are having a highly adverse impact on Lufthansa Cargo’s revenue.”
As a result, the division is continuing to revise and execute on its “Cargo eVolution” corporate strategy in an effort to regain profitability.
The air cargo carrier launched a cost cutting program in the fall of 2015 aimed at reducing annual staff and service provider costs by 80 million euros. The company said it also expects increased revenues from “innovative products and a particular proximity to customers,” new services like its myAirCargo product, which provides specialized transport solutions for private individuals, network expansion through new partnerships, and increased digitalization.
In an effort to improve its cargo load factor, Lufthansa Cargo provisionally retired two MD-11F freighters at the end of 2015. The company now operates 17 of its own freighters five B777Fs and twelve MD-11s.
On a brighter note, Lufthansa Cargo was able to decrease first half 2016 operating expenses 14.8 percent year-over-year to 1.1 billion euros. Capital expenditures were down 84.2 percent to 15 million euros compared with first half 2015 due primarily to the end of down payments and final payments in connection with the purchase of a B777F aircraft last year.
Lufthansa Cargo posts fifth straight quarterly loss
