Lufthansa Cargo profit tumbled 86% last year

Airline gives muted guidance for 2024 despite early market strength

Blue-tailed Lufthansa Cargo jet touches down on a runway.

Lufthansa Cargo has 17 Boeing 777 cargo jets and an additional one on the way. (Photo: Lufthansa Group)

Sharply lower yields due to excess capacity from passenger flights combined with higher costs led to an 86% plunge in Lufthansa Cargo’s operating profit in 2023, underscoring how challenging the year was for the entire air logistics industry.

Lufthansa Group (DXE: LHA) on Wednesday reported its third best financial results in history, but the cargo subsidiary was battered by lower demand and rates as the global economy returned to more normal patterns following the COVID crisis. With more predictable supply chain activity and weak economic growth in Europe, there was less need for faster transportation options.

Lufthansa Cargo’s adjusted operating profit tumbled to 219 million euros ($239 million) from $1.7 billion in 2022, behind a 37% drop in core transportation revenue to $3 billion. The profit margin was cut from 34.6% to 7.4%, suggesting the company likely earned less than its cost of capital.

Global airfreight volumes, writ large, decreased 2% year over year in 2023 on the heels of an 8% decline in 2022, according to the International Air Transport Association. Yields fell 32%.


Lufthansa management forecast a slight increase in demand for 2024, with profit levels staying about the same, despite robust airfreight volumes across the industry so far this year. Market researchers report air cargo volumes jumped about 14% in January and an additional 11% in February compared to the same periods in 2023. 

A major headwind for cargo was the company’s injection of more passenger flights, which raised the amount of cargo capacity across the network by 7% and weighed on pricing. In fact, volume of 7.5 billion freight ton-kilometers was 3% higher than the previous year, while yields fell 39.3% — an indication the top line was most harmed by falling rates. Increased capacity was reflected in a 1.9-point drop in the cargo load factor, meaning less than 60% of available cargo space was filled.

Despite the reduced year-over-year performance, yields were still better than prior to the pandemic.

The company doesn’t break out expenses for the logistics segment, but across the entire group they increased 14% to cover higher labor and maintenance costs. Lufthansa Cargo’s profits undoubtedly were impacted by the higher costs. On Thursday, Lufthansa ground staff walked off the job, while on Wednesday cabin crew voted to strike as they seek a 15% wage increase, a potential harbinger of further profit erosion, Reuters reported.


Lufthansa Cargo is the 16th-largest cargo airline in the world by shipping activity. It operates 17 Boeing 777 freighters on long-haul routes and four Airbus A321 converted freighters for same-day e-commerce customers within Europe, and is scheduled to receive an additional 777 factory freighter from Boeing in the first half of the year. Supply chain delays briefly kept two of the narrowbody cargo jets out of service earlier this year.

Eleven aircraft are operated by Lufthansa Cargo crews under the Lufthansa Cargo brand. Six aircraft are chartered from AeroLogic, a joint venture with DHL, and operated by AeroLogic on behalf of Lufthansa Cargo. Lufthansa Cargo also manages the belly cargo for Lufthansa and all sister airlines besides Swiss International.

Revenue for Lufthansa’s logistics segment, which includes Lufthansa Cargo, the 50% stake in Aerologic, airfreight container specialist Jettainer, on-demand logistics provider time:matters, e-commerce service Heyworld and a customs brokerage unit, was $3.2 billion. 

Lufthansa is a bellwether for the air cargo logistics sector, and its results show that even well-managed companies weren’t immune from the global downturn in freight activity. Logistics giant Kuehne+Nagel, for example, reported revenue in its air logistics division fell 41% last year and that operating profit dropped 61%. Expeditors International said overall operating income fell 40%. Cargo revenue at the big three U.S. international airlines — American, Delta and United — dropped more than 30%. And Air Canada, which also has freighter aircraft, saw cargo revenue decrease by 27%.

Infrastructure and service upgrades

Lufthansa is investing about $544 million to modernize its cargo hub in Frankfurt, Germany, with the goal of enabling faster handling speeds and service capabilities for specialty product lines such as pharmaceuticals. About 80% of Lufthansa Cargo’s global traffic flows through Frankfurt. Cross-border e-commerce is the fastest growing airfreight product.

Construction of the new high-stacking warehouse, including an automated transport system, began last year. In addition to the new building, Lufthansa will upgrade existing buildings and warehouses at the Lufthansa Cargo Center. The project is expected to be completed by 2030.

Lufthansa Cargo recently introduced a new ultra-expedited service offering for time-critical freight called td.Zoom that can shave nearly a day off transit time for an intercontinental shipment compared to td.Pro. It also expanded digital capabilities in the past year, offering direct system interfaces to its booking system to key accounts.

Overall, Lufthansa Group more than doubled net profit to $1.8 billion behind a 15% hike in revenues related to strong travel demand. Group airlines include Swiss International Airlines, Austrian Airlines, Brussels Airlines, Eurowings, Discover Airlines and newly founded Lufthansa City Airlines. Lufthansa is also working with the European Commission to finalize taking of a 41% stake in Italy’s national carrier ITA Airways. 


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