Thursday 24th Aug 2017 - Logistics & Supply Chain

IAG holds yields despite fall in cargo volume

Commercial revenue fell 8.3 per cent to €541m at IAG Cargo in the first half of 2013 compared to a year earlier. However, it managed to maintain its overall yield.

The figure reflects a fall in volumes which were down at 2,756 million cargo tonne kilometres (CTKs) – a decrease of 8.4 per cent on the first half of 2012. Cargo capacity was down 2.7 per cent.

Overall yield (commercial revenue per CTK) remained flat – excluding the effect of exchange brings this to a 0.9 per cent increase.

Managing director Steve Gunning said: “These results reflect the overall weak market conditions, particularly across the North Atlantic, and Iberia’s capacity reduction which affected our volumes in the first half of the year. Given these operating circumstances, we are pleased with our yield performance.

“Our progress on integration is delivering clear benefits to customers who have welcomed both the range and accessibility of the distribution channels now on offer. Additional commercial initiatives, such as our first ever worldwide sale and our premium product promotion through iagcargo.com, are working well to support the development of the business and build awareness of our extended network.”

Overall, IAG produced an operating profit of €245m for the first half compared to a loss of €4m in the first half of 2013.

Chief executive Willie Walsh said: “Several factors have contributed to this improvement. Firstly, the benefits of Iberia’s restructuring are beginning to show. Having reduced capacity at Iberia in the first quarter, costs began to be taken out in the second quarter following the implementation of the mediator’s proposal.

“Nearly 1,700 employees have left the airline so far with remaining staff taking salary reductions of 18 per cent for flight and cabin crew and 11 per cent for all other employees. This is the first step in the restructuring but it is already bearing fruit with Iberia’s losses down from €93 million last year to €35 million reversing the negative trend of the last 11 quarters.”

“British Airways’ performance has improved with operating profit up from €94 million in 2012 to €247 million. The London market and transatlantic traffic remains strong, legacy costs from the bmi integration have ended and the airline remains focused on cost control.” 

* Air France KLM saw cargo traffic fall 6.3 per cent in the first half. Capacity was down by 4.2 per cent resulting in a 1.4 point fall in load factor to 63.0 per cent.

Unit revenue per available tonne kilometre (RATK) declined by 3.6 per cent (-2.9 per cent ex-currency).

* Global air freight demand has grown by 1.2 per cent year-on-year in June, compared to the 0.9 per cent year-on-year demand growth recorded in May, according to the International Air Transport Association.

The association said that a quarter of global freight volumes’ 0.8 per cent increase from May to June was thanks to European airlines, which also saw a 0.9 per cent improvement in demand from May to June.

But it reported that Asia-Pacific carriers and North American airlines have recorded year-on-year declines of 1.8 per cent and 1.2 per cent respectively.

“It’s too early to tell if June was a positive turning point after 18 months of stagnation, said Tony Tyler, IATA’s director general and chief executive officer.

“Air freight volumes are at their highest since mid-2011, but that good news needs to be tempered with a dose of reality.

“The global economic environment remains weak, and the basis for the acceleration of air cargo growth in June appears to be fragile.”

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