Lufthansa Cargo chief says freight crisis exceeds worst forecasts
Lufthansa Cargo chairman and CEO Carsten Spohr admits that the sudden cargo downturn has exceeded even the company's most extreme crisis planning scenarios, and he outlines a cautious approach to 2009.
Last year Lufthansa Cargo delivered the second-best results in its history, with revenues rising 6.3% to €2.9 billion ($3.9 billion) and operating profits up 20.9% at €164 million. But load factor for the year dipped three points to 66%, after the first half's double-digit growth gave way to a downturn from July onwards.
Speaking during Lufthansa Cargo's annual results briefing in Frankfurt, Spohr labelled the 2008 performance as "very good", but he added the decline had reached an extent not witnessed since the Second World War. IATA figures show that freight volumes in February were down by over 20% for the third month in a row.
Spohr spoke to Flightglobal about the cargo industry downturn, outlining his personal view that the industry might have seen the lowest point but adding: "The more difficult question is how long we will be at this level."
Over recent years Lufthansa Cargo's crisis-planning scenarios have only ever extended to a 15% decline, says Spohr, based on cargo volumes falling 10% after the events of 11 September 2001.
"We said it will never get that bad again but, if it does, let's allow for another 5% [decline]. Nobody would seriously think about a 25% decline," says Spohr.
"IATA numbers over recent months are showing double the downturn that we saw after 11 September 2001, so that gives you a feel about where we are."
During 2009 Spohr expects revenues to "fall perceptibly" and for operating profits to drop well below 2008 levels, as Lufthansa Cargo faces its biggest challenge for many years. He believes the turbulent market conditions will "separate the men from the boys".
Lufthansa Cargo has already put four of its Boeing MD-11 freighters out of service, cut management salaries and placed 2,600 German ground workers on reduced hours in a bid to counter the downturn.
