Cargo revenue falls at IAG and Air France-KLM

Both IAG Cargo and Air France-KLM have reported falls in airfreight revenue reflecting tough market conditions.

IAG Cargo saw commercial revenue fall 6.6 per cent to €1 billion last year as competitive trading conditions hit yields.

Although traffic volumes rose three per cent, capacity grew by 10.5 per cent, partially reflecting the integration of the Aer Lingus network in the year to 31st December. On a like for like basis, overall yield for the year was down 9.3 per cent on 2015.

Chief executive Drew Crawley said: “These are resilient results in the face of challenging market conditions. Growing supply from freighter and new generation passenger fleets have continued to outstrip flat demand for general freight. Our focus on aggressive cost management combined with premium product growth has enabled us to offset some yield pressure and grow our revenue share of the market this year.

“While there was a robust start to 2016, the second and third quarter suffered from diminishing demand, leading to significant yield pressures. The final peak months of the year brought some improvement, driven by stronger than expected consumer sales in December and a high demand for last minute e-commerce products. Our new ‘Critical’ product performed well during the peak, processing over 600 emergency shipments. More broadly our premium product mix now sits at 20 per cent, with our industry leading Constant Climate product continuing to see significant volume growth year on year, shipping over 40,000 consignments in 2016.”

As well as integrating Aer Lingus, IAG has launched several important destinations: Lima, San Juan, San Jose (California), San Jose (Costa Rica) and Tehran; and plans to launch services to Santiago, New Orleans, Fort Lauderdale and Oakland in 2017.

Crawley said: “Our strategy is being developed to embrace the digital disruption in our industry. We believe digitisation will play a significant role in shaping our industry in the coming years and we recognise the benefits this can bring in relation to costs and improving customer experience. Throughout 2017 we will introduce a number of new innovations to help drive forward the digitisation of cargo and improve our customers shipping experience.”

* Air France-KLM reported a 14.7 per cent fall in cargo revenue to €2.1bn for 2016 resulting in a €244m operating loss for the year – similar to the year before.

In its annual results, the group said it was continuing to restructure its cargo activity resulting in its gradual turnaround, to address the weak global trade and structural industry overcapacity, and to maximise its contribution to the Group.

During full year 2016, full – freighter capacity was reduced by 2.4 per cent with a reduction of the number of full – freighters in operation to six, leading to a 4.6 per cent decrease in total cargo capacity measured in ATK.

The losses on the full-freighters were further reduced by €14m resulting in an operating loss of €28m euros.

Air France-KLM has decided to change its cargo reporting policy to include it in the passenger network results.