CHINA – If one looks for evidence that the increased competition in the country’s air freight market has grown ever keener the news this week that Jade Cargo International has folded will doubtless send a chill down the collective spines of those who saw the expanding sector as hope for the future. With principal shareholders including Shenzen Airlines, Lufthansa and institutional German investors the venture would seem to have had the twin advantages of home market knowledge and established international management.
Lufthansa had a quarter stake and Shenzen 51% in the company which stopped flights some months ago whilst refinancing was sought. A ray of light came when Uni-Top Airlines, an all cargo carrier based in Wuhan and with published intent to expand, apparently agreed to act as a partner in Jade. Now, with no sign of Uni-Top’s support and Lufthansa saying they lost around $20 million last year on the venture the Jade company website is down.
Jade ran a fleet of half a dozen aircraft serving the Middle East, Europe and India and was involved in one controversial incident in May 2010 when one of its fleet of six Boeing 747-400 freighters hit problems in the approach to Istanbul’s Ataturk airport and landed safely after an LOC approach when a large hole was found in the fuselage caused by tyre damage presumably caused during take off at Shanghai.
Just last week IATA predicted that the Asia Pacific carriers would make the largest contribution to industry profits as a whole this year but noted with caution that the air cargo market had shown little sign of benefitting from a slight world upturn and also pointed out that the slowdown in the Chinese and Indian economies, two of Jade’s principal markets, was another factor in the slow growth environment over the past few months.
Speaking to Reuters about the situation a Lufthansa spokesman confirmed that all shareholders had agreed to suspend Jade’s operations and dissolve the company and admitting his company’s involvement even as a minority shareholder had been expensive.