Thursday, February 7, 2013

Freight Only Air Carrier Cargolux Sets Out Future Plans

Boss Speaks at Length to Employees and Investors Alike
Shipping News Feature

LUXEMBOURG – Speculation has been rife in air freight circles regarding the future of Cargolux Airlines International S.A., the only European all cargo carrier which saw Qatari support withdrawn in November in controversial circumstances and the Luxembourg government taking up the slack until a new shareholder for the available 35% holding is found. Now the company has acted decisively to reassure both its customers, and particularly its employees, that it has the matter under control.

Today (7 February) the Cargolux Board approved the airline’s business plan for the period from 2013 to 2017 and Paul Helminger, Chairman of the Board of Directors spoke at great length about his view of what lies ahead for the company. The Board has requested that shareholders i.e. local passenger airline Luxair, two state controlled banks, BCCE and SNCI plus the government, commit additional liquidity to the airline, with a first tranche of US$ 100 million requested for the first quarter of 2013 in the form of a convertible loan. The Board believes that the two moves enhance the government’s position in the ongoing discussions with potential new shareholders, amongst which are believed to be Russian heavy lift and project forwarding air cargo specialist Volga Dnepr and the Chinese HNA group which deals in both passenger and cargo logistics.

In an in house interview, Paul Helminger said he felt that the airline now had a, ‘clarity of purpose’ and felt the ability to draw on the fresh tranche of capital would allow Cargolux to fund the proposed future strategy and instil a sense of purpose amongst its 1,500 or so staff worldwide. He made mention of the anti trust convictions which obviously hit the airline hard, both financially and by way of reputation, including the jailing of two company executives and resultant heavy fines in 2011, without which the airline would have been profitable in nine years from the past twelve.

Mr Helminger went on to scotch talk of a change of fleet policy toward the B777 F saying the maintenance of the current debt free B747-400F’s and the purchase of the new, more economical B747-8F type, which saw Cargolux as the launch customer, would add flexibility thereby supporting the new business plan. He commented:

“Given the inherently cyclical nature of the sector, the challenge ahead will be to more efficiently manage the volatility in the gap between supply and demand. Our objective is to regain lost ground and move a few ranks above our current number 11 market position. This means that we must be able to successfully manage high energy costs and aggressive competitors. We have no influence over jet fuel prices nor do we influence the demand for air cargo or the amount of capacity that our competitors bring to the market. Part of the solution to the challenge comes from building increased levels of flexibility in terms of our costs and capacity. Because it is more fuel efficient, the B747-8F helps us mitigate our exposure to fuel prices. Our fleet growth will also result in a more favourable operating unit cost per tonne of cargo carried.”

Mr Helminger praised the government for boldly stepping in to repurchase the shares which they originally sold to the Qatari interests and equally lauded the efforts of all of his staff continuing on to say that the company was working closely with the government to identify which of several interested parties would maximise the Cargolux brand if they were to buy the government’s share.