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Lufthansa Cargo Unit Plans Higher Capacity on Industry Rebound

Deutsche Lufthansa AG (LHA)’s cargo unit plans to increase freight capacity as it expects demand to rebound in the second half of the year at the latest.

The carrier expects to raise the capacity by 1 percent to 2 percent this year, Karl Ulrich Garnadt, who heads the unit, said at a press conference today, after cutting it by 8.2 percent in 2012. Operating profit at the unit fell 58 percent in 2012 to 104 million euros ($134 million), Lufthansa said on March 14.

“We’ve lost some market share last year as we focused on profitable freight,” Garnadt said in Frankfurt. “The first two months of this year have been difficult, but we are optimistic we can show slight growth this year.”

Cargo carriers worldwide suffered a blow to profitability with higher fuel costs and declining demand on slower economic growth. Air France-KLM Group (AF) more than tripled its operating loss in cargo last year to 222 million euros, and Singapore Airlines Ltd (SIA)’s cargo operations remained loss-making in the quarter ended Dec. 31.

Garnadt reiterated the unit will earn more this year and next, and post a record operating profit in 2015, as the freight carrier trims costs and seeks to expand more profitable businesses such as perishable goods and shipping for the health- care industry under a group-wide efficiency push.

Lufthansa fell to “third or fourth place” in the global cargo ranking last year, Garnadt said, with Emirates Airline climbing to “the clear No. 1.”

“Our position in terms of volumes will remain under pressure as we focus on profit, not market share,” he said.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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