Air France KLM Cargo eyes Asia as performance improves in Q3

Air France KLM Martinair Cargo recorded improvements in cargo volumes, revenues and yield in the third quarter as it benefitted from rising demand out of Asia Pacific.

The Franco-Dutch airline group noted a 0.6% increase in overall third-quarter cargo revenues to €561m, while cargo traffic revenues improved by 7.3% on last year to €471m.

Cargo carried was up by 3.5% to 226,000 tons and the cargo load factor improved by 0.7 percentage points to 45.5% as capacity was up 1.5%. Yields (unit revenue per ATK) were up 5.9% compared with a year ago.

The airline group said that much of the volume growth came from the Asia Pacific market, and it hoped to capitalise on the trend through the deployment of additional capacity to the region.

“Today’s airfreight market is dynamic and Asia in particular is performing well driven by e-commerce and the Red sea disruption. In response to market dynamics, a part of the Group’s full freighter capacity is being redeployed to Asia,” the company said in a press release.

In September, Martinair launched a new freighter flight to Hong Kong from Schiphol after an absence of nine years to capitalise on strong cargo demand.

The flight is operated by Martinair on behalf of KLM utilising a 110 tonne capacity Boeing 747-400 freighter.

The service initially operated three times per week but increased to four weekly flights at the start of the winter season on October 27.

The improvement in performance in third quarter cargo revenues can be seen when comparing with the carrier group’s results over the first nine months.

Between January and September, the group saw its cargo traffic revenues fall by 8.5% year on year and yields were down 9.6%.

However, the group’s cargo performance lags behind that of European rival Lufthansa, which reported a 16% increase in revenues during the third quarter and a 11% improvement in revenue cargo tonne kms.

The overall Air France-KLM  group saw its third-quarter earnings impacted by a higher-than-expected cost increase at its Dutch operation, as it gave further details on the “firm measures” it is taking to tackle what it describes as a “structural” challenge.

Challenges include the uncertainty created by Dutch government efforts to cap capacity at Schiphol airport, operational challenges – and the consequent passenger compensation claims – that KLM has faced at its hub, maintenance challenges relating to a lack of technicians and parts, and difficulties with boosting its capacity, partly given current labour agreements make it “complex” for the business to integrate new aircraft types into its fleet.

Amid those challenges, the group in early October launched a programme named “Back on Track” at KLM, which aims to address productivity, revenue and operational shortfalls and deliver a €450m ($484m) in short-term EBIT improvement.

Air France-KLM achieved an operating profit of €1.18 billion for the third quarter, down €162m year on year. 

AF KLM Cargo returns to Hong Kong as carriers add Asia freighter capacity