Cargolux operates profitably but sees year-end loss

2008 was a very difficult year for the airfreight industry that had to face exploding oil prices coupled with a worldwide downturn in traffic and volumes. The market for airfreight declined by 4% on an annual basis with a dramatic 17% drop in December alone.
Despite the extreme volatility of key market parameters, Cargolux strengthened its overall market position and increased revenues (+18%) to a record level of close to US$ 2 billion. The company ended the year with an operational profit of US$ 55 million. 
Tonnage carried grew slightly by +0.1% to 703,601 tons, freight tonne kilometres decreased by 2.3% to 5.4 million, and load factors reached 70.6%. Daily aircraft utilization was 15:37 block hours, slightly higher than the 2007 average.
Based on IATA statistics and measured in international freight tonne kilometers, Cargolux’ global market share was about 4%, slightly higher than 2007.
Fuel costs reached record levels, increasing by 49% to US$ 934 million and representing over 47% of total costs.The pre-tax profit was burdened by a mark down of the company’s interest rate and fuel derivative portfolio and a provision following a settlement agreement reached with the US DoJ. Under a plea agreement dated 2 April 2009, the company agrees to pay to the DoJ a fine of US$ 119 million over several years. Despite this multi-year payment schedule, the complete fine had to be charged against the 2008 accounts. The net (after-tax) loss for the year is US$ 61 million following tax adjustments required to be made pursuant to the Company’s accounting rules.

Network
Cargolux expanded its route network with the addition or extension of destinations, such as Amsterdam, Cairo, Miami, Vienna, Brussels, Hahn, Tbilisi, Almaty, Doha and Baku. Our flexible network policy helped to battle the unfavorable market conditions of 2008.

Fleet
Cargolux added its final B747-400F to the fleet in August 2008. Consequently, capacity, measured in available tonne kilometres, increased by 6.8%. Due to strong charter demand, we also wet-leased some additional equipment.
Boeing announced a delay in the production of the new B747-8F of which Cargolux is a launch customer. As a result, the company’s first delivery of the new generation freighter slips from 2009 to late 2010.

Corporate and social responsibility
Having joined and committed to the UN Global Compact in 2007, Cargolux issued its first sustainability report as part of its annual report 2008.

Source: Transportweekly