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            october 18, 2019

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Lufthansa Cargo's earnings shrink in H1 on back of overcapacity


Falling demand on tradelanes between Europe and Asia dragged down Lufthansa Cargo's first-half adjusted earnings before interest and taxes (EBIT) for the company's logistics segment to EUR15 million (US$16.61 million), compared with EUR127 million for the same period a year earlier, according to Shipping Gazette.
In response the carrier is adjusting its capacity in line with changes in the air freight market.
Deutsche Lufthansa AG's chief financial officer Ulrik Svensson was quoted as saying in a report by London's Air Cargo News: "Our earnings are feeling the effects of tough competition in Europe and sizeable overcapacities, especially on our short-haul routes out of Germany and Austria. We are responding to this by further reducing our costs and increasing our flexibility."
The carrier's half-year report also shows that its long-haul operations and Technik engine maintenance services performed well in the first six months of 2019. Although, the price war in Germany and Austria had a negative impact on its short-haul route earnings.
Looking ahead, Lufthansa anticipates its cargo segment will record a full-year margin of between three and five per cent, provided that freight demand stabilises in the fourth quarter, the season in which this business segment tends to generate a substantial chunk of its earnings.

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