Cargolux Loss to Top $100 Million

Freight airline Cargolux will lose more than $100 million in 2009, its third consecutive annual loss, the head of the Luxembourg-based carrier said.

"The year was a disaster" and will result in a "three-digit million loss," Cargolux Director General Ulrich Ogiermann told Tageblatt, a Luxembourg newspaper.

Yields have slumped by 20 percent to 25 percent from a year ago and some planes have flown empty from Dubai to Hong Kong, Ogiermann said.

Cargolux, the world’s eighth largest cargo airline, also has to pay the first of five annual instalments of a $119 million fine by the U.S. Department of Justice for its role in an international price fixing cartel between 2001 and 2006.

The airline reported a net loss of $61 million last year following a $47 million loss in 2007 largely because it had to book the US fine in its 2008 accounts.

Revenues rose 18 percent to a record $2 billion, of which 30 percent related to fuel surcharges, while operating profit slumped 50 percent to $55 million.

The global cargo market started to improve in October as companies began to replenish depleted inventories, but it will be a long haul back to pre-crisis levels, Ogiermann said. The industry will have to wait until 2013 or 2014 to return to the cargo volumes of 2008.

Cargolux has cut the equivalent of 140 jobs this year through reduced working hours, staff sabbaticals and early retirement.

Capacity also has been trimmed with the sale of two Boeing 747-400 freighters to UPS under an earlier agreement, which reduced the Cargolux fleet to fourteen Boeing 747-400 freighters. An additional four aircraft will be sold in 2010 and 2011.

Cargolux has ordered thirteen Boeing 7747-8 freighters and as a launch customer will get a big discount on the $3.5 billion list price. Boeing rolled out the first of the long delayed aircraft in mid-November and will make the first delivery to Cargolux in the final quarter of 2010, a year behind schedule.

Ogiermann said Cargolux has no plans to move its hub from Luxembourg where it employs 1,000 of its total 1,400 worldwide payment.

Contact Bruce Barnard at brucebarnard47@hotmail.com