Cargolux has adopted a new five-year business plan, including a $275 million capital injection, aimed at returning the financially troubled all-cargo carrier to profitability in 2014.
Shareholders of the Luxembourg-based carrier have agreed to issue a $100 million convertible bond this year followed by a $175 million bond in 2014.
“This is an important milestone for Cargolux in securing its sustainability,” said Paul Helminger, Chairman of the Board of Directors.
The Luxembourg government, which is seeking a buyer for a 35 percent stake in Europe’s largest all-cargo carrier it recently repatriated from Qatar Airways, will not participate in the capital injection.
The new capital will be used to finance the ongoing fleet renewal program of 13 Boeing 747-8 freighters, for which Cargolux was the launch customer, and to bolster the balance sheet.
Cargolux will now seek union agreement to cut labor costs by $10 million a year through 2017 in return for a guarantee of no job losses among the 1,400-strong payroll.
“Going forward, all stakeholders will need to contribute their part to ensure this plan’s success,” Helminger said.
Cargolux said it took out $60 million in costs last year but did not address labor costs, which will account for around a quarter of its $1.8 billion costs in 2013.
Unions have questioned Cargolux’s figures and vowed to retain the collective work agreement which the carrier wants to renegotiate.
Cargolux said there are several potential buyers for the Luxembourg government’s 35 percent stake but did not give further details. Chinese transport and logistics group HNA and Russia’s Volga-Dnepr, owner of AirBridgeCargo, have been tipped as the most likely new investors in Cargolux.