Lufthansa looking to snatch ailing airlines?
I’m not as hooked into the air cargo industry like I used to, so anyone out there (Splatty?) who knows more feel free to chime in. I had no idea Lufthansa was in such a position of strength to be targeting so many airlines: Brussels Airlines, SAS, Alitalia, Austrian, BMI. Via Air Cargo World:
The potential behemoth resulting from these ploys (not including the BMI scenario) would have some 1,100 aircraft and annual revenues in the neighborhood of $58 billion, based on 2007 results. Rival Air France-KLM, which fields a combined fleet of 606 aircraft, reported revenues of $34 billion last year.
This new Lufthansa group would also have the flexibility to slot cargo over a number of European gateways and sell a global network from these markets. On the other hand, integrating these operations and avoiding turf battles within a unified structure would be a formidable task.
They also voice some concerns LH has had with its other joint venture airlines:
Without a doubt, Lufthansa Cargo has its hands full with its joint venture airlines, including AeroLogic, the joint undertaking with DHL that is due to take off next spring. Carsten Spohr, chief executive of Lufthansa Cargo, has described these ventures as a strategy of “zero risk growth”, as Lufthansa Cargo itself has no plans to boost its freighter fleet in the foreseeable future. However, Jade has been problematic for some time. First a pilot shortage kept some of its freighters on the ground, then deteriorating market conditions caused management to postpone the launch of planned transpacific service and lease one B747-400ERF for a year to Jett8 on an ACMI basis. In August unconfirmed reports surfaced about an argument between Lufthansa Cargo and its venture partners about who should shoulder the burden of injecting more funds into Jade, which was short of cash. By some estimates, Lufthansa has spent in excess of $100 million on the Shenzhen-based cargo outfit so far.
In the past I had always liked LH Cargo’s service, but I have to say I’d be concerned if they succeeded in growing to such a tremendous size, especially if it was done in a short period of time. Still, the AF-KLM behemoth more or less worked, so it’s certainly likely that they could pull it off.
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