Cargolux, a Luxembourg-based all-cargo airline, ended the year 2019 with a positive net profit of USD $20.2 million with operating margin of 5.1%.
In a statement released today, Cargolux announced its financial results for 2019. After two years of exceptional growth, the industry once again entered turbulent times in 2019. On the eve of its 50th anniversary, and in a challenging climate marked by a global economic slowdown, overcapacity and low yields, Cargolux still managed to outperform the industry average and closed the year with a profit.
The Cargolux Group (Cargolux) generated a positive net result of $20.2 million with an operating margin of 5.1% - despite unfavourable and volatile market conditions. At year-end, Cargolux’ balance sheet reflected stable financial ratios compared to the previous year and a further improvement in its cash position versus 2018.
In 2019, Cargolux witnessed softening markets, unresolved trade conflicts and uncertainties surrounding an agreement on the UK’s exit from the EU. This resulted in a general downtrend in the industry, specifically over-capacity in the markets. After a solid start to the year, the industry experienced weak demand for the available capacity during the summer and autumn period, prior to a short peak season in the fourth quarter. These circumstances translated into a sharp decrease in profitability compared to 2018 ($211 million). Cargolux is currently seventh in the International Air Transport Association's (IATA) ranking of the world's top 25 international scheduled cargo carriers.
Moreover, 2019 saw Cargolux strengthen its footprint as an expert in niche markets with an expanding global network. The company added two new destinations: Santiago de Chile and Jakarta. Cargolux is currently the only cargo carrier to offer main deck capacity between Europe and the Indonesian capital. The airline also bolstered its presence in Eastern Europe by doubling its services to Budapest. The initial Hong Kong – Budapest route increased from three to four weekly frequencies and two new weekly services were added from Zhengzhou to Budapest. Cargolux now offers six weekly rotations through Hungary. A new transpacific frequency from Zhengzhou (CGO) to Los Angeles via Xiamen also complemented the airline’s offer last year.
At the end of December 2019, the total fleet of 30 aircraft comprised sixteen Boeing 747-400 freighters (11 B747-400Fs and 5 B747-400ERFs) and fourteen Boeing 747-8 freighters. The majority of the 747-400 fleet is either debt free or on flexible lease contracts (Power-by-the-Hour basis). Similar to other operators of 747-400 freighters, Cargolux recorded an impairment of $47.6 million in respect of its 747-400 fleet in 2019.
Total revenues decreased throughout the year as a result of lower load factors and yields coupled with lower fuel surcharge revenues as a result of a declining fuel price. Consequently, earnings before interest and taxes (EBIT) decreased to $114 million which translates into a 5.1% operating or EBIT margin. The airline also continued to pay down debt. The higher number shown for 2019 reportedly resulted from new accounting rules adopted in accordance with International Financial Reporting standards (IFRS); IFRS 16 requires entities to capitalise all operating leases meeting specific criteria.
In 2019, Cargolux pursued its efforts to reduce night landings and take offs and once again registered a significant reduction in nighttime movements.
The airline's worldwide activities comprise over 2,200 employees across the globe.
