Lufthansa CFO Says Cargo 'Absolutely Booming'

July 12, 2010

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Lufthansa's cargo business is benefitting from rising demand for goods in China and growing appetite worldwide for Chinese goods, the airline's finance chief said.

"The cargo business is currently absolutely booming. For the first time in over 10 years we are seeing not just strong imports out of China, but also strong exports to China," Stephan Gemkow said.

Demand in China for goods made in the United States and in Europe is rising as wages improve and markets open. Trade data published on Saturday showed that imports rose 34.1 percent in June.

At the same time, exports rose 43.9 percent, giving China a USD$20 billion trade surplus.

Global industry body the International Air Transport Association (IATA) said last month that demand for both air travel and air freight rose strongly in May and now exceeds levels seen before the global economic downturn.

Air cargo is seen as a leading indicator of the health of global trade. Lufthansa, Germany's biggest airline, on Friday reported a 20 percent rise in June cargo.

Gemkow said the company was not feeling any effect from the European debt crisis and said he was optimistic for the company's second-quarter earnings.

"As far as a CFO can be optimistic, I am optimistic," he said.

IATA has said it expects the world's airlines to post an overall 2010 profit, though European carriers will continue to lose money this year, partly due to a volcanic ash cloud that swept large parts of the continent in April.

Lufthansa's aim is to improve 2010 operating profit compared with last year's result of EUR€130 million (USD$163.7 million) on hopes global economic recovery will help offset the negative impact of the volcano crisis.

Gemkow said Lufthansa still expected recently acquired Austrian Airlines, bmi and Brussels Airlines to post a loss this year but that restructuring at the units was going well.

"Management is undertaking a whole bunch of measures to turn them around. We are very happy with the progress they are making," he said.

Lufthansa added the three carriers in a shopping spree last year as it competes with British Airways and Air France-KLM for European pole position.