Cargolux: the lost management effect?

My Orchids. Dendrobium "ABC". Photo ET

Cargolux: the lost management effect?

Are we already witnessing the effects of the loss of top talent at Cargolux earlier in 2014? There are some signals that are discomforting, though not conclusive yet. But they all show in the same direction.

Let’s take as a starting point Cargolux’ business in 2013. CV carried 754,000 tons, an increase in cargo traffic of 16.7% compared to the year 2012 (the Qatar Airways year). Whereas 2012 ended with a loss, 2013 produced a relatively small profit, but a profit.

Then comes 2014. Top managers leave. The first half of 2014 generates a loss of $31 million. Is it the market, or CV and the loss of talent, or the new CV brand allied to HNCA? The second half will show. The new management might get more insight, the market may improve. One element however will add to the earnings crisis: the pre-programmed losses of mandatory flights to Zhengzhou.

According to Radio 100,7 today, Dirk Reich, the new CEO of Cargolux gave the Board the (dire) outlook, as results are below expectations so far, and where he projects the need for another capital injection by the end of 2015. Of course, as the CEO who just took over the reins, he better tells all the truth and the bad news upfront. He can only be a hero if he beats those bad expectations.

Now change of viewpoint. Let’s have a look at Airbridge Cargo, ABC. That’s where Robert van de Weg took his talents, after undeniably having made out of CV a fighting force. Compared to CV, ABC is young, 40 years for CV, 10 years for ABC. In the first half of 2014, ABC forwarded 188,354 tons, according to “The Loadster”. That’s an increase of 16%. Freight ton-kilometers in the 1 January-30 June, 2014 period, rose by 19% (industry 4.4%). And here is ABC’s outlook for 2014, as quoted by The Loadster:

“Denis Ilin, Executive President of Air Bridge Cargo Airlines, said: “The challenges which the global air cargo market continues to face have not held back ABC’s development. We have achieved our goals for the first half of the year and lay down ambitious plans for the second half of 2014, which will include launching of more new routes and increasing our frequencies on a number of existing routes, as well as growing our fleet. We will surely keep focus on our home market, not only by developing additional import business to Russia but also by launching domestic routes using the Boeing 737 freighter fleet of Atran Airlines, another part of Volga-Dnepr Group. We are on track for good 2014 and projecting our total tonnage for the year to exceed 400,000 tons of cargo”.

Should I just highlight once more: Robert van de Weg left Cargolux to join ABC in March 2014, and no one held him back. So did too many others.