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.

Cargolux: One moves in, two move out

My Orchids. Phalaneopsis. Photo ET

Cargolux: One moves in, two move out

While it has been reported that Dirk Reich will be Cargolux' next CEO, Board willing,  Robert van de Weg and Peter van de Pas will join ABC Cargo as of the 01st of May.. If my sources and my aunt Leontine are right.

The bottom line is a strong deficit on the talent side. And the restructuring at the top missed a chance to consolidate the existing team that because of the two who are leaving, was a winning team as documented during the crisis.

Cargoforwarder: Robert Quits Cargolux

My Orchids. Vanda. "Bonjour Tristesse". Photo ET

Cargoforwarder: Robert Quits Cargolux

Cargoforwarders' report sounds like the medical report of what I called the "Chinese Syndrom".

This is the alarming quote in that report: " Robert is the first to quit, others might follow. His step clearly shows that there is widespread discontent with the Luxembourg government's decision to sell 35 percent state-held shares in Cargolux to the Chinese investor."

Losing the key architect of CV's sales is a serious problem. Without growing sales, no value is added. It is almost ironical that at the same time CV advertises that it is hiring a new CEO. Finally, but what about timing !? Any serious candidate knows now what is going on. So one can only find a kamikaze. You know those pilots who crash their aircraft on the target.

Now even that is not funny. It is perplexing how the new government just took over a lame duck solution from the former government, which did not earn the prize of the best negotiator of all times. Political expediency has won over talent and expertise.

An old friend of mine, Rene Anselmo, founder of PanamSat crafted his company's slogan on that subject: "Truth and technology will prevail over BS and bureaucracy". Well said. But in this case it is the contrary.

CARGOLUX AIRLINE EXECUTIVES PLEAD GUILTY FOR FIXING SURCHARGE RATES ON AIR CARGO SHIPMENTS

CARGOLUX AIRLINE EXECUTIVES PLEAD GUILTY FOR FIXING SURCHARGE RATES ON AIR CARGO SHIPMENTS

December 9, 2011

FOR IMMEDIATE RELEASE

Airlines Executives Agree to Serve Prison Time

Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, announced that two executives of Luxembourg-based Cargolux Airlines International S.A. have each plead guilty and agreed to serve 13 months in prison for participating in a conspiracy to fix cargo rates for international air shipments.

Ulrich Ogiermann, the former president and CEO, and current employee of Cargolux, and Robert Van de Weg, the senior vice president of sales and marketing for Cargolux, plead guilty yesterday to the charges contained in an indictment filed on Oct. 28, 2010, in U.S. District Court in West Palm Beach, Fla. Ogiermann and Van de Weg pleaded guilty to conspiring with others to suppress and eliminate competition by fixing and coordinating certain surcharges, including security and fuel surcharges, charged to customers located in the United States and elsewhere for air cargo shipments including shipments to and from the United States. According to the indictment, Ogiermann participated in the conspiracy from at least as early as October 2001 until at least February 2006, and Van de Weg participated in the conspiracy from at least as early December 2003 until at least February 2006. Under the plea agreements, Ogiermann and Van de Weg have also each agreed to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation.

Air cargo carriers transport a variety of cargo shipments, such as heavy equipment, perishable commodities and consumer goods, on scheduled international flights.

Including Ogiermann and Van de Weg, a total of 22 airlines and 21 executives have been charged in the Justice Department’s ongoing investigation into price fixing in the air transportation industry. To date, more than $1.8 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time.

Ogiermann and Van de Weg are charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $1 million and up to 10 years in prison. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Yesterday’s guilty pleas are the result of a joint investigation into the air transportation industry being conducted by the Antitrust Division’s National Criminal Enforcement Section and the Atlanta Field Office, the FBI’s Atlanta Field Office, the Department of Transportation’s Office of Inspector General and the U.S. Postal Service’s Office of Inspector General. Anyone with information concerning price fixing or other anticompetitive conduct in the air transportation industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, visitwww.justice.gov/atr/contact/newcase.htmor call the FBI’s Atlanta Field Office at 404-679-9000.

A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida athttp://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida athttp://www.flsd.uscourts.gov or onhttp://pacer.flsd.uscourts.gov.

Technical comments about this website can be e-mailed to the Webmaster. PLEASE NOTE: The United States Attorney's Office does not respond to non-technical inquiries made to this website. If you wish to make a request for information, you may contact our office at 305-961-9001, or you may send a written inquiry to the United States Attorney's Office, Southern District of Florida, 99 NE 4th Street, Miami, Fl. 33132.