TNT Express has seen no signs yet of a significant peak-season upswing in volumes, although thecompany said it had spare long-haul capacity available if there is a major surge in volumes.
CFO Bernard Bot said the company’s three Boeing 777 freighters were currently flying a fullservice, but one of the company’s two B747 freighters is currently mostly parked in Liege, whilethe other is flying a Shanghai-Europe rotation.
Bot confirmed yesterday that the two B747 freighters were still up for disposal. “But thereality is that the market remains somewhat soft, although we are still actively marketing andlooking at opportunities to dispose of them,” he said. Over the last few quarters, TNT has reducedthe value of the two B747 aircraft on its books to €79 million, in reflection of the market valueof those assets.
“But overall the strategy remains that we don’t need those two planes in our operations toprovide the service that we want to give, and therefore the exposure to this capacity is somethingwe would rather not have,” added Bot.
He said the Boeing 777s were on longer-term operating leases, and that reducing from five tothree long-haul freighters to would take TNT to a fleet position it was comfortable with fornow.
“Those are firmly with us for the time being,” he observed. “Obviously, it is something that wereassess every period to see what the optimal configuration is, but at this stage it is only thetwo Boeing 747s that are being sold off.”
Bot said it was unclear to what extent the company’s inactive B747 capacity might be needed thisquarter, and whether peak-season pre-Christmas demand would warrant bringing it back into fullservice. He told CEP-Research: “Of course, it is a more nuanced story: we have it on a weeklycharter with a Chinese company, so it’s not exactly parked, and it also rotates with the other 747.“I would say the volumes we have on the 747 are still such that we have more than enough capacityto absorb further growth if we were to see that in the peak season. We are not really seeing a verybig upswing, at least in these weeks, but it may still come.”
He said the big fourth-quarter peak season surges that had taken place in past years had beenabsent for the last two winters, “and for the moment we are not seeing it either – but if it comes,we will be ready for it”.
TNT’s long-haul strategy to limit its losses by temporarily parking unneeded aircraft capacitymirrors that of general air cargo operators, especially those exposed to the Asia-Europe trade.FedEx and UPS have also reduced their exposure to weaker Asia demand over the last two years,reducing the number of aircraft and frequencies serving Asia, and with FedEx channelling some ofits lower-yielding express traffic into third-party commercial air capacity, reserving the capacityin its own aircraft for higher-yield traffic.
Hong Kong-based carrier Cathay Pacific, said it had seen volumes and rates on the transpacificreturning to strength in recent weeks, although it said Asia-Europe yields remain at “rock-bottom”levels. It has cut its Asia-Europe frequencies from more than 30 per week in 2010 to around 10 perweek currently.
Amsterdam Schiphol Airport yesterday reported a strong September for air cargo, with volumes up3.9%, year on year. For the first nine months of 2013, it has recorded growth of 1.6%, although thenumber of freighter movements continued to show a slight decline, down 0.2% in September, and down1.4% for the year to date, reflecting a widespread shift that has taken place in the air cargomarket in favour of using passenger aircraft ‘belly-hold’ cargo capacity at the expense of usingfreighter aircraft capacity.
Earlier this month, Air France-KLM-Martinair Cargo revealed that it would cut a further fourfreighters from its fleet over the next two years, leaving Air France with just two operating fromits Paris CDG hub and eight under the control of Martinair Cargo at Amsterdam. The move reflectsthe continuing unprofitability of wide-body general-cargo aircraft in the current market,characterised by overcapacity and ever-declining air freight rates, but is also a reflection of theincreasing importance of belly-hold capacity among combination carriers.
The group’s cargo division reported half-year losses of more than €100 million, while theairline group’s passenger arm is set to introduce significant additional cargo-friendly capacity inthe next few years, in the form of B777, B787 and A350 aircraft. The new strategy contrasts starklywith the group’s plans three years ago, when Air France was operating 10 B747 freighters and hadfive new B777 freighters on order.
