Summary
- IAG saw a 30% drop in cargo revenue in 2023 as a consequence of increased passenger services and belly space availability.
- Despite the drop, IAG’s cargo volume increased by 17% with British Airways leading in revenue at £757 million.
- IAG attributes revenue drop to COVID-related disruptions in logistics industry and notes potential recovery in Asia-Pacific sector.
International Airways Group (IAG) reported almost a 30% drop in cargo revenue for 2023 in its year-end financial reporting earlier this week. The drop in cargo revenue for the airline consortium is the newest result that’s consistent with many other airlines for what was a tumultuous yr for the cargo industry.
Originally released on February twenty ninth, when the airline also announced major leadership changes, the airline group’s year-end result included many positive features, including a 22.6% capability growth on transatlantic capability and a doubling of total profits to £2.3 billion. IAG doesn’t have any freighter aircraft and operates cargo services with belly capability on its passenger airlines.
IAG, for its part, is partially owned by Qatar Airways. Its member airlines include British Airways, Aer Lingus, Iberia, LEVEL, and Vueling. Of those, British Airways brought in many of the cargo revenue for 2023, accounting for £757 million, followed by Iberia with £236 million, and Aer Lingus at £47 million.
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While its passenger services grew with great success in 2023, IAG also saw a rise in the quantity of cargo flown. In 2023, IAG’s Cargo Tonne Kilometers (CTK), or the load carried per kilometer distance of the flight, increased by greater than 17% from 3.9 billion tonnes in 2022 to 4.6 billion tonnes in 2023.
Despite carrying more cargo in weight in 2023, the revenue per CTK dropped nearly 40%. In its year-end report, the airline group noted that it had previously benefited from large disruptions within the logistics industry in 2022, stemming from the COVID-19 pandemic. These disruptions limited the power for cargo to maneuver in 2021 and 2022 as a consequence of limits in cargo capability from the shortage of passenger flights.
Cargo market turbulence
With passenger service reaching pre-pandemic levels normally and surpassing them in some, rates for cargo were dropping due to the provision of belly space. Nonetheless, IAG noted that its cargo revenue had increased by 3% in comparison with in 2019.
The airline group also noted that the biggest drop in cargo volume in comparison with 2019 was within the Asia-Pacific region. Recently, cargo industry experts have noted higher performance within the Asia-Pacific marketplace, which could indicate the start of a recovery of the faltering cargo market.
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IAG itself had just opened recent cargo facilities at London Heathrow (LHR) and Madrid (MAD). While British Airways is IAG’s largest member, and Iberia is one in every of its fastest-growing airlines, these cargo facilities improved cargo yields, resulting from the speed charged for cargo, to permit IAG airlines to hold premium goods in 2022.
The sudden return to normalcy has caused various financial hardships for firms that expanded throughout the COVID-19 pandemic. One in all these airlines is Florida-based Amerijet, which recently elected to park its fleet of narrowbody cargo aircraft. Western Global Airlines, meanwhile, filed for Chapter 11 bankruptcy protection in August 2023. Other cargo airlines, reminiscent of SmartLynx in Latvia, have parked a few of their fleet of A321 converted freighters without with the ability to operate these aircraft for a customer.
Nonetheless, despite the relatively poor performance of the cargo component, IAG’s business growth may very well be on the horizon. The airline group also reported £223 million in sales of products and services to significant shareholders, which it marked from the acquisition of cargo capability, amongst other services.