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Cargo ‘combi’ carriers Korean Air, Lufthansa post lower Q1 revenues

Lower demand, more capacity, price wars put pressure on airline logistics divisions

Lufthansa is a major passenger airline and cargo airline with its own dedicated freighter fleet. (Photo: Jim Allen/FreightWaves)

Sharp drops in first-quarter cargo revenue at Korean Air and Lufthansa Cargo, two of the world’s largest cargo carriers within a passenger airline, underscore how cooling demand and rates are resetting the market after once-in-a-generation windfalls during the COVID crisis.

Korean Air and German airline group Deutsche Lufthansa (DXE: LHA) rank in the top 10 combination carriers — operating dedicated cargo and passenger fleets — by volume.

Korean Air’s cargo revenue fell 51% to 1.5 trillion Korean won ($1.1 billion) due to weak demand and fierce price competition, according to the company’s interim quarterly report on Wedesday. The combination carrier said it expects weaker air cargo demand during the second quarter because of the ongoing economic uncertainty but hopes to pick up new revenue as it restores more passenger routes to countries that have recently reopened their borders to full international travel.

Korean Air has 23 freighters in its fleet, including seven Boeing 747-8 and 12 777 aircraft. It is the fifth-largest cargo carrier by volume in the world and third-largest “combi” carrier when express parcel carriers FedEx and UPS are excluded.  

The airline said overall revenue increased 14% as travel demand increased, but rising fuel costs and spending to support expanded aircraft operations led to a 47% decrease in operating profit ($318 million).

Airlines and logistics providers have seen air cargo profits decline in the past year as the global economy slows, consumers spend more on services again and companies take a conservative approach to adding inventory. Volumes are down about 12% globally versus a year ago. 

The air cargo industry enjoyed record revenues during the pandemic as canceled passenger flights reduced airfreight capacity at the same time ocean supply chains faced severe congestion. Ocean shipping problems have mostly been corrected and rates are very low, leaving businesses little incentive to use air cargo except for urgent and high-value products. 


Meanwhile, Lufthansa Group reported earnings that showed revenues at its cargo subsidiary fell 30% to 823 million euros ($904 million). Operating income before accounting adjustments plunged 64% to $214.2 million.

Lufthansa Cargo operates 16 Boeing 777 freighters on long-haul routes and two Airbus A321 converted freighters for same-day e-commerce customers within Europe. Eleven aircraft are operated by Lufthansa Cargo crews under the Lufthansa Cargo brand. Five aircraft are chartered from AeroLogic, a joint venture with DHL, and operated by AeroLogic on behalf of Lufthansa Cargo. Lufthansa Cargo also manages belly cargo for Lufthansa Airlines and sister passenger carriers Austrian Airlines, Brussels Airlines and Eurowings. 

Chargeable volume as a function of distance carried declined 3% during the quarter while capacity increased 9%, resulting in a 7.7-point drop in the load factor. The carrier said it was able to fill 61% of available cargo space on aircraft. Yields were 29.2% lower than in the previous year but 63% higher than in 2019. 

Lufthansa Group recently promoted Ashwin Bhat to lead Lufthansa Cargo after reassigning Dorothea von Boxburg to be CEO of Brussels Airlines.

Lufthansa Group cut its operating loss nearly in half to $301 million but not as much as analysts expected. Group revenue increased 40% thanks to high demand. The company said bookings remain strong through the summer.

New hiring, the effects of strikes at German airports and spending to rebuild flight operations for the summer season after the pandemic retrenchment pressured earnings.

The cargo performance of Lufthansa and Korean Air is similar to that of other carriers and logistics providers. The top U.S. carriers saw cargo revenues fall 28% to 38% during the first quarter, while dominant logistics providers Kuehne+Nagel and DSV reported revenue declines for air cargo of 41% and 33%, respectively.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.


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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. In December 2022, he was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]