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Lufthansa Cargo Eyes Intra-European Services with A321 Conversions
The rise of e-commerce has been amplifying since the start of the Covid-19 pandemic, whereby many brands with physical retail stores worldwide had to shift to e-commerce as an effort in surviving through such uncertain times.
This brought on a bright side of the crippling aviation industry, as despite the dwindling passenger numbers, airlines could still count on air freight revenue to ride the rocky tides as air freight demand numbers rose even higher than pre-Covid times.
To cater to the increasing demand for cargo worldwide, many international airlines and cargo companies looked towards investing much more into the expansion of their cargo capabilities, be it through purchasing more converted aircraft or increasing routes frequencies.
The Expansion of Lufthansa Cargo
Lufthansa Cargo was one of such cargo airlines, as it announced on Wednesday, July 7, about its intention to start focusing more on the growth of its cargo capacities by permanently converting two of its parent airlines’ Airbus A321 passenger aircraft into freighters.
The twin-engine, medium-haul aircraft will be converted with large cargo doors for the convenient facilitation of container transportation on the main deck and will be expected to start operations by Lufthansa CityLine – on behalf of Lufthansa Cargo – at the beginning of the year 2022.
Considered as one of the most flexible aircraft in its class, the two Airbus A321P2Fs will use standardized cargo pallets. Additionally, they offer a payload of 28 tonnes, as well as a range of 3,500 kilometers each, allowing for extremely efficient continental flight operations.
As the growth for cross-border e-commerce demand is forecasted for approximately 20 percent per year for the next five years, Lufthansa Cargo made the decision of conversion to meet the demand for quicker, more efficient intra-European connectivity.
“Lufthansa Cargo wants to offer customers in the eCommerce segment fast intra-European connections. With the converted A321s, we are meeting our customers’ growing demand for same-day solutions and further strengthening our dense network of global connections as well as our product offering,” said Dorothea von Boxberg, CEO of Lufthansa Cargo.
In regards to why the two converted freighters will be operating by Lufthansa CityLine on behalf, she added on by suggesting that the airline’s immersive experience of more than six decades in the targeted air transport market is what makes it reliable as an “important partner in the Lufthansa Group.”
On behalf of the parent airline, Lufthansa CityLine operates as a regional capacity provider, connecting from its hubs in Frankfurt and Munich to a vast number of destinations in Europe, operating a fleet of 50 aircraft including Bombardier CRJ900S, Embraer E190s and E195s, and Airbus A319s.
The two A321P2Fs are the latest in line with the cargo airline’s expansion, as just last month, it acquired another new Boeing 777F aircraft and the delivery is expected to be before the end of this year.
With a massive payload capacity of over 100 metric tonnes and paired with a range of more than 9,000 kilometers, the B777F aircraft has been the most efficient freighter in its class and has been highly populated in the fleets of other cargo airlines.
Once the new addition comes in, it will bring the total number in Lufthansa Cargo’s fleet to be 15 full-freighters, all ready to be in service for the cargo airline’s customers.
Confidence in Lufthansa
Besides the bloom in cargo, parent airline Deutsche Lufthansa itself has been on the receiving end of better news as well – having sold approximately 1 billion euros (US$1.19 billion) in bonds on Wednesday.
This marks the second time this year that the Frankfurt-based airline had sold bonds as a means of raising cash, the first time having happened in March when the airline raised an estimated 10.6 billion euros (US$12.6 billion) in cash and equivalents.
A high demand both times for the German carrier’s bond indicates investor confidence in the airline’s future ahead of the pandemic. “The repeated successful placement of a corporate bond again confirms our access to a variety of advantageous financing instruments,” Finance Chief Remco Steenbergen said in a statement.
Lufthansa said that it would be using the cash proceeds to further cement its liquidity positions, as the airline had already secured the refinancing of all its financial liabilities that are due by this year.
In addition to the successful bond issue, the airline is planning for an initiative for a capital increase, suggesting that the net proceeds from it would contribute to the repayment of stabilization measures of the German Economic Stabilisation Fund (ESF) and to the restoration of a sustainable and efficient long-term capital structure.
However, the Executive and Supervisory Boards have not yet succumbed to a decision about the size and timing of the capital increase venture, and approval by the ESF for it has to be obtained as well before anything can be done.
Regardless, it would seem that Lufthansa is steadily on the rise again after being hit hard by the pandemic last year. And with the rise of air travel climbing expectedly in Europe and other parts of the world, the airline is confidently looking to reinstate almost all of its routes by end of summer in September.
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