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Release Date:
Release ID: 4651

Cargolux survives its most difficult year

Luxembourg, 21 April 2010 – 2009 was arguably the most difficult year in the history of air freight. The industry registered a decline in freight volume of well over 20% during the year, compared to 2008. This led to an immediate overcapacity with dire consequences for all players, including Cargolux.

We saw a reduction in fleet utilization and load factors, but, most importantly, a reduction in yields. In 2009, Cargolux tonnage declined by close to 11%, but yields were down by over 26%. The daily average aircraft utilization dropped 6.7% to 14.34 hours. Total block hours for 2009 decreased by 9.3% to 83,102.

The underlying rate declined by 13.8%. We saw a drop in tonnage versus 2008 of 10.8%, down to 627,813 tons.

Freight tonne kilometers where down by 11.3% to 4,800 million while available tonne kilometers reached 6,954 million, a reduction of 9.3%. Load factors declined by 1.6 points to 69%. (All figures include data for Cargolux Airlines International S.A. and Cargolux Italia SpA).

A reduction in tonnes sold and the decline in yields resulted in a drop in revenue of 34% to US$ 1.3 billion. Cargolux recorded an overall loss of US$153 million.

NETWORK
The crisis affected all Cargolux destinations and areas. We temporarily reduced capacity on all routes and closed a number of destinations, including Istanbul, Toronto, Helsinki and Cairo. No new destinations joined our network in 2009.




FLEET
Cargolux kept its fleet of 16 B747-400Fs in operation. However, a lower utilization of each aircraft meant that, in practice, we had the equivalent of two aircraft on the ground during the months of June and July.

In September and October, we delivered two aircraft to UPS in a deal that had been concluded before the crisis hit and was intended to facilitate the planned delivery of our new B747-8 freighters in 2009. However, by the time those two aircraft left our fleet, we actually found us in need of more capacity, as the markets began to rebound.

To cover the demand, we leased-in up to three B747-200Fs for the peak season in the last three months of the year.

Despite the worldwide decline and operating with reduced capacity, we could keep our market share stable at around 4%.

NEW OWNERSHIP STRUCTURE
As a result of the losses incurred and to ensure the survival of the company, a re-capitalization of Cargolux became necessary. In November 2009, the company implemented a restructuring of its capital structure in a two step transaction. First, shareholder SAirlines (part of the defunct Swissair Group) sold its 33.7% stake to Luxair, BCEE, SNCI (all current shareholders of Cargolux) and, as a new shareholder, the Luxembourg State.

Secondly, Cargolux’ shareholders approved the creation of an authorized capital of US$200 million, giving power to the board to issue new shares. A capital injection of US$100 million took place before year-end.

747-8 DELAY
The production delay of the B747-8F has pushed the first delivery to Cargolux from 2009 to late 2010. Cargolux saw this development with mixed emotions. On one hand, the delay helped us to preserve much-needed cash. On the other hand, we could have well used the added efficiency, lower fuel consumption, higher range and payload to reduce our operating costs.


SOCIAL RESPONSIBILITY
With the 2009 annual report, Cargolux also publishes its second sustainability report. The company went through the crisis without any forced lay-offs among its permanent staff. Instead, part-time work, unpaid leave and early retirement schemes were well received and have helped the company to no small extent. Throughout the year, the Cargolux management kept close contact with the social partners in a constructive dialogue. We have recently renewed the collective work agreement until the end of 2010 in a responsible manner from all sides.


For a full copy of the 2009 annual and sustainability report, please visit www.cargolux.com

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