The cargo business is the second of the Group’s activities, representing some 11% of the total revenues and regrouping the Air France-KLM Cargo and Martinair Cargo activities.
Continued difficult market conditions
After a 0.6% fall in 2011, air cargo demand contracted by 1.9% in 2012. With the exception of 2010, activity in this business has been declining since 2008 whereas global trade has increased by 2.5% and global GDP by 2.9% (source: ABN-AMRO Bank). The industry had to contend with two negative factors: not only was there a slowdown in world trade but the latter saw a shift towards bulk commodities which are more suited to sea shipping. The one bright spot was the development of trade between Asia and Africa which underpinned the growth for airlines based in the Middle East (+14.8%) and Africa (+6%).
Air France-KLM Cargo confirms its leadership position
Air France-KLM Cargo confirmed its position as the European and world-wide leader excluding integrators, with a market share (including Martinair) of 29.6% in 2012 (30.6% in 2011) amongst the AEA (Association of European Airlines) airlines and 6.6% at global level (7% in 2011). These trends in market share reflect the Group’s commitment to prioritizing an improvement in unit revenues and refocusing on the healthiest markets.
During the financial year, the Group transported more than 1.4 million tons of cargo of which 66% in the bellies of passenger aircraft and 33 % in the dedicated cargo fleet, to a network of 251 destinations in some 116 countries.
Affirmation of the “belly-dominant supplemented by full freighters” business model
Within worsening market conditions, this business’s financial performance deteriorated despite a series of commercial and cost saving initiatives. The strategic positioning adopted in 2010 was reconfirmed and enabled this business to make a positive contribution to the Group, above its pre-crisis level.
Despite the 3.5% reduction in capacity, Air France-KLM Cargo reduced its unit costs by 1.2% (on a constant currency and fuel price basis) relative to 2011 thanks to strict cost control and the implementation of the Transform 2015 action plans.
New commercial strategy: strengthening innovation and the Group’s position
In 2012, the new commercial strategy was deployed worldwide to improve efficiency and adapt to market conditions, and satisfy customers through more effective contractual conditions, adjusted customer segmentation, the implementation of a stronger key account team aligned with the organization of customers and the rationalization and simplification of the product portfolio.
Consolidating partnerships with Alitalia, the trans-Atlantic joint venture and closer ties with Kenya Airways
The acquisition of a 25% equity interest in Alitalia enables the Group to step up cooperation with the Italian airline and reinforce its presence in the Italian market, the fourth largest in Europe. The Group is now responsible for Alitalia’s cargo marketing, revenue management and the supervision of cargo operations in most markets where it has the appropriate authorizations from the competition authorities.