A Sample Feature From Aviation News

Cargolux - the forwarders’ airline

Its base is in the smallest country in central Europe, but the reliability of Cargolux has made it one of the largest and wide-ranging cargo airlines in operation. Luigi Vallero reports on the carrier and its status.

Above: One of Cargolux’s 13 Boeing 747-400Fs, displaying the carrier’s latest livery. (Photo, Cargolux).

It was in September 1970, when the first flight of newly created Cargolux left the tarmac of Luxembourg’s Findel Airport, bound for Hong Kong. Since then 35 years have passed and now Cargolux stands at the forefront of the air cargo scene, recognized as the largest European all-cargo carrier, and operating a state-of-the-art fleet of Boeing 747-400Fs.

Despite being one of the smallest countries in Europe, the Grand Duchy of Luxembourg is home to two main carriers. National carrier Luxair - Luxembourg Airlines provides an ample network of passenger services to destinations within Europe and the Mediterranean basin, while since the early-1970s the country’s economy based on steel and glass production, chemicals and its position at the centre of Europe encouraged the development of Findel Airport into one of the major continental hubs for cargo. It also brought about the creation of Cargolux, a dedicated cargo carrier.

Cargolux Airlines International was created in 1970 by Luxair, the Salen Shipping Group (of Sweden), Loftleidir Icelandic Airlines and a number of private Luxembourg investors. Operations started in September of that year, when the company’s first turboprop-powered Canadair CL-44J swingtail freighter (TF-LLF), with a maximum payload of 24 tons began a Far Eastern service between Findel airport and Hong Kong.

Within three years the Icelandic-registered CL-44 fleet had grown to five, including the stretched D4 variant, and the first Douglas DC-8-54F, bringing a substantial increase in terms of payload which almost doubled from 24 to 46 tons. In 1974 the Maintenance and Engineering Department of Loftleidir Icelandic Airlines was incorporated into Cargolux, and the following year the Company inaugurated a new headquarters and two hangars.

In 1978, with the phase-out of the last CL-44, Cargolux became an all jet carrier, operating a fleet of DC-8-63Fs to a growing number of regular destinations, particularly in the Far East and the United States. The burgeoning economy saw the airline taking another bold step when, in the same year, it ordered a brand new Boeing 747-200F directly from the manufacturer.

Above: Canadair CL-44J Swingtail TF-LLJ of associate enterprise Loftleidir Icelandic, seen here in Cargolux’s original livery. Below: An evocative view of Cargolux’s Findel-based CL-44 operation in the 1970s. (Photos, author).

Registered LX-DCV, the 747 gave a dramatic increase in capability, allowing cargo up to 119 tons to be carried. It was delivered in 1979, followed by a second example one year later. Both were replaced in the mid-80s with three second-hand B747-271Cs, bought from Transamerica. In 1982 China Airlines of Taiwan became the first of many strategic partners when it signed a commercial joint-venture agreement which still continues to date in the form of a code-share partnership between the two carriers.

Underlining the committment to becoming a globally recognised brand, providing high quality services, Cargolux's Cargo Handling And Management Planning (CHAMP) computer system was introduced in 1983, while later in the same year the carrier made its first foray in the passenger market, when it leased two passenger-configured B747s and one DC-8 to operate Hadj pilgrim flights. This venture continued into 1988 and developed in what became known as Lionair, a short-lived passenger operator conceived jointly with Luxair, operating two B747-100 aircraft.

Now fully committed to updating its fleet, the last DC-8 was sold in 1984 while a third 747-200 freighter joined the ranks in 1986. The following year Lufthansa became a major shareholder when it took a 24.5% stake in Cargolux, while Luxair increased its share to 24.53%. By then among the 15 largest cargo carriers in the world, in terms of freight tonne kilometers flown, Cargolux celebrated its 20th anniversary in 1990 with an order for three new Boeing 747-400Fs. In the same period, CHAMP I, II and III, Cargolux’s latest cargo handling system, was implemented and successfully used by the Company and shortly after sold to eight other major carriers.

From the beginning of the decade the nineties promised to be exceptional years for cargo carriers, and 1991 proved to be a record year for Cargolux, with revenues in excess of $292m and an after-tax profit of $21m. The first two new generation B747-4R7Fs where delivered in 1993, the airline being the first in the world to operate this aircraft and was only recently joined by a second European operator, Global Systems Supply.

The third B747-4R7F was delivered in 1995, when Cargolux was celebrating its 25th anniversary, while the following year the new Luxair CargoCenter, with an annual capacity of 500,000 tons, was inaugurated at Luxembourg airport.

By early 1997, Cargolux was serving 31 destinations worldwide and maintaining 66 offices in 40 countries. Two more B747-400Fs were delivered in the second half of 1997 and an additional order for a further five 400Fs plus two options was placed. In September, Lufthansa sold its shares in the company to SAirLogistics, which one year later brought its share to 33.7%, while SwissCargo signed a co-operation agreement. In the meantime the Luxair stake had increased to 34.9%.

In 1998 the Company announced a record net profit of $30.7m for the previous year, four times the 1996 figure: record figures in tonnage, revenue and tonne kilometers were achieved as well. In December, the sixth B747-400F was delivered, while Cargolux announced an order for two more aircraft for delivery after 2000. The last B747-200C had in the meantime been withdrawn from service, and by the end of 1997 Cargolux was now exclusively a B747–400F operator with a fleet of ten.

Tonne-kilometres flown and tons carried reached an all-time high in 2000, with 3,200m and 377,550 tons respectively. In June that year, a new regular service to Seoul, Korea, was launched.

President and CEO Heiner Wilkens left Cargolux in April 2001, having been with the company since 1995. An eleventh B747-400 freighter joined the fleet in August, while the company’s worldwide network was now stretching to 91 regular (scheduled and regular charter) destinations, 49 served by aircraft and 42 by truck.

The new century marked two difficult years for the air cargo world, followed by the outbreak of the SARS virus which presented a serious threat to trade between Europe and the Far East. Fortunately, for Cargolux, the cancellation of large numbers of passenger flights in that period led to a relatively stronger demand for freighter capacity.

An upward trend for the air cargo business was clearly evident by 2003 and Cargolux closed the year with operating revenues of $954.3m, up 18.18% over the previous year, and a net profit of $70.9m. In the same year the new destinations of Fort-de-France, Kinshasa, Panama City and Rio de Janeiro were added. In 2004 the airline received its 13th B747-400F.

Below: The first Cargolux 747-400F in the carrier’s previous livery undergoing final tests at Boeing before delivery in November 1993. (Photo, Boeing).

For the rest of this feature please see the June 2005 issue.