Cargolux reported its best year on record in 2021 as the air cargo market surged amid capacity shortage and strong yields.

The Luxembourgian flag carrier cargo airline said revenues increased 40% over 2020's performance to US$4.4 billion last year, while earnings before interest and tax (EBIT) were up 73% year-on-year to US$ 1.72 billion in 2021.

The cargo airline also saw its profit before tax surge 94% over 2020 to US$ 1.7 billion, while Cargolux's profit after tax also increased 68% to f US$ 1.3 billion compared to 2020.

"The market dynamic in 2021 continued to be strongly influenced by the pandemic and its consequent repercussions. The capacity shortage and strong yields experienced in 2020, continued throughout 2021 when demand remained strong," Cargolux said in a statement, adding that backlog issues on the global supply chain, ocean freight capacity constraints, and limited belly-hold availability led to sustained demand for air cargo services with volumes close to peak season production throughout the year.

Compared to 2020, the air cargo airline noted that operationally, 2021 was more challenging with quarantine measures introduced in various countries, confinement of crew to hotels, lack of suitably qualified staff and infrastructure, especially in the USA all — compounded by full warehouses and a shortage of trucking services.

"The temporary blockage of the Suez Canal also resulted in customers further relying on air cargo for their shipments. The resulting capacity shortage, therefore, remained under pressure, resulting in year-round high volumes and strong yields reflected in the figures above," it added.

Use of sustainable aviation fuels

These circumstances also highlighted the importance of the air cargo industry and Cargolux said it was able to show its infinite capacity to adapt to unforeseen circumstances — allowing it to consolidate its position as a leading industry player ranking no. 5 in IATA’s top 20 cargo carriers based on international scheduled freight ton-kilometers, (FTKs), flown.

Cargolux noted that as a cargo airline operating long-haul flights it has also strived to reduce the impact of its operations on the environment and has started using Sustainable Aviation Fuel (SAF) last year to reduce its CO2 emissions.

In 2021, the airline said it managed to achieve its best carbon performance on record with carbon efficiency, measured as a factor per FTK, reduced to 0.463kg / FTK for 2021, down 4% from the previous year and almost 7% compared to 2019.

Major uncertainties in 2022

Meanwhile, Cargolux noted "major uncertainties" that would impact the air cargo market this year including the ongoing war in Ukraine and Covid-19 related lockdowns in China.

"There are several major uncertainties that lie ahead for the remainder of the year. Global supply chains continue to experience considerable strain, probably even more than in 2021, and capacity is not expected to recover to pre-pandemic levels in the coming months. Sanitary restrictions, border closures, and lockdowns are still prevalent outside of the EU, specifically in Asia, the powerhouse of global production," the cargo carrier said.

It added that geopolitical tensions are at an all-time high as war returns to Europe and there is currently no apparent resolution in sight.

"The sanctions imposed on Russia have impacted international trade and the grounding of Russian carriers has further reduced available capacity whilst at the same time increasing costs for airlines due to longer flying times to and from Asia as the use of Russian airspace is no longer available. Additionally, the price of jet fuel has become extremely volatile and significantly higher than in 2021," Cargolux further said. "Global trade will likely suffer the consequences of these circumstances and pressure on supply chains will continue."

At the end of 2021, Cargolux noted that its total fleet of 30 aircraft comprised sixteen Boeing 747-400 freighters (10 B747-400Fs and 6 B747-400ERFs) and fourteen Boeing 747-8 freighters.

It said this uniform fleet enables Cargolux to respond to changing market conditions in a flexible and timely manner.