FedEx updates on freighter retirements and TNT acquisition

FedEx has provided more details on its decision to retire freighters early, while also providing an update on its proposed takeover of TNT Express and saying that it will continue on the acquisition trail.
Speaking shortly after the announcement of its fiscal year fourth quarter results, the US express giant said its decision to retire 15 aircraft and 21 related engines and also adjust the retirement schedule of an additional 23 airframes and 57 engines was part of a profit improvement plan.
FedEx chairman, president and chief executive officer Frederick Smith said: “We’re getting rid of very inefficient fuel burning aircraft of high maintenance to a newer fleet, better maintenance, better reliability, better fuel efficiency.
“So we’re balancing our fleet in the US and around the world and that’s part of our profit improvement plan.
“We need to buy [to modernise the fleet] 12, 15 airplanes a year and we continue to do that and you can count on us continuing to that because they are aluminum, they oxidize, they wear out and the new models fortunately burn a lot less fuel and are much more reliable.
“One of the reasons that the fleet can go down is that we don’t need as many spares with the new technology airplanes as we did with the old ones.
FedEx Express president and chief executive David Bronczek said the planes that were to be retired were “basically parked in the desert”.
“They were in engine repair that was going to be too expensive to bring back,” Bronczek said.
The company also said it hoped to complete the acquisition of TNT earlier than expected, although no new time line was provided.
In May, it predicted it would take a year for the purchase to gain regulatory clearance.
Executive vice president, general counsel and secretary Christine Richards said: “We’re doing a tremendous job. We are preparing to submit our initial offering documents as required by Dutch law by the end of this month.
“And we are well underway with the preparation of the necessary filings with competition authorities.
“We have been in consultation with European Competition Commission and continue to believe FedEx and TNT operations are highly complementary in Europe and we do not believe that the transaction faces any competition issues for the commission.
“So we’re in good shape. We’re going to try to get this done as quickly as we can.”
FedEx said it would also continue to be “aggressive in the acquisition space” over the coming years.
“As to any specifics about any specific space,” said executive vice president and chief financial officer Alan Graf. “I will just say that depends on the fit, the culture, the price and all three of those things are vital.”

Source : http://www.aircargonews.net/news/airlines/single-view/news/fedex-updates-on-freighter-retirements-and-tnt-acquisition.html

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Boeing ups aircraft demand expectation

Boeing has upped its expectation for demand of new aircraft from last year’s forecast, predicting that 38,050 new airplanes will be needed over the next 20 years.
The company predicted that by the end of the 20 year forecast period, the commercial airplane fleet will double, from 21,600 airplanes in 2014 to 43,560 airplanes in 2034.
Last year, its forecast was 3.5% lower than its newly issued estimate.
It said 58% of the 38,050 airplanes delivered over that time will be to accommodate growth.
Boeing Commercial Airplanes vice president of marketing, Randy Tinseth, said: “The commercial airplane market continues to be strong and resilient.
“As we look forward, we expect the market to continue to grow and the demand for new aircraft to be robust.”
During the period cargo traffic is expected to grow at about 4.7% per year.
“The air cargo market continues to strengthen, and will drive demand of some 920 new airplanes over the 20-year forecast,” Boeing said.
"We've seen two years of solid growth in the air cargo market and we expect that growth to continue," Tinseth added. "That's great news for our line of production freighters, including the 747-8, 767 and 777."
The single-aisle market continues to be the fastest-growing, largest overall segment, requiring 26,730 airplanes over the coming two decades.
Boeing said these aircraft are the “foundation of the world's airline fleet”, operating more than 70% of the world's commercial aviation routes.
Emerging markets and low-cost airlines were fuelling the need for this type of aircraft.
Boeing forecasts that the widebody segment will require 8,830 new airplanes, led by small widebody airplanes in the 200- to 300-seat range such as the 787-8 and 787-9 Dreamliner.
This year's forecast reflects a continued shift in demand from very large airplanes to efficient new twin-engine products such as the 787 and new 777X.
While airline growth still accounts for the majority of new demand, a large and growing number of aging aircraft will require replacement. About 2 to 3% the installed fleet will require replacement each year.

Source: Boeing



Source : http://www.aircargonews.net/news/airlines/single-view/news/boeing-ups-aircraft-demand-expectation.html

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American goes further east with FlyUs

American Airlines Cargo has extended its reach in eastern Europe with the appointment of FlyUs as its general sales agent (GSA) in both Hungary and Poland. 
Both countries are currently off-line destinations in the American Airlines network, with cargo being trucked from both Budapest and Warsaw to London, Frankfurt, Munich or Paris for direct entry into the system.
Zsolt Szabó, FlyUs country manager, said that all eight American Airlines gateways in the US, as well as onward destinations in Mexico, Central America and South America have appeal for customers in Hungary.
Said Szabó: “A wide range of commodities - including electronics, pharmaceuticals, automotive and healthcare equipment - are already featuring in the kind of shipments for which we are receiving bookings. 
“We have potential business from across the whole of Hungary and are expecting demand for service to the new pharmaceutical facility in Philadelphia too, as there are several pharmaceutical factories here exporting goods all over the US and onwards to the Latin American countries.”
In Poland, customers have started sending shipments destined for the airline’s east coast hubs, with car parts, ships spares, electrical devices and cosmetics featuring in the early bookings. 
Country manager Pawel Wlodarczyk said: “We are a young and enthusiastic team and have already identified areas of business where we can win traffic for key locations in Brazil, Argentina and the Caribbean from Warsaw, central Poland and the industrialized south of the country.”
 In both countries, a dedicated sales staff has been appointed to handle the American Airlines Cargo business.

Source : http://www.aircargonews.net/news/airlines/gssa/single-view/news/american-goes-further-east-with-flyus.html

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Etihad teams up with WCA

Etihad Cargo is offering World Cargo Alliance (WCA) members special rates for certain destinations when they use the Worldwide Information Network (WIN) booking platform.
WCA members who are participants in Etihad's loyalty programme, CargoConnect, and who also use the WIN for booking and air waybill transactions, will qualify for special rates on selected origins and destinations on the Abu Dhabi-based carrier's network.
The platform offers instant pricing for all online Etihad origins and destinations, e-booking, e-air waybill plus track and trace.
Etihad Cargo vice president David Kerr said: “Part of our continuing growth story will be underscored by our ability to meet the needs of our customers, in a rapidly evolving cargo market, whether they are a large multi-national company or a small and medium-sized enterprise (SME) user that needs to send goods and services around the world to grow their business."
Membership of CargoConnect is free and gives members the benefit of exclusive pricing as a WCA member, while allowing users to earn Etihad Guest Miles for all cargo shipped on Etihad Airways.

Source :http://www.aircargonews.net/news/airlines/single-view/news/etihad-teams-up-with-wca.html

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Sharp decline in load factors

Airfreight demand growth began to ease off in April, resulting in a “sharp” decline in load factors as they reached their lowest level for a year.
The latest IATA figures show that airfreight volumes increase by 3.3% year-on-year in April compared with growth of 4.3% for the first four months.
It said that the slowdown was mainly the result of a weakening in demand in Asia Pacific, where freight tonne km (FTK) increased by 4.5% in April against the year-to-date figure of 7.3%.
“The slowdown is consistent with a reversal in earlier gains in regional trade,” IATA said, adding: “Part of the recent decline in emerging Asia exports is reflecting economic weakness in Europe, which dampens demand for manufactured goods shipped by Asia Pacific carriers.”
One contact at a European logistics firm confirmed this assumption earlier today, saying the weaker Euro was having an effect on consumers' buying power.
Conversely, exports from Europe were increasing as goods manufactured on the continent became cheaper elsewhere.
“Results have been mixed,” IATA added. “Carriers in the Middle East continue to show strong growth, with a rise of 14.1% in April year-on-year, reflecting continued expansion in capacity and network, as well as robust trade with Middle Eastern economies.
“In Europe, by contrast, airfreight volumes carried by regional airlines fell 0.3% in April year-on-year.
“Recent improvements in business confidence in the Eurozone are yet to translate to increased demand for airfreight and consumer confidence remains subdued.” 
As a result of the growth slowdown and capacity increases, the association said load factors “dipped sharply in April” to 44.7%.
In March, the figure stood at 47.9% while in April last year, load factors stood at 45.4%.
“Levels are now the lowest they have been for the past year, on a seasonally adjusted basis. All regions except Africa recorded an increase in capacity in April compared to March.”
The region with the weakest load factor in April was Africa, at 30.9%, while Asia Pacific was the best preforming with 53.2%.
IATA was not confident of a major improvement in the year ahead, although it still expects there to be growth in 2015.
“Acceleration in the airfreight growth trend is unlikely in the near term. Globally, April data show no increase in business confidence compared to the start of the year.
“Furthermore, export orders have shown gradual decline throughout the first quarter, and are now indicating no growth.
“That said, for 2015 overall, moderate expansion in air freight is expected alongside anticipated improvements in the global economy.”

Source: IATA

























Source : http://www.aircargonews.net/news/airlines/single-view/news/sharp-decline-in-load-factors.html

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FedEx takes axe to 15 freighters

US parcels and logistics giant FedEx has "permanently retired" 15 aircraft and 21 related engines as it continues to “rationalise capacity and modernise its aircraft fleet to more effectively serve FedEx Express customers”.
FedEx has taken a non-cash impairment charge of $246m recorded in May 2015 and has also adjusted the retirement schedule of an additional 23 airframes and 57 engines, with an associated $30m in cash charges.
In April this year, FedEx made a $4.8bn bid to acquire rival operator TNT Express of the Netherlands, with both sides reaching a conditional agreement on the deal, which is expected to receive regulatory approval in early 2016.
FedEx in a short statement on its investors website said: “These combined retirement changes will not have a material impact on near-term depreciation expense."
The permanent retirement of FedEx aircraft and related engines includes: seven MD11 airframes and 12 related engines; three A300 airframes and three related engines; four A310-300 airframes and three related engines; and one MD10-10 airframe and three related engines.
As of February this year, FedEx fleet totalled 673 aircraft, including 383 jet aircraft.
During the four quarters ended February, 2015, FedEx spent $3.15bn on 1.14bn gallons of jet fuel.
“The B767 provides similar capacity as the MD10, with improved reliability, an approximate 30% increase in fuel efficiency and a minimum of a 20% reduction in unit operating costs,” said FedEx.

Source :  http://www.aircargonews.net/news/airlines/express/single-view/news/fedex-takes-axe-to-15-freighters.html

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DB Schenker to charter from Etihad for new US freighter service

DB Schenker has revealed it is chartering an aircraft from Etihad for its new weekly freighter service from China to the US.
The forwarder, through its JetCargo division, this week announced it had launched a freighter service travelling between Hong Kong, Chicago and Houston.
A company spokesperson told Air Cargo News it was a fully dedicated service using a Boeing 747-8 freighter chartered from Etihad.
The service will target the oil and gas, automotive and industrial sectors with freight moving from southeast China to the US southwest, Gulf of Mexico and northern Mexico.
As is the current trend, DB Schenker is offering three service options: first class, business class and economy, which have defined lead times and end-to-end tracking.
The company recently opened a 14,000sq m facility comprised of 11,500sq m of warehousing space, 2,500sq m of office space and a two hectare laydown yard in the Houston area.

Source : http://www.aircargonews.net

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Optimistic airfreight forwarders

European airfreight forwarders are expecting volumes to continue to increase over the coming two months.
The latest monthly Danske Bank forwarder index for expectations for the coming two months came in at 57 points, with any figure above 50 suggesting that participants expect volumes to grow over the period.
The April survey also shows an improvement on future expectations compared with the March survey, when the index stood at 54 points.
Current volumes are also ahead of where they were two months ago, with this index standing at 57 points, again suggesting an improvement over the period.
However, there has been a slight tailing off in growth levels as the index stood at 63 points in March.


Source : http://www.aircargonews.net/news/forwarders/single-view/news/optimistic-airfreight-forwarders.html

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Agility's airfreight yields boost Q1 performance

Improving airfreight yields have helped push logistics firm Agility to a 5 percent year-on-year improvement in profits during the first quarter of the year.
During the first quarter, the Kuwait Stock Exchange-listed company recorded a 1 percent improvement in revenues on last year to KD318.1m ($1.06bn), while net profit increased by 5 percent to KD11.8m.
Its Global Integrated Logistics division saw margins for the first quarter improve to 24 percent from 23 percent during the same period last year.
The improvement was driven by “continued growth in contract logistics in emerging markets, coupled with improved yields in the airfreight business”.
Agility chief executive Tarek Sultan said: “Although the global economy continues to be in stop and start mode, we are cautiously optimistic about our start to this year.
“We started out on a good note, driving margin expansion in GIL and revenue growth in our Infrastructure portfolio.
“GIL will continue to sharpen its strategic focus in terms of customers, markets, and products, as well as build capacity in its business through operational transformation and a commitment to strong execution.”
The company's full-year 2014 results also benefited from improved airfreight yields.

Source : http://www.aircargonews.net/news/forwarders/single-view/news/agilitys-airfreight-yields-boost-q1-performance.html

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Vessels collide in same 2013 sea mishap spot

Talisay City, Cebu — A chief engineer was hurt when a fast craft collided with a cargo vessel late Wednesday afternoon at Lauis Ledge off Talisay City, the same spot where a passenger vessel and cargo ship collided two years ago, killing 116 passengers and crew.
The Lauis Ledge has become an eerie spot for vessels traveling from Cebu to Bohol and passengers on board fast craft Starcraft 9 went into panic when the sea craft collided with cargo vessel MV Our Lady of Faith at 5:50 p.m. last May 13.
Fortunately, all 262 passengers and crew of the Bohol-bound fast craft were unharmed, except for chief engineer Romeo Astillejo, who was thrown off into the sea during the collision.
Astillejo was rescued by fellow crewmen and was rushed to the hospital for treatment.
The Philippine Coast Guard (PCG) said the collision damaged the fast craft’s right portion but Our Lady of Faith suffered no significant damage and her crew were safe.
The cargo ship, manned by Captain Jose Adaptar, was en route to Bacolod City from the port in the City of Naga while the fast craft, under Captain Roman Pialago, was bound for Tubigon, Bohol.
PCG Central Visayas District Chief-of-Staff Weniel Azcuna said the PCG is now questioning the captains and crew of the vessels.
He said there is a “need to monitor the traffic situation” in Lauis Ledge because it is the entry and exit point of vessels heading to or from Cebu.
Right in that same spot where the two vessels crashed last Wednesday is where passenger vessel St. Thomas Aquinas and cargo ship Sulpicio Express Siete collided on August 16, 2013. The mishap caused the death of 116 passengers and crew.
The Cebu Coast Guard earlier said a naval highway will be set up to guide vessels coming and going out of that part of Cebu, but this plan has yet to be realized.
Based on the plan, the PCG will set up a Vessel Traffic Monitoring System (VTMS) to monitor vessels using the Cebu Harbor Channel.
Just like a national highway, the VTMS will put up lighted buoys to guide entering and exiting vessels, especially in the Lauis Ledge.

Read more at http://www.mb.com.ph/vessels-collide-in-same-2013-sea-mishap-spot/#VXiOgYMTwoOlMv5a.99

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NGA to cease operations at the end of May

Main-deck cargo airline Nordic Global Airlines will cease operations at the end of the month after overcapacity in the market took its toll on the operator.
NGA, which operates a fleet of four MD-11F freighters for customers, was launched in 2011 but faced continued pressure on pricing.
Finnair Cargo, which owned a 40% stake in the company, leased freighter capacity from NGA for its mainly Asian cargo traffic until the end of last year.
In a statement released to the Nasdaq Helsinki exchange last week, Finnair said the decision to close NGA was “unavoidable” because of  “overcapacity in the sector and depressed freight pricing”.
“NGA grew to fly main-deck cargo in four continents with its low-cost and thin-organization model,” it said.
Finnair, like others, is switching its focus to bellyhold capacity and discontinued separate operations at the end of last year.
At the time, it said the decision to end its MD-11F freighter service between Helsinki and Hong Kong and instead rely on daily bellyhold via an A340 passenger service was due to “deteriorating yields” caused by currency fluctuations and overcapacity.
NGA is also owned by Neff Capital Management, Daken Capital Partners and the mutual pension insurance company Ilmarinen.
In August last year, NGA chief executive and chairman Jim Neff announced the start-up of all cargo carrier Western Global Airlines utilising MD-11 freighters.
The company will begin operations with a fleet of MD-11Fs leased from Neff Air, an affiliated leasing company which owns ten GE powered MD-11Fs and two GE powered 747-400BCFs
NGA leased its four MD11Fs from Neff Air.
Neff was also the founder and chief executive of Southern Air from 1999 until 2010, when he sold the company and became a minority stakeholder.

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Damco sees $9m loss as airfreight dives

Damco, the troubled logistics arm of Danish shipping giant AP Moller-Maersk (APMM), made a $9m loss in the first quarter of 2015 as its airfreight volumes fell 19%.
The division's total supply chain revenue fell nine percent, year on year, to $683m for the January to March 2015 period, of which eight percent was due to exchange rate movements.
Netherlands-based Damco saw controlled ocean freight volumes decline by two percent, as airfreight throughputs dived, with the latter due mainly to "project shipments in prior year which were not repeated in 2015," said APMM.
It added: "Restoring growth in the ocean and airfreight segments is a key focus area to improve overall Damco profitability."
The $9m first quarter loss was actually an improvement on like period 2014, when Damco made a loss of $10m.

Source : http://www.aircargonews.net/news/forwarders/single-view/news/damco-sees-9m-loss-as-airfreight-dives.html

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Frankfurt freight disappoints

Frankfurt’s airport operator Fraport’s airfreight and airmail tonnage dropped by 2.4 per cent year-on-year to around 500,000 tonnes in the first quarter of 2015. However, the group as a whole recorded “noticeable growth” in revenue, which rose 10.8 per cent to €575.9 million.  Contributing factors included growth in traffic and fees, consolidation of two new subsidiaries and currency effects. 
Frankfurt Airport recorded a 2.7 per cent rise in passenger figures to 12.5 million in the first three months of 2015, despite strike and weather-related flight cancellations.
Cargo and passenger traffic at Fraport-owned airports other than Frankfurt also largely improved, said the company.

Source : http://www.aircargonews.net/news/airports/single-view/news/frankfurt-freight-disappoints.html

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FedEx-TNT deal to create third force in express

FedEx’s planned takeover of rival carrier TNT would create a third force in the express market – and unlike UPS’ attempted takeover 2½ years ago, it would succeed, the leaders of the two companies predicted at a press conference this morning.
The acquisition would bring TNT’s “exceptional” road platform into the FedEx fold, helping to strengthen what had been a relatively weak part of the FedEx portfolio, said the latter’s chief executive, DavidBronczek, with around 86 per cent regional coverage.
In contrast, FedEx has a strong air network in Europe, as well as in other parts of the world.
TNT chief executive, Tex Gunning, anticipated that the European road network created “would be the envy of the industry.”
At the same time, the relatively small TNT air fleet of 54 freighter aircraft would be sold to a third party, to assuage the competition authorities in the European Union and elsewhere. This had been one of the major sticking points in the proposed UPS takeover.
TNT's owned and leased fleet includes B777Fs, B747Fs, and a combination of BAe 146, Boeing B737Fs and B757Fs. 
Bronczek argued that, far from reducing competition, the takeover “would increase competition in Europe by creating a third strong competitor…which would benefit customers over the long term.”
Gunning said that the deal was attractive to his company because it would lead to a more certain future.
He predicted that, this time, the takeover would clear the regulatory hurdles because “this is much simpler than the UPS deal – there, the overlaps were far bigger.”
However, the lower synergy between the two companies was reflected in the price that FedEx would pay for TNT - €8 per share compared with the €9.50 that UPS had been prepared to offer.
The lower price was also a reflection of a “more complex” European economy that had developed in the intervening period.
Bronczek said he did not expect the relatively low price to lead to rival bids for TNT, saying: “We feel very comfortable with our offering.” Gunning said that Post NL had indicated that it would be willing to share its 14.7 per cent share in TNT.
The offer launch is anticipated during the second quarter of 2015 and the transaction is not expected to complete until the first half of 2016, a reflection of the slow pace of government and regulatory authorities, said Gunning.
The transaction is subject to a €200m break fee.
But questioned on how the two companies had managed to agree a takeover in principle within six weeks of a TNT capital markets day, Gunning said: “Like the girl next door, you already know each other very well.”
No decision has yet been made on the tricky question of brand identity. The FedEx name is very strong in North America while TNT is well known in Europe and other markets.
Gunning added that the deal would improve job security for TNT employees and that he anticipated that there would be few if any redundancies as a result of the takeover.
TNT’s main air hub at Liege would be maintained and extended, and FedEx’s hubs in Paris and Cologne would also be retained.

Source : http://www.aircargonews.net/news/airlines/express/single-view/news/fedex-tnt-merger-to-create-third-force-in-express.html

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FedEx set to buy TNT Express for $4.8bn

US parcels and logistics giant FedEx has made a $4.8bn  bid to acquire rival operator TNT Express of the Netherlands, with both sides reaching a conditional agreement on the deal.
The agreement recommends an all-cash offer by FedEx for all issued and outstanding ordinary shares, including shares represented by American Depositary Receipts of TNT Express for a cash offer price of €8.00 per share.
The surprise transaction gives TNT Express an implied equity value of approximately €4.4bn ($4.8bn).
Fred Smith, chairman and chief executive of FedEx Corp, said: “We believe that this strategic acquisition will add significant value for FedEx shareowners, team members and customers around the globe.
"This transaction allows us to quickly broaden our portfolio of international transportation solutions to take advantage of market trends – especially the continuing growth of global e-commerce – and positions FedEx for greater long-term profitable growth.”
Tex Gunning, chief executive of TNT Express, said: “This offer comes at a time of important transformations within TNT Express and we were fully geared to executing our stand-alone strategy. But while we did not solicit an acquisition, we truly believe that FedEx’s proposal, both from a financial and a non-financial view, is good news for all stakeholders.
"Our people and customers can profit from the true global reach and expanded propositions, while with this offer our shareholders can already reap benefits today that otherwise would only have been available in the longer run."

Source : http://www.aircargonews.net/news/airlines/express/single-view/news/fedex-and-tnt-express-agree-on-recommended-all-cash-public-offer-for-all-tnt-express-shares.html

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