IAG Cargo to continue M&As, but focus on cool chain product development

2012 03 06

IAG CARGO, which emerged from the merger of British Airways and Iberian merger, intends to continue mergers and acquisitions but also expand into the temperature sensitive cargo shipment products after a solid 2011, which saw revenues rise 8.6 per cent.

Managing director Steve Gunning told Rosewell, Georgia's Air Cargo World that the company's express product, Prioritise, grew 20 per cent last year and he now feels more premium products will enable the company to counter expected yield declines in 2012.

"The demand characteristics of premium products are much more resilient than general freight," Mr Gunning said. "And so we see them as a real way forward - not just with our express product, but also with temperature-sensitive products and things like high-valuable goods as well."

In the M&A field, IAG expects to buy low-cost carrier bmi from Lufthansa. "In terms of IAG Cargo, bmi is moving freight on short- or narrow-bodied aircraft, which will be a welcome expansion," he said.

While it remains a work in progress, as IAG won't receive approval of this transaction until later this month, he saw bmi acquisition as an easy fit into the IAG brand.

Mr Gunning also saw a possible partnership with troubled Japan Airlines (JAL), which has sought anti-trust immunity to ally with IAG on British Airways flights between Europe and Japan.

"JAL is an important partner for us," said Mr Gunning. "Clearly there have been challenges in Japan over the last 12 months, but it's always been an economic powerhouse and I think it will continue to be one."

But he did not appear interested in taking on India's troubled Kingfisher Airlines, despite much speculation to the contrary.

" I don't think there's any appetite for taking a stake. Although they're part of oneworld alliance, we don't have a great deal to do with Kingfisher. They have mounting funding issues."

On the other hand, export markets such as Malaysia, Indonesia and Bangladesh are said to be holding firm in terms of air freight volumes to Europe, but this is mainly in the low-end garment business that represents a lower yield for carriers.

Source Shipping Gazette - Daily Shipping News

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