Logistics: Europe’s largest cargo airline has revealed some details of its unfolding alliance with new 35% shareholder HNCA.
Cargolux has cemented business ties with the Chinese firm that has just bought a 35% in the airline from the Grand Duchy’s government.
The board of Luxembourg’s all-cargo carrier “approved entering into a commercial cooperation agreement” with Henan Civil Aviation and Investment, or HNCA, the company said in a statement on Friday.
HNCA is paying $231 million for the stake, a figure that includes a $10 million capital injection into Cargolux, according to a report in China Daily, a government-run newspaper. It will also separately subsidise the launch of a new route between Luxembourg and Zhengzhou, where it is headquartered, to the tune of $15 million, the paper said.
Cargolux will make Zhengzhou its second hub after Findel airport, and provide access to Europe for its Chinese partner.
The deal still needs to be approved by the Chinese government, Cargolux said.
At the end of 2012, the Luxembourg state re-purchased the same 35% stake from Qatar Airways, which had only taken the position in 2011, for $117.5 million.
After the deal closes, the Grand Duchy will still indirectly control a majority of Cargolux shares, and directly hold nearly 17% in the cargo airline, following a separate deal last week that saw the government acquire an 8% stake in Cargolux from passenger airline Luxair, which itself is majority-held by the state.
Luxair will still own roughly a third of Cargolux, with other stakes held by Luxembourg state savings bank BCEE and Luxembourg state investment fund SNCI.
On Thursday, BCEE said it was willing to provide a further capital injection if Cargolux’s other shareholders followed suit.
Cargolux recorded an overall loss of US$35.1 million on revenues of $1.7 billion in 2012 and also posted losses in 2011 and from 2007-2009.
Links with “dynamic” region
According to Chinese government figures, in 2011 Henan province had the country’s fifth largest economy and was one of its fastest growing.
HNCA, owned by the Henan provincial government, runs a regional airline and develops the Zhengzhou airport economic zone.
Zhengzhou is capital of Henan province with a population of around four million, and is located about 700 kilometres south of Beijing and about 900 kilometres northwest of Shanghai. It is best known internationally as the home to a massive manufacturing facility--said to employ 200,000 staff--run by Foxconn, the firm that makes electronic products on behalf of companies such as Amazon, Apple, Cisco, Dell, Nintendo, Nokia and Sony.
“This transaction will enable Cargolux to be well positioned to profit from the trade movements generated by one of the world’s most dynamic and fastest developing economies and a province with an accelerating domestic appetite for goods transported by air”, Paul Helminger, Cargolux board chair, said in a press statement.
Earlier last week, Cargolux announced that November was a record-breaking month for both tonnage handled and revenues.
In a press statement it said: “The airline carried over 74,000 tonnes of freight on its worldwide network, a 27% increase compared to November 2012 and achieved revenues in excess of $200 million. This makes November 2013 the best month in the history of Cargolux. Traffic on the airline’s European and Asian routes, especially Hong Kong, was particularly strong during the industry’s peak period.”