Cargolux, Qatar Airways End Partnership

Rory Jones

Ambitious plans by Qatar Airways to grow its presence in the European air freight market face a setback after the collapse of a partnership with the cargo airline Cargolux.

The Luxembourg carrier said that Qatar Airways would divest its 35 percent stake in the freight airline, less than 18 months after announcing the deal.

"Cargolux Airlines International today confirmed that Qatar Airways intends to exit its 35 percent shareholding in Cargolux," the company said.

Qatar Airways disagreed with the strategic direction of the airline and wanted to cut costs and transfer some operations to its Doha hub, according to media reports.

"The Luxembourg and Qatari shareholders disagreed on the future strategic orientation of the airline, which led to Qatar's decision to pull out of Cargolux," a spokeswoman for Cargolux told Reuters.

Albert Wildgen, who joined the Cargolux board in September last year, also announced his decision to step down from his post as chairman.

Cargolux said the remaining shareholders, Luxair, BCEE (Banque et Caisse d'Epargne de l'Etat) and SNCI (Société Nationale de Crédit et d'Investissement) had confirmed their support for Richard Forson, the interim president and chief executive, who would take the airline through this "difficult phase of restructuring.

"There are many significant challenges facing Cargolux and the shareholders remain committed to implementing those actions that will ensure it long-term sustainability," the company added.

Qatar bought into the airline when it was facing a difficult period, contending with high fuel prices and slow demand in Europe.

Arabian Gulf airlines are boosting investment in cargo at a time when much of the global air freight industry is suffering. Profitability in the sector came under pressure in the third quarter, according to Iata. The body said that while freight load factors had stabilised in the first half of the year, aircraft utilisation had been declining and cargo yields were expected to decline over the next year.

Cargolux made a net loss of US$18.3 million (Dh67.2m) last year as a result of "excess of capacity supply versus demand", it said in its annual report. The loss was also attributable to prolonged delivery delays in its Boeing 747-8 freighter programme.

"Our investment in Cargolux, a sound, healthy and profitable company and a leading all-cargo carrier, will deliver great value to Qatar Airways proving to be an excellent strategic partnership," said Akbar Al Baker, the chief executive of Qatar Airways when the two companies announced a deal last June.

Financial terms of the deal were not disclosed.

The purchase of Cargolux was part of plans by Qatar Airways to become one of the largest cargo airlines in the world within five years.

Qatar Airways declined to comment on the sale of its stake in Cargolux.

Last week, the airline took delivery of its first Boeing 787 aircraft.

rjones@thenational.ae

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