IAG confident about the future despite tough market conditions

Strong demand for pharmaceuticals shipments, particularly in Latin America, injected IAG Cargo with a modest lift – even though its overall revenues slumped amidst ‘challenging market conditions’ in 2019, writes Thelma Etim.

The freight division of the International Airlines Group (IAG), which owns UK flag carrier British Airways, Iberia Airlines, Vueling Airlines and Aer Lingus, reported commercial revenues of €1,117m between 1 January and 31 December 2019, a decline of 7.2 per cent on 2018’s results at constant currency, an official company statement reveals.

Overall yield for the year was down by 4.9 per cent at constant currency. Sold tons dropped by 2.8 per cent and cargo ton kilometre (CTK) volumes declined by 2.4 per cent, whilst capacity grew by one per cent in the period,” the statement points out.

“A tough year for air cargo”

Commenting on the airline’s full-year results, Lynne Embleton, chief executive of IAG Cargo, admits: “As IATA has noted, it has been a tough year for the air cargo industry. The decline in our reported revenues for 2019 reflects these challenging macroeconomic and market conditions, whilst the strength of our network and products has shielded us from the worst of the decline in demand.”

Embleton is quick to point out the freight division’s successes amidst the overall air cargo industry downturn fueled by trade wars and a listless global economy. “We have seen strong export growth out of Africa over the course of the year and, more recently, a boost to perishables volumes from Latin America,” she observes. “Our state-of-the-art Constant Climate product, for the transportation of temperature-sensitive pharmaceuticals products, has also remained resilient with strong demand, again, from Latin America in particular.”

At the beginning of last year, IAG Cargo opened a new pharmaceuticals center dedicated to Constant Climate at its Madrid hub. “Since opening this Good Distribution Practice (GDP) certified facility, our Constant Climate revenue out of Spain has grown by over 20 per cent, giving a strong return on our multi-million-euro investment and demonstrating the continued importance of the product,” Embleton insists.

IAG Cargo is among the major airlines with digitalization and innovation at the heart of its overall company strategy aimed at making its processes more efficient, less time-consuming and automated.

Drone technology

Last year, with a successful trial of autonomous drone technology at its Madrid base, the carrier took its first steps towards using drones to slash the 6,500 hours each year it currently expends on recording the barcodes and location data of freight shipments located in its warehouses.

The pilot was part of IAG’s Hangar 51 innovation program, which involved staff working alongside 10 start-ups that use “machine learning technology to optimize data extraction processes” for 10 weeks and in assisting them in developing and testing their products.

“We are now confident that the technology will help to improve the efficiency and reliability of our operations,” underscores Embleton. “These exciting developments are part of IAG Cargo’s continuous program of investment to ensure we are delivering the best possible service for our customers.

“As for 2020, we are confident that our strategy of focusing on customer service, technology and the strength of our products will continue to deliver for customers worldwide,” she concludes.