1 June 2012 • Volume 32, No. 6A

The Air Freight and Express Industry Newsletter of Record • www.CargoFacts.net

US-based ACMI and charter operator WORLDWIDE HOLDINGS took delivery of its fourth 747-8F (37570) from BOE- ING [FATs 000261 - 262]. The freighter is the first of two 747-8Fs that Atlas will operate for Panalpina, replacing two 747-400Fs it has operated for the Switzerland-based forwarder and logistics services provider for many years. Panalpina’s operation of its own-controlled air network is unique among forwarders that are not part of an inte- grated express company, and Panalpina says it moves about 20% of its global air freight volume on this network. Regarding the aircraft itself, Panalpina says it is configured so that two controlled tem- perature ranges can be maintained at the same time: One for 2 to 8 degrees Celsius (cold chain) and one for 15 to 25 degrees Celsius Panalpina’s first 747-8F will be operated on an ACMI (controlled room temperature). Panalpina’s second 747-8F is sched- basis by Atlas Air. It is the first aircraft ever to wear uled to enter service later this year. Including the second Panalpina Panalpina livery. unit, Atlas has five more 747-8Fs on firm order. For its part, Boeing has now delivered sixteen 747-8Fs and has fifty-four more in its firm-order backlog.

Air France will reduce its freighter fleet. published a statement outlining what it calls “Transform 2015”, the carrier’s plan to return to profitability. The plan is divided into five segments, the fourth of which is “Accelerate the transformation of freight.” This segment is very short, and offers a few platitudes like “step up efforts initiated three years ago in order to cut costs and improve its economic performance.” There are, however, two meaningful steps suggested: reduce the number of freighters in the Air France fleet from five to four, and complete the full inte- gration of Air France Cargo, KLM Cargo, and (presumably reducing the number of bases required). Overall, Air France-KLM operates seventeen freighters, as follows: • Air France Cargo currently operates three 747-400ERFs and two 777Fs. The carrier did not say which of these five would be removed from the fleet, but it seems likely A leader in freighter conversions to be one of the 747s. Why does AEI's new B737-400SF freighter configuration feature for more than 50 years, AEI has • KLM Cargo no longer operates freighters, but does an extra container? developed more than 120 FAA- have seventeen 747-400 combis in its fleet. approved STCs and has converted The answer is simple: • Martinair Cargo’s fleet includes four 747-400ERFs more than 360 aircraft. To take More containers (internally leased from KLM), two 747-400BCFs (one advantage of that knowledge and mean greater value experience, contact AEI today. of which it operates on behalf of ), for you and your customers. and six MD-11Fs. The B737-400SF, another “first” Robert T. Convey in a long series of exclusive EVERGREEN INTERNATIONAL leased a VP Sales & Marketing aeronautical engineering Tel 1.818.406.3666 747-400BDSF (25702) from AIRCASTLE [FAT 000255]. innovations by AEI. [email protected] This is one of the 747-400 freighters parked in the desert by during the Chapter 11 reorganiza- tion of its parent, . (More news on page 2) CARGO FACTS UPDATE and its sister publication, CARGO FACTS, are published by AIR CARGO MANAGEMENT GROUP, 2033 6th Ave, Suite 830, Seattle, WA 98121 USA Tel: 206.587.6537 • Fax: 206.238.6287 • email: [email protected] • web: www.cargofacts.net • David Harris, Editor Associate Editors: Robert Dahl, Alan Hedge, JJ Hornblass • Advertising: Joshua Ernst • Circulation: Jackie Edinger • Marketing & Events: Molly Devine ISSN 0278-0801 · Copyright © 2012 Royal Media Group. Air Cargo Management Group is a Royal Media Group company (www.royalmedia.com). All rights reserved. None of the contents of this publication may be reproduced, stored in a retrieval system or transmitted in any form without the prior written permission of the publisher. 1 June 2012 – page two

MASkargo, the cargo division of AIRLINES, recently took delivery of the fourth of four A330-200Fs (1180) it had on firm order with AIRBUS[FAT 000263]. In addition to the four A330-200Fs, MASkargo also operates two 747-400Fs. This delivery brings the total number of A330-200Fs now in operation to eleven, with 47 more shown in Airbus’ backlog. Cargo Facts believes this backlog will likely change, as Jakarta-based has publicly said it has placed an order for two units, but Airbus has so far not confirmed this. In other MASkargo news, the carrier launched twice-weekly A330-200F service on a ---Kuala Lumpur route.

FedEx signed an agreement to acquire Brazilian transport and logistics company Rapidão Cometa Logística e Transportes S.A., its main partner in Brazil for over a decade. FedEx said that, subject to regulatory approval, it ex- pects the transaction to close in the third quarter of this year. Cometa has provided FedEx with local pickup and delivery service in Brazil, while FedEx has provided Cometa with the ability to offer its customers international air express service. Cometa has 45 operational branches and about 145 distribution points in Brazil, makes some 12 million deliveries per year, and generates annual revenue of about US$400 million. This move follows two other FedEx acquisitions in recent months – Polish courier company Opek, and France-based business-to-business express transportation company TATEX. FedEx has not announced financial details for any of the three acquisitions.

In other FedEx news, FedEx Express said it would establish a new North Pacific Regional Hub at Kansai Interna- tional Airport (KIX) in Osaka, . The 25,000 sq m facility, expected to be operational in early 2014, will serve both as a consolidation point for shipments from northern to the United States, and as an international gateway for FedEx customers in western Japan.

Staying with FedEx, but moving from hard news to speculation, we address the recent rumors of a major “re- structuring” that some analysts are predicting for FedEx Express. The Financial Post quotes a Bank of America Merrill Lynch report as saying that FedEx “is poised to reveal plans for restructuring its Domestic Express network that could produce about US$270-million in savings.” To many people, the word “restructuring” conveys an idea of a desper- ate company undergoing massive reorganization while under Chapter 11 protection. Given that FedEx is a tremendous- ly profitable company and that in its most recent quarter the Express division reported revenue up 8% and operating income up 96% (60% absent one-offs), this is obviously not the case. FedEx Express is healthy. It is, however, seeing declines in package volumes both in the US domestic market (down 4% y-o-y in the recent quarter) and the internation- al export market (down 1%), and has recently taken steps to deal with this, including workforce attrition (accomplished without layoffs), reduction of flight hours, deferral of some 777F deliveries, and an order for twenty-seven 767-300Fs to be used to replace the company’s much-less-efficient MD-10Fs. In a conference call following the publication of the last quarterly results, company executives addressed the issue, indicating that they saw little likelihood of a resurgence in volumes, and that therefore FedEx would likely continue to take steps to reduce costs in its Express Segment. These steps will likely include parking some freighters, continued reduction in flight hours, and continued reduction in head- count (likely through attrition, rather than layoffs). When asked directly whether the changes would be incremental, rather than through a major network redesign, CFO Alan Graf said “I think we are too early in the stages here to com- ment any further than we have on that.” This does leave the door open for some sort of major change, but our sense is that anything truly radical is not too likely. More detail will be available when FedEx reports its full-year results on 19 June, but Mr. Graf made it clear whatever changes were introduced, “we are not going to reduce our service levels.”

Cargo traffic is down, but it is actually up! The International Air Transport Association reported that worldwide air freight traffic was down 4.2% y-o-y in April, with international traffic down 4.5% and domestic traffic down 2.7%. Looking at international traffic, carriers from North America and the Asia-Pacific region were hit hardest, with traffic down 8.2% and 8.0%, respectively. European carriers saw traffic decline 5.2% and Latin American carriers were down 1.8%. Against this background of declining traffic for carriers in the three major economic regions, carriers from the Middle East reported a startling 14.6% gain in their cargo traffic. However, IATA points out that while international traffic was down 4.5% on a year- over-year basis, “this result is not representative of developments over recent months. The trend for air freight continues to indicate improvement on the lows of Q4 2011, with 4% annualized growth for the total air freight market since that period.” IATA also underlined the growth in cargo traffic for the Middle Eastern carriers, which is says have “captured 80% of the growth in air freight between November 2011 and April 2012. cf With the March issue of Cargo Facts, we initiated our Freighter Aircraft Transactions (FAT) database, exclusively for paid subscribers to Cargo Facts. Each reference to a freighter aircraft transaction in Cargo Facts and Cargo Facts Update will henceforth contain a unique FAT code number linked to the FAT database. This database will be emailed monthly to subscribers, in Microsoft Excel format, accompanying the mid-month isuue of Cargo Facts Update. For more information call ACMG Research Director Alan Hedge at +1 206 801 8472.