An exaggeration, perhaps. But there is no denying that when Lufthansa Cargo announces its annual results and makes any forecasts everyone in the industry pays very close attention indeed. This is where air cargo has been in the last year and where it is going to go in the next year.

Relax, you had a good year. Lufthansa Cargo quadrupled its operating profit to just short of $200 million last year, the best year ever in the carrier's entire history - all five years of it. "Excellent results have vindicated our business strategy," says Jansen. "We have profited above all from the measures we have taken in previous years to set the company in the right direction and have along the way significantly increased our corporate value."

Adding company value to Lufthansa Cargo and raising its profile within the corporate Lufthansa Group seems to be a minor fixation with Jansen, who has just completed his first year as chairman of the cargo carrier.

Herr Gehl

A more prosaic view of Lufthansa Cargo's unextended history is offered-up by Walter Gehl, executive board member for finance. Gehl, Jansen and Andreas Otto, head of marketing and sales, form the three-man corral that has up until now run the airline.

Gehl has been on board since the inception of Lufthansa Cargo in 1995 and in his words, "witnessed the deep crisis" of '96 when a third of the freighter fleet was sold and also saw through the restructuring of the company in '98.

"It seems that as an airline, we are in a three-year cyclical business. We have a good year, then a very good year, then we have a year when we learn a lot," he says.

So, if last year was a very good year, what about next year?

"I think next year will be a year when we learn a lot," predicted Gehl, who paused briefly before announcing his imminent departure to join the main Lufthansa board.

Those words do not appear to deter Jansen in his quest to add further corporate value to Lufthansa Cargo AG. But progress does nonetheless seem to be painfully slow on nearly all fronts.

Lufthansa Cargo was the lead partner in the creation of the NewGlobalCargo alliance with SAS Cargo and Singapore Airlines, but that was more than a year ago in May 2000. Since then, very little progress appears to have been made in developing a tripartite cargo strategy among the three carriers.

That appears about to change, as Jansen proudly announced that the partnership was about to reach it first major milestone - in the second half of this year. "That will see the market launch of a joint express product across all our networks. This will be followed shortly after by the second step of harmonizing the standard cargo products of the three partners."

Newly Global

Jansen admits progress with NewGlobalCargo had been slow. More pointedly so, since rival alliance SkyTeam Cargo, headed by Air France, came out of the starting blocks six months later and has already rolled-out a systemwide express offering.

"It takes a great deal of time and effort to produce these type of synergies and we want to make sure we do it properly to ensure that any joint products work across all three systems," insists Jansen.

The efforts are not helped by other diversions. SAS Cargo is following the lead of its German counterpart and creating a stand-alone cargo company, indicating that it might be on the lookout for friendly shareholders. That has raised immediate speculation that Lufthansa Cargo could be interested in acquiring a "friendly" stake of as much as 49 percent in SAS Cargo.

This time Jansen's defenses were well and truly up.

"We are having ongoing discussions with SAS Cargo about all aspects of our alliance and it would be wrong for me to go into detail at this time," he said, anxious to move to any other topic of conversation.

Well, what about progress in the much-vaunted alliance between Lufthansa Cargo and Deutsche Post World Net. Again, it has been over a year since the launch of Aerologic, a specially created vehicle to help expand and develop DHL International in which Deutsche Post holds a 51 percent majority stake and Lufthansa a further 25 percent share. Similarly, at the same time Lufthansa Cargo and Deutsche Post launched e-logic GmbH as a joint e-business venture, very little of which has been heard of since.

Jansen grimaced. But he was at least able to develop a novel line in defense.

"Deutsche Post is the biggest single customer of Lufthansa Cargo, so it would be wrong for me to make any assessment about another company which is my customer," he said. This was obviously going to be difficult. Jansen was pressed repeatedly on the subject until he finally gave way.

"We are at an intensive working stage with Aerologic, which will likely lead to the development of the express product for NewGlobalCargo," he said. "The e-commerce market in general is going through a difficult stage at the moment, so again we have to be careful about our homework before going public with any proposals for our joint e-logic company with Deutsche Post."

Closer to home, Lufthansa Cargo is also facing the prospect of an intensive stand-off in its own backyard. Frankfurt Airport has finally won approval for a fourth runway ... in return for the imposition of a night flights ban. Jean-Peter Jansen is in no mood for compromise. "Over a third of our freighters operate at night, not because it is a nice time to fly, but because our customers demand it," he said. He dismissed any suggestion that the carrier move its freighter services to nearby Hahn airport, the former US airbase, being developed by Frankfurt airport as an air cargo gateway.

"We need an integrated passenger and freighter infrastructure to support our operation. As far as we are concerned there is no alternative to Frankfurt and night flights." It certainly looks like Lufthansa Cargo is going to be learning a lot this year.

Bigger bmi

ith its first two trans-Atlantic routes firmly in place, bmi british midland this month will decide on new long-haul destinations aimed at completely breaking the carrier out of its niche in a corner of the United Kingdom's aviation market.

Renamed "bmi" to give it some global panache, the former British Midland started flights to Washington and Chicago out of Manchester this spring and has applied for rights to those cities and Miami, Seattle and Denver out of London Heathrow, routes it would only get under a more liberal air services treaty with the United States. The airline is also looking at flights to the Middle East or South Africa.

"We are going from being a regional U.K. airline to a truly international, long-haul airline," said James Hogan, bmi's chief operating officer.

For shippers, the recent expansion adds only about 15 tonnes of belly capacity to an already-crowded market. But bmi hopes that the choices of gateways beyond New York and London carry some weight with shippers.

bmi is using Chapman Freeborn as its cargo sales agent in the United States, but fellow Star Alliance partner United Airlines, which has its major domestic hub in Chicago, is also expected to bring in business, said Rohan Alce, bmi's former cargo chief and now head of the airline's overall North American business.

The airline is looking at the new routes as it also prepares to decide on a replacement for the 737s that serve its European business. It's an expansion bmi officials believe they have to undertake as a new generation of low-cost European carriers cut into bmi's short-haul business.

Smaller British

he United Kingdom's airports are starting to feel pain in their cargo business, although it's hard to say how much a country-wide shipping slowdown is due to foot-and-mouth disease and how much may arise from a more general economic downturn.

BAA plc, the airports operator, reported a total 4.3 percent drop in cargo traffic in May at the eight airports it runs in Great Britain. That included double-digit drops at Glasgow and Edinburgh and, more importantly, a 5 percent dip at London Heathrow.

Cargo traffic at Heathrow is down 3 percent over the last 12 months and but that's not as bad as the outlying airports.

... Briefly

Lufthansa German Airlines reached a pay agreement with members of its pilots union after a dispute that culminated in two one-day strikes that cancelled thousands of flights this spring. … Russia's Volga-Dnepr signed an agreement with Bombardier Aerospace Shorts to ferry fuselages and other aircraft equipment from Northern Ireland to Montreal on weekly flights of oversized An-124 freighters. … Munich International Airport says a sharp expansion in Lufthansa domestic and international routes will boost the airport's flight operations 12 percent this year. ... United Kingdom-based AirRep Cargo Europe was appointed general sales agent for KLM Royal Dutch Airlines-owned carrier Buzz throughout Spain. ... UPS Logistics Group acquired the assets of Swiss service parts logistics company Polysys Electronic Systems, the company's second purchase in Europe. … As part of an effort to establish a network of 20 regional airports, British airport and property group Wiggins acquired an 80 percent share of the company that operates Lahr Airport in Germany. ... Forwarders Schenker and Panalpina are jointly handling what they call the largest supply chain management project ever implemented for Hewlett-Packard Commercial involving production in Asia of goods destined for Europe. ... The Dutch subsidiary of German forwarder Schenker acquired Dutch forwarder IDC Airfreight and its related Rotterdam-based sister operators. … Hungarian national airline, Malev, outlined a plan to cut 1,000 jobs and $50 million to make the carrier an attractive privatization target by 2003. ... Virgin Atlantic firmed up its commitment for six A380s, which it will operate on trans-Atlantic routes. … German leisure carrier Condor Berlin installed the first sliding carpet loading system, developed by Telair International, for cargo and baggage loading on an A321. … American forwarder CF AirFreight, a unit of trucker Consolidated Freightways, opened stations near London Heathrow Airport and in the Netherlands between Amsterdam and Rotterdam. … AviaPartner opened its first handling service at Turin Airport in Italy with Air France as its customer. … The Gollcher Co., which claims to be the largest forwarder in Malta, joined the Hi-Tech Forwarder Network. … FedEx Express signed a five-year agreement with Britain's Business Post to have the company pickup and deliver goods in some parts of the United Kingdom. … Freight traffic at France's Lyon-Saint Exupery Airport fell 8 percent in the first four months of 2000, including a 19 percent drop in April. … Danzas opened the first of two "mega-warehouses" in Sweden through its Danzas ASG Solutions branch. ... Cathay Pacific Airways moved into a new 60,000-square-foot facility at London Heathrow Airport where it will be the only tenant and will be handled by Plane Handling. … KLM was named Airmail Carrier of the Year for the second straight year at the World Mail & Express Conference. KLM also said it would start two weekly flights between Amsterdam and Johannesburg using 747 "combi" aircraft.