t was probably the worst time ever to start-up a new cargo airline, particularly when attempting to do it with a pair of gas-guzzling 747-200 freighters. But against highly stacked odds Belgium carrier Cargo B survived its first year of operation.

No one is more relieved than Chief Executive Officer Rob Kuijpers. "You can expect a tough first year with the start of any company, but I think we certainly had it tougher than anyone could imagine," he said.

The airline launched operations in October 2007, beginning with flights out of its Brussels airport base to Africa and South America.

"We were basing our marketing strategy on operating routes out of Europe, which were not served with extensive wide-bodied passenger belly space or main-deck cargo capacity," said Kuijpers. "We were also looking for strong return loads to Europe and perishables traffic from Africa and South America seemed to fill this criteria."

But right away Cargo B was hit by its own capacity problem.

"The intention was to bring an additional 747-200F on stream soon after start-up, but unfortunately we were not able to put our second aircraft into operation until the end of January this year," said Kuijpers. "It meant we missed the busiest period of the perishables market and so this had a serious impact on our revenue projections."

But since that blip Cargo B has been able to focus its full attention on the South American market and build up a consistent market presence.

The all-cargo carrier has operated over 60 flights on South American routes in recent months, which included three frequencies per week to São Paulo.

Sourced Parts

Niek Van der Weide, executive vice president of commercial said Germany remains the main source for the carrier's outbound traffic with auto parts high on the export list. The airline has also operated charters to destinations such as Brasilia, Asuncion, Buenos Aires and Panama.

Return flights stop at Latacunga, Ecuador, near Quito, to pick up fresh flowers. "We have set up our own cooler shed on the airport, which helps to keep the flowers fresh for shipment to the Amsterdam market as well as to Russia," said Van der Weide:

Fresh cut roses for the Russian market are one the mainstays of this slice of the perishables market.

Van der Weide said Cargo B is operating in a very tough environment and might not have the right tools for the job. "Clearly market conditions are very tough and the cost of fuel is causing everyone massive difficulties, but our operation is solid and viable," he said.

He maintained Cargo B can stay on course despite operating two thirsty 747-200s.

It is an attitude shared by Kuijpers, who said Cargo B is small and flexible enough to work the market to its advantage.

"One important thing we have achieved in a relatively short time is to gain the confidence of the market and in particular the support of the major forwarders in Europe," said Kuijpers.

Having known industry veterans on staff are key to the carrier's future success. "Niek van der Weide is a well known and experienced sales executive in the cargo industry and I too have some notoriety," he said.

Backed Up

Kuijpers was a very high profile industry executive as CEO of DHL Worldwide Express, after which he spent four years as executive chairman of Belgian passenger carrier, SN Brussels Airlines

In addition to an experienced staff, Cargo B appears to have some strong financial clout behind it.

One of the main investors is PNV, the financial investment arm of the Flemish government in Belgium. In what is virtually still a two state country, the Flemish government's jurisdiction rules over Brussels airport and its future direction.

Petercam, a Belgian wealth management company, represents another segment of the Cargo B ownership portfolio, with private equity investors making up the remainder of investors. Kuijpers must report Cargo B's financial loss for its first full year of operation, but he is bound to report the airline's prospects remain bright.

"Obviously, with the market conditions as they are and particularly with the high cost of fuel, we're having to review our operations very closely," Kuipers said.

The airline is looking at the imminent prospect of introducing a third freighter to its fleet in order to maintain its planned growth strategy.

"Originally, this was going to be another 747-200F," said Kuijpers. "But we recognized that the 747-200F is no longer a realistic long term prospect." Cargo B is having trouble finding an available 747-400F.

"We might acquire a third 747-200F on a short-term lease and then replace it as soon as a suitable 747-400F when it becomes available," said Kuijpers.

The third aircraft, whatever type is chosen, would be used to strengthen the airline's South American network and to develop routes to Africa.

TNT Falls

TNT is seeing the same shipping trends in Europe that FedEx is seeing in the United States, and that could give the two carriers something to talk about.

TNT's earnings took a 16 percent dive in the second quarter, to $322 million, as a sharp downturn in premium air express demand in June cut into the global carrier's results.

FedEx has seen a similar drop, and TNT like FedEx says it is benefiting from earlier moves to expand its road network while keeping a lid on capacity growth in the air. The carriers may be looking for even more common ground, according to reports in Europe that said the companies have started talks about a possible FedEx takeover of Netherlands-based TNT.

TNT CEO Peter Bakker would not comment in a conference call with investment analysts on the reports but said the company would listen to any serious offer.

… Briefly

Cargo traffic for European airlines grew 1 percent in June, the smallest monthly expansion since July 2007. Traffic for the first half of 2008 was up 3.2 percent over the same period last year, according to the Association of European Airlines, including a 4.4 percent decline in intra-European freight business. … British Airways World Cargo reported revenue of $356 million in the first quarter of 2008, a 22 percent increase over the year beffore. BA's profit overall plummeted 90 percent to $53 million. … Forwarder Panalpina reported net earnings of $73.9 million for the first six months of 2008, a 29.2 percent drop from the year earlier period. Gross revenue for the half-year was $4.2 billion. Air freight tonnage grew by 6.1 percent, but gross profit declined by 8.8 percent, due mainly to rising fuel costs, decreasing demand and Panalpina's decision to drop its troubled Nigerian services. … MK Airlines, the British-based all-cargo carrier, signed a letter of intent for 10 FF5000 Freighter Feeder Aircraft manufactured by Albuquerque, N.M.-based Utilicraft Aerospace Industries. … Lufthansa Cargo and World Airways extended for 15 months their contract for three World MD-11 freighters to operate between Europe and the United States. … Freight tonnage at Glasgow Prestwick Airport grew 5 percent in May. … Brussels Airlines launched a daylight courier service to major cities across Europe. … Ground handler Skyport picked CHAMP CargoSystems' CargoSpot for its operations at its Prague cargo terminal. … Cargo 2000 certified Traxon Europe's Cargo 2000 Data Management Platform, which measures and manages the quality of air cargo processes between freight forwarders and airlines. … Freight tonnage at Munich Airport grew 4.3 percent in the first half of 2008. … Russian Prime Minister Vladimir Putin endorsed the construction plan for a freight carriage works to be built near Leningrad by ICT Group. The planned start-up of the $800 million facility is 2010. … DHL signed a two-year, multimillion-dollar shipping agreement with motorcycle manufacturer KTM North America. … Ground services specialist Swissport acquired U.S.-based security company NASS. … Ariel Global Logistics will be the shipping and forwarding agent in the United Kingdom and Ireland for GoAir of India. … Start-up freighter operator Stabo Air is offering 747 all-freighter service to Zambia and Uganda from Ostend Airport. … Construction started on the Lufthansa Cargo Service Center in CargoCity South at Frankfurt Airport. The facility will have 215,278 square feet of warehouse capacity and 86,000 square feet of office space. … Fraport Cargo Services will take over the cargo handling for AirBridgeCargo at Frankfurt Airport this month. AirBridgeCargo, the scheduled cargo operator of the Volga-Dnepr Group, offers 16 flights per week to Frankfurt. … DHL announced a five-year agreement with Airbus, under which the express and logistics company becomes the lead transport provider and a tier one partner for the manufacturer. … Ceiba Cargo of Equatorial Guinea named EasternAirCargo its general sales agent in Germany. ... Gabon Airlines named ANA Aviation Services its cargo general sales agent for the United Kingdom, North America, Scandinavia and Spain.