Jade Cargo International announced (31-Dec-2011) the temporary suspension of Jade Cargo services "due to overall weak air cargo demand". The carried added the suspension of service will "provide the shareholders with an opportunity to coordinate with stakeholders to continue with the restructuring of the company’s financial structure". The Shenzhen-based carrier is a JV between Lufthansa Cargo (25%), Shenzhen Airlines (51%) and DEG (24%). As a result of the suspension, the carrier's six Boeing 747-400ERFs aircraft have temporarily been grounded. According to reports in Boersen Zeitung, Jade Cargo no longer has the funds to purchase fuel for its six 747 aircraft. As previously reported, Lufthansa Cargo CFO Peter Gerber in mid Dec-2011 stated the carrier was looking for a new Chinese partner for Jade Cargo due to slowing demand growth and excess capacity in the China market (Borsen Zeitung, 16-Dec-2011). Lufthansa Cargo head of sales and marketing Andreas Otto separately stated last month if profit margins at Jade Cargo did not improve, it would not rule out a divestment from the carrier (Air Cargo News, 05-Dec-2011). "We shall withdraw from loss-making units without a reasonable turnaround perspective," he said at the time. The carrier has reportedly held talks with Bank of China and Shenzhen Airlines to agree a capital increase for undercapitalised Jade. Jade Cargo was founded in Oct-2004 with flight operations commencing in Aug-2006. The airline currently has around 390 employees. [more - original PR]
Jade Cargo temporarily halts operations amid weak air cargo demand and shareholder negotiations
You may also be interested in the following articles...
Chinese long haul secondary city air routes: BA's Chengdu exit does not reflect the broader market
The fastest long haul airline growth is not occurring with Gulf airlines but rather, with services to and from secondary Chinese cities. It is not a secret that local incentives and subsidies, generally common in any market, are especially large in price and duration for secondary Chinese cities. An airline might expect over a third of revenues to be subsidised. This drastically alters the business case in a low-margin industry, hence the proliferation of secondary city services. This extreme dependence on subsidies raises the question of how long governments are willing to issue generous subsidies, and how many routes can be sustainable without them.
British Airways' decision to exit its only secondary Chinese route to Chengdu, in Jan-2017, might suggest the music is ending and the secondary long haul bubble is popping. There is added colour given the recent UK-China air service agreement expansion, and Brexit/British pound depreciation overhangs.
BA's exit does confirm market fundamentals: secondary city yields are low, and some routes are ahead of their time. Yet a number of factors unique to British Airways suggest caution in concluding that BA's Chengdu exit could foreshadow other withdrawals.
Where the A380 flies: Japan and intra-Asia routes decline while Australia & Middle East grow
The A380 is once again under media scrutiny, despite there being no major movement on the type. Comments from Air France and Qantas about not taking further A380s have long been assumed, and it has been apparent that Malaysia Airlines does not even have the need for its A380s. Singapore Airlines not renewing the lease on its first A380 is hardly surprising, and offers no definitive conclusion about the A380 or second-hand market; early A380s had different production and are not as efficient as later models. The lack of movement on the A380neo continues to irk the model's largest customer by far, Emirates, and may not make for a productive relationship as Emirates weighs an A350 or 787 order.
For most, the A380 continues to fly. How and where it flies is changing. Flights to and from the Middle East are becoming more common as Gulf airlines, and mostly Emirates, take delivery of A380s. A further shift to the Middle East is inevitable. In Japan there has been a near exodus of A380s; airlines dropping the type as they moved from Narita to Haneda, which cannot accommodate the A380 during the day, and Singapore Airlines down-gauging. Intra-Asia flying is decreasing – notable given the growth of A380s based in the region. Services by the A380 to Australia are growing, perhaps as it becomes an easy market for airlines to redeploy capacity amid European security concerns and trans-Pacific overcapacity.