- Passenger numbers: 3.1 million, +10.3% year-on-year;
- Cargo volume: 78,700 tonnes, +3.8%;
- Aircraft movements: 24,800, +10.5%.
Shenzhen Airport pax up 10%, cargo up 4% in Jul-2014
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Air cargo: few other industries would tolerate its structural overcapacity
IATA's most recent air freight market analysis, published 1-Oct-2014, said "The outlook for air freight markets has started to look better again", but it added that "the extent of future gains could be limited". IATA cautioned that trade volumes are expanding at a slower pace than global economic growth and that gains in business confidence have been slow due to the presence of political and economic risks. Recent concerns in the financial markets about the outlook for global economic growth add to this note of caution about future air cargo demand.
However, air cargo faces much more fundamental problems. It accounted for just 8.6% of total airline industry revenue in 2013, down from 12.4% a decade earlier. Freight load factor was just 45.3% in 2013, compared with almost 80% for the passenger business.
Very few other industries would tolerate such a degree of overcapacity. Perhaps the approach of many LCCs - to ignore cargo - is the right one.
TAP Portugal Part 1: the national carrier needs privatisation to tap fresh capital
Portugal is widely expected to relaunch the privatisation of TAP Portugal before the end of 2014, possibly offering a 49% stake and a management contract. It is likely to seek assurances on issues such as the retention of TAP's Lisbon hub and connectivity with the Azores.
Although debt is falling, TAP needs fresh equity to increase its fleet expansion options. The privatisation must ensure that the airline, and not the government, benefits from external investment. Through operating leases, TAP has grown its fleet in 2014 (the first time since 2010), but its first Airbus A350 deliveries had to be pushed out to 2017 from 2015.
The delay since the first attempt at privatisation has allowed for some improvement in financial results, but the TAP Group remained in loss at the net income level in 2013 and in 1H2014. Selling or closing loss-making activities such as the Brazil Maintenance division may help the privatisation. In this first part of our analysis, we review TAP's financial track record.
In Part 2, we will look at TAP Portugal's competitive position and its appeal to potential bidders.