IATA Cargo Conference Presented by
Dr. Emre Serpen Executive Vice President March 8 , 2011
…in 2008 world air cargo market looked bleak YoY Percent Change
Air Freight Traffic January 2008 – January 2009
10%
5.9% 5%
4.5%
3.3%
3.7%
1.3%
0%
-0.8%
-1.9%
-5%
-2.7% -7.7%
-10%
-7.9%
-13.5%
-15%
-20%
-22.6% -23.2%
-25%
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Source: International Air Transport Association
However compared with 2009 world air cargo market expected to grow approx 5.9 % per annum over the next 20 years
1
Since 2000, GDP growth for emerging and developing economies has outpaced advanced economies Real GDP Growth CY 1980 – CY 2010 10%
8%
Emerging and Developing Economies
6%
4%
2%
Advanced Economies
0%
-2%
-4% 1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
Source: International Monetary Fund, World Economic Outlook Update, November 2010
2000
2002
2004
2006
2008
2010
2
Air Freight Traffic Shows Normalisation of cargo traffic in recent months, as high yoy growth rates was due to recovery from recession Air Freight Traffic January 2010 – January 2011
YoY Percent Change 40%
34.3%
35%
30%
28.3%
28.1% 26.5%
26.5% 25.2%
25%
22.7% 19.6%
20%
14.8%
15%
14.4%
9.1%
10% 6.7% 5.4% 5%
0%
Source: International Air Transport Association
3
IMF sees strong growth in emerging markets such as India and China World Economic Outlook Projections (GDP) 2011 Estimates Euro Area
1.5
Japan
1.6
United Kingdom
2
Canada
2.3
Advanced Economies
2.5
United States
3
Central & Eastern Europe
3.6
Other Advanced Economies
3.8
Mexico
4.2
World
4.4
Brazil
4.5
Russia
4.5
Africa
4.5
Middle East
4.6
CIS Excluding Russia
5.1
ASEAN-5
5.5
India
8.4
China
9.6
0
2
4
6
8
10
12
Percent Growth Source: International Monetary Fund, World Economic Outlook Update, January 2010
4
Asian and Middle Eastern Markets are among fastest growth markets World Air Cargo Forecast (RTKs) CY 1999 – 2009 (Historical) and CY 2010 – CY 2029 (Long-Term Forecast) 5.9%
1.9%
World
3.0%
-2.5%
Intra-North America
Latin America–North America
1999-2009 5.6%
2.5%
Latin America–Europe
4.2%
-1.5%
Europe–North America
2010-2029
5.7%
-0.7%
3.6%
0.1%
Intra-Europe
6.0% 6.5%
Middle East–Europe 5.1%
3.3%
Africa–Europe
6.7%
1.4%
Asia–North America
6.6%
4.1%
Europe–Asia
7.9%
3.4%
Intra-Asia
6.5%
4.1%
South Asia–Europe
9.2%
13.1%
Domestic China
-4%
-2%
0%
Source: Boeing World Air Cargo Forecast
2%
4%
6%
Economic Trends
8%
10%
12%
14%
5
Since 2004, the historical relationship between GDP and air freight volume growth has deteriorated YoY Percent Growth in Freight Tonne Kilometers vs. World GDP CY 2000 – CY 2009 YoY Percent Growth 14%
Freight Tonne Kilometers
12% 10% 8% 6% 4%
GDP
2% 0% -2% -4% -6% 2000
2001
2002
2003
2004
2005
Source: ICAO Air Transport Reporting Form A plus ICAO estimates for non-reporting States
2006
2007
2008
2009
6
Air freight yields continued to rise thru 2008 with increasing fuel prices than fell 22% 2009 with falling fuel prices Air Freight Operating Revenues per RTK CY 1995 – CY 2007
Air Freight Yield (USD ¢) 33¢
Fuel/Security Surcharge Effects 31¢
29¢
Avg. Annual Growth Rate Air Friend Yields
27¢
Deregulation, liberalisation and increased belly capacity contributed to continuously declining air freight yields
1995-2001
-1.1%
2002-2006
+2.9%
25¢
1995
1996
1997
1998
1999
2000
2001
2002
Source: ICAO Air Transport Reporting Form A plus ICAO estimates for non-reporting States
2003
2004
2005
2006
7
Few years ago compared to passenger airlines cargo airlines were slow in executing capacity adjustments YoY Percent Chance in Air Freight Traffic CY 2007 – 2008 5%
4.3%
4%
3% 2% 1% 0%
Capacity Growth
-1%
Market Growth
-2% -3% -4%
-4.0%
-5% -6%
2007
2008
Source: International Air Transport Association 8
Cargo Airlines are now doing much better job matching cargo capacity with demand YoY Percent Change in Traffic and Capacity – Passenger vs. Cargo January 2011 vs. January 2010
Passenger Traffic & Capacity
Cargo Traffic & Capacity
12% 10.9%
1.8% 10%
0.9%
9.1%
9.1%
Passenger Growth
8.2% 8%
Cargo Growth 6%
4%
2%
0%
Commercial decision making, Balancing Yield, Price and Service Source: International Air Transport Association
9
Operating freighter efficiency critical for profitable operation Net Payload (lbs)
Net Payload vs. Fuel Burn per Block Hour for Select Freighter Types
250,000
B747-400F B777-200F
200,000
MD11-F 150,000
A340-300F
B767-300F 100,000
A300-600F
50,000
10,000
12,500
15,000
17,500
20,000
22,500
Fuel Burn per Block Hour Source: DAC; Note: Fuel burn and net payload at 2,500 km (net payload at 8.5 lb/cu ft); Boeing
Fleet Trends
25,000
Opportunities for improving ‘ margins with better commercial decisions, route/yield management, fleet mix, and working with other carriers/alliances Operating Margin for Select Cargo Operators FY 2009 Astar Air Cargo
14.2%
Atlas Air
14.1%
EgyptAir Cargo
14.0%
Centurion Air Cargo
6.5%
UPS
5.9%
Kalitta Air
4.6%
Cargolux
4.4%
FedEx
3.6%
AirBridge Cargo
3.6%
Polar Air Cargo
-0.2%
Lufthansa Cargo Arrow Cargo
Average 4.1%
-8.8%
-12.5% -15%
-10%
-5%
Source: ATW World Airline Report Financial 2010
0%
5%
10%
15%
20%
11
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