IAG Cargo yields creep up as specialist cargoes drive increased revenue
An enticing combination of fidget spinners, pharmaceuticals and e-commerce saw IAG Cargo commercial revenues rise 7.6% to €260m ...
Three chief executives in two years has not hindered IAG Cargo’s ability to push through developments, and its latest offering has seen bumper interest from forwarders.
Aimed at small-to-medium-sized forwarders, FWD.Rewards has attracted 600 customers in the 10 weeks since it launched and commercial director David Shepherd told The Loadstar the carrier was “delighted” by the feedback from the SME community.
Developed in partnership with customers, FWD.Rewards earns businesses points every time they ship, which they can convert into cargo credit, commercial flights or hotel stays.
“Our global research shows the key priority for smaller forwarders is to grow their business, while a major concern is ensuring the retention of their most valuable staff,” said Mr Shepherd.
“We therefore developed a loyalty scheme that supports our customers in helping them both in growing their business and rewarding members of staff with incentives and recognition.”
The carrier’s chief financial officer, Lewis Girdwood, told The Loadstar the success of the forwarder loyalty scheme was indicative of the good shape the business was in.
“While there have been changes in chief executives, the key is that the business remains strong, and this is because of a well-versed, long-standing executive team,” he said.
“In Lynne [Embleton, the new chief executive], we have a leader with an immense amount of experience, capable of building on the carrier’s already strong foundations.”
The April appointment followed the unexpected departure of Drew Crawley 16 months after replacing long-standing chief executive Steve Gunning in January 2016.
“Having lived through the transitions, I am confident about the shape of the business,” said Mr Shepherd. “All three of our recent chief executives have brought strong qualities: in Steve, you had someone that guided us through a massive merger; while in Lynne, we have someone with laser focus.”
Mr Shepherd challenged the notion that the changes may have unsettled the company, noting that neither growth nor developments had been stunted.
“Not only have we introduced the loyalty scheme, we also have our new premium centre going up and are in the middle of launching our new website,” he said. “Despite change in leadership, the airline’s development has been constant because of the strong team we have in place.”
Ms Embleton’s first quarter at the helm saw revenues increase 7.6%, with volume growth at 6.4% ahead of a 5.9% year-on-year upturn in capacity.
This helped bolster IAG Cargo’s first-half performance, with revenue growth of 2.6% for the six months to June coming as welcome news after the IT disaster that hit British Airways in May, costing it some £150m.
“We are witnessing a robust market, largely driven by the rebound in ocean, ecommerce and consumer markets,” said Mr Shepherd.
“Largely, we can be happy with Asia, but also we are seeing strong demand out of Europe and our results for Latin America would have been better if we hadn’t dropped the A340s.”
Mr Shepherd said the carrier was working to improve its e-commerce capabilities and was in discussion with postal offices to make sure handling and capacity needs were aligned.
He also said he was speaking with forwarders active in the ecommerce sector to see what they needed from the carrier to help bolster volumes.
“Volumes are well up on last year, we have retained business and are forever on the lookout for capacity opportunities to augment our network,” Mr Shepherd added. “Whenever we put business somewhere, our partners take care of it, and we do likewise – so we continue to look for partnerships and agreements that make good financial sense.”
One agreement that has come under scrutiny in recent months has been with Qatar Airways, which has faced difficulties following the decision by neighbouring Gulf countries to cut ties with Qatar.
Mr Shepherd, however, brushed off the notion that the Qatar blockade had affected IAG’s business and access to capacity.
“We purchase capacity from Qatar Airways as part of an arm’s length trading agreement; the impact of the blockade could be described as negligible at best,” he said.