The main business of Icelandair Cargo is scheduled airfreight services supplemented by ACMI (aircraft, crew, maintenance and insurance) leases of freighter aircraft. The company serves ten destinations in Europe and North America. 82% of total tonnage is carried on the company´s five Boeing 757-200 freighters and 18% in the holds of Icelandair´s passenger aircraft.
The year´s results were very much influenced by the fall in value of the USD and appreciation of the ISK. This hit exports from Iceland hard, causing only a modest 2.7% growth in total tonnage of. In total, Icelandair Cargo carried 42,000 tons on scheduled flights. Exports, which are dominated by fresh seafood, declined by 8%, but during the latter part of the year monthly fluctuations were down by up to 30% in total, but up to 50% for the US. Imports to Iceland grew by 14% and transit freight across the North Atlantic grew by 13%. Yields, however, improved by 1.6% increases freight revenue was up by 4.6% for the full year. Turnover was ISK 7,555 million equalling a 12.8% growth over 2006.
Three aircraft were on an ACMI lease to TNT on weekdays, but were operated in the Icelandair Cargo schedule at weekends. Two aircraft served the market to and from Iceland on a daily basis.
There were no major changes in the network. Liege was served nine times per week, Brussels and Humberside four times, as well as East Midlands, Jönköping and Norrköping all with one weekly flight. Halifax also had one weekly flight, but New York was served with six flights per week. Flights to Charlotte were discontinued but a new weekly flight to Gander was introduced in November. This network of freighter aircraft was enhanced by the 24 destinations in Icelandair´s passenger network.
Icelandair Cargo offers its customers a competitive and quick global service through the extensive interline and special prorate agreements it has with other airlines. The company also operates a trucking network within Europe and the United States. The company runs its own sales offices in Iceland, Benelux, Italy and North America and is represented by general sales agents in other key markets in Europe and Asia. For a number of years Icelandair Cargo has carried express freight for TNT across the Atlantic. Express freight to and from Iceland is also carried for TNT and DHL on overnight freighters. The company also counts FedEx among its important customers.
Future strategy - Outlook
In 2008 Icelandair Cargo is not expecting more than marginal growth in total tonnage. A moderate increase is forecast in imports and transit, while exports are expected to decline further by 2-3%. The movements in the value of the USD and the ISK are, however, hard to predict and could cause major swings in the directionality of trade and total volumes.
In 2007 about 80% of the tonnage on scheduled flights was either to or from Iceland, the rest being between other European countries and North America. This makes Icelandair Cargo too dependent on a small and volatile market. The Icelandic market has a history of fluctuating up or down by up to 30% with fluctuations in currency and levels of economic activity. A new strategy aims at making the company less dependant on the home market by expanding into new international arenas. To support this strategy, four Airbus A330-200 freighters will be joining the fleet in 2010 and 2011. At the same time, the network will be expanded to include new destinations in the USA and Canada as well as Asia. The aircraft will be on longterm leases and will mainly complement the existing Boeing 757 fleet.