Cargolux (CV, Luxembourg) chairman Paul Helminger told staff representatives and union officials at a meeting last week that the airline will require USD100 million in annual capital injections in order to meet its future financial commitments in addition to remaining competitive.
The Luxemburger Wort says Helminger described the freight specialist's financial situation as "very serious" adding that contentious plans to grow Cargolux Italia (C8, Milan Malpensa) are among Cargolux's last resort options to remain afloat.
"Long gone are the days when Cargolux was making annual profits of USD200-300 million annually. In 2013 it lost money and while returning to the black last year, the estimated profit was only USD12 million. So cash is an issue," OGBL union spokesman Hubert Ollerich said.
The move, however, has drawn severe criticism from the Luxembourg Confederation of Christian Trade Unions (LCGB) and Luxembourg’s pilot association (ALPL) which claim the decision to transfer an aircraft to Italy, and 25 jobs along with it, amounts to a forced cost-cutting programme that could lead to more outsourcing in the future. Talks between management and the unions concerning the Italian venture have yet to reach an agreement.
The Lloyds Loading List news site reports unions are also unhappy about plans to establish Cargolux China (Zhengzhou) - a joint-venture between the Luxembourg carrier and the Zhengzhou-based Henan Civil Aviation Development & Investment Company (HNCA) which already owns a 35% stake in Cargolux.
Under its current shareholding, HNCA will hold 51% of the joint-venture with Cargolux to hold 24%. While there is provision for other Luxembourg shareholders to control the remaining 25% stake, unions are concerned that should no suitable local partner be found, Cargolux would lack blocking rights on strategic decisions.
The Cargolux China subsidiary is currently undergoing a feasibility study with results likely to be out later in the year.
