Fresh evidence of strains in the air cargo market came on Monday when Lufthansa said a troubled Chinese freight venture was being wound up.
The venture with China’s Shenzhen Airlines, in which Lufthansa holds a 25 percent stake, is being dissolved because of tough freight conditions in the world’s second-largest aviation market, Lufthansa chief executive Christoph Franz said.
Jade Cargo, based in China’s southern boom town of Shenzhen, has ceased to operate.
“We are a minority shareholder, but the shareholders all together agreed that we will dissolve the company,” Franz said on the sidelines of the IATA annual general meeting. “There is too much capacity,” he added.
The decision comes as global airlines lobby IATA holds an annual meeting overshadowed by concerns over the European debt crisis. Some executives say the impact of a slump in European confidence could seep into Asia through a drop in volumes of exports to Europe.
Jade Cargo, whose operations have been grounded since January as its owners held talks on financing, announced at the end of February that Chinese group UniTop had agreed to come on board as a partner.
“We agreed the best way forward is to cease its operation and dissolve the company and make sure the employees get their individual contractual rights,” Franz said.
Lufthansa took a loss of almost EUR€16 million (USD$21.2 million) from the joint venture in 2011.