Fuel costs appear to have claimed their first major victim within the European air freight sector. The British company European Cargo has been declared bankrupt and three liquidators have now been appointed to wind up the estate. Whether a restart is possible remains uncertain for the time being. Market experts consider the prospects to be limited.
The cargo company, based at Bournemouth Airport in southern England, had been in financial difficulties for some time. In its most recently published annual report for 2024, a loss of over 26 million dollars was reported on a turnover of nearly 140 million euros. A recovery plan was intended to return the company to profitability in 2025, but reality proved considerably more stubborn.
According to market analysts, the sharp rise in fuel costs played a significant role in the collapse of European Cargo. The aviation sector has been facing higher operating costs for some time now as a result of rising kerosene prices and geopolitical tensions.
For air cargo carriers, fuel costs are one of the biggest expense items. When rates are under pressure and volumes are falling, rising fuel prices can quickly erode carriers’ financial position. In the case of European Cargo, a significant debt burden was also a factor.
European Cargo was founded during the coronavirus pandemic in 2020. At that time, many passenger aircraft were grounded, whilst demand for air freight was skyrocketing. The company decided to convert older Airbus A340 passenger aircraft for cargo transport by removing seats and reinforcing the cabin floors.
These modified aircraft were capable of carrying approximately 80 tonnes of cargo. During the pandemic, this proved to be a profitable model, partly thanks to the transport of face masks, medical supplies and other urgent goods.
However, the market changed rapidly after the coronavirus crisis. As the aircraft did not have a large cargo door, loading and unloading took considerably longer than with regular cargo aircraft. This created operational disadvantages that became increasingly difficult to compensate for.
At the same time, passenger airlines returned to their normal flight schedules following the pandemic. This meant that a significant amount of belly capacity became available again on regular passenger aircraft. This created additional competition in the air freight market and put pressure on rates.
As a result, European Cargo was already recording significant losses by 2023. Investors continued to have confidence in the company for some time, partly because a global shortage of cargo aircraft was expected. Ultimately, however, the combination of operational constraints, market pressure and high fuel costs proved too much to bear.
Further information on international air freight solutions can be found on the pages about air freight, express shipments and chargeable weight.
...fuel costs often account for between 20 and 35 per cent of an airline’s total operating costs? Fluctuations in kerosene prices therefore have a direct impact on profitability.
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