Air France-KLM Gets Partner for Cargo --- Container shipping firm will take a 9% stake in Franco-Dutch flag carrier

"LONDON -- French container shipping firm, CMA CGM Group, said it would take a stake in Air France-KLM as part of a deal to combine the airfreight operations of both companies amid a boom in demand for cargo since the start of the pandemic.

Under a 10-year agreement, the two companies will combine and jointly market their airfreight operations including a fleet of 10 dedicated freighter aircraft as well as another 12 jets on order. The deal also covers the belly-cargo operations of Air France-KLM's passenger aircraft, which includes more than 160 long-haul aircraft.

As part of the deal, CMA CGM will purchase as much as 9% of the Franco-Dutch airline, the companies said in a joint statement. The airline's main shareholders will also support the appointment of CMA CGM to the company's board, they said.

The combination comes as the world's biggest container shipping lines have posted record earnings after demand for manufactured goods soared during the pandemic. At the same time, increasing demand after pandemic lockdowns has snarled the once carefully choreographed supply line for shipping goods by sea. Big shipping lines have been buying aircraft to supplement the movement of freight by sea and land.

CMA CGM created its own air cargo division in March last year, when much of the world's planes were still grounded. It has been building its own aircraft fleet, including an order for a new dedicated freighter model of Airbus SE's A350 wide-body.

Danish shipping giant A.P. Moller-Maersk spent $644 million last year to buy German airfreight specialist Senator International in a move that would double its airfreight volume. Meanwhile, cruise and boxship operator Mediterranean Shipping Co. has said it is bidding to buy Italy's reincarnated flag carrier, ITA Airways.

Moving cargo by air -- a bright spot for airlines that were largely grounded during the pandemic -- is usually the last, and most expensive, option for manufacturers and retailers looking to move goods. But labor shortages at ports across the globe, limited warehousing capacity and Covid-19 outbreaks have weighed on deliveries, at times leaving container ships waiting weeks to be unloaded. That has also driven up the price of shipments by sea to record prices and led some manufacturers to turn to aircraft to cut down on delivery times and map out a more reliable delivery schedule.

Under the CMA CGM and Air France-KLM deal, the two companies will jointly design flight networks for their dedicated freighter jets and combine those with CMA CGM's ground and sea links, the companies said. The initial deal covers 10 years, but will likely be renewed beyond that, executives said." [1]

1. Business News: Air France-KLM Gets Partner for Cargo --- Container shipping firm will take a 9% stake in Franco-Dutch flag carrier
Katz, Benjamin. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 19 May 2022: B.6.