Joint venture Jade Cargo faces crash landing

Bad news for Jade Cargo: Lufthansa pulls itself out from the cargo company backed by Shenzhen Airlines. There’s no more flights of Jade Cargo “until further notice”.

It was only a small glimmer of hope, as of Monday this week, the partners involved, Shenzhen Airlines and Lufthansa had temporarily parked the fleet because of weak demand around the Christmas holidays.

But the return to heaven is no more. In a brief letter, Lufthansa Cargo‘s freight department stated that there’s no flights of Jade freighter anymore “until further notice”. “This gives Lufthansa the final out of the joint venture,” said the industry circles.

A spokesman for Lufthansa Cargo declined to comment on this information upon request. However, the wording of the brief letter to the customer leaves no room for interpretation. “We thank you for the support to Jade Cargo in the past and hope that we can count on your support in the future,” writes Lufthansa in the letter.

Jade Cargo was founded in 2004. The company has six Boeing 747 and 390 employees. Lufthansa has been involved in the joint venture with 25 percent shares, another 24 percent was hold by a subsidiary of the state development bank KfW, the majority of 51 percent is hold by Shenzhen Airlines.

The hopes were high. China is a huge market, dominated by massive imports and exports. Lufthansa wanted to cut a big piece of jade of this cake.

The company came belatedly into operation in 2006. The joint venture has suffered a series of problems from the beginning. First, missing equipment, then licenses for the pilots. The biggest problem was always the liquidity of Jade Cargo. Industry sources said the company has been able to realize only 20 percent of the targeted sales. The debt would have reached a three-digit million amount, the revenue was not even last for the fuel bill.