Singapore, Lufthansa, Scandanavian Airlines Sign MOU to Study Cargo Venture

Business Wire, March 15, 1999

LOS ANGELES--(BUSINESS WIRE)--March 12, 1999--Singapore Airlines (SIA), Lufthansa Airlines (LH) and Scandanavian Airlines System (SAS) have announced plans for closer co-operation in the air cargo business.

A Memorandum of Understanding (MOU) has been signed by Dr. Cheong Choong Kong, deputy chairman and CEO of SIA; Juergen Weber, chairman and CEO of LH; and Jan Stenberg, president and CEO of SAS.

The MOU provides for a feasibility study on various integration models among the companies in the airfreight market. The study, which is to be completed within a year, will scrutinize the prospects for wide-ranging matching of network management, marketing and sales, product harmonization, and a common infrastructure for information technology. It will also look at the type of organizational structure best suited to implement these extensive integration plans.

Explaining the purpose of the project, Cheong said: "There is a growing trend towards globalization and maintaining just-in-time inventories. With our combined freighter network covering the Americas, Europe, Asia, the Middle East, South Africa and the Southwest Pacific, our customers will be able to enjoy improved service benefits, such as more frequent and direct routes, increased capacity and shorter transit times."

Weber noted: "In the increasingly intensive competitive environment, the common aim of the companies commited to the project is to strengthen their position in the air cargo market of the future and equip themselves to serve even better the global logistics requirements of their customers and partners. They will seek to harness synergies from their joint activities."

Stenberg expressed great satisfaction over the fact that SAS Cargo was one of the three initiators of the study. "Air freight is after all becoming a mature business and it is therefore natural that it, in the future, should develop more on its own terms. We have seen this development coming for some time now and I am very pleased that SAS Cargo, together with its two partners, has placed itself in the lead."

The signing of the MOU enhances ties between three cargo carriers that already command a major position in the world airfreight market. According to International Air Transport Association (IATA) statistics for international air cargo traffic in 1997, the combined international market share for all three airlines was more than 13 percent.