Sweden-based cargo specialist West Atlantic reduced losses in 2017, ending the year with a net loss of SEK61.6 million ($7.5 million) compared to a deficit of SEK81.8 million for the previous year.

The airline recorded a significantly better 4Q than in 2016, swinging from a loss of SEK23.3 million to a profit of SEK17.4 million.

There was strong revenue growth of 20.4%, to SEK1.59 billion over the year, mainly because of a contract with the UK Royal Mail.

Over the year, however, the company faced increased costs through a combination of having to sub-charter aircraft because of late deliveries of Boeing 737-400 freighters; maintenance costs on its Boeing 767s; and the continuing financial headwind of having parked a number of its BAe ATP turboprop freighters.

In his outlook for 2018, president and CEO Fredrik Groth said demand for the company’s services remained strong, with the air logistics sector benefiting from the increasing level of e-commerce.

“Most of our customers are seeing growth, thus tendering for additional capacity. Almost all our customers are forecasting the need for additional capacity in 2018 and onward, with most of the growth coming from the larger aircraft sectors.

“The company is now one of the largest Boeing 737 freighter operators in Europe, as well as a growing provider of 40 ton+ capacity with our Boeing 767s. The demand for the smaller aircraft (Bombardier CRJ and ATP) is more stable, but we are seeing increased competition in these sectors from smaller operators.”

A major focus for the coming year, Groth said, was to identify new opportunities for the parked ATPs. The aim was to maintain 10-15 aircraft on operations, while selling or leasing out excess aircraft to operators outside Europe. Some aircraft would also be parted out, to reduce spare parts costs for the operating fleet.

High aircraft maintenance and spare parts costs were expected to start decreasing as the company had consolidated its aircraft maintenance from Malmö (Sweden) and Coventry (UK) to another UK location, East Midlands Airport.

The company was also working to improve pricing levels on certain contracts that were currently below market rates, as they came up for re-tender.

A major development in 2018 will be the arrival of Boeing 737-800 freighters, for which West Atlantic will be the launch customer. Boeing and engine manufacturer GECAS have experienced delays in the program, Groth said, but the first of the type is now expected to arrive at the end of March 2018. The remaining three -800s are scheduled to arrive by January 2019.

The company also is also likely to increase its 767 fleet during 2018.

“The group still needs to reach acceptable long-term levels of cash flow generation and profitability,” Groth said, but “outlook for the business is favorable.”

Alan Dron alandron@adepteditorial.com