Aston Martin, Ferrari among luxury cars that boost airlines

People gaze at a 1963 Aston Martin, which People gaze at a 1963 Aston Martin, which Sean Connery drove in James Bond movies, and a 1937 Roll Royce. (June 20, 1963) Photo Credit: AP

advertisement | advertise on newsday

A 1963 Aston Martin like the one James Bond drove in Goldfinger began its journey from Frankfurt to New York by being maneuvered into the hold of a Delta Air Lines Inc. jet.

The tires of the $450,000 coupe were lashed to a standard freight pallet. Its gleaming chrome bumpers extended over the sides, so workers adjusted by putting slimmer cargo nearby. The bill for the trans-Atlantic trip: More than $10,000.

Delta flies about 100 cars a year, putting it in the vanguard of a new front in U.S. airlines quest to widen profit margins with premium services for wealthy fliers. That strategy drives the lie-flat seats and multi-course meals lavished onfull-fare travelers. The payoff from freight, a $4 billion-a- year industry for North American carriers, is even bigger because passenger operations largely cover flight costs.

The higher the value of the goods youre shipping, the higher the margin, and a lot of these cars are almost irreplaceable, said Helane Becker, an analyst at Cowen Securities LLC in New York who recommends buying Delta. Most of that is going toflow to the bottom line.

Profit margins on Deltas $1 billion-a-year cargo business can top 50 percent, the airline has said, compared with a forecast operating margin of 10 percent companywide this quarter. Its a reliable profit contributor because costs for aircraftpayments, crew and fuel are largely covered by fares from passenger ticket sales, the airlines main business.

advertisement | advertise on newsday

Delta Growth

By definition, if its something people are shipping by belly, they need it fast and theyre willing to pay for it, said Savanthi Syth, an analyst at Raymond James Financial Inc. in St. Petersburg, Florida, who rates Delta market perform. Not justanybody off the street can do this. It requires special training and handling.

Deltas current automotive cargo compares with a few dozen vehicles a year in the past, said Ray Curtis, vice president of worldwide sales for Delta Cargo.

The airline recently handled a $250,000 Lamborghini and a $150,000 Porsche 911 GT3 in addition to the vintage Aston Martin favored by Bond, the fictional British spy also known as 007.

The carriers shipments still lag behind European carriers such as Deutsche Lufthansa AG, which leads passenger airlines in automobile deliveries, and British Airways parent International Consolidated Airlines Group SA.

1948 Ferrari

advertisement | advertise on newsday

Delta extended its year-to-date gains with a 0.7 percent advance to $19.10 at 9:58 a.m. today in New York. The airline previously rose 60 percent this year, the second-best return on the Bloomberg U.S. Airlines Index. That outpaced both the 47percent increase at United Continental and a 16 percent advance by the Standard & Poors 500 Index.

Lufthansa climbed 11 percent to 15.75 euros this year through yesterday, while IAG increased 46 percent to 269 pence in London.

American Airlines, which, like Delta, handles about 100 cars a year, recently flew a restored red 1948 Ferrari from London to Chicago for a customer who had purchased it in Monaco, said Tristan Koch, managing director of cargo sales in Europe for theFort Worth, Texas-based carrier.

advertisement | advertise on newsday

The car sold for 1.1 million euros ($1.4 million), according to RM Auctions, which handled the sale.

Newest Bentley

Some people want to be the first person in Los Angeles with the newest Bentley, so $10,000 on a $250,000 product isnt important, Koch said of the typical cost, which can top $13,000. If you stick it on a boat, its out of your sight in a 40-footcontainer for weeks. Or if you have a race in Argentina this week and need it in Switzerland tomorrow, you need to put it on an airplane.

One constraint is that American mostly uses Boeing Co. 777 jets on trans-Atlantic routes and loads cargo pallets horizontally, which means it cant handle cars that are longer than 4 meters (13.1 feet), such as modern Rolls-Royces, he said.

We cant physically load them, Koch said.

Lufthansa, based in Cologne, Germany, transports about 1,400 vehicles per year and also has a fleet of dedicated freighter jets.

For our employees, the transport of exclusive and rare sports or luxury cars is always a special highlight, Brigitta Ebeling, product manager at Lufthansa Cargo, said in an e-mail.

British Airways parent IAG said it handles hundreds of cars per year, declining to be more specific. Recently the London-based carrier flew a dark-colored Pagani Huayra, which starts at 850,000 euros.

Achieving Perfection

Even with volume growth at the passenger airlines, airfreight specialists such as Cargolux Airlines International SA and Deutsche Post AGs DHL retain an edge.

In addition to flying Formula 1 cars, DHL also flies Bugatti sports cars, which have an average sale price of $2.5 million, around the world for customer delivery, said John Hill, director of sales for the Americas for the Molsheim, France- basedautomaker.

Its the best way to ship a car because it is safer, Hill said in a telephone interview. Everything is geared toward perfection. Theres nothing we do thats trying to cut costs, and that continues through the delivery phase.

Some Bugatti owners fly their cars in the bellies of passenger jets to high-end collector car shows at Pebble Beach, California, and Amelia Island, Florida, or to races and driving events, he said.

Some people like golf, Hill said. This is a hobby that these individuals like to do when they get away.

You also may be interested in: