News / Big Three US airline cargo revenues continue to shrink alongside margins and rates

© Giovanni Gagliardi

Unveiling its numbers yesterday, American Airlines was the last of the Big Three US passenger airlines to report results for the first quarter and, while passenger revenues continued to climb, cargo sales were still shrinking, albeit at a slower rate.

Delta was the first out of the starting gates with numbers for the period, reporting a record GAAP operating revenue of $13.7bn (adjusted: $12.6bn) and an operating income of $614m.

Its cargo business remained in decline mode, though, showing a 15% year-on-year drop in revenue, to $178m. This was better than how Delta Cargo had fared in the previous three quarters, when revenues fell between 28% and 37%.

Cargo volume picked up about 12% in the first quarter, illustrating the downward pressure on yield, which has weakened since the third quarter.

American posted record overall revenues of $12.6bn, which was neutralised by $12.6bn in operating expenses, resulting in a net loss of $312m for the period. Cargo revenues amounted to $187m, a 6% decline from the previous quarter.

United saw operating revenue in the first quarter rise 9.7%, to $12.5bn, which resulted in a net loss of $124m, of which $97m was attributed to the temporary grounding of its B737 Max-9 aircraft contingent. Cargo revenues slipped 2.7% from the final quarter 2023, to $391m.

All three carriers beefed up their international networks last year, which bolstered cargo revenues, although they ultimately sank as yields and rates fell for most of 2023. Most of this expansion played out across the Atlantic, while Asian growth was hobbled by restrictions on traffic rights to China. United pursued a more aggressive build-up of its international operations than its rivals.

This pattern looks set to continue this year. While much of the passenger expansion is set to play out with narrowbody aircraft, United is adding flights to Marrakesh, Cebu and Medellin, and boosting frequency on routes to Seoul, Hong Kong and Porto. It also intends to add four weekly flights between Los Angeles and Shanghai this summer and ramp this up to daily frequency in October. This year, United will fly to 134 international destinations in 67 countries.

Delta is launching flights to Naples with four weekly flights between Atlanta and Zurich, and will resume flights to Shannon. It will operate nearly 260 flights a week to 29 international destinations in 18 countries.

American will launch flights to Tokyo (from New York) and Copenhagen this summer, and services to Brisbane, Tel Aviv and Rio de Janeiro in the autumn.

In terms of capacity, two of the three are adding widebodies this year. Delta stands to receive six A350-900s and ordered 20 A350-1000s in January, but these are not due to enter its fleet before 2026. American fleet additions this year will be narrowbodies, offering little increase in cargo capacity, while United is set for five B787s to join its fleet alongside a gaggle of narrowbody planes.