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Like its US rivals United and Delta, American Airlines cargo revenue slipped, year on year, but still managed to rake in over $1bn.
The Dallas-based carrier reported its results for the fourth quarter and the full-year yesterday, announcing $1.233bn in cargo revenue for 2022, a slip of 6.2% from its turnover the previous year.
This month, Delta and United reported cargo revenue of $1.05bn and $2.2bn, respectively.
All three carriers lost momentum in the weakening market towards the end of the year, which is amply reflected in their Q4 results: United’s cargo revenue slumped 35%, year on year, to $472m; American turnover shrank 22.9%, to $263m; while Delta’s cargo income was 18.4% down, at $248m.
Delta was the only one of the trio that managed to exceed its 2021 cargo revenues last year, beating its 2021 tally by $20m, which nudged it above the $1bn mark.
AA Cargo president Greg Schwendinger this was record revenue growth of 43% over 2019, with 21% less capacity.
“While our 2022 revenue does represent a small decline versus 2021, much of this is attributable to foreign exchange and the end of our Cargo Only programme, due to increasing passenger demand – something that is positive for the overall health of American Airlines,” he added.
United Cargo president Jan Krems also pointed to a reduction in flights as a major factor behind his airline’s decline in cargo revenue. United has been one of the prime operators of belly cargo flights, with a tally of about 17,000.
When capacity was tight and rates in the stratosphere, United could have raked in more money through higher pricing, he said, but chose to take the long-term view in its relationships with customers. Cargo revenue for the year was down 7% on 2021, but 84% higher than in 2019.
While the carriers’ cargo revenues sank towards the end of the year, income from passenger operations soared, which returned all three to profitability – although they will take some time to whittle down the debt piled up during the pandemic.
Mr Krems said United could lift more cargo in certain markets, notably China, where the airline’s current presence is a shadow of its pre-pandemic footprint. It ramped up capacity on the North Atlantic aggressively last year and is preparing for more expansion, this month signing an order for 100 B787 aircraft to renew its widebody fleet.
After a 15-month hiatus, American received its 47th B787 last August, with 42 more due to join the fleet. Four are scheduled for delivery this year, alongside a handful of A321XLRs.
Delta’s fleet renewal plans have focused on the narrowbody fleet, where it recently signed up for more A220s as well as B737 MAXs. Its cargo division is gearing up for a major technology upgrade. Last month, it signed an agreement with IBS software to adopt its cloud-based iCargo platform to modernise its technology toolkit.
American installed iCargo under Mr Schwendinger’s predecessor, and the roll-out of functionality remains a priority this year.
Meanwhile, United is working on a price quote tool that shows all available options and possible routes, and has embarked on a beta project for online bookings of express and general cargo. At the same time, Mr Krems is looking to tweak the carrier’s product portfolio, where he has set his sights on high-end perishables. He would like to see 50-60% of cargo revenues generated by traffic that requires added-value service.
As passenger demand is projected to remain buoyant, while the froth has come off the cargo market, freight is firmly back to playing second fiddle at the mega-carriers. But the momentum the cargo divisions built during the pandemic, and the investments they have garnered, should keep them in high gear despite the slower market.
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Comment on this article
Deanna CarlsonJanuary 27, 2023 at 10:26 pm
United could have raked in more money through higher pricing, he said, but chose to take the long-term view in its relationships with customers…
I will keep the above in mind when flying, I am pleasantly surprised of this strategy and appreciate it. Too bad the Ocean Carriers did not think this way, had they done this, we would not be dealing with global inflation and very likey a recession by the end of the year.