Date: Wednesday, July 26th, 2023
American Airlines said Thursday second-quarter cargo revenue fell nearly 40% year over year, hours after United Airlines reported a 37% drop in sales from shipments carried in the lower hold of its passenger fleet. Cargo performance at the Big Three U.S. airlines is now worse than it was in 2019, before the pandemic.
The disappointing numbers were expected because the air cargo market has experienced a 16-month power loss, with demand down 7% to 10% over that period and rates 40% to 50% below the year-ago level. Cargo revenue fell 37% at Delta Air Lines during the quarter, the carrier said last week.
Cargo revenue declined 39.8% in the second quarter at American Airlines (NASDAQ: AAL) to $197 million. American ended the first half with $420 million in sales and a similar result in percentage terms. In 2019, a weak year for air cargo, American generated $219 million in cargo revenue. American topped $1.2 billion in cargo sales last year, the second-best result in its history.
United Airlines’ (NASDAQ: UAL) results, released after the market’s close on Wednesday, showed cargo revenue slid 37% to $362 million. The first-half total wasn’t much better, with cargo business down 36.7% to $760 million. Four years ago, United pulled in $295 million from cargo. United topped the $2 billion mark for cargo revenue in 2021 and 2022, when global supply chain disruptions generated intense interest in air transport.
Overall results for American and United were strong and both companies raised their full-year profit outlooks.
Second-quarter revenue at American Airlines increased 4.7% to $14.1 billion, a record for the three-month period, with adjusted profits of $1.4 billion. Domestic and international short-haul business performed especially well.
United this week announced a significant expansion of flights in the Asia-Pacific region, adding more nonstop flights to Hong Kong, Tokyo and Taipei, Taiwan, as well as the first direct flight by a U.S. airline to Manila, Philippines, from the continental United States. The widebody aircraft used on these routes will also offer extra cargo capacity for shippers. United has more widebody aircraft, and more on order from Boeing, than its U.S. competitors.
“Cargo is an amazing strong spot for us that really helps fuel our global long-haul growth,” Chief Commercial Officer Andrew Nocella said during Thursday’s earnings call with analysts.