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Delta Air Lines posts 35% gain in cargo revenue

Strong cargo business, passenger yields help airline turn profit corner heading into second half of year

Delta is flying towards profitable skies this quarter and may not even need federal payroll support to get there. (Photo: Jim Allen/FreightWaves)

A big jump in cargo revenue helped Delta Air Lines (NYSE: DAL) significantly narrow pretax losses in the second quarter, with officials telegraphing the company will be profitable on an operating basis in the second half of 2022 because passenger demand is returning faster than expected.

The Atlanta-based carrier on Wednesday reported cargo revenue increased 35% to $251 million versus the same period in 2019 even though the airline ran a much smaller network than before the COVID pandemic. Cargo sales were $16 million more than during the prior quarter. For the first half of the year, cargo revenue was up 23%.

The results reflect the emphasis on integrating cargo into the broader airline operation under new cargo chief Robert Walpole, who explained in a recent interview how cargo is a big part of the business strategy and more actively involved in route planning and aircraft procurement. 

Delta’s earnings report exceeded analysts’ expectations and recent guidance as the carrier rounds the corner into profitability and building back business lost during the pandemic. 


The company suffered a pretax adjusted loss of $881 million, but that was an improvement of more than $2 billion from the first quarter. On paper, the company actually generated net income of $654 million, which was only possible because of $1.5 billion in federal grants to cover payroll costs as part of the government’s effort to preserve industry jobs during the crisis.

Adjusted operating revenues clocked in at $6.3 billion, down 49% from the 2019 benchmark but 76% higher than in the prior quarter. 

And the company is no longer burning cash. Instead, it generated $195 million in adjusted free cash flow in June.

Domestic leisure demand is nearly back to 2019 levels, with higher yields, and executives are bullish on corporate and international business. Business travel drives many of the key routes serviced by airlines, and the more widebody routes they fly the more belly capacity that is available for freight forwarders and other shippers to utilize.


Corporate travel volumes accelerated in May and June with almost 95% of corporate accounts booking travel last month, Delta President Gary Hauenstein said on a call with analysts. 

“We’re beginning to see a return of consulting and sales-related travel and higher volumes in traditionally business-heavy markets like New York City and Boston. Our recent corporate survey results show that over 90% of our corporate accounts anticipate travel volumes to increase in the September quarter, up from just 33% in the March quarter.

“In addition to these survey results, our close engagement with customers gives us increased confidence in the acceleration of business travel, especially as we move towards the post-Labor Day period as schools and offices continue to reopen.”

The airline reported that business travel doubled from the first quarter to 40% of pre-pandemic levels, and officials said they expect domestic corporate volumes will recover to between 55% and 60% of 2019 levels by the end of the third quarter.

Analysts and airlines have projected a slow recovery for business and international travel into 2023 and 2024, with big banks talking about reducing travel for environmental and financial reasons, and others limiting trips out of health concerns for workers, the availability of technology substitutes, fewer city pairs offered by airlines and tight budgets.

The CAPA Center for Aviation in Australia estimates that internal business meetings will be cut by 50%, which represents 21% of corporate travel spending. Supplier and customer meetings only represent about 40% to 50% of business travel.

Delta’s international bookings and load factors are also increasing. Meanwhile, more than 15 European countries are now open to vaccinated travelers compared to two in the spring. Officials said they hope the U.S. will soon ease restrictions on inbound travel.

Delta’s commentary suggests the recovery in business and international travel could happen faster than many projected, although the spread of new COVID variants is a notable risk to upside expectations.


It said revenue should recover to 65% to 70% of 2019 levels in the third quarter, with capacity down about 30%. But officials said they expect positive pretax income even with unit expenses 11% to 14% higher than in 2019 as it rebuilds its workforce and other competencies.

“I think the surge is coming. And just as we’ve seen it on the consumer side, we’re getting ready for it on the business side. And once you open businesses, offices, and you get international markets opened, I think it’s going to be a very good run over the next 12 to 24 months,” CEO Ed Bastian said.

Delta is giving itself flexibility to ramp up service if demand increases with the acquisition of 36 used aircraft. On Tuesday, it announced the purchase of 29 Boeing 737-900 jets and the long-term lease of seven large Airbus A350 aircraft that will cover international routes. If growth doesn’t materialize as planned, the planes can be used to replace older models that are less fuel-efficient.

Delta accumulated a lot of debt to make sure it had sufficient cushion to weather the downturn, but with $15 billion in cash it can start paying down that $18.3 billion liability. That process began Thursday with the announcement of a $1 billion price to repurchase some of its outstanding bonds.

Delta’s earnings set a solid baseline for what the rest of the domestic airline industry will report. 

American Airlines (NASDAQ: AAL) on Tuesday offered an optimistic preview of next week’s earnings in which it said revenue and expenses came in better than earlier guidance and it could break even for the quarter. Subtracting the U.S. government’s payroll assistance, however, will leave it with a net loss of between $1.1 billion and $1.2 billion. 

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. He won Environmental Journalist of the Year from the Seahorse Freight Association in 2014 and was the group's 2013 Supply Chain Journalist of the Year. In December 2022, he was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]