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Delta Cargo celebrates diamond anniversary with $1B of revenue

Omicron to dent early 2022 earnings after airline posts $170M pre-tax profit in Q4

Delta Air Lines’ cargo division achieved its best year ever in 2021, its 75th anniversary, with more than $1 billion in revenue from transporting COVID-19 vaccines, auto parts, merchandise and other goods that helped keep the economy going through a pandemic.

During the fourth quarter, the Atlanta-based carrier posted $304 million in cargo sales, a 63% hike from the same period in 2019 and 24 points better on a sequential basis from the prior quarter on strong holiday demand and yields, according to results released Thursday. It was the fifth consecutive quarter of positive revenue growth for Delta Cargo.

The $1 billion full-year total was a 37% improvement from 2019.

Since the spring of 2020, Delta Cargo has coordinated more than 2,600 cargo-only flights to meet the needs of shippers while its passenger schedule was sharply reduced. Few passenger-freighters are running anymore as the airline restores more passenger service, but management has said that routes, frequencies and aircraft types are frequently being dictated more by cargo opportunities than passenger ones, especially for international destinations.

Delta Cargo has ambitious plans to sustain the pace of growth from the past 18 months through 2025. 

“As we look forward to the next three to four years, we have identified several key opportunity areas that we can work with other Delta partners on (technology, operations and sales, among others), that will help us grow revenue by several hundred million dollars by 2025,” cargo chief Robert Walpole said in a company blog post last month.

CEO Ed Bastian told analysts that Delta’s (NYSE: DAL) operations have stabilized in the past week with fewer crews calling out sick with COVID infections, with omicron-related cancellations impacting only about 1% of flights. Since Sunday, the company has had to cancel only about 20 flights per day out of nearly 4,000 daily flights. 

But the cargo division later notified customers that it is temporarily adjusting capacity to ensure it can meet service levels. Between Jan. 17 and Feb. 15, it will limit the amount of cargo it can carry during certain times of day on narrowbody flights in large domestic hub operations. The throttling of volume will not impact international and domestic widebody flights. 

“We are confident that the capacity we will have available over the next few weeks will serve your shipping needs, and our goal is to minimize the impact on your business,” the announcement said.

The strong cargo numbers were a small portion of Delta’s $9.47 billion in fourth-quarter operating revenue, which was still 17% below 2019 levels. But with a 19% cut in operating expenses, Delta was able to achieve $170 million in adjusted pre-tax income and be profitable for the entire second half of 2021. For the full year, Delta suffered a $3.4 billion pre-tax loss.

Fourth-quarter cargo revenue was 3.2% of total operating revenue, which is close to the difference before the pandemic.

The revenue and adjusted earnings per share of 22 cents beat consensus estimates. The company was on track for better results, but weather and COVID-related cancellations at the end of December hurt the bottom line.

Bastian predicted the omicron variant would delay demand recovery for travel by 60 days, resulting in operating losses for January and February, followed by profitability in March as case counts decline and people start traveling more. The first quarter outlook calls for Delta to operate at between 83% and 85% of pre-pandemic capacity, with revenues about 75% back to normal. The Delta chief expressed confidence that the company will generate a meaningful profit for the full year.

Delta’s figures exclude non-core and one-time items such as refinery revenue, government payroll assistance and gains from accounting practices.

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 from the American Society of Business Publication Editors for government coverage and news analysis, and was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. 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 ekulisch@freightwaves.com