Delta Cargo revenue up 16% in Q2

Delta Air Lines today reported record second-quarter adjusted operating revenue of $15.4 billion, up 5.4% from Q2 2023. The carrier saw its cargo revenue rise 16% year over year to $199 million. [caption id="attachment_57133330" align="alignright" width="300"] An Airbus A319 plane, operated by Delta Airlines, departs Raleigh-Durham International Airport (RDU) in Morrisville, North Carolina. (Photo/Bloomberg)[/caption] THE BIG PICTURE: Delta’s improved cargo revenue indicates growth in the sector, which was hampered in 2023 by high capacity and low demand. The carrier’s cargo revenue had fallen 15% YoY in Q1 2024 and fallen 31% YoY for full-year 2023. Throughout 2023, analysts were optimistic that the market would normalize in 2024 . BY THE NUMBERS: Delta reported $2.3 billion in adjusted operating income in Q2, down 9% YoY. The carrier also reported in Q2: Diluted earnings per share of $2.36, down 12% YoY; Pre-tax income of $2 billion with a pre-tax margin of 13%; Operating cash flow of $2.5 billion; and Operating expense of $14.4 billion, up 10% YoY. WHAT THEY’RE SAYING: Delta executives were pleased to see cargo revenue bounce back. “Cargo revenue was 16% higher than the previous year, a significant improvement from the last 12 months, and we are encouraged by the trends we're seeing,” Delta President Glen Hauenstein said on today’s earnings call. Delta ranks 33rd on Air Cargo Next ’s Freight 50 list of top air cargo carriers, flying 2.2 billion cargo tonne kilometers in 2022. STATE OF PLAY: While cargo revenue is recovering, passenger revenue saw a 5% YoY rise in Q2 to $13.8 billion. The carrier forecasts a lower-than-expected profit for Q3 as overcapacity on the passenger side has decreased airfares. “We expect September quarter capacity growth of 5% to 6% and revenue growth of 2% to 4%, with sequential improvement in unit revenue trends through the quarter,” Hauenstein said. NOTEWORTHY: Delta has been expanding its network and implemented its largest international summer schedule this year with more than 1,700 weekly flights to 80 international destinations, according to the earnings report. The carrier is also expanding its routes with: Flights between Seattle, Wash., and Taipei, Taiwan, launched in June; Flights between Tampa, Fla., and Amsterdam, to launch in October; Flights between Orlando, Fla., and London, to launch in October; and Resumed daily nonstop service from New York to Tel Aviv in June. Delta this week signed a strategic cooperation memorandum of understanding with Riyadh Air . This interline agreement is intended to expand connectivity between North America and Saudi Arabia. FUTURE LOOK: With the goal of achieving net zero by 2050, a sustainability target generally shared across the aviation sector, Delta is conducting a study with Hartsfield-Jackson Atlanta International Airport (ATL), Airbus and hydrogen fuel cell developer Plug Power to assess the feasibility of hydrogen fueling at ATL. ATL ranks 43rd on Air Cargo Next ’s top 50 cargo airports list, with throughput of 688,614 of cargo in 2023. The study “will help define the infrastructure, operational viability, and safety and security requirements needed to implement hydrogen as a potential fuel source for future aircraft operations at ATL,” according to a May release from Delta. The study is expected to be completed by the end of 2026. MARKET REACTION: Shares of Delta Air Lines ( NYSE: DAL ) were down 3.91% from market open to $45.03 as of market close today. Delta has a market capitalization of $29 billion.

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