LATAM’s cargo revenue grows 2.1%

LATAM Airlines today reported $3.3 billion in operating revenue for the first quarter of 2024, an increase of 18.4% from the same period last year. The carrier’s cargo revenue was $369.4 million, down 2.1% year over year. [caption id="attachment_70651" align="alignright" width="300"] (Courtesy/LATAM Cargo)[/caption] This is an improvement in cargo revenue from Q4 2023 , when the company posted $363.8 million, a decrease of 13.4% YoY. “It is important to acknowledge that the industry is still facing important challenges, [such as] significant issues related to aircraft financing durability, persistent aircraft delivery delays, stripped supply chains for parts, and high and volatile fuel prices due to global geopolitical factors, among other issues,” Chief Executive Roberto Alvo said on today’s earnings call. LATAM also reported in Q1: Adjusted operating margin of 13.9%, up 3.4 percentage points; Adjusted EBITDA of $795.5 million, up 38.8% YoY; Adjusted EBITDA margin of 24%, up 3.5 percentage points; and Adjusted net income of $281.9 million, up 84.1% YoY. In cargo operations, the company reported in Q1: The carrier saw 1.9 million available ton kilometers (ATK), up 13.4% YoY; Yield based on ATKs was 19.1 cents, down 13.7% YoY; LATAM reported 1 million revenue ton kilometers (RTK), up 12.2% YoY; Yield based on RTKs was 36.5 cents, down 12.7% YoY; The carrier transported 213,188 tonnes of cargo, up 2.2% YoY; and Load factor was 52.4%, down 0.5 percentage points. Some of the carrier’s success can be attributed to Chapter 11 restructuring, Alvo said on the company’s Q4 earnings call on Feb. 23. LATAM filed for Chapter 11 bankruptcy in May 2020, as it struggled to stay afloat during the pandemic. The carrier has recovered significantly and emerged from bankruptcy in November 2022. Leading credit rating agencies recently upgraded LATAM’s ratings: S&P Global Ratings upgraded LATAM’s corporate rating to B+ from B, with a positive outlook, on March 1; Moody’s Investors Service upgraded LATAM’s corporate rating to Ba3 from B1, with a stable outlook, on April 12; and Feller Rate upgraded LATAM’s local rating to BBB with a positive outlook from BBB- with a stable outlook on April 30. LATAM ranked 25th on Air Cargo Next ’s Freight 50 list of top cargo carriers, flying 3.3 billion cargo tonne kilometers (CTK) in 2022. Air Canada’s cargo revenue falls 9.7% Air Canada reported CA$5.2 billion ($3.8 billion) in operating revenue for Q1 2024, an increase of 7% from the same period last year. [caption id="attachment_57136089" align="alignright" width="300"] (Courtesy/Air Canada Cargo)[/caption] Q1 cargo revenue fell 9.7% YoY to $157.2 million. By comparison, Air Canada’s Q4 2023 cargo revenue fell 15% YoY to $181 million. “Despite higher [cargo] volumes, revenues declined $23 million year over year due to softer yields,” Mark Galardo , executive vice president of revenue and network planning, said on the company’s May 2 earnings call. “Volumes were aligned with our expectations and recently we have seen encouraging signs of volume pickup. “Cargo is a good complementary business for us and an important lever to differentiate our revenue streams,” he said. Air Canada also reported in Q1: Operating expenses of $3.8 billion, up 6% YoY, driven by higher labor, maintenance and information technology costs; Operating income of $8 million, with an operating margin of 0.2%; and Adjusted EBITDA of $331.1 million, with an adjusted margin of 8.7%. Cargo revenue by region in Q1 was: $18.3 million in Canada, up 4.2% YoY; $8.8 million in the United States, up 9.1% YoY; $61.4 million in the Atlantic, down 29.4% YoY; $45.3 million in the Pacific, down 26.5% YoY; and $23.4 million in other areas, down 8.6% YoY. “One freighter entered into service [in Q1] bringing the total active freighters to eight, a level that we will sustain for the foreseeable future,” Chief Financial Officer John Di Bert said on the call. Air Canada Cargo was named the 2024 cargo operator of the year in the 50th annual ATW Airline Industry Achievement Awards in January. “We are the first Canadian operator to win the award,” President and Chief Executive Michael Rousseau said on the call. “ATW cited Air Canada Cargo’s digital transformation that has created a customer-centric digital environment. S&P Global Ratings upgraded Air Canada’s credit rating to BB from BB- on April 24 and said the carrier has a stable outlook. Air Canada ranked 36th on Air Cargo Next ’s Freight 50 list, flying 1.9 billion CTKs in 2022. Cargojet revenue down 0.3% Cargojet this week reported $168.9 million in Q1 revenue, down 0.3% YoY. [caption id="attachment_68387" align="alignright" width="300"] (Courtesy/Cargojet)[/caption] “On the domestic side, the volumes from our major customers have stabilized and improved sequentially each quarter since the middle of last year,” co-Chief Executive Jamie Porteous said on the company’s April 29 earnings call. “On the international side, the macro conditions also remain weak and the current geopolitical situation is expected to further disrupt supply chains,” he said. “This is leading to increased and somewhat temporary demand for global air cargo services, as evidenced by several industry indicators, including IATA , which we hope to capitalize upon.” Cargojet also reported in Q1: Adjusted EBITDA of $57.3 million, up 4.5% YoY; Net earnings of $23.7 million, up 6.6% YoY; Revenue from domestic network, ACMI and charter of $132.2 million, up 6.5% YoY; Adjusted earnings per share of $1.36, up 91.8% YoY; and The carrier operated 17,315 block hours, down 2.9% YoY. Co-Chief Executive Pauline Dhillon touted Cargojet’s in-house flying simulators on the earnings call. “We are getting better utilization of our pilot training,” she said. “This, in turn, is reducing pilot downtime, cutting travel and hotel costs, and helping reduce crew overtime.” Cargojet is also focusing more on information technology to increase productivity and optimize decision-making, Dhillon said. “We are also monitoring the emerging AI-assisted tools that can provide faster answers by extracting relevant information from thousands of pages of manuals, and, in turn, can enhance technician productivity and aircraft maintenance processes,” Dhillon said. Cargojet operates a fleet of 41 aircraft, including: Seventeen B757-200s, three more than in Q1 2023; Three B767-200s, the same number as in Q1 2023; and Twenty-one B767-300s, three more than in Q1 2023. “We continue to see margin improvements driven by our optimization of fleet and flight schedules and the rigorous management of block hours flown, especially on our domestic overnight network,” Porteous said. “Much of the heavy lifting on fleet optimization started early last year, and we are now starting to see its impact in our performance metrics.” Cargojet ranked 46th on Air Cargo Next ’s Freight 50 list, flying 1.1 billion CTKs in 2022. Maersk logistics revenue up 1% Denmark-based shipping giant Maersk reported Q1 revenue of $12.4 billion, a 13% YoY decline. Its logistics and services revenue, which includes air, rose 1% YoY to $3.5 billion. “Our three main business segments of Ocean, Logistics and Services, and Terminals all saw year-on-year volume growth with a demand that has stabilized,” Chief Executive Vincent Clerc said on the company’s May 2 earnings call. “In Logistics and Services, we continue our journey toward raising margins and renewing the business with growth. We saw volume growth across the board in all product families.” Maersk transported 85,000 tonnes of air cargo in Q1, a 51.8% YoY increase, according to the company’s earnings report. Logistics and Services faced challenges from its contracts and ground freight operations, Clerc said. Maersk also reported in Q1: EBITDA of $1.6 billion, down 59.9% YoY; EBITDA margin of 12.9%; Profit of $208 million, down 91% YoY; and Ocean freight revenue of $6.7 billion, down 20.4%. Maersk ranked 25th on Air Cargo Next ’s Power 25 list of top freight forwarders, transporting 211,484 tonnes of air cargo in 2022. Amazon aims to optimize fulfillment network Amazon posted $143.3 billion in Q1 net sales on April 30, a 13% YoY increase, which the company partially attributed to “fast and convenient delivery.” “With more than 2 billion global units arriving the same or next day in Q1, Amazon delivered to Prime members at its fastest speeds ever,” the April 30 earnings report stated. “In March, across the top 60 largest U.S. metro areas, nearly 60% of Prime member orders arrived the same or next day, and in London, Tokyo and Toronto, three out of four items were delivered the same or next day.” Amazon also reported in Q1: North American net sales of $86.3 billion, up 12% YoY; International net sales of $31.9 billion, up 10% YoY; Amazon Web Services net sales of $25 billion, up 17% YoY; and Net income of $10.4 billion, or 98 cents per diluted share. Amazon announced in Q1 that it will introduce its Delivery Service Partner (DSP) program in Australia’s Brisbane, Melbourne and Sydney this year. The DSP program provides access to logistics tools and know-how to help entrepreneurs start delivery businesses, according to the earnings report. The program is expected to expand Amazon’s last-mile network in Australia. The company also announced plans to open robotics fulfillment centers in Asturias, Spain, and Sagamihara City, Japan. It has robotics fulfillment centers in 11 countries to help employees reduce heavy lifting and repetitive tasks, according to the report. “We’ve continued to inspect our fulfillment network for additional opportunities [for regionalization] and are working on several areas where we believe we can lower costs even further while also improving customer experience,” Amazon President and Chief Executive Andy Jassy said on the company’s earnings call on April 30. “One example of this is our work to increase the consolidation of units into fewer boxes.” Fewer boxes means fewer deliveries, which reduces costs and lowers carbon emissions, Jassy said. Editor’s note: All amounts have been converted to U.S. dollars.

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