Decline in Delta Air Lines' Q1 Cargo Revenue Has Silver Lining

Atlanta-based Delta on Wednesday reported record first-quarter adjusted revenue of $12.6 billion, but cargo revenue fell 15% year over year to $178 million. The world's second-largest passenger airline by passengers carried almost never mentions cargo beyond a line on the income statement, but the earnings news release twice said cargo and maintenance service were nearly a 1-point drag on total unit revenue, which dipped 0.7% year over year.

Delta's cargo revenue during the fourth quarter, the busiest period for freight, fell 24% to $188 million. That was better than the prior three quarters, when cargo revenue was down between 28% and 37% from the same periods in 2022. For the full year, Delta Air Lines' cargo sales fell 31% to $723 million.

Delta wasn't alone in experiencing negative effects of a prolonged international freight recession. Most hybrid and all-cargo airlines saw revenues drop between 25% and 50%, or more, last year. Shipping demand and rates bottomed out last summer and have steadily improved since September, with global air cargo volumes surging about 12% during the first quarter versus a year ago, according to market data providers.

Delta credited strong domestic, international and corporate business travel, along with good operational execution, for higher corporate revenues and a 17% increase in operating income to $640 million. Pretax income was up $163 million to $380 million. The company said corporate travel has continued to accelerate since the start of the year and predicted record corporate revenues in the second half.

The company reiterated its full-year outlook and released second-quarter guidance for revenue growth of 5%-7%.

Revenue and adjusted earnings per share of 45 cents beat analysts' consensus estimates.

Delta shares were down 1.7 points in late afternoon trading.

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