Delta Air Lines’ cargo revenue dropped 28% year-on-year in Q1, reflecting a weak freight market due to a slowing global economy, high inflation, the Ukraine war, and excessive retail inventories. The airline reported $209 million in cargo revenue for the quarter.
Delta’s cargo business surged during the pandemic as air travel halted and supply chains were disrupted, driving up demand for air transport. Although cargo revenues exceeded $1 billion in 2022, they fell from a Q1 high of $289 million, and the expected fall spike in bookings did not occur.
Market data shows that air cargo volumes have decreased by 4% to 8% this year, with rates dropping by over a third compared to last April. In 2019, Delta’s Q1 cargo revenue was $192 million.
Delta Cargo recently upgraded to a new refrigerated warehouse at JFK to manage more pharmaceutical and perishable goods. Despite a 36% revenue increase to $12.8 billion, Delta reported a $363 million Q1 loss due to high fuel and labor costs, alongside weather-related delays.
Q1 is typically the slowest period for airlines. Delta Air Lines’ noted it would have earned $163 million if not for pilot bonuses and one-time expenses.
Management expects a strong second quarter with record revenue and 15% to 20% annual growth, driven by increased international travel as pandemic restrictions lift, especially in Asia. However, analysts are concerned about recent domestic booking declines and American Airlines’ lower profit guidance.
Airlines face challenges with rebuilding staff, air traffic control understaffing, and delays in aircraft deliveries, leading to higher fares. Delta plans to increase seat capacity by about 15% this quarter.
