Delta Air Lines’ cargo division had 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 aided the economy during a pandemic.
According to results released Thursday, the Atlanta-based carrier posted $304 million in cargo sales during the fourth quarter, a 63 percent increase from the same period in 2019 and a 24 point improvement on a sequential basis from the prior quarter due to strong holiday demand and yields. Delta Cargo’s revenue increased for the fifth consecutive quarter.
The $1 billion total for the year was a 37% increase over the previous year.
Delta Cargo has coordinated over 2,600 cargo-only flights to meet the needs of shippers since the spring of 2020, while its passenger schedule has been drastically reduced. Fewer passenger-freighters are now in service as the airline restores more passenger service, but management has stated that routes, frequencies, and aircraft types are frequently dictated more by cargo opportunities than passenger opportunities, particularly for international destinations.
Delta Cargo has ambitious plans to maintain the current rate of growth 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 last month in a company blog post.
Delta’s (NYSE: DAL) operations have stabilized in the last week, according to CEO Ed Bastian, with fewer crews calling out sick with COVID infections and omicron-related cancellations affecting only about 1% of flights. Since Sunday, the airline has only had to cancel about 20 flights per day out of nearly 4,000 daily flights.
However, the cargo division later informed customers that it is temporarily adjusting capacity to ensure service levels are met. Between Jan. 17 and Feb. 15, it will limit the amount of cargo it can carry on narrowbody flights in large domestic hub operations at certain times of the day. Volume throttling will have no effect on international or domestic widebody flights.
“We are confident that the capacity we will have available in the coming weeks will meet your shipping needs, and our goal is to minimize the impact on your business,” according to the announcement.
The strong cargo results accounted for only a small portion of Delta’s $9.47 billion in fourth-quarter operating revenue, which was still 17 percent lower than in 2019. Delta, on the other hand, was able to achieve $170 million in adjusted pre-tax income and be profitable for the entire second half of 2021 by cutting operating expenses by 19 percent.
The revenue and adjusted earnings per share of 22 cents were higher than expected. The company was on track for better results, but cancellations due to weather and COVID at the end of December hurt the bottom line.
Bastian predicted that the omicron variant would delay travel demand recovery by 60 days, resulting in operating losses in January and February before Delta returns to profitability in March. Delta is expected to operate at between 83 and 85 percent of pre-pandemic capacity in the first quarter, with revenues returning to normal around 75 percent of the time.
Non-core and one-time items such as refinery revenue, government payroll assistance, and gains from accounting practices are not included in Delta’s figures.
