U.S. Markets open in 4 hrs 14 mins
  • S&P Futures

    4,704.00
    +2.50 (+0.05%)
     
  • Dow Futures

    35,830.00
    +19.00 (+0.05%)
     
  • Nasdaq Futures

    16,494.75
    +13.50 (+0.08%)
     
  • Russell 2000 Futures

    2,365.40
    +1.20 (+0.05%)
     
  • Gold

    1,861.20
    -0.20 (-0.01%)
     
  • Silver

    24.88
    -0.02 (-0.08%)
     
  • EUR/USD

    1.1369
    -0.0006 (-0.0568%)
     
  • 10-Yr Bond

    1.5890
    -0.0150 (-0.94%)
     
  • Vix

    17.59
    +0.48 (+2.81%)
     
  • GBP/USD

    1.3497
    -0.0003 (-0.0216%)
     
  • USD/JPY

    114.3040
    +0.0520 (+0.0455%)
     
  • BTC-USD

    56,967.16
    +2,561.52 (+4.71%)
     
  • CMC Crypto 200

    1,402.14
    -65.80 (-4.48%)
     
  • FTSE 100

    7,255.96
    -35.24 (-0.48%)
     
  • Nikkei 225

    29,683.09
    +84.43 (+0.29%)
     
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

American Airlines' Q3 Cargo Yields Double From Pre-Crisis Levels

·2 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

American Airlines turned a small profit for the first time since the pandemic began during the third quarter with the help of a 62% gain in cargo revenue compared to 2019, the company reported Thursday.

Revenue from cargo shipments reached $332 million for the quarter. American Airlines (NASDAQ: AAL) notably offered comparisons to 2020, but most airlines are using 2019 as their benchmark because 2020 was an extreme outlier due to the global shutdown of most travel for several months. Using the 2019 financial results shows that American's revenue jumped 62%. For the first nine months of the year, cargo revenue grew 50% to $973 million.

American, like its competitors, is benefiting from remarkably strong demand for air cargo shipments that coincide with extreme ocean shipping delays and low inventories, coupled with a shortage of capacity, that have combined to drive cargo rates to all-time highs in many regions. That is why the carrier moved less cargo but made more money than in 2019.

Cargo ton-miles, which measures the revenue from the number of tons flown times the distance, actually dropped about 18.5% to 510 million. But cargo yield nearly doubled to 65 cents per ton-mile. 

American's cargo division is in the middle of the pack among its U.S. peers with major international operations. United Airlines (NASDAQ: UAL) led the way during the third quarter with $519 million in cargo revenue, up 84% over 2019, and $1.6 billion in cargo revenue for the first nine months. Delta Air Lines' (NYSE: DAL) cargo revenue grew 39% to $262 million and through three quarters stood at $728 million.

Overall, Fort Worth, Texas-based American posted $8.9 billion in revenue with an absolute profit of $169 million. But take away one-time payroll support from the federal government to maintain the workforce during COVID, plus other one-time events, and the carrier had a $641 million loss — albeit less than in recent quarters.

Expenses are growing compared to 2020 (up 38.5%), but that is to be expected as airlines heavily ramp up operations as travel demand recovers. The company burned $2 billion in cash in the quarter. It has $18 billion in liquidity and recently said it plans to pay down $15 billion in debt by 2025.

Business traffic at American increased during the summer, then slid back when the COVID delta variant took hold in August. Echoing other U.S. airlines, management predicted a strong holiday season but suggested the fourth quarter could be financially challenging because demand is softening for nonpeak periods and fuel costs are rapidly rising.

CEO Doug Parker said that airline profitability depends on the return of business travel, a huge profit center for the industry.

United reported an adjusted loss of $300 million and Delta eked out an adjusted profit of $216 million.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

RECOMMENDED READING:

United Airlines makes more cargo revenue with less cargo

Airline group says air cargo grew 7.7% in August

Pandemic taught passenger airlines lesson about the value of freight

Image Sourced from Pixabay

See more from Benzinga

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.