American Airlines (NASDAQ: AAL), unlike its peers, didn’t experience a bump in cargo business during the peak shipping season that ended in mid-December.
Cargo revenue was $199 million during the fourth quarter, a 24.2% decline from the same period in 2022, the Fort Worth, Texas-based carrier said in its earnings report released Thursday.
The sales total was only $6 million more than during the third quarter and $2 million above second-quarter receipts for what is normally the busiest and most profitable period for the air logistics sector as companies rush goods to stores for the holiday shopping season and to meet year-end financial targets. In fact, American Airlines’ highest quarterly revenue in 2023 was during the first quarter.
American collected $812 million in cargo revenue for the full year, down 34% year over year.
It said cargo-ton-miles, a measure of cargo volume by distance transported, increased 9.5% during the quarter to 501 million. That indicates the top-line number was hurt by lower rates even though American was able to operate with more aircraft as it restored more international service following the COVID crisis. American said in its filing that unit yield fell 31% to just under 40 cents. Full-year yield decreased 29% to 44 cents.
Results were roughly on par with the airline’s primary competitors: United Airlines and Delta Air Lines.
Delta (NYSE: DAL) reported cargo revenue slid 24% to $188 million for the fourth quarter. For the year, Delta Cargo recorded $723 million in revenue, down 31% year over year. United (NASDAQ: UAL) was the best performer among the big U.S. international carriers, with cargo revenue shrinking 14.8% to $402 million during the fourth quarter. Cargo revenue for the full year was $1.5 billion, down 31%. United’s cargo-ton-miles increased 16.9% during the fourth quarter.
Demand for air shipping service turned positive in September for the first time in nearly 18 months and continued to increase through the end of the year, culminating in 9% growth year over year in December. High inflation, more consumer spending on services, the end of supply chain bottlenecks and an overhang in retail inventories kept air cargo volumes in contraction territory for most of 2023. A burst in e-commerce orders from China and new releases of electronic gadgets fueled the late surge in air shipments. Analysts estimate air cargo volumes for 2023 will register 3.5% less than in 2022.
Overall, American Airlines finished the year with lower profits of $19 million compared to $803 million a year earlier. Factoring out one-time charges for implementing a new contract with mainline pilots and taxes related to debt extinguishment, American had a profit of $192 million. The company had forecast it would break even in the fourth quarter.
American said revenue dipped 1% to $13 billion, with strong international passenger demand offsetting a slowdown on the passenger side and fueling its profit guidance for 2024.
Click here for more FreightWaves/American Shipper articles by Eric Kulisch.
Contact reporter: ekulisch@freightwaves.com
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