Cargo carriers reap rewards of coronavirus chaos

- Advertisement -
KEY POINTS
  • Two cargo carriers are surging, while their passenger-focused counterparts reel from the coronavirus.
  • Grounded passenger jets around the world have meant less belly cargo space, a boon for cargo airlines.
  • ATSG and Atlas Air shares have soared on revenue increases and higher rates.
- Advertisement -
- Advertisement -
- Advertisement -
A Boeing 747 cargo freighter belonging to the Atlas Air flies into the clouds after lifting off from Hong Kong International Airport, on 23 October 2017, in Hong Kong, Hong Kong.
A Boeing 747 cargo freighter belonging to the Atlas Air flies into the clouds after lifting off from Hong Kong International Airport, on 23 October 2017, in Hong Kong, Hong Kong.

Not all airlines are reeling from the coronavirus pandemic. Cargo airlines are cashing in on the rush for medical supplies and other goods, marking a reversal of fortunes for the sector on the heels of its worst year in a decade.

As passenger demand plunged while Covid-19 spread around the globe, airlines have stored about two-thirds of the world’s fleet of about 26,000 planes through mid-April, according to U.K.-based aviation consulting firm Ascend by Cirium.

That meant a crunch for space because passenger planes routinely carry everything from mail to fresh food to pharmaceuticals in aircraft bellies.

Air freight volumes worldwide dropped by more than 15% in March from a year earlier, but capacity dropped 23%, the International Air Transport Association said.

Some cargo carriers are reaping the benefits.

Atlas Air Worldwide Holdings on Thursday said it swung to a $23.4 million profit in the first quarter from a loss of nearly $30 million in the same period a year ago. Executives were upbeat about strong demand in the second quarter. Shares of the cargo airline that flies for Amazon and others were up by about 6% in midday trading and have risen by about 47% in the second quarter.

The company said in a statement that it expects adjusted net income in the second quarter to rise as much as 50% from the first quarter. It also announced an agreement with its pilots for 10% pay increases, after a protracted battle with their labor union.

Air Transport Services Group, another Amazon contractor that also offers passenger charters, on Tuesday reported a nearly 12% increase in revenue in the first quarter from a year earlier. ATSG posted net income of $133.7 million for the first quarter, compared with $22.6 million in the first three months of 2019, according to FactSet. Its stock was slightly down Thursday but up by about 16% in the second quarter so far.

The results are a stark contrast to the four biggest U.S. passenger airlines, which last month posted their first quarterly losses in years as U.S. travel demand dropped more than 90%, a result of the virus and measures to keep it at bay, like shelter-in-place orders.

United’s stock is down by about 25% since the end of March, Delta is off 23%, Southwest has fallen 28% and American is down about 21%.

Those airlines, however, have quickly moved to operate cargo-only flights facing a dearth of passengers. American, for example, seeing a strong demand for medical supplies, in March flew its first scheduled flight carrying only cargo since 1984.

Home of Science
Follow me

Latest posts by Home of Science (see all)
- Advertisement -

Discover

Sponsor

Latest

“The Last Kaleidoscope” (Kalamazoo) Movie Review

"The Last Kaleidoscope" is a sequel to the 2020 film "The Secret Life of Bees." It stars Aziz Ansari as Khalid, an Arab immigrant...

Fed Warns of Significant Financial-Sector Vulnerabilities

The Federal Reserve put a spotlight on job losses and risks to the financial sector in its semi-annual report to Congress released Friday. “Despite increased...

Gaming companies are looking like a coronavirus-proof investment. Here are the stocks to play, top fund managers say

People around the world are turning to fan-favorite games like Assassin’s Creed and Prince of Persia to pass the time during lockdown, firmly placing...

Making masks at home – what you need to know about how to reduce the transmission of coronavirus

The recent Centers for Disease Control and Prevention recommendation to use cloth face coverings to help slow the spread of COVID-19 has generated numerous how-to articles...

Understanding Mesothelioma Causes

Some people have the misconception that mesothelioma causes are limited to the overall machinations of a person's respiratory system. Some people think this is...
Home of Science
Follow me
Latest posts by Home of Science (see all)