The prospects of air freight returning to some sort of normality seem to be improving. The latest numbers from Delta Airlines seem to tip the balance towards the more optimistic forecasts for air transportation growth.
Publishing the company’s second-quarter results, Ed Bastian, Delta’s Chief Executive Officer said, “Domestic leisure travel is fully recovered to 2019 levels and there are encouraging signs of improvement in business and international travel. With the recovery picking up steam, we are making investments to support our industry-leading operation. We are also opportunistically acquiring aircraft and creating upside flexibility to accelerate our capacity restoration in 2022 and beyond in a capital-disciplined manner”.
Looking at Delta’s financial numbers, it seems that revenue is still half that of 2019 but revenue is up 45% on the first quarter of 2021, with “adjusted operating revenue” up 76% and load factors up “24 points” quarter-on-quarter. The company is still loss-making however, with a pre-tax loss of $881m not including the “$1.5bn of benefit related to the first and second payroll support programme extensions”. Delta is also in the process of expanding its fleet by 61 aircraft, with these planes entering service through 2022.
At the same time, the Federal Aviation Authority has extended permissions for passenger aircraft to carry freight inside the cabin when the aircraft is not being used for passenger operations. These adaptions do not make a huge difference to the market, none-the-less in conditions of tight supply their withdrawal would be noticed.
The clear indication from the Delta numbers is that US passenger demand is recovering and therefore the availability of belly freight ought to be improving as well. The US consumer economy has been strengthening for several quarters, however, airlines were perceived as one of the most vulnerable sectors. Although conditions vary around the world, it seems that in parts of the global economy the availability of airfreight capacity may bounce back more quickly than anticipated. This ought to have strong implications for prices and supply.
Source: Transport Intelligence, July 15, 2021
Author: Thomas Cullen
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