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Delta cargo continues to decline

ATLANTA: Delta Air Lines has reported third quarter net income of US$1.4 billion on revenue of US$11.1 billion, an increase of 45 percent over the same period last year. However cargo revenue fell 19.7 percent during the period to US$196 million – echoing a downward trend for the year following a second quarter drop of 10 percent to US$207 million and a first quarter result of US$217 million.

Delta cargo palletBased on results to date, the airline appears unlikely to reach US$1 billion in freight and mail revenue this year – a figure reported back in 2012 under former cargo head Neel Shah.

Delta said the US$1.4 billion of free cash flow generated during the third quarter was used to pay US$450 million for a 3.5 percent stake in China Eastern; and return US$532 million to investors as it reduced adjusted net debt to US$6.4 billion.

Commenting on the Delta passenger results, Delta CEO Richard Anderson cited a combination of continued passenger demand and lower fuel costs for the airline's record third quarter.

"We expect that strong performance to continue in the December quarter with operating margins of 16 to 18 percent and over 40 percent earnings per share growth," he said. "It's an honor to recognize the hard work of 80,000 outstanding Delta employees with over US$1 billion of profit sharing accrued so far this year."

Suggesting shippers are always prepared to pay more for the right level of service, in another part of Atlanta UPS announced it would implement a 4.9-5.2 percent increase in various ground, international and freight rates between October and December this year. The company said it would also begin charging for third-party billing in January 2016 in response to "increased costs, changing demand for select UPS products and other market factors".

Compared to Delta, for the six months ending June 30, UPS generated a 12 percent earnings-per-share increase compared to the same quarter in 2014 on revenue of US$14 billion, and US$3.3 billion in free cash flow. The company paid dividends of US$1.3 billion and repurchased 13.5 million shares for approximately US$1.4 billion.

UPS will announce its third quarter results on October 27.

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