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.
S3studio | Getty Images
Not all airlines are reeling from the coronavirus pandemic. Cargo airlines are cashing in on 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 says.
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 from 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 are up 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 for higher pay.
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. 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 is down 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.