Delta Air Lines Inc. (DAL), bucking an industry slump in cargo shipments, is packing more auto parts, mail and salmon into the bellies of its passenger jets to beat its largest U.S. competitors.
Delta is on a five-month streak of gains in cargo traffic, bolstering the bottom line ahead of tomorrow’s quarterly earnings report. The cargo operations produce $1 billion in annual sales and profit margins that have topped 50 percent because goods are flown on jets with fare-paying passengers.
The second-biggest carrier is jumping ahead of peers with a wider network after the 2008 purchase of Northwest Airlines, new markets and improved on-time performance. With the merger done, Delta is expanding in cargo while United Continental Holdings Inc. (UAL) finishes its own merger integration and American Airlines parent AMR Corp. (AAMRQ) reorganizes in bankruptcy court.
“People underestimate the benefit of Delta having integration behind them,” said Savanthi Syth, a Raymond James & Associates Inc. analyst in St. Petersburg, Florida. “United is still trying to combine networks and cargo space tends to be one of the last things that gets optimized. And American has been so focused on their bankruptcy.”
Delta surpassed United, the world’s biggest airline, in cargo tonnage in July as the Chicago-based carrier meshes former United parent UAL Corp. and Continental Airlines Inc. The Atlanta-based carrier’s cargo rose 1.1 percent through September while United’s fell 6.4 percent and American’s slid 1.2 percent.