Not all airlines are reeling from the coronavirus pandemic. Cargo carriers 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 gained 8.6% and have gained 50% 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% interim 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 fell slightly Thursday but is up more than 17% 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 28% since the end of March, Delta is off 24%, Southwest has fallen 28% and American is down 22%.
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.Â
Cargo airlines aren't totally out of the woods. A sharp rise in unemployment and economic weakness as a whole are headwinds to any growth in cargo volume. Atlas pulled its full-year 2020 guidance as a result of the murky picture.