Wednesday, October 24, 2012
Delta air cargo business tops U.S. rivals
Delta is beating its air cargo rivals, with cargo creating $1 billion in yearly sales and profit margins of 50 percent as goods are flown on planes along with fare-paying passengers.
The company created a bigger market and a better on-time record after the completion of the 2008 merger with Northwest Airlines. Now, Delta is expanding its cargo share while United Continental Holdings deals with its own merger and American Airlines (parent AMR Corp) deals with bankruptcy reorganization.
"People underestimate the benefit of Delta having integration behind them," said Savanthi Syth, an analyst with Raymond James and Associates. "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 stock increased 25 percent in 2012, closing yesterday at $10.14. Delivery giant FedEx gained 9.5 percent in the same period, and UPS dropped 2.2 percent.
"We have definitely outpaced our peers," Chief Cargo Officer Tony Charaf said in an interview with Bloomberg.
Bloomberg analysts project Delta's third-quarter net income will jump 44 percent while United's could drop by 12 percent.
For more of the Bloomberg story: bloomberg.com
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