Cargo carriers are reaping the rewards of the coronavirus slowdown in air travel

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 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. 

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.

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