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Air Cargo Growth In Line

U.S. airlines are expected to report $2 billion to $3 billion profits for 2006, according to the Air Transport Association of America (ATA). While cargo remains a small part of that, both the International Air Transport Association (IATA) and ATA reported freight traffic was on the rise.

Calling the November 2006 growth rate of 3.1% for international freight traffic “sluggish,” IATA indicated that year-to-date freight traffic rose by 4.8% for the 11 months of 2006.

Looking forward, the ATA suggested 2007 shows promise, but the challenge facing airlines will be achieving meaningful and sustainable profits.

AMR Corp., parent of American Airlines, reported a net profit of $231 million in the fourth quarter, its third consecutive profitable quarter. Cargo revenues for the three months ended December 31, 2006 were $222 million, up 5.2% over the prior-year period. This was based on an increase of 1.9% in cargo ton miles. For the full year, Cargo revenues were up 5.5% to $827 million on volumes (cargo ton miles), which increased only 0.7% over 2005.

Though it had not yet reported full-year results, Continental Airlines indicated a December consolidated load factor of 79.5, up 1.8 points over December 2005. Cargo revenue ton miles were up 2.8% for the month and 5.5% for the year. Still, analysts expected Continental to report a fourth quarter loss but they look for the airline to have a strong 2007.

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