Close up of a white plane with blue United lettering.

(Updated 11:45 P.M. ET with Kirby comments)

Lost in the news that United Airlines’ $942 million third-quarter profit and guidance for positive travel trends the next three months sent shares higher Thursday was the continued strong performance of the cargo division amid weakening market conditions for shipping.

United Cargo generated $498 million in revenue, a 4% dip from the same period in 2021 but 76% above the pre-pandemic level in 2019. That the sales drop-off was so minimal is noteworthy since last year was a record for the air cargo industry overall, the market has been in a slump since March and United’s $519 million revenue a year ago was an all-time best for the third quarter. 

And United outperformed the overall market, which has fallen off by 5% to 9% year-over-year depending on the month and data provider.

For the first nine months of 2022, United (NASDAQ: UAL) pulled in $1.7 billion in cargo revenue, $77 million more than during the same period a year ago and nearly double the 2019 take.

Peer Delta Air Lines (NYSE: DAL) last week reported cargo revenue of $240 million, down 8.4% from a year ago and a 27% improvement from 2019. Year-to-date revenue was $840 million, less than half that of United.

The airfreight market has been slowing from last year’s peak because inflation has curbed goods demand, and large companies preshipped goods far ahead of the holiday season to avoid potential supply chain bottlenecks. Global economic growth, industrial production and exports are also slowing. 

Airlines benefitted from record yields the past two years, but rates have dropped significantly this year. According to the Baltic Air Index, global spot rates were down an average of 27.7% in early October compared to a year ago. United has much more of its widebody fleet in the air this year, indicating that sustained revenue performance in cargo is due to flying more volume. 

United shows financial health

United quarterly operating revenue improved 13.2% versus 2019 to $12.9 billion. Adjusted earnings per share of $2.81 and the revenue results beat consensus estimates by a wide margin. Cost controls helped the carrier to an 11.5% adjusted operating margin.

United said it expects consumers’ unabated hunger to travel to override inflationary pressures and a potential recession in the months ahead. It predicted its first fourth-quarter profit since 2019. 

Airlines have several favorable trends boosting the passenger side of the business, United said. Air travel is still in the COVID-19 recovery phase, hybrid work gives customers the freedom and flexibility to travel for leisure more often and capacity will be constrained by slow aircraft production related to supply chain delays, giving airlines pricing power.

“We believe that a new and durable trend is becoming evident in travel demand – hybrid work gives people the flexibility to make any weekend a three or four-day weekend by working remotely for a day or two,” CEO Scott Kirby said in a LinkedIn post. “That’s leading to much higher demand during traditionally off-peak travel periods – September was the third highest RASM (revenue per available seat mile) month in our history and October is even stronger. This isn’t pent up demand, it’s the new normal that hybrid work allows.”

United shares lifted 7% in after-hours trading Tuesday.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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