GlobalData : Cargo businesses could be the lifeline airline operators need with mentions of ‘cargo’ in earnings transcripts rising 18% in 2020, says GlobalData

01 Dec 2020
Cargo businesses could be the lifeline airline operators need with mentions of 'cargo' in earnings transcripts rising 18% in 2020, says GlobalData Posted in Travel & Tourism

Theonline shopping boom during theholiday season and theneedfor vaccine delivery couldhelp airliners mitigate losses inQ4 2020 via their cargobusiness. Infact, mentionsoftheword 'cargo' and related keywords have grown by around 18% in2020* as this emerged as a key discussion agenda intheearning transcriptsofairlineoperatorsworldwide, according to theFiling Analytics tool by GlobalData, a leading data and analytics company. Airlinecompanies may beable to use cargoservices as a risk-mitigation strategy amid volatile market conditions following COVID-19.

Rinaldo Pereira, Senior Analyst at GlobalData, notes: 'Thesecond wave ofCOVID-19 has further delayed travel recovery. Withgovernments pushing for thequick release ofhigh-efficacy vaccines, airlines withdelivery preparedness couldaid intransport to reduce losses, while keeping otherwise grounded aircraft functional.

'With61% ofconsumers surveyed by GlobalData noting they intended to stay home as much as possible amid thepandemic, airliners are having to look at alternative avenues to steady theship. Unlike peers Flybe, Virgin Australia and LATAM Airlines, which filed for bankruptcy this year, Korean Air was kept afloat by focusing attention on alternative revenue streams - such as its well established carriers business - leading to thecompany seeing operating profits for Q2 and Q3 despite sharp travel declines. Cargobusinessescouldbea bright spot for airlineoperatorsand help save them from thesame fate as their peers.'

It isn't just Korean Air - Lufthansa witnessed profits for its cargobusiness improve inQ3 (cargorevenue rose by around 4% inthefirst nine months of2020 compared to thesame period a year ago) and United Airlines saw cargorevenues grow by around 50% inQ3 2020 compared to Q3 2019.

*Until 19 November 2020