AA forecasts $800 Million revenue from cargo in 2014

[700UW]

American forecasts $800M revenue from cargo in 2014
American Airlines expects to report $800 million in revenue for cargo traffic this year. New international routes also offer new opportunities for cargo traffic. At Dallas-Fort Worth airport, American also handles perishable food such as salmon from Chile and mangoes from Peru. "What's great about these new airplanes is they have really good cargo capacity," said Joe Reedy, vice president of cargo sales at American, about Boeing 777s and 787s.
 
 
Fort Worth Star-Telegram (Texas) (7/4)

 

[CMH_GSE]

And they probably will have triple that in bag fees.
 
The cargo money is nice, but given what needs to be in place to collect it, fees are the better way to go.

 

[AANOTOK]

And they probably will have triple that in bag fees.
 
The cargo money is nice, but given what needs to be in place to collect it, fees are the better way to go.

Yes, let's go ahead and outsource cargo at LAX, MIA, DFW, ORD and JFK (the only stations we still have it in the system) and add more baggage fees. Sure fire way to preserve jobs I'd say!

 

[737823]

Yes, let's go ahead and outsource cargo at LAX, MIA, DFW, ORD and JFK (the only stations we still have it in the system) and add more baggage fees. Sure fire way to preserve jobs I'd say!

With the help of the IAM and a side letter of agreement from DL 141 United Airlines did just that in summer 2012. They even made changes to their baggage policy as well.

Josh

 

[700UW]

With the help of the IAM and a side letter of agreement from DL 141 United Airlines did just that in summer 2012. They even made changes to their baggage policy as well.

Josh

 

[AANOTOK]

It will definitely be on the chopping block when the negotiations for the JCBA begin.

 

[robbedagain]

Why do you constantly have to bash the flippin UNION josh   It is so flippin nerve wracking you come on to every dam thread and spread your anti union rhetoric garbage   The whole dam world knows it   Time to move on.   The IAM may have F..K in the UA and HA deals but I for one think they may things a helluva lot better with the TA at US   GET OVER THE ANTI UNION CRAP ON EVERY DAM THREAD   ITS OLD

 

[Rogallo]

But posting only PRO UNION CRAP is ok?

 

[robbedagain]

not saying it is    I may be pro union  but im not trying to turn every single thread into pro union or anti union

 

[FrugalFlyerv2.0]

Why do you constantly have to bash the flippin UNION josh   It is so flippin nerve wracking you come on to every dam thread and spread your anti union rhetoric garbage   The whole dam world knows it   Time to move on.   The IAM may have F..K in the UA and HA deals but I for one think they may things a helluva lot better with the TA at US   GET OVER THE ANTI UNION CRAP ON EVERY DAM THREAD   ITS OLD

 
1)  If it is true that the IAM did what Josh posted at UAL, then it isn't union bashing. 
2)  Also, I'm kind of curious what makes you think the IAM will do things a helluva lot better with the TA at US?

 

[WorldTraveler]

returning somewhat remotely to the topic at hand, several int'l airlines have warned that there is overcapacity not just in the passenger market but also in the air cargo sector of the business.

This from the WSJ today after Air France warned about lower earnings just a few weeks after LH did the same thing.

"The airline already was struggling with weakness in its cargo operations and Venezuela where the government has withheld funds from carriers and the currency has been devalued.

"Lufthansa, Air France-KLM's German rival, last month reduced its full-year earnings outlook by 33% to about €1 billion and said it would fail to meet a profit target for next year blaming pricing weakness, labor unrest, and a drag from its cargo operations. Lufthansa's Chief Executive Carsten Spohr is set to unveil new measures to improve profitability on Wednesday."

It is hard to believe that the industry issues including Venezuela debt and overcapacity in the passenger and cargo sectors won't affect AA.

 

[FrugalFlyerv2.0]

But isn't the economic situation in EU still much worse than USA? 
I'm not saying USA carriers won't be affected, but the EU & Eurozone are still a huge mess.

 

[WorldTraveler]

AF and LH both spoke about issues involving the Gulf carriers pulling down yields between Europe and Asia so yes they should be disproportionately affected.

But keep in mind that cargo doesn't care if it spends more time on a flight (ie a connection thru the Middle East).

If there is overcapacity in cargo because of either new US or Asian carrier capacity or because of the Gulf carriers, it will affect US carriers.

 

[eolesen]

$800M really isn't much to get excited about. Sure, it's a lot of zeroes, but do the math...

There are ~180 widebody flights between the two certificates, plus another ~70 operating with narrowbodies into markets where there's a demand for overnight freight.

$800M is entirely attainable if every widebody carries $11,000 in revenue freight, and each narrowbody carries $5,000.

Can't say that is a very lofty goal, guys. Sure, it's soaking up belly space that would otherwise go empty, but it certainly undercuts the old adage that "cargo pays the way" we hear so often...

 

[WorldTraveler]

AA/US carried $685 million in cargo revenue last year, slightly ahead of the year before.

So, $100M in additional cargo revenue is significant - but it is next to nothing compared with the increased labor costs and the reduction in RASM that could very easily sweep the industry if overcapacity becomes reality. $100 million is not even a rounding error on AA's total revenue but is actually about 1/4 of one percent.

Further, all of that forecast growth could become uneconomical if other carriers start pricing their belly capacity more aggressively.

The cargo business has been very cyclical over the past several years with a number of all cargo operations within passenger carrriers being ended only to be replaced by all cargo carriers and larger, more cargo capable aircraft like the 773 and 787 which increase the amount of available cargo capacity.

AA's desire to get a bigger piece of the cargo business comes up against other airlines, including in Asia where much of the world's cargo originates, who want to do the same thing.