Delta Air Lines has reported a 17 percent year-on-year increase in cargo revenue for the first quarter of 2025, reaching US$208 million. The result, though a modest proportion of the airline’s US$14.2 billion total revenue, underscores the increasingly strategic role that cargo operations are playing within the airline’s broader financial and operational planning.
The cargo segment’s performance offers a relevant case study in the evolving role of bellyhold cargo in the financial architecture of passenger carriers, particularly as airlines recalibrate post-pandemic growth trajectories and adapt to geopolitical and environmental regulation pressures.
Rebalancing trade
The 17 percent uplift in cargo revenue—rising from US$178 million in Q1 2024 to US$208 million in Q1 2025—was delivered despite a backdrop of stabilised freight rates and slower-than-anticipated recovery in global trade volumes. Delta increased available seat miles (ASMs) by 4 percent year-over-year while reporting a marginal decline in load factor, indicating that cargo performance was not contingent on expanded passenger capacity alone.
Strategically, Delta’s network benefits from its positioning on high-value transpacific and transatlantic routes, where cargo uptake remains resilient. The Pacific region in particular saw a 16 percent increase in capacity, with air freight demand buoyed by stable volumes in sectors such as pharmaceuticals, electronics, aerospace components, and cross-border e-commerce. These are high-yield segments where reliable belly capacity provides a competitive advantage over integrators and chartered freighters.
Margin efficiency
Delta’s cargo operations have likely benefitted from improved unit economics, owing in part to a year-on-year reduction in adjusted fuel prices (down 11 percent to US$2.45 per gallon). While Delta does not disclose cargo yield metrics separately, the overall 3.3 percent rise in adjusted operating revenue (excluding refinery sales) suggests margin stability. With air cargo margins traditionally thinner than passenger revenues, the ability to generate double-digit growth in this segment reflects disciplined operational management and improved asset utilisation.
Importantly, Delta also generated US$1.3 billion in free cash flow during Q1, even after gross capital expenditures of US$1.2 billion, reinforcing its financial flexibility. Investment in new-generation widebody aircraft such as the A330-900 and A350-900—both of which offer enhanced lower-deck cargo capacity—aligns not only with long-term sustainability objectives, but also with increasing the profitability of bellyhold operations.
Capacity strategy
A key announcement in Delta’s Q1 report was its decision to moderate capacity growth for the second half of 2025, aiming for flat year-on-year output. This strategy signals a pivot from volume expansion to yield optimisation—a move that may favour bellyhold operations where marginal capacity can be monetised without the fixed cost overheads of dedicated freighters.
From a sustainability standpoint, this fleet modernisation supports Delta’s longer-term emissions reduction targets, especially under increasing regulatory scrutiny in both the US and the European Union. Integrating cargo into the airline’s environmental, social, and governance (ESG) framework also reflects broader industry trends, as regulators and investors seek more granular disclosures on cargo-related emissions and SAF adoption across airline portfolios.
Sector outlook
Speaking to the broader performance of the airline, Delta President Glen Hauenstein highlighted the contribution of diversified income streams by stating that, “Diverse, high-margin revenue streams showed resilience, improving over prior year and approaching 60 percent of total revenue. This underpins our ability to stay agile amid economic uncertainty.”
On the cost performance and outlook towards this milestone, financial markets have echoed this sentiment post Delta’s financial report release.
“Our teams ran a strong operation despite challenging weather at the start of the year, enabling us to drive efficiency and deliver non-fuel unit cost growth of up 2.6 percent over prior year. This was better than our initial expectation and a sequential improvement from the end of 2024,” Dan Janki, Delta’s chief financial officer, added. “As we reduce capacity growth, we are taking incremental action to manage costs. We expect non-fuel unit cost growth consistent with our long-term target of up low-single digits in the second quarter and through the rest of the year.”
This repositioning of air cargo within the airline’s income mix also comes at a time when major global carriers are reconsidering the cost-benefit equation of operating freighter fleets versus optimising bellyhold capacity. For US and EU regulators, this trend may prompt further reflection on slot allocation, customs efficiency, and SAF infrastructure planning at mixed-use terminals.
