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Delta Airlines’ cargo revenue dropped 37% to $189 million in the third quarter and year-to-date is off 13% to $567 million compared to the same period last year due to lower volumes and yield, the company reported Thursday.

Delta [NYSE: DAL] is a victim of a weakening air cargo market that has seen a steady drop in volumes since the end of 2018. Yesterday, American Airlines said it expected cargo revenue to fall 16% in the third quarter when it reports later this month.

Overall, however, Delta’s October 10 earnings were positive, depicting a company that continues to spin off profit and returns to shareholders. Net income for the quarter grew 13% to $1.5 billion, with adjusted pre-tax income up 22% and adjusted earnings per share up 29% to $2.32, pushing profit margin up 2.5 points to 16.5%.

The Atlanta, Georgia-based airline said operating revenue, excluding sales from its refinery, improved 6.5%, or $771 million, to a quarterly record of $12.6 billion for the quarter ended Sept. 30 on the strength of premium passenger tickets, loyalty programs and third-party maintenance service. Premium products and non-ticket sources, such as its amended credit card arrangement with American Express and aircraft maintenance for other carriers, now compromise 52% of Delta’s total revenue.

Consolidated operating costs decreased 2.1%, primarily due to lower fuel costs and higher capacity. Excluding fuel, operating costs on a per-seat basis increased 2.4%, or $345 million, compared to the prior year, because of higher profit sharing expenses, overtime costs to accommodate record passenger volumes and weather-related delays, including Hurricane Dorian. The company also spent $150 million toward to help LATAM Airlines gain regulatory approval for their new strategic partnership, announced in September. 

Adjusted fuel expense declined 10%, or $249 million. Delta paid $1.96 per gallon, benefitting in part from its own jet fuel refinery operation in New Jersey. 

Delta generated $2.2 billion of operating cash flow and $1.4 billion of free cash flow during the quarter after the investment of $814 million primarily for aircraft purchases and improvements. Year to date, the company has generated $7.5 billion of operating cash flow and $4.0 billion of free cash flow.

Delta continues to be a leader in operational execution, with 202 days of zero mainline cancellations and 115 days of zero system cancellations through the first nine months of the year, an improvement of 12% and 19% respectively compared to 2018. 

It carried 55.2 million passengers in the quarter, 6% more than the year-ago period.

The Air Line Pilots Association, which represents Delta pilots, said it hopes members are rewarded for their role in Delta’s profitability during current contract negotiations, adding that an estimated 900 additional pilots are needed to meet next summer’s projected passenger volumes.