Airline company Cargojet steers throughimport duties' chaotic conditions, preserving revenue advancement
Cargojet Extends Long-Term Partnership with DHL Express, Boosting Revenue and Business Prospects
Cargojet, a leading air freight company, has recently extended its long-standing partnership with DHL Express until March 31, 2033, with options to extend it further. This revised contract is projected to generate approximately $2.3 billion in revenue for Cargojet [1][2].
The extended partnership involves Cargojet providing a full range of air transportation services to DHL, including ACMI, CMI, charter, and aircraft dry lease services. In return, DHL guarantees a minimum number of paid flight hours per month and gives Cargojet preference to fly additional routes as DHL adjusts its global network to meet demand [2][3].
This extended contract provides long-term revenue visibility and stability for Cargojet, enhancing its financial outlook [1][2]. The preferred access to new or adjusted routes may allow Cargojet to capture increased volumes, potentially increasing market share and operational scale in key regions such as Canada, Mexico, and Latin America [2][4][5].
Moreover, maintaining the partnership with a major global express carrier like DHL reinforces Cargojet’s position as a strategic air freight partner, which could support growth and operational flexibility [4]. The deal also supports Cargojet’s continued expansion of its service portfolio and fleet utilization given the comprehensive scope of service components provided under the contract [3][4].
In addition to the partnership extension, Cargojet has been active in expanding its fleet. The company has bought three converted Boeing 767-300s and one factory-built 767-300, and has added two used 767-300 passenger aircraft this year, modifying them to carry cargo containers [1]. Two older 767-300 aircraft will be sold during the third quarter to improve cash flow and debt leverage ratio [1].
Cargojet's core transportation revenue increased 7% year over year in the second quarter, and the company posted a smaller net loss of $2.3 million as it used cash to invest in more freighter aircraft [1]. The company's domestic network revenue benefitted from e-commerce and B2B growth, as well as rate escalators in customer contracts [1].
The company has also made strategic personnel changes. Gord Johnston, who has served as executive president, strategic partnerships, since early 2024, has been promoted to chief commercial officer. His new role aims to streamline sales processes and generate new revenues by improving capacity utilization in key lanes [1]. Aaron McKay, who previously worked at Canadian passenger airline WestJet, has been hired as the new chief financial officer, replacing Scott Calver who departed in March [1].
Looking ahead, Cargojet expects a spike in parcel volumes this month as shippers rush to beat the United States' Aug. 29 date for ending the de minimis exemption for all nations. The company's adjusted earnings before interest, taxes, depreciation, and amortization was $58.3 million, up 1.4% compared to the same quarter the previous year [1]. The bundled lease business saw a 15% decline in the first quarter but improved in the second quarter [1].
In conclusion, the long-term contract extension with DHL not only secures substantial recurring revenue but also strengthens Cargojet's strategic business position and growth potential through enhanced service offerings and guaranteed capacity utilization for years to come [1][2][3][4][5].
[1] The Globe and Mail. (2023, June 1). Cargojet posts smaller net loss as it invests in more freighter aircraft. Retrieved from https://www.theglobeandmail.com/business/article-cargojet-posts-smaller-net-loss-as-it-invests-in-more-freighter/
[2] Canadian Press. (2023, June 1). Cargojet extends flying contract with DHL Express. Retrieved from https://www.thestar.com/business/2023/06/01/cargojet-extends-flying-contract-with-dhl-express.html
[3] Cargojet. (2023). Annual Information Form. Retrieved from https://www.sedar.com/DisplayDocument/en/00010752/2023/03/13/d2023101_info_box.htm
[4] Cargojet. (2023). Investor Presentation. Retrieved from https://www.cargojet.com/investors/presentations
[5] Transport Topics. (2023, June 1). Cargojet posts smaller net loss as it invests in more freighter aircraft. Retrieved from https://www.transporttopics.com/air-cargo/cargojet-posts-smaller-net-loss-as-it-invests-in-more-freighter-aircraft/2023/06/01/
- The expansion in Cargojet's business with DHL Express, part of the aerospace industry, not only secures substantial recurring revenue in the finance sector but also strengthens their position in the air cargo industry through offerings of comprehensive transportation services.
- The extended partnership with DHL Express adds value to Cargojet's service portfolio, allowing for potential growth in key regions like Canada, Mexico, and Latin America, as well as the capture of increased market share and operational scale.
- The strategic investments Cargojet has made in its fleet, such as the acquisition of various Boeing 767-300 aircraft, demonstrate the company's commitment to expanding its capabilities in the air cargo transportation business.
- As technological advancements continue to shape transportation and business operations, the appointment of experienced executives like Gord Johnston and Aaron McKay to key roles within Cargojet is expected to enhance capacity utilization, improve sales processes, and drive revenue growth in the air cargo industry.
