Air cargo company, Cargojet, manages through tariff upheaval, sustaining revenue increase
Cargojet Extends Strategic Partnership with DHL Express, Securing Significant Revenue and Growth
Cargojet, a leading air cargo carrier in North America, has announced a long-term extension of its flying contract with DHL Express. The revised contract, which runs until March 31, 2033, is projected to generate $2.3 billion in revenue for Cargojet and guarantees DHL a minimum number of paid flight hours monthly while giving Cargojet preferential rights to fly additional routes as DHL adjusts its global network.
The extended partnership secures Cargojet’s role as a key strategic partner in DHL’s express package network, spanning deliveries into Canada, Mexico, and Latin America, using Cargojet’s fleet of over 40 Boeing 767 and 757 freighters. The deal also includes a reduction in DHL’s potential ownership stake in Cargojet from 9.5% to 6.6% in exchange for renewing the contract early.
The implications for Cargojet's revenue and growth are significant. The contract guarantees a stable and substantial revenue stream of $2.3 billion over the term, supporting Cargojet’s financial stability and investment plans. The minimum monthly paid flight hours and the right of first refusal on new routes provide operational certainty and growth opportunities aligned with DHL’s global network changes.
Moreover, the renewal motivates DHL to increase volume with Cargojet, as the revised warrants incentivize Cargojet to prioritize scaling its business with DHL. This strategic partnership strengthens Cargojet’s market position in e-commerce and freight logistics, valued for its high on-time performance and operational flexibility, thus laying a foundation for long-term growth amid macroeconomic challenges.
In the financial realm, Cargojet posted a smaller net loss of $2.3 million, using cash to invest in more freighter aircraft. 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. Cargojet's domestic network revenue benefitted from e-commerce and B2B growth, as well as rate escalators in customer contracts. As a result, Cargojet's core transportation revenue increased 7% year over year in the second quarter.
In addition to the DHL partnership, Cargojet has been actively expanding its fleet. The company has recently bought three converted Boeing 767-300s and one factory-built 767-300, and added two used 767-300 passenger aircraft this year, which were modified to carry cargo containers. A third 767-300 aircraft is currently under conversion and is expected to be delivered in the fourth quarter.
To further streamline sales processes and generate new revenues, Gord Johnston, who has served as executive president, strategic partnerships, since early 2024, has been promoted to chief commercial officer. Aaron McKay, previously from Canadian passenger airline WestJet, has been hired as Cargojet’s new chief financial officer, replacing Scott Calver who departed in March.
Despite a 15% decline in the bundled lease business in the first quarter and a 2.4% decrease in domestic revenues due to economic uncertainty from trade tensions with the United States, Cargojet’s strategic moves are poised to position the company for continued growth and success in the competitive air cargo industry.
[1] Cargojet News Release, [Link to news release] [2] DHL News Release, [Link to news release] [3] Air Cargo World, [Link to article] [4] Air Cargo News, [Link to article] [5] FreightWaves, [Link to article]
- The long-term extension of Cargojet's flying contract with DHL Express, valued at $2.3 billion, secures a significant revenue stream for Cargojet in the air cargo business.
- The strategic partnership between Cargojet and DHL has fostered growth opportunities in the finance sector through investments in freighter aircraft, strengthening Cargojet's financial stability and future expansion plans.
