Cargojet sees Q3 revenues improve on e-commerce demand

By Damian Brett

Cargojet Inc saw revenues and operating profits improve in the third quarter of the year on the back of increased demand for freighter services and growing e-commerce volumes.

The Canada-based aircraft lessor reported a 38.2% year-on-year increase in third-quarter revenues to C$162.3m, while adjusted earnings before interest, tax, depreciation and amortisation (ebitda) were up 99.7% to C$78.1m.

However the company reported a loss of C$20.4m against a profit of C$11.8m as a result of a C$47.2m loss on fair value adjustment of stock warrant obligation. It also continued to pay down debts.

On the improved revenues and ebitda, the company said that it benefitted from a C$11.7m increase in domestic network revenues, a C$21.1m increase in ACMI revenues and a $18m increase in all-in charter revenues.

Its domestic network benefited from an increase in e-commerce volumes during the period, but was partially offset by a significant decrease in B-2-B volumes, both as a result of the Covid-19 pandemic.

The e-commerce volumes continued to be significantly higher than previous years while the B2B volumes improved during the quarter and were similar to prior  year volumes by end of the quarter as more businesses started to reopen.

The improved ACMI scheduled and ad hoc charter revenues came as new scheduled routes to the US and Mexico started in September 2019 and two new scheduled routes to Europe started in April to replace passenger belly cargo capacity that disappeared as a result of passenger airlines cutting back capacity and flying. Another route to the US and Mexico was added at the end of September.

All-in scheduled and ad hoc charter revenues were boosted by international relief charters for the federal and some provincial governments of Canada flying PPE and other medical supplies from China and Turkey.

Ajay Virmani, president chief executive, said: “There is no doubt that Cargojet’s Domestic Overnight Network continues to benefit from the elevated levels of e-Commerce, but we are equally focused on ensuring that we are building strong long-term growth in our ACMI and Charter businesses. We are also continuing to invest in growth opportunities while prudently strengthening our balance sheet with an overall reduction of C$92m in net-debt on a year-to-date basis.”

“Although we have been operating at near peak level volumes for the past two quarters, it is vitally important that we do everything we can to support our customers during the upcoming holiday season. As a result, we are deploying additional resources all across our network to ensure that we play our part in delivering a successful holiday season for all our customers.

“We are closely monitoring the changing shopping habits and shipping trends in the domestic and international markets and spending the necessary time to understand and adapt to the new dynamics. While we face some uncertain climate in the near future, we believe the key to success will be resilience and adaptability.”

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