Cargojet sees revenues soar but losses deepen
07 / 03 / 2016
Cargojet’s revenues saw double-digit growth in 2015 thanks to its Canada Post contract win, but this wasn’t enough to stop the airline recording a full-year loss.
The Canadian airline recorded a 50.2% year-on-year increase in 2015 revenues to C$289m, while earnings before interest, tax, depreciation and amortisation (ebitda) jumped by 552.8% on 2014 to C$34.6m.
As well as the Canada Post contract, it also benefited from higher fuel surcharges and increases in charter revenues.
However, this was not enough to turnaround losses and the airline recorded a C$18m loss compared with a C$9.5m loss in 2014.
The year was described as “transformational” by president and chief executive Ajay Virmani as it added 14 new aircraft to its fleet in response to the Canada Post contract win and strong demand from existing customers on domestic network and charter market services.
Full-time and part-time employees increased from less than 400 at the start of 2014 to over 700 in 2015 and the total aircraft fleet grew from 16 to 23 aircraft.
The company said it had managed to reduce costs in the second half of the year and as a result its loss for the final three months was C$1.5m compared with C$5m last year.
“During the latter half of the year, the company identified opportunities to significantly reduce operating costs by realigning capacity to more closely match overall customer demand,” it said.
“This included working closely with all customers to reach consensus on a refined overnight network that met all individual customer requirements.
“These changes to the company’s route and cost structures were successfully implemented by the end of the fourth quarter of 2015 achieving a 17% reduction in network block hours.”
Although it did not provide details on its bottom line performance, it said its ebitda was positively affected by the increase in core overnight volumes of existing customers, the full service start-up of the Canada Post contract on April 1, an increase in ACMI revenues and higher charter activities and an increase in fuel surcharges due to higher block hours.
Ebitda was negatively affected by: higher operating costs due to higher block hours and increase in fleet size required by the Canada Post contract, exchange rate effects on US dollar expenditures and the increase in one time Canada Post contract start-up costs, such as aircraft leases and additional payroll and training of crew, maintenance and commercial staff.