Market Overview

E-commerce Drives 3Q Gains At Canada's Cargojet

Share:
E-commerce Drives 3Q Gains At Canada's Cargojet

Canadian overnight air cargo provider Cargojet [TSE: CGJTF] increased its third-quarter adjusted pretax earnings by 24% to $39.1 million compared to the same period in 2018, consistent with the nine-month growth rate.

Revenues, excluding fuel surcharges, increased 2.4% to $85.4 million, powered by a 5.5% increase in domestic network revenue based on strong e-commerce activity and a 33% gain in turnkey leasing of aircraft and operating services to other airlines, the company reported Monday (Nov. 4).

Cargojet primarily focuses on the domestic Canadian market with a network of 14 cities, which partially insulates it from some headwinds bringing down the international airfreight market this year. A major customer is Amazon.com, Inc. (NASDAQ: AMZN), which in August struck an agreement to eventually acquire 15% of Cargojet. It is similar to ownership arrangements it has with larger U.S. carriers, Atlas Air Worldwide Holdings and Air Transport Services Group.  Business is usually busiest in the fourth quarter due to holiday retail demand, although a significant portion of domestic network revenues come from guaranteed space and weight allocations.

However, Cargojet also provides aircraft to other airlines, with crew, maintenance and insurance (ACMI) included, between points in North America and flies scheduled charter routes for customers to a handful of international destinations with a fleet of 26 aircraft, all but two of which are Boeing 767s and 757s.

During the quarter, it began operating a new scheduled ACMI route between the U.S. and Mexico that is expected to boost revenue by about $11 million per year. Under the arrangement, Cargojet operates six flights per week with a dedicated Boeing 767-300 aircraft. 

The company's average amount of cargo carried per day grew 2.4% to 1.31 million pounds. Gross sales margin increased 12% to $29.8 million. On a nine-month basis, revenues increased 7.6% to $347 million.

Image Sourced from Pixabay

 

Related Articles (AMZN)

View Comments and Join the Discussion!

Posted-In: air cargo Canada Cargojet e-commerce FreightEarnings News General