Thursday, November 16, 2017

Hurricane-related charters, ACMI revenues lift Cargojet 3Q profits

A surge in Caribbean hurricane-related ad hoc charters, combined with ACMI revenue related to the April opening of a new US route, lifted Canadian scheduled air freight carrier Cargojet’s third-quarter net profit to C$5.6 million ($4.5 million), reversed from its C$3.9 million net loss in 3Q 2016.

Cargojet operations include domestic air cargo services for a number of international airlines between points in Canada that connect such airlines’ gateways to Canada. The company also provides dedicated aircraft to customers on an aircraft, crew, maintenance and insurance (ACMI) basis operating between points in Canada and the US, as well as scheduled international air cargo routes between Canada and Colombia, Mexico and Peru; a scheduled weekly flight between Canada and Frankfurt, Germany; and 5X-weekly air cargo service between Newark, New Jersey and Hamilton, Bermuda. The airline also provides specialty charter service across North America to the Caribbean and Europe.

On April 23, Cargojet began operating a new scheduled ACMI route between Canada and the US under a three-year contract. Under this contract, Cargojet operates 6X-weekly flights with a dedicated 767-300 aircraft.

The carrier’s 11% year-over-year (YOY) rise to C$89.4 million in revenue during the quarter was driven by increases in core overnight revenues, ACMI revenues, all-in charter revenues and fuel surcharges and other cost pass-through revenues.

Cargojet’s third-quarter expenses were up 8% YOY to C$64.7 million, attributable primarily to increases in fuel costs, aircraft depreciation and rising maintenance expenses.

“The company experienced growth over all revenue streams [during 3Q 2016, and] … anticipates that revenues will continue to sustain growth [with] the continued development and strengthening of its relationships with existing customers and establishing new relationships with national and international carriers to establish new ACMI routes to the US and south America and ad hoc charters,” Cargojet management said in a statement Nov. 13.

As of Sept. 30, Cargojet’s in-service fleet totaled 20 aircraft, comprised of five finance-leased and three owned Boeing 767-300s; one 767-200 under operating lease; four owned and two finance-leased 757-200s; three owned 727-200s and two Challenger 601s converted for cargo operations.

Cargojet said its exclusive ACMI agreement with Air Canada to fly twice-weekly to Mexico, twice-weekly to South America and once-weekly to Europe will expire Dec. 31, which coincides with the expiration of Air Canada’s agreement with pilots regarding Cargojet flying. Cargojet expects to replace these flights and approximately C$9 million in annual gross revenues by “operating directly for its ACMI and interline partners on similar routes, as demand for this service remains strong,” the company said. “Cargojet and Air Canada will continue to work together to build upon their strong commercial cooperation and will continue exploring synergies in the marketplace.”

Additionally, Cargojet expects to retire its remaining 727-200s before the end of 2019 because of regulatory requirements that will prevent the aircraft from being flown in North America.

(Mark Nensel - ATWOnline News)

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