Cargojet Inc. Secures Investment-Grade Credit Rating, Enhancing Market Position and Financial Stability
- Cargojet Inc. received a BBB (low) investment-grade credit rating, reflecting strong financial health and market presence.
- The company plans to invest $300 million to expand capacity, acquire new aircraft, and improve efficiency.
- Cargojet maintains a 90% market share in Canadian overnight air cargo, with projected mid-single-digit revenue growth for 2025.
Cargojet Inc. Achieves Investment-Grade Credit Rating, Strengthening Market Position
Cargojet Inc., a leading provider of time-sensitive air cargo services in Canada, announces the receipt of an inaugural investment-grade issuer credit rating of BBB (low) from Morningstar DBRS. This milestone, which reflects the company's strong financial health and market presence, is a significant achievement for Cargojet as it navigates the competitive landscape of the air cargo industry. The rating underscores Cargojet's robust financial metrics, driven by its solid revenue streams, efficient operational practices, and a commanding 90% market share of the Canadian domestic overnight air cargo sector. Co-CEOs Jamie Porteous and Pauline Dhillon emphasize that this recognition validates their commitment to disciplined cost management and a diversified portfolio of services, including Domestic, Charters, and ACMI offerings.
The BBB (low) rating with a stable trend serves to reinforce Cargojet's strategic goals, particularly in enhancing financial stability and flexibility to optimize capital costs. The company operates a fleet of 41 cargo aircraft, transporting over 25 million pounds of cargo weekly across major North American cities. This operational scale not only supports the company's revenue growth but also positions Cargojet favorably against potential economic downturns. With an anticipated mid-single-digit revenue growth for 2025, driven by new contracts, including one with Hong Kong Express Airways, Cargojet is well-equipped to leverage its existing contracts and operations to sustain performance despite external challenges such as trade tariffs.
In addition to the positive credit rating, Cargojet plans to invest approximately $300 million in capital expenditures to expand capacity and improve operational efficiency. This includes acquiring new aircraft and addressing maintenance needs. However, the company acknowledges the potential for a moderate free cash flow deficit, which may lead to an increase in total indebtedness by $50 to $100 million. Despite these financial dynamics, Morningstar DBRS projects that Cargojet's EBITDA margins will remain robust, exceeding 30%, primarily due to effective cost management and operational optimization strategies.
Cargojet continues to adapt to the evolving air cargo landscape, maintaining a strong focus on sustainable growth and financial prudence. The company's recent updates to its investor presentation reflect its commitment to transparency and strategic planning, ensuring stakeholders remain informed about its operational and financial outlook. While the newly assigned credit rating presents an opportunity for enhanced market positioning, Cargojet remains cautious about the inherent risks and uncertainties in the air cargo market, highlighting the importance of maintaining its operational performance to uphold its rating.
As Cargojet progresses, it clearly underscores its commitment to not just maintaining a strong credit profile but also to exploring avenues for optimizing its financial position in an increasingly complex market environment.
