Cargojet TSE: CJT reported higher revenue and adjusted EBITDA in the second quarter of 2026, citing growth in its charter operations, continued strength in domestic overnight service and improved fleet utilization. Management also outlined the financial and operational implications of a newly completed five-year pilot agreement.
Chief Executive Officer Pauline Dhillon said the company maintained an on-time performance rate of 99.2% during the quarter. She said Cargojet remained focused on service reliability, safety, efficiency and deploying aircraft where they can generate the strongest long-term returns amid elevated fuel costs and geopolitical uncertainty.
“Our one-fleet approach continues to be a significant competitive advantage,” Dhillon said, describing the strategy as providing flexibility to move aircraft across the network and pursue higher-return opportunities as conditions change.
Revenue and EBITDA Increase
Chief Financial Officer Aaron McKay said Cargojet generated revenue of C$275.8 million and adjusted EBITDA of C$87.3 million in the second quarter, with both measures improving sequentially and year over year. Adjusted EBITDA rose from C$80.2 million in the prior-year period.
Rising fuel prices affected reported margins because Cargojet generally recovers fuel costs through customer surcharges. McKay said the increased surcharges lifted reported revenue in proportion to fuel expenses and temporarily diluted adjusted EBITDA margin, without having a material effect on adjusted EBITDA itself.
Fuel-price increases resulted in approximately 260 basis points of margin dilution in the quarter, according to McKay. Excluding the impact of higher fuel prices compared with the second quarter of 2025, revenue was C$250.1 million, up C$11.9 million, or 5%, year over year.
- Domestic overnight revenue, excluding the year-over-year impact of fuel pass-throughs, was C$104.9 million, up 3% from a year earlier and slightly higher sequentially.
- Hybrid ACMI revenue was C$54.7 million, slightly above the first quarter but down 12% year over year, reflecting the transition from East-West transoceanic operations to North-South Intra-Americas flying.
- Charter revenue was C$54.7 million, up 37% year over year, supported by the Liège service, a Central and South American charter partner, and support flying for a previous MD-11 operator.
Cargojet generated C$56.2 million of free cash flow during the quarter, compared with a C$72.5 million cash outflow in the second quarter of 2025. The company’s leverage ratio declined to 2.6 times at quarter-end, moving toward its stated objective of below 2.5 times. Cargojet also repurchased 121,390 shares during the period.
Pilot Agreement Includes Wage Increases and Productivity Changes
Cargojet recently completed a five-year collective agreement with its pilots that takes effect July 1, 2026. The agreement includes a 26% wage increase at implementation, followed by annual 5% increases over the following four years through June 30, 2031.
The agreement also raises the baseline number of working days to 16 per month from 15, though pilots can elect to remain at 15 days for most of the year with proportional compensation. Executive Chairman Ajay Virmani said the additional day represents about 6.5% more productivity, supplemented by additional training days over the agreement’s term.
McKay said wages have historically represented roughly 60% to 65% of total reported crew costs, with the remainder including expenses such as per diems, hotels and transportation. He said the productivity provisions are expected to offset part of the wage increase over time, while lower overtime needs could provide further benefits.
Dhillon said Cargojet plans to seek recovery of the increased labor costs as customer agreements come due and through discussions with customers on shorter-term arrangements. She said no contract-customer agreements are scheduled to come due this year, with the next agreements expiring in 2029 and 2030. However, the company is discussing the new costs with certain customers and expects real-time pricing in charter and ACMI operations to reflect the changes.
International Expansion and Fleet Utilization
Management highlighted the company’s Liège, Belgium hub and its recently launched Liège-to-Tel Aviv service as examples of its effort to expand internationally using existing aircraft. Dhillon said the Liège operation has exceeded expectations and that Cargojet continues to evaluate opportunities in Europe, Africa, the Far East, Asia and the Middle East.
The company is also operating charters from Western Canada to China and from Miami into South America and North America, according to management. Dhillon said Cargojet is seeking opportunities to use aircraft that otherwise would be idle, including aircraft positioned in Canada and Europe during periods of lower scheduled utilization.
McKay said the company is reviewing opportunities to either use or monetize assets as part of an effort to “clean up the balance sheet.” Cargojet has placed one B767-200 feedstock aircraft into conversion, which is expected to add C$10 million to C$15 million of capital expenditures in 2026 and about C$5 million in 2027. Management said the aircraft would be tied to revenue and EBITDA growth opportunities or could be divested if it is not needed.
Outlook Focuses on Revenue Quality and Cost Discipline
Dhillon said domestic demand was strong in July and that the company expects domestic overnight operations to remain strong in the third and fourth quarters. She attributed part of the trend to e-commerce growth, particularly in secondary markets, as retailers reduce inventory holdings and shipments move more directly to consumers.
Management said DHL’s projected third- and fourth-quarter volumes indicate potential growth in Cargojet’s ACMI business, although the company had not received specific indications of incremental flying. McKay added that comparisons should normalize in future periods because the transition to North-South Intra-Americas operations was completed by the end of the second quarter of 2025.
Virmani said the company’s recent initiatives have emphasized “quality of revenue and revenue enhancement,” including yield management and reducing business that does not meet profitability or time-sensitivity standards. McKay said Cargojet is also maintaining pressure on its cost structure while pursuing higher-margin revenue and better asset utilization.
“Return on Invested Capital is something that I am laser-focused on,” McKay said. He said management expects continued progress from lower invested capital, higher-quality revenue and improved margins, though the effect on average invested capital will take several quarters to fully develop.
About Cargojet (TSE:CJT)
Cargojet Inc operates a domestic air cargo co-load network between sixteen major Canadian cities. The company provides dedicated aircraft to customers on an Aircraft, Crew, Maintenance and Insurance basis, operating between points in Canada, USA, Mexico and Europe. The company also operates scheduled international routes for multiple cargo customers between the USA and Bermuda, between Canada, UK and Germany; and between Canada and Mexico.
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