Cargojet (TSE:CJT) reported record third-quarter revenue and adjusted earnings as stronger charter flying and efforts to improve aircraft utilization helped lift results. Management said it expects peak-season domestic demand to be broadly comparable to last year while preparing to replace a reduction in supplementary flying for UPS.
The air cargo carrier generated revenue of CAD 286.5 million and adjusted EBITDA of CAD 90.2 million in the third quarter of 2026. Net earnings rose 117% from a year earlier to CAD 19.1 million, while free cash flow was CAD 62.1 million.
CEO Pauline Dhillon attributed the performance to operational and commercial changes, including a focus on revenue quality, cost management and network efficiency. Cargojet’s on-time performance reached 99.3% during the quarter, she said.
Charter growth and international expansion
Charter revenue rose 88.1% year over year to CAD 61.9 million and increased 13.2% from the second quarter. CFO Aaron McKay said the gains reflected flying for UPS, an additional midweek frequency on Cargojet’s Liège service and its extension to Tel Aviv, along with flights to Central and South America and weekend charters to China.
Dhillon said the charter business is shifting from primarily ad hoc flying toward a mix that includes more scheduled and customer-specific services. Cargojet plans to begin a scheduled Hamilton-to-Miami charter three times a week on December 2 and has secured volume commitments from existing customers.
The Miami service will use existing aircraft and will not require new capital spending, Dhillon said. McKay added that the route could make it easier to reposition aircraft within the network for maintenance without operating separate ferry flights.
Cargojet expects UPS’s need for supplementary capacity following an MD-11 disruption to decline significantly after the fourth quarter. Dhillon said the company has secured replacement opportunities, including South American contractual routes that have already started and additional flying to China.
Executive Chairman Ajay Virmani said the company hopes to have replacement work for the UPS aircraft within the first quarter, although the planes may not all be redeployed immediately.
Domestic demand and ACMI outlook
Domestic overnight revenue was CAD 105.9 million, excluding CAD 5.3 million from fuel-price pass-throughs, up 6.3% year over year. Dhillon said October domestic volumes remained strong and customer forecasts were encouraging ahead of the peak season.
Asked about the fourth-quarter domestic outlook, Dhillon said Cargojet was looking for a similar seasonal step-up, while expecting peak demand to be comparable to 2025 based on customer feedback and market research.
Hybrid aircraft, crew, maintenance and insurance, or ACMI, revenue rose 10.8% both sequentially and year over year to CAD 60.5 million. Dhillon said she viewed the improvement as sustainable, citing customers finding new trade lanes and opportunities across several customers. Virmani said customers had indicated that trade and traffic had increased substantially from a year earlier.
Fuel, labor and capital priorities
McKay said higher fuel prices affected reported results because Cargojet generally passes fuel costs through to customers via surcharges recorded as revenue. The mechanism diluted the adjusted EBITDA margin by an estimated 190 basis points year over year without materially affecting adjusted EBITDA, he said. Excluding the effect of fuel-price increases, revenue rose 20.9% to CAD 265.9 million.
Free cash flow declined from CAD 152 million a year earlier, primarily because of higher proceeds from sale-and-leaseback transactions in the prior-year quarter. Net leverage ended September at 2.5 times, within the company’s long-term target range, while return on invested capital improved to 5.8% from 5.0% in the second quarter.
Cargojet repurchased 76,749 shares during the quarter. McKay said future capital allocation would weigh shareholder returns against leverage and growth opportunities that meet the company’s return requirements. He said the fleet plan does not currently include speculative aircraft.
On labor costs, McKay said a pilot agreement signed in July was effective for the full third quarter. Total crew costs rose CAD 4.4 million year over year, primarily because of the new contract. Cargojet expects to implement the agreement’s productivity benefits over coming quarters, he said.
About Cargojet (TSE:CJT)
Cargojet is Canada’s leading provider of time-sensitive premium air cargo services to all major cities across North America, providing Dedicated, ACMI and International Charter services and carries over 25,000,000 pounds of cargo weekly. Cargojet operates its network with its own fleet of 41 aircraft.
