Cargojet Inc. has provided an update on its ongoing efforts to further streamline its fleet strategy and the associated impacts to capital expenditures and cash flows.
“Throughout 2023 we exercised caution in deploying growth capital given the softer economic conditions,” said Dr. Ajay Virmani, Executive Chairman,
“Forecasts continue to indicate that the international air cargo market will remain soft in the short to medium term and deploying B-777s into the market would not be strategically prudent. We have decided to exit our commitments for the four remaining B-777 aircraft, while continuing to flex our B767 fleet to accommodate our organic growth strategy.
“Cargojet has substantially completed the operational groundwork to be able to enter the B-777 market should economic conditions change. Cargojet has also retained the rights to provide the optionality for future conversion slots.”
“The holiday season performance for 2023 was in line with our expectations,” noted Jamie Porteous, Co-Chief Executive Officer.
“With our optimized fleet strategy and cost efficiencies gained throughout 2023, we are well positioned to deliver strong cashflows and shareholder value,” commented Pauline Dhillon, Co-Chief Executive Officer.
As a further update to the above comment, the Corporation is providing the following estimated capital expenditures targets for the years ending December 31, 2024 and 2025 (see “Notice on Forward-Looking Statements” below):
| Maintenance Capex(1) | Growth Capex(1) | Proceeds from Dispositions | Net Capital Expenditures(1) | ||
| 2024 | $140M – $150M | $20M – $30M | $100M – $110M | $60M – $80M | |
| 2025 | $140M – $150M | $20M – $40M | nil | $160M – $180M |
Cargojet is not expecting to incur any meaningful Growth Capital Expenditures in 2024.
However, the Corporation continues to monitor macroeconomic conditions for opportunities to deploy capital if profitable growth opportunities emerge in the future.
