Cargojet picks up a 757, plots international growth

Canada-based Cargojet Airways will soon add a ninth 757-200 freighter to its active fleet as the carrier prepares to expand its operations. In Cargojet management’s discussion of its results for the first quarter of 2021, the company said it had signed a letter of intent in March 2021 to purchase the 757-200 and expects to close the deal in the second quarter. During a call with analysts, President and CEO Ajay Virmani said the 757 acquisition was prompted by demand from an ACMI customer for a certain route. Cargojet had not planned to add the aircraft until recently but was able to secure a 757 in the process of being converted. The aircraft will likely join the fleet around the end of May, he said. [caption id="attachment_415863" align="alignright" width="560"] Cargojet currently has eight 757-200Fs in operation. (Photo/Cargojet)[/caption] Cargo Facts believes the aircraft could be unit 29594 (ex-American Airlines), a 1999-vintage 757-200 AerSale purchased and inducted for conversion at its own facility in Goodyear (GYR) around the end of December 2020. The 757 is one of a batch of twenty-four AerSale announced it will acquire. Cargojet continued to see robust demand for capacity-neutral lift, ACMI and charter services during the fourth quarter, driven by strong demand and limited airfreight capacity. Block hours rose 40.2% year on year to 13,100 for the first quarter of 2021. Average volume per operating day increased by 35.4% during the same period, to 1.75 million pounds. The report also said that Cargojet purchased a 767-200 converted freighter in April 2021 and that the aircraft is currently on lease to a third party. Cargo Facts believes this is unit 23803, a 1987-vintage 767-200BDSF in service with 21 Air. The aircraft Cargojet acquired in 2019 was 21 Air’s other 767-200BDSF (23801). Much of Cargojet’s future growth will center around its widebody fleet, and international opportunities. To that end, Cargojet is due to grow its own widebody fleet after raising equity earlier this year, and will add five 767Fs along with up to four 777-300ERSFs. CFO John Kim confirmed the start of conversion of the first 767 in May, and said Cargojet is potentially looking at not having to buy the first two feedstock 777s until around late 2022. Cargojet plans to deploy the incoming 767s on international routes, but is also looking at ACMI opportunities. “We do not anticipate these aircraft to be sitting idle even for a day,” said Virmani. While Cargojet’s fleet and Air Operator’s Certificate enables domestic routes and round-trip flights between Canada and the United States, it is looking to make an investment in a U.S.-based certificate holder to unlock additional freedoms of the sky. Cargojet will “seriously pursue” these opportunities in the second quarter“ that will enable the carrier to cover routes and areas it currently cannot. “We’re kind of handicapped with not having an investment or license in a U.S. carrier,” he said, noting destinations in the Caribbean and Latin America Cargojet is currently unable to serve. The company did not identify any specific acquisition targets but noted it was looking to make an investment of “no more than between CA$5 million and CA$20 million” to meet the U.S. Department of Transportation’s 25% stake requirement for an ownership position in an airline. It remains to be seen which carrier Cargojet could end up investing in, but we note Cargojet already owns at least one of 21 Air's 767s and another passenger 767-200 operated by Elan Express. Cargo Facts EMEA, taking place June 2-3 as a virtual experience, is the event for exploring opportunity in the EMEA region. The event continues to bring together the best, brightest, and most innovative executives in the global air cargo industry. Learn more and register at www.cargofactsemea.com .

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