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Cargojet raises $268M to help pay for seven new freighters

E-commerce, international widebody shortage drives growth strategy

A Cargojet plane waiting to pick up a shipment. (Photo: Flickr/Caribb)

Ontario-based all-cargo carrier Cargojet (TSX: CJT) announced Monday it raised CA$350.2 million ($268 million) through a stock offer to fund an aggressive fleet expansion. 

The company is investing in more aircraft and buildings to take advantage of a dramatic increase in domestic e-commerce activity and strong demand for international air cargo service spurred by the coronavirus pandemic, which has altered consumption and inventory patterns.

Cargojet said it intends to use a large portion of the proceeds from the equity sale to pay for the acquisition of five Boeing 767 passenger-to-freighter conversion aircraft, to be delivered through 2023, as well as new hangar and other ground infrastructure. 

The money raised will also help fund the purchase of two long-range Boeing 777 converted freighter aircraft for delivery in late 2023 and 2024. The carrier said it estimates the cost of each 777 at about $57.4 million.

Cargojet said it will use about $68 million of the proceeds to pay off aircraft loans and retire the outstanding balance on its credit facility. 

The stock sale was structured for the underwriters to buy the entire offering before the filing of a preliminary prospectus. A “bought” deal eliminates the issuer’s financing risk compared to a traditional securities offering in which underwriters have to market the offering to prospective buyers and then set the price.

Cargojet was experiencing strong growth in e-commerce shipments even before the pandemic as Amazon and other retailers compete with faster delivery standards and major brands increase direct-to-consumer business models. 

Demand for international airlift remains very high because passenger airlines continue to park large portions of their fleets due to limited travel. In normal times, the lower-deck area of those aircraft provides more than 50% of the global air cargo capacity.

Last year, Cargojet added international routes to the U.S., Mexico and the U.K. to support DHL Express

Click here to read more FreightWaves/American Shipper stories by Eric Kulisch.


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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. In December 2022, he was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]