Canadian airline Cargojet has extended its long-term transport agreement with integrated carrier DHL Express until March 31, 2033, and reduced DHL’s potential ownership stake in the company from 9.5% to 6.6% in exchange for renewing the deal two years before it expired, the companies announced Wednesday.
The revised freight services contract is projected to deliver $2.3 billion in revenue for Cargojet. DHL has the right to extend the agreement two times for two-year terms, potentially stretching the deal until March 2037.
In early July, Cargojet extended its contract with Amazon for four years. The contract now runs until March 31, 2029.
Cargojet began flying in DHL’s express package network in 2005. It now provides bundled lease packages that include aircraft, crews and mechanics to fly freight; crew and maintenance in cases where DHL provides its own freighter aircraft; and charter service for short-term capacity needs. Cargojet has a fleet of more than 40 Boeing 767 and 757 freighters. Some of DHL’s volume moves in Cargojet’s domestic Canadian overnight network in which capacity is shared by various customers.
Cargojet’s current contract with DHL was signed in March 2022 and was scheduled to run five years. The companies cemented their partnership with the issuance of warrants giving DHL 9.5% of Cargojet shares after a seven-year vesting period.
Cargojet operates five to six flights per day from its hub near Toronto to DHL’s hub at Cincinnati/Northern Kentucky International Airport (CVG), and supports DHL’s express network with daily flights between CVG and Mexico, South America and the Caribbean.
Cargojet Executive Chairman Ajay Virmani told analysts during an earning’s presentation the following day that the refreshed partnership agreement benefits both sides by reducing ownership dilution for Cargojet and reducing the number of warrants DHL needs to buy to secure a minority investment, while also lowering the strike price from CA$150.
“The contractually different is that the warrants that we have now reissued, which are a lot less, the strike price is different. And the most importantly, the revenue associated with warrants that they have been delivered is more geared towards growth than maintaining the business. So the interest aligned from that, that they’re interested in growing with us based on our performance, our flexibility, our willingness to do more than anybody else. And we wanted to make sure that we refreshed the agreement two years early,” he said. “We could have lived with an outdated agreement that did not motivate the customer or us to do anything different. So a two-year earlier renewal refreshes the whole agreement, the commercial terms, adds the minimum block hours, adds the minimum number of planes and certainly rejuvenates the whole partnership.”
Under the expanded partnership, DHL will continue to guarantee a minimum amount of paid flight hours per month and give Cargojet preference to fly additional routes as it adjusts its global network to meet shipping demand. Cargojet will also terminate the warrants to acquire more than 1.6 million voting shares and instead issue warrants giving DHL the right to acquire 1 million shares at a price of $67.90 per share over a period of eight years, with vesting tied to DHL delivering up to $3.2 billion in business volume during the period.
(Updated on Aug. 7, 2025, at 12 p.m.)
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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