Another Cargo Operator Throttles Back

Cargojet will be easing up on its plans to continue converting Boeings to freighter specifications, in addition to selling off a few of its Boeing 757s.

The move is just another in recent ripples throughout the air cargo market that betray a cooling off throughout the industry. Cargojet’s competitors have been on a similar downsizing mission, like Air Transport Services Group parking 6 of its passenger widebodies and scaling down conversions by 3. Cargojet is doing the same, listing 4 of its surplus 757s despite their relative freshness. The firm recently dropped more than $5 million on each of the aircraft, converting them from passenger layouts and overhauling their engines. The company hopes to snag around $87 million from the sale of all 4 aircraft, but it remains open to leasing them out should interest arise. Chances are, the aircraft could even see themselves end up like ATSG’splans for its own parked aircraft - engines leased out, parts stripped where profitable.

Overall, Cargojet’s situation fairly closely mirrors ATSG’s recent reports. Domestic revenues have fallen thanks to rising inflation taking a bite out of contracts, parcel shipping volumes down, and the holiday season isn’t inspiring much confidence. Cargojet’s revenues declined 8%, adjusted earnings fell 17%, and flight hours dropped almost 9%. CEO Ajay Virmani said Cargojet would have to wise up in its spending, cutting routes, overtime, training, and employees. In addition to the widebodies for sale, the firm is also listing a pair of Beechcraft aircraft, presumably turboprops, originally intended for employee transportation. 

FMI: www.cargojet.com