Cargojet closes $274 million funding for 7 P2F freighters

Cargojet
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Canadian all-cargo airline, Cargojet raises CAD 350.2 million (USD 274 million) through a share offer to help pay for five B767 freighters and two B777 freighters.

The five passenger-to-freighter (P2F) conversions are to be redelivered from 2021 through to 2023. The company is also planning for expenditures for investments in a new hanger and additional land-based facility infrastructure to accommodate the fleet expansion and demand driving it.

Cargojet says the infrastructure investments will support additional e-commerce volumes, driven by the ongoing pandemic, that are expected to establish a new higher baseline going forward.

As part of this, the carrier says it is pursuing a US and international growth strategy, noting the significantly increased demand for its international cargo services as a result of the Covid-19 pandemic. It also highlights the fact air cargo capacity has been severely constrained due to the reduction of passenger aircraft operating on international routes, adding “it is uncertain when such capacity will return to pre-pandemic levels”.

“Furthermore, US and international air cargo growth opportunities have emerged as a result of rapidly evolving global supply chains and a lack of air cargo capacity in key markets,” it says.

The company intends to use a portion of the net proceeds of the share offering, along with cash on hand and drawings on its revolving credit facility, to capitalise on what it says are “potential strategic investments in the US,” alongside the acquisition of two P2F long-range B777 freighters for international routes.

Those freighters will be re-delivered in late 2023 and the first half of 2024 with the company estimating the cost of each B777 freighter to be approximately CAD 75 million.

The company added international flights to the US, Mexico and the UK for its client, DHL Express. Cargojet currently operates a fleet of eight B757-200PCF, three B767-200ER/BDSF and 14 B767-300ER/BDSF.

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