Cargojet Inc.

Cargojet reported Q2 2026 revenue of $275.8 million and adjusted EBITDA of $87.3 million, versus $80.2 million a year ago. Excluding the impact of higher fuel prices, revenue was $250.1 million, up $11.9 million or 5% year over year; domestic overnight revenue net of fuel pass-throughs was $104.9 million, up 3%; hybrid ACMI revenue was $54.7 million, down 12% year over year; and charter net revenue was $54.7 million, up 37% year over year. Adjusted EBITDA margin was 31.7%, with about 260 basis points of compression from fuel price increases. Free cash flow was $56.2 million, compared with a $72.5 million cash outflow in Q2 2025, and leverage ratio ended the quarter at 2.6x. Management did not give explicit company-wide revenue or EPS guidance, but said the next quarters should benefit from repricing customer agreements where possible, continued domestic strength, growing ACMI demand if DHL volumes rise, and ongoing international and charter opportunities. Capex was updated for one 767-200 conversion, adding $10 million to $15 million this year and about $5 million next year.

Pauline Dhillon framed the quarter as another strong result built on resilience, customer relationships and operational execution. She emphasized 99.2% on-time performance, the flexibility of the One Fleet model, and opportunities in domestic overnight, charter, interline, ACMI and international flying. Her tone was confident and forward-looking, with repeated references to disciplined growth, selective international expansion and better asset utilization.

Aaron McKay highlighted the main financial drivers: $275.8 million of revenue, $87.3 million of adjusted EBITDA, $56.2 million of free cash flow and leverage of 2.6x. He explained that fuel surcharge revenue can temporarily compress reported margins, noting about 260 basis points of margin dilution in Q2, but said fuel generally should not materially affect long-term profitability. He also quantified the pilot agreement impact: a 26% wage increase starting July 1, 2026, followed by 5% annual increases for four years, with productivity benefits from moving from 15 to 16 workdays per month and additional training days. On capital allocation, he said share repurchases continued, with 121,390 shares bought back in Q2, and reiterated a focus on deleveraging toward below 2.5x.

Analysts pressed on when DHL-related ACMI volumes would inflect, and management said DHL had not yet given incremental volume guidance, though Cargojet expects growth if DHL volumes rise. They also asked whether the One Fleet strategy is creating incremental revenue; management said it is hard to isolate aircraft-specific revenue, but gave examples like Liege-Tel Aviv and other charter uses for idle aircraft. Questions on the pilot deal focused on modeling the wage increase versus productivity gains; management said the simple gross math points to a higher crew-cost run rate, but added that more workdays, training days and less overtime should offset part of the increase over time. Analysts also asked about CapEx and ROIC, and management said the 767-200 conversion adds $10 million to $15 million this year, while ROIC should improve over the next 3 to 4 quarters as past invested-capital peaks roll off.