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.
Cargojet was scheduled to release second-quarter results Wednesday after the stock market closed, but had not done so as of 7 p.m. ET.
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.
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.
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