Cargojet Inc. (Cargojet) said it would be focusing on cost-saving measures as demand from e-commerce and business-to-business sectors drag its financial performance.

The announcement came as the Canada-based freighter operator reported a decline in second-quarter revenues.

Cargojet reported a 15% drop in revenues year-on-year to C$209.7 million (US$154.8 million) from the C$246.6 million (US$182.04 million) it made during the same period in 2022.

The decline is mainly due to decreases in domestic network revenues, all-in charter revenues, fuel surcharges and other pass-through revenues.

The airline said revenue excluding fuel surcharge and other revenues came in at C$171.6 million compared to C$177.2 million. Adjusted EBITDA for the quarter was  C$74.3 million compared to the the second quarter of 2022 Adjusted EBITDA of C$81.1 million.

For the period, net income came at C$31.1 million (net loss of C$1.7 million excluding warrant valuation gain) compared to net income of C$160.9 million in 2022 (net income of C$26.2 million excluding warrant valuation gain).

Economic conditions to remain difficult

"To prepare Cargojet to ride the current economic cycle, we shifted our focus to cost management as well as right-sizing our network, while curtailing growth CapEx and focusing on generating free cash flow," said Dr. Ajay Virmani, president and CEO.

He noted that Cargojet's EBITDA margin of 35.4% in this quarter vs. 32.9% prior year "clearly demonstrates that our cost management initiatives are yielding the desired results."

"While we expect economic conditions to remain difficult, the shift in consumer spending towards travel and leisure vs goods is expected to normalize towards the end of this year," Virmani said, adding that the Cargojet team continues to be industry leaders providing a 99.6% on-time performance in the quarter. 

"Our focus remains on delivering exceptional reliability and customer service," the Cargojet chif added.