Cargojet's Q2 2025 Earnings: A Contrarian Opportunity Amid Air Cargo Market Volatility

In a global air cargo market buffeted by macroeconomic headwinds and shifting trade dynamics, Cargojet Inc. (TSX: CJT) has emerged as a rare bright spot. The Canadian carrier's Q2 2025 earnings report, released on August 5, 2025, reveals a company that has mastered the art of strategic resilience. Despite a soft patch in its ACMI (Aircraft, Crew, Maintenance, Insurance) segment—driven by weaker European traffic—Cargojet delivered $238.2 million in total revenue, a 3.2% year-over-year increase, while expanding adjusted EBITDA margins and slashing net losses by 87%. For long-term investors, this performance signals a compelling contrarian opportunity in a sector often prone to overreaction.

Strategic Resilience: Turning Weakness into Strength

Cargojet's ability to thrive amid volatility stems from its disciplined cost management and operational agility. The company's adjusted EBITDA of $80.2 million in Q2 2025, up 1.4% from the prior year, reflects a 140-basis-point margin expansion to 33.7%. This was achieved despite a 10% reduction in block hours flown compared to 2024, a testament to productivity gains and efficient resource allocation.

The ACMI segment, traditionally a cornerstone of Cargojet's international operations, faced headwinds due to soft European demand. However, the company's domestic and charter divisions more than compensated. Domestic revenue surged 14%, and charter revenue jumped 22%, driven by robust demand for time-sensitive freight and strategic fleet utilization. These gains highlight Cargojet's ability to pivot quickly, leveraging its 43-aircraft fleet (a mix of Boeing 757s and 767s) to capitalize on high-margin opportunities.

Margin Expansion and Balance Sheet Fortitude

Cargojet's financial discipline is perhaps its most underrated asset. The company reported a net loss of $3.2 million in Q2 2025, a dramatic improvement from the $25.0 million loss in the same period of 2024. Adjusted net earnings, which exclude non-operational items, rose 124.3% to $15.7 million. This turnaround was fueled by cost-cutting initiatives and a focus on high-margin routes, even as the ACMI segment struggled.

The balance sheet further reinforces this resilience. Cargojet generated $28 million in operating cash flow and maintained a strong liquidity position, despite a $72.5 million free cash flow deficit driven by capital expenditures. These investments, however, are not wasteful but strategic: modernizing its fleet and expanding capacity to meet anticipated demand from the EU–US trade corridor.

The EU–US Trade Deal: A Catalyst for ACMI Recovery

While the ACMI segment's Q2 performance was lackluster, the long-term outlook is far more promising. The newly enacted EU–US trade deal, which eliminates tariffs on a range of goods, is expected to reignite cross-Atlantic cargo demand. Cargojet's management has already flagged the EU–US corridor as a key growth driver, with potential for ACMI and charter revenue expansion in the coming quarters.

This development is critical. The ACMI segment, which accounted for a significant portion of Cargojet's international revenue, has historically been cyclical but high-margin. With European traffic expected to rebound, the segment's contribution to earnings could rebound sharply, especially as Cargojet's fleet remains well-positioned for long-haul operations.

Investment Implications: A Contrarian Play

Cargojet's Q2 results underscore its ability to navigate economic uncertainty while maintaining profitability. For investors, the key takeaway is that the company is not merely surviving but strategically positioning itself for growth. Its 99.5% on-time arrival performance and focus on premium cargo services (carrying over 25 million pounds weekly) further insulate it from commodity-like price competition.

The stock's current valuation, trading at a discount to its historical EBITDA multiples, offers a compelling entry point. While the air cargo sector remains volatile, Cargojet's margin expansion, balance sheet strength, and exposure to the EU–US trade rebound create a favorable risk-reward profile.

Conclusion: A Model of Operational Excellence

Cargojet's Q2 2025 earnings are a masterclass in strategic resilience. By leveraging cost discipline, capitalizing on domestic and charter demand, and preparing for the EU–US trade boom, the company has positioned itself as a leader in a fragmented industry. For long-term investors, this is not just a defensive play—it's a forward-looking bet on a carrier that turns volatility into opportunity.

In a world where economic cycles are inevitable, Cargojet's ability to expand margins and reduce losses while others falter is a rare and valuable trait. As the EU–US corridor reopens, the company's ACMI segment—and its shareholders—stand to benefit disproportionately. Now is the time to consider Cargojet not as a speculative bet, but as a cornerstone of a resilient portfolio.