Cargojet announces long-term strategic agreement with DHL

Cargojet Inc. announced today that it has entered into a new long-term strategic agreement with DHL Network Operations (USA) Inc., an affiliate of Deutsche Post DHL Group, for a term of five years with a renewal option for an additional two years, to provide air-transportation services for DHL’s global network.

The Agreement is expected to be meaningfully accretive to Cargojet’s earnings and cash flows over time and help Cargojet further diversify its portfolio of services in line with its previously announced strategic goal of achieving a balanced portfolio.

Under the Agreement, Cargojet will provide ACMI, CMI, charter, and aircraft dry lease services to DHL to support DHL’s international requirements for Europe and North, South, Central and Latin America, as well as Asia. Cargojet utilizes 12 freighters to service DHL’s current requirements.  DHL intends to add 5 additional Boeing 767-300 freighters during the 2022-23 timeframe to fulfill DHL’s anticipated network requirements. Additionally, DHL intends to be Cargojet’s inaugural launch customer for the state-of-the-art Boeing 777F wide body long-range cargo aircraft, which are expected to be deployed in late 2023 or early 2024.

In addition, to align interests and strengthen the long-term strategic relationship, Cargojet will issue to DHL warrants to acquire up to 9.5 percent of Cargojet’s outstanding voting shares (on a non-diluted basis as of the date hereof) at a price of C$158.92 per share (based on the 20-day volume weighted average trading price immediately prior to the date hereof) over a period of seven years, with vesting tied to the delivery by DHL of up to C$2.3 billion1 in business volume during the same term.