Airline cargo specialist sees business, profit soar
Ajay Virmani grabbed opportunity and built Cargojet into a winner
Once hobbled by bankruptcy, Cargojet is now soaring.
But it has taken perseverance and long-term thinking to get things off the ground, according to CEO Ajay Virmani.
The Delhi-born businessman acquired the cargo operation of Canada 3000, a discount airline that was forced into bankruptcy in the wake of 9/11, in early 2002.
When Virmani took over, the company had just four aircraft.
“There I was, partnered with a bankrupt company, so I had to decide whether to walk away from it or invest more money,” he said.
While several investors backed out, Virmani saw an opportunity to change course, and rebranded the company Cargojet.
In the 14 years since, the company has grown its fleet to 25 repurposed Boeing planes, and now has more than 800 employees — up from just a few dozen at its inception. The company also provides international charter flights, but most of the deliveries are made within Canada.
On Monday, the air cargo company headquartered in Mississauga, Ont., announced its second quarter results, reporting revenue of $79.3 million, up from $75.2 million a year earlier. Profit for the company was $3.8 million, up from a loss of $6.1 million the previous year. Adjusted earnings before interest, taxes, depreciation and amortization were $22.5 million, an increase of $15.9 million from the same quarter of 2015.
The announcement follows a tailwind of strong first quarter earnings — propelled by an estimated $1-billion contract with Canada Post — and growing demand for overnight delivery across the country.
The company delivers more than 300 tonnes of cargo every night, operates in 14 Canadian cities, and has recently worked with Air Canada Cargo to provide deliveries to and from South America.
The company’s stock price has increased to $36.10, up from the $14 range prior to the Canada Post deal in early 2014. Cargojet’s story is in many ways paralleled by Virmani himself.
The now 57-year-old CEO moved to Canada from Delhi, India in 1975. When he arrived, he landed his first job washing windows at the TD Tower in downtown Toronto.
“I had never seen a building that high in Delhi, and thought they would start me off working the lower floors first. Little did I know that on my first day they had me at the very top,” he said, smiling.
With a degree in business from the University of Delhi and an eye for seeing value in unlikely places, Virmani found another job as a door-to-door salesman.
“Early on, I learned that people weren’t as kind to immigrants as they are today,” Virmani explained.
“People laughed at my accent or what I ate, and I saw it as a handicap at the time. So to make up for that, I felt that I had to work harder.”
Virmani also worked several factory jobs, and tested mufflers for Midas. Things started to turn around when he started work at Cottrell Transport.
Virmani worked his way up at Cottrell, learning how to find efficiencies in cargo transport, and was offered a partnership in the company in the late 1980s. He ultimately decided to go his own way, and started a cargo company called CTI/Fastair, which was sold to Eagle Global Logistics in 2000.
Cargojet recently won a contract with Canada Post and Purolator for overnight deliveries. The deal is expected to be worth about US$1 billion over seven years, based on current projections. Virmani sits on the company’s five-member board of directors, along with Postmedia CEO Paul Godfrey.
With Cargojet rapidly expanding its business, Virmani says he wants to make sure the company stays true to its founding principles.
Over the past two months, he has travelled across Canada, meeting with workers at every stop along Cargojet’s routes.