Canada’s Cargojet announced Monday that founder Ajay Virmani is vacating his role as CEO, effective Jan. 1, with Pauline Dhillon, the chief corporate officer, and Jamie Porteous, chief strategy officer, taking over as co-CEOs.
The news marks the third time the leader of a North American cargo airline has been replaced in the past six weeks.
Dhillon and Porteous have been part of Virmani’s executive team since he founded the all-cargo airline 22 years ago.
“Their complementary skill set, long-standing dedication to our organization along with unwavering focus on our team, customers, and stakeholders makes them the ideal strategic successors to lead us into a new era of innovation and growth while continuing to provide a seamless service to our customers,” said Virmani, who will transition to executive chairman.
In his new role, Virmani will focus on strategic planning, including aircraft acquisitions, and help train the next generation of company leaders.
Virmani is well recognized for building out Cargojet’s capabilities. Under his leadership, Cargojet (TSX: CJT) has grown into Canada’s largest cargo airline, with 39 aircraft and with compound annual growth in core operating profit of 20% over the past two decades. The company operates an overnight freight network. It also provides outsourced cargo transport – in which the customer assumes the risk for fuel, booking shipments at market rates, and other operating fees – as well as charter services. Blue-chip customers include Amazon, DHL, Purolator, UPS and Canada Post, as well as freight forwarders.
The company’s stock has enjoyed an 18% compound annual return since its initial public offering in 2005.
“Everything we have done at Cargojet has been against odds. Starting an airline after 9/11; convincing global package delivery brands that it is more efficient to abandon their own aircraft fleets in favor of Cargojet’s network; surviving the 2007-08 global financial crisis, and more recently tackling once in a 100-year pandemic,” said Virmani in a statement.
Cargojet last week reported revenue in the third quarter declined 8% to $155 million, partially due to lower fuel surcharges, and adjusted earnings before accounting measures fell 17% to $50.6 million year over year, as the air cargo sector craters from the pandemic peak in 2021 when shippers were desperate for airlift to bypass supply chain congestion.
The airline flew 8.8% fewer hours during the period versus last year.
In response to continued contraction in business, the company is targeting a $325 million reduction in capital expenditures, including the already completed divestment of three large Boeing 777 freighters and abandoning purchase plans for a fourth aircraft. Management last week said it also plans to sell four newly converted Boeing 757 freighters and put the brakes on converting some used 767 aircraft to freighters.
Air Transport Services Group (NASDAQ: ATSG), an Ohio-based freighter lessor and operator, last week fired CEO Rich Corrado for not meeting investor expectations for stock growth despite solid operating performance. In early October, Amerijet parted ways with CEO Tim Strauss as the airline struggles to cover costs amid a sharp reduction in revenue.
Dhillon has had various levels of corporate responsibility, including marketing, government relations, human resources, legal, facilities and commercial operations. She currently oversees all aspects of support functions as well as ground operations globally.
Porteus has led sales, customer relations, commercial strategy, operations, network planning and design, and investor relations during his time at Cargojet.
Walter Spracklin, an equity analyst at Royal Bank of Canada Capital Markets, praised the promotion of Dhillon and Porteous, saying in a client note that they are strong leaders who have helped Cargojet be successful.
Last week, Virmani was appointed to the Order of Ontario, the highest honor the province bestows on civilians for demonstrations of excellence in any field. The
Globe and Mail newspaper honored Virmani as the CEO-Strategist of the year in 2020.
More FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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