Morningstar DBRS has confirmed Cargojet Inc.'s issuer rating and senior unsecured notes at BBB (low) with a Stable trend, reported Toronto-based Morningstar DBRS.

The confirmation reflects Cargojet's resilient domestic network and steady cash flow despite weaker earnings over the last 12 months. Profitability moderated due to softer ACMI activity and a less favorable business mix, but operating performance remained broadly stable.

Cargojet's 2025 revenue fell 0.8 percent year on year to about $993 million, while EBITDA declined 0.7 percent to $319 million. Cash flow from operations dropped 2.9 percent to $280 million. Capital expenditure rose sharply to $350 million, leading to a free cash flow deficit of $86 million.

Adjusted debt-to-EBITDA increased to 3.11 times in 2025 from 2.35 times in 2024, reflecting higher debt and lower earnings. For the 12 months ended March 31, 2026, revenue was $998 million and EBITDA $313 million, with leverage improving modestly to 2.95 times.

Morningstar DBRS stated that a negative rating action could follow if operational performance deteriorates or leverage remains above 3 times for a sustained period. Conversely, a positive action could be considered if Cargojet achieves structural improvements in diversification and scale.

Earnings in 2026 are expected to remain resilient, with net revenue forecast to rise to about $1.0 billion, supported by charter activity and stable domestic demand. Adjusted EBITDA is projected at $320 million, with margins easing to 31 percent due to higher costs.

Financial performance is expected to stabilize with lower capital spending below $200 million and modest deleveraging. Cargojet is forecast to generate a free cash flow surplus in 2026, allowing for debt reduction of $50 million to $100 million.