Consumers spent nearly $5 trillion on e-commerce purchases last year, representing just a quarter of all retail sales. In addition to shifting spending online, Amazon.com and other services have made two-day or next-day delivery an expectation among consumers. The result has been a soaring demand for air cargo to move products quickly.
In this article, we’ll look at why Global Crossing Airlines Group Inc. (NEO: JET) (OTCQB: JETMF) is well-positioned to benefit from these tailwinds in the air cargo market.
Why Invest in Air Cargo?
The International Air Transport Association projects that cargo volume for airlines will grow about eight percent in 2021, reaching a record $175 billion (an upward revision of $23 billion from April). Like many other parts of the supply chain, these growth rates would be even higher if not for operational strains like staffing shortages.
“We are experiencing the longest and strongest airfreight bull run in recent memory,” said Stifel analyst Bruce Chan in the Baltic Air Freight Index’s January newsletter. “With little relief coming to broader supply chain congestion, broad demand expected to remain strong, and capacity still under pressure, we don’t expect much relief anytime soon.”
Unfortunately, investing in the air cargo market is challenging because most major airlines serve passenger and cargo markets. Last year, the trade group estimated that airlines would lose $51.8 billion in 2021 thanks to reduced passenger travel due to COVID-19. That’s better than the prior year’s $137.7 billion loss but still not ideal for investors.
GlobalX’s Unique Position
GlobalX is a new airline that just began generating revenue last year. After spending 2020 getting certified, the company began flight operations in August 2021. And between August and December 2021, it operated 730 revenue flights with 1,700 block hours for nearly two dozen customers, generating $11 million in revenue during Q4 2021.
Unlike most cargo airlines, GlobalX leases aircraft to keep its capital expenditures low and quickly adapt to changing market conditions. The company also has programs to streamline hiring and training pilots and flight attendants, enabling them to efficiently navigate the shortages facing the rest of the industry.
Currently, the company focuses on charter flights and expects Q1 2022 revenue to exceed the $14.3 million in total revenue from FY 2021 and grow at a 30% sequential rate through 2022. However, the company is undergoing the FAA certification process for its cargo business, which could help it capitalize on a massive and complementary opportunity.
The Bottom Line
GlobalX trades with a market capitalization of just about $60 million, making it a minor player in the charter and, eventually, air cargo market. However, if it successfully expands its fleet to 50 aircraft by 2025, it could become on par with competitors like Sun Country Airlines, which trades closer to a $1.5 billion market capitalization.
In addition to its growing revenue, the company plans to achieve profitability by the end of its first year of revenue operations. That sets it apart from the hundreds of other airlines that operate with perpetual losses and thin margins. Investors could see real long-term value creation, making it an opportunity to watch over the coming quarters.
Disclaimer
The above article is sponsored content. CannabisFN.com and CFN Media, have been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: http://www.cannabisfn.com/legal-disclaimer/
