ATSG continues to grow freighters with e-commerce profits

Air Transport Services Group, a provider of leased freighter aircraft and outsourced airline operating services, said Thursday that it will continue to demand more aircraft for time-sensitive e-commerce deliveries, as express delivery customers continue to demand more aircraft. The company reported an 80% increase in adjusted pre-tax earnings in the second quarter to $67 million. .

Results came in a few hours Its main competitor, Atlas Air, has announced a private acquisition for $5.2 billion. It is backed by three investment funds led by Apollo Global Management.

ATSG (NASDAQ: ATSG), based in Wilmington, Ohio, had revenue of $524 million, up 24% year over year. Adjusted earnings before interest, taxes, depreciation and amortization increased 23% to his $158 million. Adjusted earnings of 59 cents per share beat Wall Street expectations.

Earnings adjustments discount one-time gains of $38 million on federal COVID-19 relief for passenger airlines and $30 million on stock option revaluations last year.

The company is leasing nine more Boeing 767 freighters to customers than a year ago, and said its subsidiaries ABX Air and Air Transport International have increased flight hours. Its top three customers are the Department of Defense, Amazon (NASDAQ: AMZN) and DHL Express.

Inflation is increasing costs for employees, contract labor, crew travel and other air costs, according to management.

CEO Rich Corrado said: “E-commerce shopping habits are now well-established, reinforced by lower online prices, and will continue to drive expedited shipping networks that ensure fast and reliable delivery. It will drive ATSG’s cash flow growth through the economic cycle and beyond.”

ATSG’s leasing arm has 89 aircraft under contract and plans to lease another six in the second half of the year. The main he is four 767-300s and two Airbus A321-200 narrowbody freighters, once converted to carry heavy containers on deck. Amazon has leased 42 of his 767s, and ATSG flies five of his other aircraft provided by Amazon.

Cargo Aircraft Management (CAM) has purchased five pre-owned 767-300 and four A321-200 airliners in the first half for conversion to freighters, the company said. A 767 removed from charter passenger airline Omni Air’s fleet will also be sent for conversion.

A total of 19 CAM-owned aircraft, including five A321s, were in or awaiting conversion to freighters.

ATSG said earlier this year The first two A321s will be sent to Dublin-based ASL Aviation Holdingsis a courier company and a contract airline of Amazon Air.

The A321 is a new aircraft for ATSG, which has so far operated only wide-body Boeing aircraft. It also plans to convert 29 Airbus A330-300 equivalents to 767s to access more aircraft as its pool of used 767s begins to dwindle and conversion facilities face production backlogs. I am also planning to The A321 also offers entry into the popular regional package market, particularly the daily shuttle market between sub-cities and large network hubs.

ATSG has a 360-degree money-making strategy for A321 freighters competing with Boeing 737-800 modified freighters and older 757s. We are also a joint venture partner of 321 Precision Conversions, where we have designed conversion kits, including wider cargo doors, reinforced floors and wing boxes, rigid cockpit barriers, container conveyor systems, and approvals from U.S. aviation regulators. I have received Pemco, an in-house maintenance and repair organization, does many of the joint venture installations. Finally, ATSG can also provide crews to fly standard jets for its customers.

The company said it plans to lease a record 18 freighters in 2023, including 14 767s and four A321s.

“The majority of these orders are backed by customer deposits, nearly all from existing customers, giving us great confidence in our core lease revenue growth over the next 18 months,” Corrado said. says.

ATSG has previously revealed that it has an order for 20 freighters converted from A330s. The first conversions will begin next year, with deliveries starting in 2024.

Management is front-loading capital spending by $35 million to acquire the conversion aircraft this year instead of 2023. Total investment this year is expected to be $625 million for him, primarily funded by free cash flow, including his $420 million for growth.

In April, the air transportation conglomerate acquired a 40% ownership interest in joint venture GA Telesis Engine Services, providing engine dismantling services to harvest and sell engine parts.

transportation service

ATSG’s dedicated transportation segment saw a 27% increase in revenue. A significant increase in passenger aircraft and the use of eight more freighters (four from CAM and four customer-provided) were a major reason for the surge.

The company’s turnkey products provide aircraft, crew, maintenance and insurance under long-term contracts, with customers responsible for fuel, operating costs and shipping.

According to ATSG, freighter operating hours increased by 7%.

The company maintained its full-year guidance for adjusted EBITDA of $640 million, up $100 million from last year.

For more FreightWaves/American Shipper articles by Eric Kulisch, click here.

Recommended reading:

Apollo-led investor buys cargo carrier Atlas Air for $5.2 billion

Why Atlas Airways Is An Attractive Acquisition Target For Investors

ATSG leases Airbus cargo planes to European cargo carrier

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