Air Transport Services Group’s (ATSG) revenue increased 24 per cent to $768.9 million in 2016 and it was up 22 per cent in the final quarter of the year.
ATSG’s earnings from continuing operations fell though as were $21.1 million in 2016 down from $39 million in 2015 – while it posted a $755,000 loss for the fourth quarter. These results include the non-cash effects of warrants issued in March 2016 to Amazon Fulfillment Services in connection with operating and lease agreements.
Fourth quarter and full-year earnings were also impacted by a $7 million reduction in revenue and pre-tax earnings from continuing operations, due to a strike by Teamsters-represented ABX Air pilots in November.
Pre-tax earnings from continuing operations were $34.5 million for the year and $420 thousand for the fourth quarter of 2016.
Earnings before interest, taxes, depreciation and amortization (EBITDA) increased seven per cent to $211.8 million for 2016. Fourth quarter adjusted EBITDA was $56.4 million, even with the prior year.
ATSG president and chief executive officer, Joe Here says: “In 2016, we completed a major set of long-term agreements with Amazon in support of its new dedicated air network, and by year-end began leasing 14 of the contracted 20 Boeing 767s for that network.
“A 15th Boeing 767 was leased to Amazon in early January 2017. Our aircraft leasing, maintenance, and logistics businesses met aggressive targets from Amazon and other customers while generating good margins.
“However, our airline operations, particularly those at ABX Air, incurred significant pilot training and premium pay related to expanded CMI operations, along with lower revenues due to a November ABX pilot work stoppage.
“Taken together, these factors reduced our second-half 2016 pre-tax earnings by approximately $20 million. After first quarter 2017, we anticipate costs at our airlines to be normalized. That, along with minimal non-cash pension expense in 2017, is projected to result in a profitable year for our ACMI Services segment.”
Last year, ATSG penned an agreement with Amazon Fulfillment Services, an affiliate of Amazon.com – to operate an air cargo network to serve Amazon customers in the US. The aircraft lessor lease 20 ATSG-owned Boeing 767 Freighter’s to Amazon.
ATSG is the holding company for cargo airlines ABX Air and Air Transport International and maintenance, repair and overhaul firm Airborne Maintenance & Engineering Services, while it has other subsidiaries.