Omni Air and Amazon help revenue grow for ATSG

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Revenue for Air Transport Services Group (ATSG) was up in the second quarter of 2019 helped by the acquisition of Omni Air and more flights for Amazon.

Second quarter revenue was $334.5 million compared to $203.6 million in 2018, and first half revenue increased from $406.6 million last year to $682.7 million.

Net earnings turned from a $24.5 million profit to a $26.6 million loss in the second quarter due to changes in values of warrants issued to Amazon.com Services, increased interest expenses, depreciation and amortisation, and retiree benefit costs.

Joe Hete, president and CEO of ATSG says that the company agreed to lease 10 more Boeing 767-300 converted freighters to Amazon in December 2018, expecting five deliveries a year.

He says: “At Amazon’s request, we now expect to deliver them six 767 freighters this year, and the remaining four in 2020. The first of those six was delivered in June, the second in early July, and the third is due later this month. At the same time, we have agreed to lease four 767 freighters to United Parcel Service this year, starting in September.”

Capital expenditure for 2019 is projected to be around $475 million due to purchasing and modifying 767s.

ATSG also expects FAA approval to product a converted freight variant of the Airbus A321-200 in mid-2020, and will invest $6 million in the joint venture with Precision Aircraft Solutions in the second half of 2019.

Hete says more than 80% of its 767 freighters are deployed on long-term leases, and CMI, ACMI and charter flights continue to grow through its relationships with large commercial and government customers.

He says: “Compared with air carriers with more payload-sensitive business models, the outlook for the e-commerce-driven regional air networks that drive our cash flow remains very bright.”

In response to the results, pilots say another earnings report without an updated contract for ABX Air pilots is not good, with more and more retiring or seeking opportunities elsewhere due to management failing to negotiate a new contract.

Captain Rick Ziebarth, an ABX Air pilot and executive council chairman for ABX Air pilots of Teamsters Local 1224 says: “ At ABX Air, demand for business continues to increase for customers like Amazon Air and we need more pilots to staff the growing demand for flights. ATSG executives must take these attrition issues and negotiations for a new contract seriously. A new pilot contract is the only pathway to future success for ABX Air.”