Revenue at Air Transport Services Group (ATSG) grew 37.9 per cent to $237.9 million in the first quarter while net earnings were up to $9.9 million.
The leasing, transportation and services company says revenue was strong across all business areas, with ACMI revenue up to $144.9 million, ‘other activities’ growing from $55 million in 2016 to $89.2 million this year while cargo aircraft management (CAM) dipped to $47.9 million from $51.7 million.
ATSG president and chief executive officer, Joe Hete says: “Forty-three of our Boeing 767s were dry leased to external customers at the end of the first quarter, compared with 29 a year earlier. Our leasing business revenues from external customers increased 7 per cent for the quarter, and we expect accelerating growth in that segment as the year progresses.”
“That trend, plus improved profitability in our airline operations and good returns from our aircraft maintenance and logistics businesses, position us to deliver continued strong earnings and cash flow in the months ahead.”
ATSG says CAM’s dip was because of the Amazon lease incentive valuation, as well as reductions in external maintenance revenues, spare engine leasing, parts sales and temporary revenue interruptions while transitioning aircraft between customers.
CAM owned 61 Boeing cargo aircraft, of which 60 were in service, and nine 767-300s were awaiting or undergoing modification from passenger to freighter (P2F).
ACMI revenue grew due to CMI operations for Amazon and losses were reduced to $3.7 million, which included higher costs for pilot training and premium pay as the airline continued expanding Amazon operations.
‘Other activities’ were helped by PEMCO announcing agreements for P2F conversions of five Boeing 737s for China-based airlines.
ATSG predicts adjusted EBITDA from continuing operations for 2017 to exceed $260 million based on growth programs and initiatives and assuming the deployment of 10 additional 767s and two 737s with lease customers through the last nine months of 2017.
It says the forecast includes the relocation of Amazon hub operations from Wilmington to Cincinnati, and the cessation of operations formerly performed by ATSG’s LGSTX Service business.
Hete says: “Strong competition continues to drive e-commerce merchants worldwide to invest in dedicated networks that can achieve faster throughput of the goods their customers need. Our aggressive fleet investments and expansion into the narrow-body freighter segment expands our leading role in this key growth market.”
