ATSG sees Q2 revenues jump thanks to Amazon operation
09 / 08 / 2016
Air Transport Services Group (ATSG) continued to benefit from its new freighter contract with Amazon as both revenues and net earnings increased during the second quarter.
The Wilmington, Ohio-based provider of medium wide-body freighter aircraft leasing saw second quarter revenues increase by 19% year on year to $176.5m, while net earnings for the period were up 7.3% year on year to $11.6bn.
On the downside, second-quarter operating profits declined by 20.2% on last year to $15.8m.
ATSG said the revenue increase was down to the lease of 35 Boeing 767 freighters compared with 29 during the second quarter of last year.
Eight of those B767s were operating for Amazon Fulfillment Services, which it began working for in September last year.
Earnings from continuing operations were affected by ramp-up costs stemming primarily from flight and crew compensation and training for its expanding Amazon and DHL crew, maintenance and insurance (CMI) operations.
ATSG president and chief executive Joe Hete said margins would improve as the year progressed.
“Last week, we leased and began operating the tenth of twenty B767 freighters we will fly for Amazon.
“We expect margins to improve substantially in the second half as we approach our year-end 2016 target of 43 dry-leased B767 freighters, and increase from twenty-two to thirty the number of those we operate for customers under multi-year CMI agreements.
“We have increased acquisitions of B767-300 airframes, and have secured the conversion slots to satisfy strong customer demand.”
The company also continued to diversify its revenues. Last year, almost 50% of revenues were down to DHL. In the second quarter of this year, that was down to 37%, with Amazon accounting for 22% and the US military 13%.
The company also plans to continue to buy back shares at a moderate pace, and on an opportunistic basis.