ATSG Q3 revenues up but profits slide

ATSG saw profitability decrease in the third quarter of the year despite a boost in revenues as its Amazon deal affected the business.
In the third quarter of the year, the Wilmington-based aircraft lessor saw net earnings from continued operations decrease to $2.1m from $6.3m a year earlier.
The company said that warrants issued to Amazon Fulfilment Services in March – part of a deal to operate a fleet of 20 B767 aircraft for the e-commerce giant – continued to have a “significant impact” on financial results in the third quarter.
Pre-tax profitability at its aircraft, crew, maintenance and insurance (ACMI) division was also affected as it had to pay premium wages and training to staff as a result of a ramp up in business, primarily driven by the Amazon network. This had a $6.5m impact on pre-tax results.
The company said it is in the process of hiring new crew members.
While the extra business had a negative impact on profitability, revenues for the period increased by 36% year on year to $193m.
ATSG president and chief executive Joe Hete said: “Our rapid growth remains strong across all of our businesses as our leased freighter fleet and logistics and maintenance operations continued to expand in the third quarter.
“In our airlines, costs associated with expansion of our operations continue to affect the profitability of those businesses.
“In particular, our third quarter results were adversely impacted by premium pay to ABX Air pilots, despite an aggressive crewmember recruiting program and rigorous training schedule.
“We estimate that this additional compensation, along with ongoing training, negatively impacted our pre-tax results by approximately $6.5m for the third quarter.”
During the third quarter two more B767 aircraft were acquired as the lessor looks to build up its fleet for the Amazon expansion.
The lessor also continues to be involved in a dispute with pilot unions.
Yesterday, Atlas, which will also operate a fleet of aircraft for Amazon, reported a third-quarter loss.