ATSG to acquire US passenger carrier Omni Air International for $845m

03 / 10 / 2018

US freighter lessor Air Transport Services Group (ATSG) is to acquire Oklahoma-based Omni Air International (Omni Air), a passenger and charter services provider, for $845m.

Omni Air, founded in 1993 and with a fleet of 13 passenger aircraft, a mix of Boeing 767 and Boeing 777 extended range units, serves the US and allied foreign governments and commercial customers.

The combination with Omni Air is anticipated to add over $430m in annualized revenues to ATSG, which is also a provider of B767 converted freighter services to e-tailing giant Amazon.

The agreement is expected to close during the fourth quarter of 2018, subject to regulatory approvals, and ATSG did not assume any debt in connection with the acquisition.

Joe Hete, president and chief executive of ATSG, said that the acquisition would allow the group to pursue new growth opportunities, “including serving the expanding global e-commerce demand.”

Omni Air provides passenger airlift services to the US Department of Defense (DoD) via the Civil Reserve Air Fleet (CRAF) programme, and is a worldwide provider of full-service passenger charter and aircraft, crew, maintenance an insurance (ACMI) services.

Omni Air also carries passengers worldwide for a variety of private sector customers and government services firms. Omni Air is an FAR Part 121 certificated and IATA Operational Safety Audit registered airline.

ATSG said in a statement that the acquisition “also exceeds” the company’s investment hurdle and is expected to be immediately accretive to ATSG’s adjusted earnings per share in 2019, with Adjusted EBITDA in line with ATSG’s margin profile.

Added the statement: “The acquisition of Omni Air will further diversify ATSG’s customer base, add significant presence in the growing government passenger charter services market, add 13 aircraft to ATSG’s fleet, and broaden the ATSG carriers’ operating capabilities to include three Boeing 777-200 extended range (ER) aircraft.

“The transaction will further ATSG’s strategic goals by adding growth opportunities with long-time and blue-chip customers, and by positioning it to meet customers’ global cargo needs with the longer-range B777 platform. The strong recurring cash flows from Omni Air’s operations augment the sustainable cash flow generated by ATSG’s dry leasing business model.”

Omni Air’s fleet, which includes seven 767-300ER, three 767-200ER and three 777-200ER aircraft, complements ATSG’s industry leading fleet of Boeing 737, 757, and 767 aircraft. Eleven of the thirteen aircraft Omni Air operates are owned, with one 767-200ER and one 767-300ER leased.

In total, the ATSG companies will have a combined fleet of more than 90 aircraft in service by year-end.

Hete added: "Combining ATSG and Omni Air’s operating expertise and array of aircraft options fulfills several of our principal goals – to broaden ATSG’s ACMI capabilities; grow and diversify our revenue streams with government and commercial customers; and reach new global markets with our full range of leasing, operating, and aircraft maintenance capabilities.

“We look forward to working with Omni’s excellent management team to pursue new growth opportunities, including serving the expanding global e-commerce demand.”

Jeff Crippen, president and chief executive of Omni Air, said. "Combining Omni Air and ATSG’s experience and skillsets unquestionably makes for a stronger company that can better serve its customers worldwide."

Omni Air will operate as a separate subsidiary within ATSG under Jeff Crippen’s leadership from its existing Tulsa, Oklahoma, headquarters. An invitation has been extended to Rob Coretz, chairman, co-founder, and former Cchief exeuctive of Omni Air, to join ATSG’s board.

ATSG plans to fund the all-cash acquisition of Omni Air by expanding the term loan under its existing credit facility.