ATSG's results reflect growing returns from fleet investments

Air Transport Services Group, a provider of medium wide-body freighter aircraft leasing, air cargo transportation and related services, reported consolidated financial results for the quarter ended June 30th, 2015. Pre-tax earnings from continuing operations increased 17% to US$17.2m, including a 35% increase in Cargo Aircraft Management’s pre-tax earnings, driven by eight additional freighters leased to external customers. Net earnings from continuing operations increased 14% to US$10.6m. Operating loss carryforwards for U.S. federal income tax purposes offset much of the company’s federal tax liabilities. ATSG does not expect to pay significant federal income taxes until 2017 at the earliest. Consolidated revenues were approximately flat at US$148.4m. Excluding revenues from reimbursed expenses, revenues increased 3%. Revenues from cargo aircraft leasing were up 12%. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) increased 13% to US$51.2m, and increased 16% to US$97.7m year to date.  The second quarter marked the commencement of a new four-year commercial agreement governing air network services that ATSG provides to DHL. It began with fifteen dry leases for Boeing 767 freighters dedicated to DHL through March 2019, currently operating in its U.S. network. DHL added a sixteenth dry lease, a 767-300 freighter delivered in June, and we expect to place two additional 767-300s, both under eight-year lease terms, during the fourth quarter of 2015. Accordingly, ATSG has purchased two more passenger-configured 767-300s for freighter conversion to meet DHL’s requirement.