Air Transport Services Group (ATSG) saw overall net earnings increase year-on-year in Q1 2018 as its MRO Services segment along with Amazon and DHL cargo aircraft leasing arrangements all made sizeable contributions.
In first quarter results ending March 31, ATSG, whose MRO subsidiaries include Airborne Maintenance & Engineering Services and Pemco World Air Services, reported a slight decline in revenues of $203 million, down 14.6% year-on-year while adjusted EBITDA rose 26%.
However, the business said the revenue decline reflected two factors: first, the adoption of a new revenue standard along with reimbursable expenses last year amounting to $54.4million. Excluding these, ATSG said that its revenues would have improved by 11% compared to Q1 2017.
Its MRO Services unit, established as a new reporting segment in January to include its aircraft maintenance services and modification services businesses, accounted for a 31% year-on-year revenue rise.
Total revenues for the segment were $52.7 million in Q1 2018, bettering Q1 2017’s $40.3 million. Revenues generated by third-party customers of the ATSG MRO businesses also climbed by 22% the first three months of the year.
Its cargo leasing division also performed strongly. Its tie-up with Amazon, for which it has a deal to operate 20 of the e-commerce giant's 767s, accounted for 28% of the total for the quarter under the company’s new revenue recognition rules, while DHL also contributed to 28% and the military 11%.
Nevertheless, its other activities saw a 39% decrease, driven by Amazon’s decision to move from its former hub close to ATSG’s headquarters in Wilmington, Ohio eliminating ground services work to a new site in Cincinnati.
“Our results stem from our continued success against our strategy to acquire, convert, lease and operate Boeing 767 freighters around the globe,” said ATSG’s president and CEO Joe Hete in an earnings call held on Tuesday (May 8).
He stated that two more of the aircraft have been leased and deployed so far in 2018 with a third due later this month. “We intend to deploy seven others by the end of the year,” he added.
As of the end of March 2018, ATSG owned a total of 79 Boeing aircraft, with a total of 70 aircraft in-service.