ATSG sees revenues rise but profits fall in Q2
Freighter lessor ATSG saw its revenues rise but profits fall in the second quarter of the year as it faced higher costs, but benefited from more flying.
The Wilmington-headquartered company reported a 24% year-on-year increase in second-quarter revenues to $510m, operating income for the period was down 16.6% to $70.5m and net earnings slipped 31.1% to $55.1m.
The company said that the higher revenues came on the back of a return of passenger flying and increased cargo demand. Profits were affected by higher crew and operating costs.
Rich Corrado, president and chief executive officer of ATSG, said, “Leasing converted midsize freighter aircraft and flying them in express-package networks remained a powerful and resilient driver of our strong cash flow in the second quarter
“CAM, our aircraft lessor, again fueled our adjusted earnings momentum, with nine more Boeing 767 freighters leased to third-party customers than a year ago. Our cargo airlines continue to fly more hours, using both freighters that CAM owns plus others that customers have assigned to them.”
Second-quarter results were affected by additional costs for crew coverage and inflation-driven increases in operating costs, including crew travel, fuel costs for positioning aircraft, and labor costs, including contracted worker costs.
Last year the company also benefitted from $38m in government grants awarded to offset pandemic effects on Omni Air’s passenger operations.
Looking ahead, Corrado expects the company to hit its targets for the full year.
“Despite persistent inflation, we expect to reach our financial targets for 2022, as demand for our express package network assets and flight operations remains high,” he said.
“E-commerce shopping habits, now well ingrained and reinforced by often lower online prices, will continue to drive express-package delivery networks that assure rapid, reliable delivery.
“That trend, in turn, will drive growth in ATSG’s cash flow through the current economic cycle and beyond.”
ATSG expects to lease a record eighteen freighters in 2023, including fourteen 767s and four A321s.
“The majority of those orders are backed by customer deposits, and nearly all are from existing customers, giving us great confidence about growth in our core leasing returns over the next 18 months,” Corrado said.
“Beyond that, we have customer orders for twenty Airbus A330s we will start to acquire and convert next year, with deliveries beginning in 2024.”
Damian Brett www.aircargonews.net