US lessor ATSG revenues up in Q1 2021 fuelled by e-commerce demand

US lessor Air Transport Services Group (ATSG) reported revenues of $486m for the first quarter of 2022, up 29% compared with the first quarter of 2021.

ATSG said adjusted EBITDA was $158m, up 49% from the first quarter of 2021. Full year 2021 revenues were $1.73bn, up 10% year on year.

The demand for capacity has been driven by “the growth of e-commerce driven express networks,” according to Rich Corrado, president and chief executive of ATSG.

Looking at the performance of ATSG’s divisions, the Group said a larger fleet of externally leased Boeing 767s versus a year ago contributed to Cargo Aircraft Management’s (CAM) $24m first-quarter revenue gain.

CAM also realised 2022 revenues from new pay-by-cycle engine support services with several lessees of its 767-200 freighters.

Aircraft leasing and related revenues from external customers were up 26%.

CAM’s first-quarter pre tax earnings increased 63% to $35m versus the prior-year quarter.

Eighty-six CAM-owned 767 freighter aircraft were leased to external customers as of March 31, eleven more than a year ago. CAM expects to lease nine more 767 and two A321 freighters in 2022.

CAM purchased one 767-300 and two A321-200 passenger aircraft during the first quarter for conversion to freighters. Fifteen CAM-owned aircraft were in or awaiting conversion to freighters as of March 31, including three A321s. In March, CAM placed a second order with Boeing for the conversion of four CAM-owned 767-300 aircraft.

First-quarter revenues increased 34% to $330m for ATSG’s ACMI Services business.

Block hours for ATSG’s airlines reflected sharply higher passenger flying and the benefit of ten more freighters in CMI service than a year ago. That includes one that was provided by a customer for ATI to operate during the quarter, for a total of seven such customer-provided aircraft at March 31, up from two a year ago.

Revenue block hours increased 21% overall, including a 32% increase for passenger and combi flying and a 19% increase for cargo aircraft.

ATSG projects a record $640m in Adjusted EBITDA for 2022, up nearly $100m from 2021.

The forecast assumes dry leases of eleven more converted freighters, including nine 767-300s; and CMI assignments for nine more 767 freighter aircraft. That includes two that CAM will lease and another seven others that the owners or lessees of those aircraft are placing with ATSG’s cargo airlines to operate.

The forecast also assumes Omni’s commercial charter and ATI’s combi flights continue to increase throughout 2022, as charter demand and airport access reflect diminished pandemic risk.

Corrado said that Group plans to continue acquiring passenger aircraft to fill more than 80 passenger-to-freighter conversion slots.

ATSG’s current plan calls for all of the Boeing 767, Airbus A330, and Airbus A321 aircraft that will enter those slots to be leased and delivered to customers by the end of 2027.

“Demand for express-package air assets remains very high,” said Corrado. “We have customer orders for all 30 of the newly converted freighters we will lease this year and next year, and already have customer orders for the first 20 of 29 Airbus A330s we will start to acquire and convert next year, with leases beginning in 2024 through 2026. We are pleased to count ASL Aviation Holdings, a major source of cargo lift to integrated global networks, among our future lessees of Airbus cargo aircraft. ASL has ordered the first two of our A321 freighters in the second half of this year, a third in 2023 and two A330 freighters in 2024.”

Rebecca Jeffrey www.aircargonews.net & ATSG