ATSG remains bullish about its adjusted EBITDA from continuing operations for 2016. However, the provider of air cargo transportation and related services felt the impact of its year-long relationship with Amazon during Q2, with first-half capital expenditure was $125 million, up from just $76 million a year earlier.
In terms of profit, net earnings in the second quarter grew 7 percent, year-over-year, to $11.6 million, but falling slightly to $19.8 million in the first half.
Revenues over the second quarter increased 19 percent to $176.5 million, a 13 percent increase, year-over-year, excluding revenues from reimbursed expenses. As of June 30, ATSG had thirty-five 767 freighters leased to external customers, six more than the same time a year earlier.
Pre-tax earnings from continuing operations were $18.8 million, up from $17.2 million in Q2 2015. Adjusted pre-tax earnings from continuing operations, however, declined slightly to $16.3 million from $16.7 million. ATSG cited its $2.6 million in ramp-up costs from staffing and training related to the Amazon and DHL CMI operations.
First-half capital expenditures included purchases of seven 767-300F aircraft – three in the second quarter, plus freighter modification costs for those and other aircraft, capitalized maintenance costs, and payments for other ground and maintenance equipment. For the full year, ATSG anticipates that capital expenditure will reach $315 million, of which $235 million will be spent on fleet expansion largely related to meeting the terms of the Amazon deal.
Joe Hete, president and CEO of ATSG, said, “our operating performance across the board in the second quarter was strong, and yielded financial results that met or exceeded our targets. Last week, we leased and began operating the tenth of twenty 767 freighters we will fly for Amazon.”
Hete added that he expected margins to improve “substantially” in the second half of 2016 as the carrier approaches its year-end 2016 target of 43 dry-leased 767 freighters. ATSG also expects to increase the number of aircraft it operates for customers under multi-year CMI agreements from 22 to 30 by year-end. “We have increased acquisitions of 767-300 airframes, and have secured the conversion slots to satisfy strong customer demand,” he added.
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