WILMINGTON — Air Transport Services Group, Inc. (ATSG) reported consolidated financial results for the quarter and nine months ended Sept. 30, 2020.

In a Thursday afternoon news release, ATSG reported third quarter 2020 results, as compared with the third quarter of 2019, include:

• Customer revenues up 10 percent, or $38.1 million, to $404.1 million. ATSG’s principal business segments, aircraft leasing and air transport, increased revenues by seven percent and 10 percent, respectively, before eliminations. Revenues from other businesses decreased six percent on the same basis.

• Capital spending through the first nine months totaled $394.3 million, up 17 percent. Capital expenditures included $273.4 million for the purchase of eight Boeing 767 aircraft in the first nine months of 2020, and for freighter modification costs.

Rich Corrado, president and chief executive officer of ATSG, said, “In the third quarter, ATSG’s businesses continued to deliver better than expected results, aided by a quarterly record seven deployments of 767 freighter aircraft to its aircraft leasing customers, and by seizing opportunities for charter and cargo ACMI operations to supplement the capacity of our customers. These opportunities helped to offset pandemic-driven year-over-year declines in commercial passenger and Boeing 757 combi operations at two of our airlines.

“We will achieve our goal of delivering a record 12, 767-300 freighters in 2020 to external customers, including four in the fourth quarter, while also re-leasing three 767-200s to customers in Kenya, Malaysia and Mexico.”

ATSG’s Cargo Aircraft Management (CAM) third quarter revenues, net of warrant-related lease incentives, increased seven percent versus the prior year.

Revenues increased primarily from 11 more converted 767-300 freighters in service, compared with Sept. 30, 2019. CAM’s revenues from external customers increased 22 percent for the third quarter versus the same prior-year period.

• ATSG’s total fleet consisted of 101 aircraft in service at the end of the third quarter, nine more than at the same point in 2019. CAM owned 96 of those aircraft; three were leased to ATSG airlines by third parties and two were customer-provided for ATSG to operate. Sixty-nine of those in-service, CAM-owned cargo aircraft were dry-leased to external customers on September 30, 2020, eleven more than a year ago.

• CAM owned nine 767-300 aircraft in or awaiting cargo conversion as of Sept. 30, versus 10 a year ago and eight at the end of 2019. CAM expects to lease at least 15 of the 767-300 newly modified freighters during 2021, including 11 already under firm customer commitments with Amazon, and four for which CAM is finalizing lease arrangements.

• Through nine months of 2020, CAM has purchased two 767 freighters, and six 767 passenger aircraft for freighter modification, all for lease deployment in 2020 and 2021. It expects to purchase three more feedstock 767s in the fourth quarter, and at least seven in 2021. One other CAM owned, in-service 767 passenger aircraft will be converted to a freighter for lease in 2021.

• ATSG’s airlines operated 71 aircraft at September 30. Total block hours increased 13 percent for the third quarter versus a year ago, principally due to more aircraft in service and expanded route commitments from Amazon and DHL.

Outlook

While ATSG’s aircraft leasing demand is exceptionally strong, the pandemic’s effects on the global economy and on commercial and military passenger operations remain difficult to predict.

Corrado said that ATSG’s long-term outlook remains very bright.

“We expect another record year for cargo aircraft leasing in 2021, given an order book that already calls for us to modify and dry-lease at least 15 more 767 freighters, while redeploying others to new customers,” he said. “We are also hopeful that demand from Omni’s commercial passenger charter customers resumes in early 2021.”

Corrado added, “ATSG’s capital expenditures for 2021 are projected to be lower than in 2020, as we indicated last quarter. However, given the continued strong demand for our leased mid-size freighters, we now project purchasing at least seven feedstock 767s next year with continued opportunity for lease deployments at attractive long-term returns on capital extending into 2022. We now project that 2021 capital expenditures will be in the range of $425 million, down from the approximately $485 million we anticipate for 2020.”

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