Freighter aircraft deployments and additional business handled for the U.S. Department of Defense helped raise first quarter earnings and revenue by double-digits for cargo aircraft leasing company Air Transport Services Group (NASDAQ: ATSG).
Wilmington, Ohio-based ATSG reported earnings from continuing operations of $26 million in the first quarter of 2019, up 26 percent over the same period in 2018, with adjusted earnings per share coming in ahead of analyst expectations at $0.37 cents per share. Customer revenues surged 71 percent in the first quarter of 2019 to $348.2 million, due primarily to $135.8 million contributed by the company's $845 million purchase of Omni Air in October 2018.
"Our acquisition of Omni Air, and recent agreements with our largest commercial customers, Amazon and DHL, add years of contracted revenue streams from aircraft leasing and from operations by our airlines and related service businesses," commented ATSG President and CEO Joe Hete.
"Our customers are focused on transport options that offer optimal combinations of reliability, flexibility and cost-efficiency, with a particular emphasis on speed. In response, we continue to add aircraft options, including the Boeing 777 via Omni, and a converted freighter variant of the Airbus A321-200 aircraft we are developing through our joint venture with Precision."
Pretax earnings in the first quarter increased to $12.3 million from $3.4 million in the first quarter of 2018 due to increased "block" hours – the industry-standard measure for aircraft utilization – flown for the Department of Defense.
Total block hours increased 24 percent from the first quarter of 2018, the company said, due principally to the addition of and growth in Omni's ACMI and charter operations.
ATSG's earnings were negatively affected by $3 million in unscheduled engine maintenance expense, the company stated, and segment costs for scheduled airframe maintenance checks came in lower than a year ago.
Through its leasing and airline subsidiaries, ATSG is the largest owner and operator of converted Boeing 767 freighter aircraft. Along with Atlas Air Worldwide Holdings (NASDAQ: AAWW), ATSG is the principal flying partner of Amazon.com, Inc. (NASDAQ: AMZN), and could potentially benefit from Amazon's recently announced one-day delivery service.
The company will host an investor conference call on May 8 at 10:00 a.m. EDT to review its financial results.
Image sourced from Pixabay
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