Air Transport Services Group reported a 35 percent decline in net profit in the first quarter, to $7.2 million, as the cargo airline restructured operations under new agreements with DHL and flight crews at its ABX Air subsidiary.
Revenue from continuing operations of $160.9 million dropped from $211.8 million a year ago, partly from reduced demand and lower reimbursed operating expenses.
Pre-tax earnings from continuing operations fell 18 percent to $10.8 million. Higher pre-tax earnings from ATSG’s operations for DHL and from its aircraft leasing business, CAM, were offset by 2010 losses from ACMI services and from other activities.
“Our first-quarter 2010 financial results, excluding ABX Air’s DHL-related operations, improved sharply from January through March, but pre-tax earnings still fell short of acceptable levels for the quarter as a whole. The first quarter results were generated under customer contract terms and a labor cost structure at ABX Air that have changed dramatically, and as such are not representative of ATSG’s anticipated future performance for the rest of 2010,” said Joe Hete, president and CEO of ATSG.
Agreements with DHL completed on March 31 have established seven-year leases for 13 767 freighter aircraft, a five-year CMI (Crew, Maintenance and Insurance) operating agreement, and terms for ending the original ACMI Agreement with ABX Air prior to its scheduled expiration in August 2010.
Also effective March 31, final provisions of the previously completed labor agreement between ABX Air and its flight crews were adopted. ABX expects reduced costs and greater operating flexibility as a result.
-- Contact Thomas L. Gallagher at firstname.lastname@example.org.