ATSG Q12022 revenue up 29% on high returns from leases
Businesses are operating at pre-pandemic levels with year-over-year gains in revenues and earnings: CEO Rich Corrado
Rebound in passenger flights and returns from freighter leasing saw Nasdaq-listed Air Transport Services Group, Inc. (ATSG) report a 29 percent increase in revenue to $486 million and 18 percent increase in earnings to $50 million for the first quarter ended March 31, 2022.
"The businesses of ATSG are all operating at pre-pandemic levels with year-over-year gains in revenues and earnings from our airlines, led by Omni Air's passenger flying for military and commercial customers," says Rich Corrado, president and chief executive officer, ATSG. "Our employees again delivered outstanding service during the winter months. Our CMI customers have noticed, and are bringing more of the Boeing 767s they own or lease from others to our airlines to fly in their networks. CAM, our aircraft lessor, contributed to our earnings momentum for the quarter following last year's record fifteen deployments of leased Boeing 767-300 freighters.
"To date, CAM has completed the first two of its projected eleven - nine 767-300s and two Airbus A321s - freighter lease deliveries in 2022. We have customer orders for all eleven 2022 deliveries as well as 19 deliveries in 2023, including fourteen 767-300s and five A321s."
Adjusted earnings per share (EPS) of $0.56 nearly tripled compared to the year-earlier EPS of $0.20. While adjusted EBITDA was up 49 percent to $158 million, adjusted free cash flow was up 13 percent to $89 million (and $406 million for the trailing twelve months).
Bullish 2022 outlook
ATSG continues to project a record $640 million in adjusted EBITDA for 2022, up nearly $100 million from 2021. "ATSG also projects 2022 capital spending of $590 million, including $200 million in sustaining capex and $390 million for growth, primarily funded by the strong adjusted free cash flow ATSG will generate this year."
The forecast assumes dry leases of 11 more converted freighters, including nine 767-300s; CMI assignments for nine more 767 freighter aircraft, and increased demand for Omni's commercial charter and ATI's combi flights.
"Demand for express-package air assets remains very high," says 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."
ATSG will continue to acquire passenger aircraft to fill the more than 80 passenger-to-freighter conversion slots it now controls. Corrado added. "Those investments will extend our global leadership in the leased midsize freighter market, support the growth of e-commerce driven express networks throughout the world, and create a growing stream of capital for allocation among a range of value-enhancing options."
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.