Air Transport Services Group: The World’s Largest Owner and Operator of Converted Boeing 767 Freighter Aircraft

Air Transport Services Group, Inc. is a foremost provider of aircraft leasing and air cargo transportation and related services. The Company, by way of its leasing and airline subsidiaries, is the world’s largest owner and operator of converted Boeing 767 freighter aircraft. Air Transport Services Group is headquartered in Wilmington, Ohio.

Its subsidiaries include ABX Air, Inc.; Airborne Global Solutions, Inc.; Air Transport International, Inc.; Cargo Aircraft Management, Inc.; Airborne Maintenance and Engineering Services, Inc.; LGSTX Services, Inc.; and Global Flight Source (GFS).

In essence, Air Transport Services Group is the worldwide leader in midsize wide-body leasing and operating solutions. The Company serves domestic and international air carriers and other companies that outsource their air cargo lift requirements. It has the largest fleet of 100% owned midsize converted Boeing freighters available on a dedicated basis, with an extensive range of freighter network applications.

Via its main subsidiaries, Air Transport Services Group provides aircraft leasing, air cargo lift, aircraft maintenance services, as well as airport ground services. Its Cargo Aircraft Management subsidiary involves in Dry Leasing of 767-300s, 767-200s, and 757-200s; Engine Leasing; Conversion Management; Engine PBH Services; and Certification Support.

Its Air Transport International subsidiary and ABX Air subsidiary involve in ACMI (Aircraft, Crew, Maintenance and Insurance); CMI; Wet Leasing; and Ad-Hoc Charter. Moreover, its Airborne Maintenance and Engineering Services subsidiary involves in Support Services –  Heavy & Line Maintenance; Component Services; and Engineering Services. In addition, its LGSTX Services, Inc. subsidiary involves in Sort Operations; GSE Leasing, Service; and MHE Service.

Lease demand is propelling Air Transport’s growth. Its emphasis on regional air networks is driving demand for more of the Company’s midsize 767 freighters, longer-term dry leases, and more CMI, maintenance and logistics support. Air Transport’s largest customer is DHL.

Air Transport Services Group has agreements with Amazon. The two companies completed long-term agreements for 20 leased and operated 767 freighters, plus warrants for 19.9% of Air Transport Services Group shares.

The five-year operating agreement with Amazon was signed March 8, 2016, and effective April 1, 2016. Amazon is to receive Air Transport Services Group warrants for the purchase of up to 19.9% of the Company’s common shares at $9.73 per share through March 2021.

Air Transport Services Group has these agreements with Amazon Fulfillment Services, Inc., an affiliate of Amazon.com, Inc., to operate an air cargo network to serve Amazon customers in the U.S.

Moreover, Air Transport now has an avenue into the China market. This is through a joint venture (JV) with Okay Airlines and VIPShop for regional cargo airline. The focus is on expanding the e-commerce opportunity throughout southeast Asia. There is also the opportunity for more Air Transport freighter leases.

Air Transport’s sustained cash flow is lease-driven. Its business model centers on long-term returns from dryleasing freighter assets to leading network operators, enhanced by innovative combinations of airline, maintenance, logistics and network management services.

For Q2 2016, Air Transport Services Group had revenue growth in each of its main segments and across its other businesses. The Company bought seven Boeing 767 300 aircraft in 2016, including three in Q2.

After taking out its fuel and other reimbursements, Air Transport’s revenue growth over its last four quarters has averaged 12%. The Company said that it foresees that its double-digit growth pace will continue along with margin improvement as it expands its dry leased aircraft fleet in CMI operations.

By the end of 2016, the Company expects every one of its 53 767s to be in service. Over 80% will be organized under dry lease agreements with the remaining lease terms ranging from 3 to 8 years.

Subsidiary ABX Air, Inc.

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