ATSG Q4 profit falls from US$59.9 million to $45 million

ATSG (Air Transport Services Group Inc) has posted fourth quarter net profit of US$45 million in 2009 against $59.9 million in 2008, drawn on revenues of fourth quarter revenues $250.5 million in 2009 against the $257 million in 2008 sales.

ATSG, parent of ABX, which only recently announced the coming resumption of a deal to again run aircraft for DHL, had to include its previous arrangement with the German express delivery giant under the heading of discontinued operations.

ATSG's net earnings from discontinued operations were $1.2 million in the fourth quarter of 2009, versus $5 million. Net earnings from discontinued operations were $6.2 million.

ATSG also disclosed in a separate announcement a set of new multi-year agreements between its subsidiaries and DHL for support of DHL's US air network, effective March 31.

"Over the course of the past three years, ATSG has transformed the business model from one that was highly dependent on cost-plus contracts with DHL, to a diversified model with a particular emphasis on operating margins and returns on invested capital," said a company statement.

The key elements in the change involved a fleet of 62 aircraft, backed by a spectrum of air transport services and capabilities which included dry leasing, ACMI (aircraft, crew, maintenance and insurance), third-party maintenance and technical services, equipment leasing and facility management services and logistics services.

Other factors included a diversified mix of customers which, in addition to DHL, include BAX/Schenker, TNT, Qantas, the US military and the US Postal Service.

"With new long term agreements in place with DHL that more appropriately reflect the value of ATSG's assets and service capabilities, coupled with a more diversified breadth of customers and businesses, ATSG is poised to generate superior returns, relative to its historic business model which was dominated by low margin, cost-plus contracts with DHL," said the company statement.

Commenting on the business outlook CEO Joe Hete said: "With our DHL partnership entering a new phase, and its related uncertainty behind us, I am excited about ATSG's growth opportunities. The conversion programme for nine more 767s will only enhance our capabilities and allow us to meet the growing demands of our customers."

(Source: www.schednet.com)