ABX parent posts 2008 loss of US$56 million after losing DHL

AIR Transport Services Group, Inc (ATSG) has suffered a 2008 fourth quarter net loss of US$64.2 million, and $56.0 million in losses for the year.

ATSG said its 2008 revenues increased 37 per cent to $1.61 billion from $1.17 billion in 2007, mostly from air cargo it acquired at the end of 2007 and the deployment of additional Boeing 767 and 757 aircraft. Fourth-quarter 2008 revenues rose by 35 per cent to $430.7 million, up from $319.2 million.

Results for 2008 include pretax impairment charges for acquired goodwill and customer intangibles totalling $91.2 million in the fourth quarter.

Fourth quarter 2008 adjusted EBITDA, which excludes the impairment charges, increased 122 per cent to $68.1 million from $30.7 million. Adjusted EBITDA for 2008 increased 85 per cent to $174.5 million from $94.5 million in 2007, the company said in a statement.

Earlier this month, ATSG's subsidiary ABX Air, Inc signed an agreement with DHL to amend its $92.3 million unsecured promissory note with DHL, and also signed a memorandum of understanding with DHL concerning leases of certain Boeing 767 aircraft. The combined effect of the agreement and MOU, when finalised, will reduce ATSG's total outstanding debt principal by more than $110 million, a company statement said.

DHL's decisions during the year to restructure, and later to convert its domestic US package delivery network into an international-only network, together with the onset of a global recession, made the year extraordinarily challenging, said ATSG president and CEO Joe Hete.

The businesses we acquired have significantly increased our cash generating capacity, and have prepared us to withstand the loss of a substantial portion of our business with DHL,he said.

ABX Air's aggregate revenues under its ACMI and Hub Services agreements with DHL were $313.9 million in the fourth quarter, eight per cent more than in the fourth quarter a year ago, and $1.15 billion for the year, up six per cent versus 2007.

In response to DHL's restructuring, and subsequent suspension of its domestic package delivery services in the US in favour of international-only services to and from the US, ABX Air had eliminated approximately 4,800 positions through February 2009, reduced its DHL-related sort management operations from a network of regional hubs to a single overnight operation in Wilmington, and idled more than half of its DHL-dedicated fleet, including all of its DC-9 aircraft, the release said.

We are continuing to support DHL's international network with both air transport and sorting services in the United States, but we do not know whether, or for how long, our role in its operations will continue, Mr Hete said.

Source: Transportweekly