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AIR TRANS SVCS GROUPINC COM Reports Operating Results (10-Q)

August 02, 2012 | About:
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10qk

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AIR TRANS SVCS GROUPINC COM (ATSG) filed Quarterly Report for the period ended 2012-06-30.

Air Transport Services Group Inc. has a market cap of $329.7 million; its shares were traded at around $4.82 with a P/E ratio of 7.2 and P/S ratio of 0.5. Air Transport Services Group Inc. had an annual average earning growth of 1.8% over the past 10 years.

Highlight of Business Operations:

The Company ceased providing services to BAX/Schenker as of the end of 2011. The Company's revenues from the services performed for BAX/Schenker, derived primarily by providing Boeing 727 and DC-8 airlift, were $60.3 million and $116.3 million for the three and six month periods ended June 30, 2011, respectively. The Company's revenues from BAX/Schenker comprised approximately 31% and 32% of the Company's total revenues during the three and six months ended June 30, 2011 (17% and 18% of total revenues excluding directly reimbursable revenues).

The consolidated net earnings from continuing operations were $11.2 million and $17.9 million for the three and six months periods ended June 30, 2012, respectively, compared to $12.3 million and $15.2 million for the corresponding periods of 2011. Pre-tax earnings from continuing operations were $18.2 million and $28.9 million for the three and six months periods ended June 30, 2012, respectively, compared to $19.7 million and $24.2 million for the corresponding periods of 2011.

Total customer revenues from continuing operations decreased by $39.5 million to $153.6 million during the second quarter of 2012 and by $69.1 million to $299.1 million for the first six months of 2012 compared to the corresponding periods of 2011. The declines reflect $60.3 million and $116.3 million of revenues during the three and six month periods ending June 30, 2011, respectively, from services for the BAX/Schenker air network which was discontinued. Revenues from reimbursed fuel and other reimbursed operating expenses declined $29.3 million and $56.7 million during the three and six month periods ending June 30, 2012, respectively, compared to the corresponding periods of 2011. These declines were also primarily due to the discontinuation of the BAX/Schenker air network. Excluding directly reimbursed revenues, customer revenues decreased by $10.2 million and $12.4 million during the three and six month periods ending June 30, 2012, respectively, compared to the corresponding periods of 2011. Revenue growth during 2012, driven by additional external aircraft leases by CAM and additional Boeing 767 and Boeing 757 aircraft operations by ACMI Services, was offset by the revenue decline from the discontinuation of the BAX/Schenker air network.

Revenues from ACMI Services decreased 26% and 25% during the three and six months periods ended June 30, 2012, respectively, compared to corresponding periods of 2011 as a result of the discontinuation of services for BAX/Schenker's North American air network. Since June 30, 2011, ACMI Services has retired seven Boeing 727 and eight DC-8 freighter aircraft in response to the discontinuation of BAX/Schenker's North American air network in 2011. During the three and six month periods ended June 30, 2011, ACMI Services revenues included $35.0 million and $66.5 million for the reimbursement of fuel and other operating expenses for the BAX/Schenker air network. Airline services revenues, which do not include revenues for the reimbursement of fuel and certain operating expenses, declined 12% and 9%, reflecting the loss of BAX/Schenker revenues of $25.0 million and $49.6 million during the three and six month periods ended June 30, 2011, respectively.

The Company's Senior Credit Agreement with a consortium of banks includes a fully drawn term loan of $150 million and a revolving credit facility, of which the Company has drawn $131 million, net of repayments as of June 30, 2012. The Company intends to make further draws on the revolving loan to fund its fleet expansion plans. On July 20, 2012, the Company executed the first amendment to the Senior Credit Amendment ("Credit Amendment"). The Credit Amendment increased the amount available under the revolving credit loan by $50 million to $225 million, extended the maturity of the term loan and revolving credit loan to July 20, 2017, and provided for an accordion feature whereby the Company may draw up to an additional $50 million, subject to the lenders' consent. If the Company exercises the accordion feature, the same terms and conditions of the Senior Credit Agreement would apply to the accordion feature and additional collateral would need to be posted to maintain the 150% collateral coverage requirement. The additional debt may result in higher interest rates. Under the Senior Credit Agreement, interest rates are adjusted quarterly based on the prevailing LIBOR or prime rates and a ratio of the Company's outstanding debt level to earnings before interest, taxes, depreciation and amortization expenses ("EBITDA"). At the Company's current debt-to-EBITDA ratio, the unsubordinated term loan and revolving loan bear a variable interest rate of 2.72% and 2.50%, respectively. The Credit Amendment did not effect the EBITDA based pricing or covenants of the Senior Credit Agreement.

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