Profile: Air Transport Services Group Inc (ATSG.O)
14 Mar 2014
Air Transport Services Group, Inc. (ATSG) provides airline operations, aircraft leases, aircraft maintenance and other support services primarily to the cargo transportation and package delivery industries. Through its subsidiaries, it offers a range of complementary services to delivery companies, freight forwarders, airlines and government customers. ATSG wholly owns three independent airlines, ABX Air, Inc. (ABX), Capital Cargo International Airlines, Inc. (CCIA) and Air Transport International, LLC (ATI), which provides aircraft, crews, maintenance and insurance (ACMI) services. ATSG's aircraft leasing subsidiary Cargo Aircraft Management, Inc. (CAM), services medium range airlift capacity by offering aircraft. ATSG operates in two segments: ACMI Services and CAM. ATSG's airline operations are aggregated into the ACMI Services segment. ATSG offers a range of complementary solutions to shippers, freight forwarders and other airlines. In March 2013, the Company announced the completion of the merger of two of its airline subsidiaries, Air Transport International Inc. (ATI) and Capital Cargo International Airlines, Inc. (CCIA).
The Company’s other business operations include aircraft maintenance and modification services, aircraft part sales, equipment leasing and maintenance and mail handling for the United States Postal Service (USPS). ATSG’s other businesses and subsidiaries providing support services consists of: Airborne Maintenance and Engineering Services, Inc. (AMES), which is an aircraft maintenance and repair organization; AMES Material Services, Inc. (AMS), which markets and sells aircraft parts; LGSTX Services, Inc. (LGSTX), which provides facility maintenance and ground equipment rentals for aircraft support; LGSTX Distribution Services, Inc. (LDS), which operates mail sorting centers for the USPS, and Global Flight Source (GFS), which provides aircraft dispatch and flight tracking services.
ATSG wholly owns three independent airlines, ABX, CCIA and ATI, primarily transport cargo using Boeing 767, 757, 727 and McDonnell Douglas DC-8 freighter aircraft under contracts providing for a combination of ACMI services for customers. Through the Company's three airline subsidiaries, it provides airline operations to DHL Network Operations (USA), Inc. and its affiliates (DHL), other airlines, freight forwarders and the United States Military. As of December 31, 2011, DHL was leasing 13 aircraft from CAM, all of which ABX operates for DHL under the CMI agreement. ATI provides airlift to the Air Mobility Command (AMC), which is organized under the United States Military. ATI contracts its fleet of McDonnell Douglas DC-8 combi aircraft to the AMC. The combi aircraft are capable of carrying passengers and cargo containers on the main flight deck. In addition, ATI often operates temporary expansion routes for the AMC using its McDonnell Douglas DC-8 combi and freighter aircraft.
CAM’s fleet consists of Boeing 767, Boeing 757, Boeing 727 and McDonnell Douglas DC-8 aircraft. CAM leases aircraft to ATSG airlines and to external customers, usually under multi-year contracts with a schedule of fixed monthly payments. As of December 31, 2011, CAM had 52 aircraft that were under lease, 31 of them internally to ATSG airlines.
Aircraft Maintenance and Modification Services
The Company provides aircraft maintenance and modification services to other airlines through its ABX and AMES subsidiaries. ABX provides digital aircraft manuals for customers in conjunction with the modification of aircraft from passenger to cargo configuration. AMES operates a 145 repair station, in Wilmington, Ohio, including hangars, a component shop and engineering capabilities. AMES’ marketable capabilities include the installation of avionics systems and flat panel displays for Boeing 757 and Boeing 767 cockpits.
AMES has the capability to perform line maintenance and airframe maintenance on McDonnell Douglas DC-9, MD-80, Boeing 767, 757, 737 and 727 aircraft. AMES also has the capability to refurbish airframe components, including approximately 60% of the components for Boeing 767 aircraft. DHL contracts with the Company to provide scheduled airframe maintenance for the 13 Boeing 767 aircraft that it leases from CAM. The Company also provides scheduled maintenance for four DHL-owned aircraft operated by ABX under the CMI agreement.
Aircraft Parts Sales and Brokerage
AMS is a reseller and broker of aircraft parts. AMS carries an inventory of Boeing 767, DC-9 and DC-8 spare parts and also maintains inventory on consignment from original equipment manufacturers, resellers, lessors and other airlines. AMS' customers include the commercial air cargo industry, passenger airlines, aircraft manufacturers and contract maintenance companies serving the commercial aviation industry, as well as other resellers.
Equipment and Facility Maintenance
LGSTX provides contract services for aviation support and facility services throughout the United States. LGSTX has a large inventory of ground support equipment, such as power units, airstarts, deicers and pushback vehicles that it rents to airports, airlines and other customers. LGSTX is also licensed to resell aircraft fuel. LGSTX arranges fueling services for customers and can provide fuel for aircraft charter customers.
The United States Postal Service
The Company’s subsidiary, LDS, manages USPS mail sort centers in Indianapolis, Dallas and Memphis. LDS is also operating two load consolidation centers for the USPS in Des Moines and Memphis under contracts that expire in June of 2012.
ABX offers flight crew training to customers and rent usage of their flight simulators for outside training programs. ABX has three flight simulators in operation. The Company's GFS business provides aircraft dispatch and flight monitoring to supplemental air carriers.
Airline flight operations include aircraft dispatching, flight tracking and crew scheduling. Each airline performs routine inspections and airframe maintenance. Each airline’s maintenance program includes tracking the maintenance status of each aircraft, consulting with manufacturers and suppliers about procedures to correct irregularities and training maintenance personnel on the requirements of its Federal Aviation Administration (FAA)-approved maintenance program. The airlines contract with maintenance and repair organizations (MROs), including AMES, to perform heavy airframe maintenance on airframes and engines. Each airline owns and maintains an inventory of spare aircraft engines, auxiliary power units, aircraft parts and consumable items.
Air Transport Services Group Inc
145 Hunter Drive, # 2061-N
WILMINGTON OH 45177-9550