ATSG predicts bullish outlook for 2022, 2021 revenue hits $1.7 billion

Nasdaq-listed Air Transport Services Group (ATSG) forecasts a $100 million increase in EBITDA for 2022 to $641 million based on long-term leases, CMI contracts and combined transactions.

The forecast assumes:
• Lease of nine 767-300 freighters and two A321-200s.
• Contribution of seven 767 freighter aircraft to be added to CMI customer contracts during 2022, including five to be supplied by customers; and
• Continued moderation of the effects of the pandemic on demand for ATSG and Boeing 757 combi passenger operations.

The ATSG also described capital expenditure of $590 million in 2022, including $200 million in maintenance investments and $390 million for growth.

“We have customer commitments to lease all nine Boeing 767s we will deploy in 2022 and the majority of those we plan to lease in 2023,” said Rich Corrado, president and CEO of ATSG. “Furthermore, we already hold lease depots for more than half of the A330 aircraft we intend to start deploying in 2024.”

ATSG, a leading provider of medium wide-body aircraft leasing, contract air transportation and related services, announced a 10% increase in revenue in 2021 to $1.73 billion and adjusted EBITDA of $541 million, up 9% from last year.

Fourth quarter results ended on a strong note with a 21% increase in revenue to $482 million and adjusted EBITDA of $154.8 million, up 27%.

“Our 2021 results demonstrate the powerful combination of having the right solutions for our customers, the right strategy to deploy our in-demand assets, and the right people to operate and support them,” Corrado said. “These results are the result of investments to extend our lead as the largest lessor of freighter aircraft and the provision of a best-in-class air express service for e-commerce customers. I am extremely proud of our employees, as they lay the foundation for even more exceptional results over the next few years. As we look to the immediate future in 2022, we expect even greater achievements with our outlook of nearly $100 million in ‘Additional Adjusted EBITDA over our record 2021 results.

Operational highlights for 2021 include:

• 15 additional customer leases of Boeing 767-300 freighters and three Boeing 767-200 launches. Eleven of the fifteen 767-300 freighters are also operated by ATSG airlines. In addition, four other customer-provided 767 freighters have been assigned to our airlines to operate on their behalf.

• Certification by the FAA of the design of the ATSG joint venture for the P2F modification of the Airbus A321-200, as well as the conversion and the delivery of the first freighter of the JV. CAM will add its first A321-200 freighter to its leased freighter fleet at the end of 2022.

• Commitment to convert 20 Airbus A330-300 passengers into freighters. The first induction will begin in 2023 with deliveries to tenants from 2024 to 2026. Like the 767-300, the A330-300 is well-suited to support expanding airline regional express networks.

• Acquisition of base aircraft and conversion slots for all 11 freighter aircraft that CAM plans to lease in 2022 and the majority of those it plans to lease in 2023. (At the end of the year, CAM held 70 P2F conversion slots for induction from 2022 to 2025, including 35 Boeing 767-300s, 20 Airbus A330-300s and 15 A321-200s); and

• 2021 negotiations with DHL led to February 2022 agreements to extend and expand our 18-year business relationship, including six-year extensions to the operating agreement and five freight leases.

There are a lot of other big pieces to our story, Corrado said on an analysts’ call after the results. “We continue to take great pride in being the largest provider of cargo aircraft and flight services leased to Amazon. Earlier last year, the FAA certified our joint ventures designed for passenger cargo aircraft conversions Airbus A321 200.”

Corrado added: “Year after year, we meet or exceed our performance targets as the vast majority of our results come from the expansion of leases and long-term contracts. We are among the highly regarded companies whose value does not is not based solely on what they say but the ability to deliver superior performance year after year.”

ATSG has significant P2F conversion capability for Boeing 767s and Airbus A330s over the next few years. Along with investing in A321 narrow-body conversions, ATSG expects to be a primary source of dedicated freighters for express parcel delivery networks around the world.

Sallie R. Loera