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ATSG Reports Fourth Quarter and Full-Year 2023 Results

Air Transport Services Group, Inc., the leading provider of medium wide-body freighter aircraft leasing, contracted air transportation, and related services, has reported consolidated financial results for the quarter and year ended December 31, 2023.

Joe Hete, chairman and chief executive officer of ATSG, said, "As expected, the fourth quarter saw lower demand in our leasing segment and reduced demand in our passenger airline operations. Flying for the U.S. military decreased throughout the quarter, and fewer leased Boeing 767-200 freighters in service continued to affect results at our leasing segment. Despite challenges in the second half of 2023, we converted and leased thirteen aircraft, including our first three Airbus A321-200 freighters. We have substantially reduced our capital spending plans, and now expect to generate positive cash flow in 2024."

2023 Operating Highlights:

  • Ten new dry leases of Boeing 767-300 freighters and three dry leases of newly converted A321-200 freighters.
  • One of the newly converted 767-300 freighters operated under a CMI agreement with an ATSG cargo airline.
  • Three customer-provided 767-300 freighters subleased and operated by an ATSG cargo airline, totaling sixteen such aircraft in the fleet by the end of the year.

2023 Financial Highlights:

  • $2.1 billion in revenue for 2023, a $25 million increase from 2022.
  • Primarily attributed to a full year of contributions from six new leases of 767-300s in 2022 and partial-year contributions from 2023 leases of ten newly converted 767-300 freighters and three A321-200 freighters.
  • $562 million in Adjusted EBITDA for 2023, down by $79 million.
  • Weaker performance in airline operations and lower leasing segment results, with a decline of approximately $33 million from the 767-200 freighter aircraft leases.
  • Growth investments of $574 million to support leased freighter deployments in 2023, as well as future plans for 2024 and 2025.
  • Repurchased 7.4 million ATSG common shares in 2023, representing 13% of the shares outstanding at the beginning of 2022.
  • Secured $400 million of additional debt capital through a new six-year convertible bond offering, primarily used to retire existing debt and repurchase shares.

Segment Results:

Cargo Aircraft Management (CAM):

  • Aircraft leasing and related revenues increased 15% for Q4 and 5% for the year, driven by full-year contributions from six 767-300 freighters leased in 2022 and partial-year revenues from additional 767-300s and A321-200s leased in 2023.
  • Revenues negatively impacted by fewer 767-200s in service.
  • CAM's Q4 pretax earnings decreased by $11 million (34%) to $21 million, and full-year pretax earnings decreased by $34 million (23%) to $109 million, primarily due to lower 767-200 freighter and engine lease results.
  • Ninety CAM-owned freighter aircraft leased externally at the end of 2023, one fewer than the previous year.
  • Twenty-three aircraft in or awaiting conversion to freighters at the end of 2023.

ACMI Services:

  • Q4 pretax losses of $2 million compared to gains of $26 million in 2022.
  • Full-year pretax earnings were $32 million in 2023, down from $95 million in 2022, attributed to fewer block hours flown for the U.S. military and lower overall margins on cargo revenues.
  • Revenue block hours for ATSG's airlines decreased 4% for Q4 and 1% for the year over 2022, with decreases in cargo and passenger block hours.

2024 Outlook:

  • ATSG expects Adjusted EBITDA of approximately $506 million in 2024, down $56 million from 2023. This excludes potential contributions from additional aircraft leases or flying opportunities not currently under contractual commitment.
  • Projected capital spending for 2024 is $410 million, down $380 million from 2023.

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