ABX pilots’ strike lowers ATSG 2016 earnings

Air Transport Services Group (ATSG) announced that it expected fourth-quarter and full-year 2016 Adjusted EBITDA to be approximately US$7 million short of its previous guidance. The company blamed work stoppage in mid-November 2016, when pilots at its subsidiary ABX Air, which flies packages for Amazon.com and DHL Worldwide Express, went on strike. ATSG’s revised 2016 estimates for Adjusted EBITDA for the fourth quarter and full year 2016 are now approximately $56 million and $211 million, respectively.

The strike, which caused the cancellation of 75 flights, lasted only two days until a court ruling that it was illegal sent the pilots back to work. However, despite the short duration, it raised speculation about the durability of Amazon’s much vaunted supply chain.

“Overall, we achieved significant gains across our businesses in 2016, including strong revenue growth and cash flow from additional 767 freighter deployments to external lease customers as well as other support services,” said Joe Hete, president and CEO of ATSG. “The decision of the Teamster-represented pilots at ABX Air to resort to a work stoppage stemmed from a dispute over scheduling assignments and interrupted ABX Air’s operations for a short time prior to being enjoined by the U.S. District Court.”