ATSG homes in on 767 conversions amid sluggish passenger market

Air Transport Services Group (ATSG) expects to make more 767 freighter placements in 2021 and 2022 through its leasing division Cargo Aircraft Management (CAM) than had been previously forecast, as cargo continues to overperform offsetting demand for passenger services that have been weakened by the pandemic. CAM expects to place at least sixteen aircraft this year, and ten next year, up from guidance of fifteen and nine 767s in February, during when ATSG released its fourth quarter 2020 earnings. The figures for 2021 include eleven 767-300BDSFs placements with Amazon as well as five with other customers. As of May 5, CAM has placed five 767-300BDSFs with Amazon and leased one to Northern Air Cargo. Air Canada expects to take its first of two 767 conversions later this year. ATSG also identified previously undisclosed 767F lease agreements with CAM from Amerijet and DHL Express. ATSG Chief Commercial Officer Mike Berger said the company has already started building up its order book for 2023, and is already seeing customer interest reaching all the way to as far as 2025. [caption id="attachment_415461" align="alignright" width="424"] ATSG’s own airline, Air Transport International, flies both 767-200BDSFs and 767-300BDSFs. (Photo/ATSG)[/caption] With ATSG’s passenger operations as the relative underperformer during the first quarter of 2021, flying During the quarter, ATSG carrier Omni Air returned a CAM-leased 767-300ER, which CAM will convert to freighter configuration and lease to an external customer later this year, according to Rich Corrado, CEO of ATSG, during an earnings call. That aircraft appears to be unit 27449, which arrived in Tel Aviv (TLV) at the end of December 2020. In terms of portfolio growth, CAM plans to acquire thirteen 767-300s this year, but “may acquire others given the opportunity,” Corrado said. Aside from 767-300 freighters, CAM continues to see demand for the smaller 767-200F. According to Corrado, CAM received three units off lease in the first quarter and is preparing to place them on five-year leases with Malaysia-based Raya Airways, Denmark-based Star Air and Poland-based SkyTaxi. CAM had already leased a third 767-200BDSF (22224) to Raya earlier this year. 321 Precision Conversions, ATSG’s joint venture with Precision Aircraft Solutions, recently obtained its STC for the A321-200PCF conversion program. Corrado said ATSG’s affiliate PEMCO will begin converting its first A321 in Tampa (TPA) in June; Cargo Facts believes that aircraft is unit 775 (ex-Ural Airlines), which arrived at TPA May 1. While unit 775 is not an ATSG-owned aircraft, Corrado said the company intends to acquire and convert its own A321s at the PEMCO facility and lease them to customers. “We’re in the market now for A321s,” he said. “We’re negotiating, in fact, for some aircraft right now, and we’ll see how that goes.” Returning to ATSG’s first quarter results, despite CAM’s strength in the leasing space, customer revenues were down $13.2 million year over year, to $376.1 million. Although CAM revenues grew 12% YoY to $83 million, ACMI revenue declined 13% YoY to $247 million, as a result of lower passenger activity at Omni Air. Losses at Omni Air were offset by a $43 million grant as part of the federal payroll support program. ACMI pretax earnings declined 13% YoY to $21 million, while CAM earnings rose 36% during the same period to $21.5 million. Overall, adjusted earnings decreased $14.1 million, to $15.1 million for the quarter. Cargo Facts EMEA, taking place June 2-3 as a virtual experience, is the event for exploring opportunity in the EMEA region. The event continues to bring together the best, brightest, and most innovative executives in the global air cargo industry. Learn more and register at www.cargofactsemea.com .

ATSG homes in on 767 conversions amid sluggish passenger market

Company already has customers lined up for the next couple of years

Turkish Cargo launches direct flight to Munich

AEI-converted 738s cleared by EASA

AEI-converted 738s cleared by EASA

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password