767F lease returns impact ATSG earnings

ATSG is preparing for the return of up to ten 767 freighters off lease in 2024 as it restructures its budget to strengthen its revenue and capital after weakening financial performance led to Joe Hete replacing Rich Corrado as chief executive in November. The group expects its adjusted EBITDA for 2024 to fall 10% to nearly $506 million from the $562 million it reported in 2023, which includes accounting for the return of seven 767-200Fs from Amazon and three 767-300Fs when their leases expire this year, Quint Turner, chief financial officer of ATSG, said during today’s earnings call. [caption id="attachment_56867335" align="aligncenter" width="1268"] ATSG's airlines, ABX Air and ATI, both operate 767-200BDSFs. (Courtesy/ATI)[/caption] A portion of the $506 million in projected earnings includes the expected leases of four 767-300Fs, Hete said during the call, adding that the company has already placed two units on lease, with a third to follow in March. One of those was a 767-300BDSF that joined Uzbekistan-based My Freighter in January. The return of the 767-200Fs will mean a $55 million decline in EBITDA compared to the last year, ATSG President Mike Berger said during the call. ATSG received ten 767-200BDSFs returned off-lease in 2023, according to the earnings release, including aircraft returned by Amazon and Mexico-based Mas, which returned one unit after it revealed plans in November to cease all 767 freighter operations. CAM, ATSG’s leasing arm, had ninety freighters on lease to external customers, one fewer than a year ago, according to the earnings release. It also sold five 767-200s and three 767-300s in 2023. ATSG will set capital expenditures for 2024 at $410 million, approximately $95 million less than 2023. This includes the conversion costs for fourteen aircraft that will be redelivered this year and the acquisition of nine additional aircraft for feedstock, Hete said. Five of those feedstock acquisitions are A330s , he added. The group said during its third-quarter earnings call in November 2023 that it had reduced its capital expenditures to $505 million after deciding to halt additional 767-300ER conversions and shift its focus to A330 conversions . ATSG announced on the same day as its third-quarter results that its board of directors had decided after “careful and thoughtful deliberation” to replace Corrado with Hete “effective immediately.” The board’s hope is that Hete, who previously served as CEO and president for seventeen years, will help the company navigate the softer market and deliver higher shareholder returns, sources have told Cargo Facts . ATSG’s stock price plummeted by 33.6% from about $26.00 per share at the beginning of 2023 to $17.26 at the end of the year. Shares of ATSG [NASDAQ: ATSG] were trading at $12.82 as of market close today, down 4.4% from market open. It has a market capitalization of about $837 million. Cargo Facts Asia 2024, the essential event for stakeholders in the Asia-Pacific region, will take place April 15-17 in Singapore. Learn more and register by Friday, March 1, to take advantage of early-bird pricing.

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