Air Transport: A Lift for Cargo

06/02/2017 2:50 am EST

Focus: STOCKS

David Fried

Editor, The Buyback Letter

Air cargo company Air Transport Services Group (ATSG) is a provider of aircraft leasing, air cargo transport, and related services to domestic and foreign air carriers and other companies that outsource their air cargo lift requirements, notes buyback expert David Fried, editor of The Buyback Letter.

It is based in Wilmington, Ohio. ATSG, through its leasing and airline subsidiaries, is the world's largest owner and operator of converted Boeing 767 freighter aircraft.

Two well known wholly owned subsidiaries are PEMCO World Air Service and Airborne Maintenance and Engineering Services (AMES), which offer passenger-to-freighter aircraft conversions, lease hangar space in Florida and Ohio, and provide a range of aviation services including heavy maintenance and engineering for Boeing and Airbus fleets.

Other subsidiaries are ABX Air, a cargo airline headquartered in Ohio that services both Amazon and DHL deliveries, Airborne Global Solutions, Air Transport International and Cargo Aircraft Management.

The stock gained 17% in one day early this month after releasing Q1 results, based on reports that sales jumped by a third, and adjusted earnings from continuing operations rose by a similar amount.

CEO Joe Hete said the number of aircraft from its Boeing 767 fleet that were leased to external customers jumped by nearly half from year-ago figures, and the company believes stronger leasing activity reflects good trends in the industry right now.

New business in external maintenance services, parcel handling, and logistical support helped bolster Air Transport's recent numbers, leading investors to surmise even more positive results will come in the future.

Q1 figures: Net income of $10 million, or 13 cents per share. Earnings, adjusted for one-time gains and costs, were 17 cents per share, exceeding Wall Street expectations by 5 cents per share.

Revenue was $237.9 million, also surpassing Street forecasts of $214.1 million. Management has reduced shares outstanding by 7.043% in the last 12 months.

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