ATSG reports strong second quarter 2022 results and six months ended June 30, 2022. The group reported revenues of $510 million, up 24%.
Rich Corrado, president and chief executive officer of ATSG, said, "Leasing converted midsize freighter aircraft and flying them in express-package networks remained a powerful and resilient driver of our strong cash flow in the second quarter. CAM, our aircraft lessor, again fueled our adjusted earnings momentum, with nine more Boeing 767 freighters leased to third-party customers than a year ago. Our cargo airlines continue to fly more hours, using both freighters that CAM owns plus others that customers have assigned to them. Inflation-driven increases in employee costs, contracted labor, crew travel and other costs are affecting our ACMI Services results and we are taking steps to mitigate the impact where we can."
?Despite persistent inflation, we expect to reach our financial targets for 2022, as demand for our expresspackage network assets and flight operations remains high. E-commerce shopping habits, now well ingrained and reinforced by often lower online prices, will continue to drive express-package delivery networks that assure rapid, reliable delivery. That trend, in turn, will drive growth in ATSG?s cash flow through the current economic cycle and beyond," he said.
Corrado noted that ATSG expects to lease a record eighteen freighters in 2023, including fourteen 767s and four A321s.
?The majority of those orders are backed by customer deposits, and nearly all are from existing customers, giving us great confidence about growth in our core leasing returns over the next 18 months,? he said. ?Beyond that, we have customer orders for twenty Airbus A330s we will start to acquire and convert next year, with deliveries beginning in 2024. Our existing lease portfolio and order book translate into a compelling growth story for ATSG in the coming years."
2022 Outlook
ATSG continues to project a record $640 million in Adjusted EBITDA for 2022, up nearly $100 million from 2021. Our 2022 Adjusted EBITDA forecast assumes:
? The addition of ten dry leases of converted freighters for the year, including eight 767-300s and two A321-200 aircraft.
? Seven more 767 freighters that our airlines will operate under CMI arrangements that the aircraft?s owners or lessees have assigned to our airlines.
? Mitigation of some inflation-driven cost increases in ACMI Services and rate increases for military passenger operations beginning in the fourth quarter.
? Full restoration of ATI?s global combi service to all remote U.S. military facilities it served before the pandemic, including a major route scheduled to resume in the fourth quarter.
ATSG has raised its capital spending projection for 2022 by $35 million to $625 million, including $205 million in sustaining capex and $420 million for growth. The increase in growth capex reflects payments in the second half of 2022 to acquire feedstock aircraft previously scheduled to be purchased in 2023. 2022 growth capex will be funded primarily by the strong Adjusted Free Cash Flow ATSG will generate this year.
CAM has completed the first four of its projected eight 767-300 leases this year. ATSG?s cargo airlines continue to add customers? aircraft to its freighter fleet. Those aircraft, along with expanded peak flying, are expected to boost air delivery revenues and earnings in the second half of the year.
Corrado said that Omni Air?s revenues and flights for the U.S. military remain at high levels and ATSG?s passenger business is expected to deliver solid results in the second half.
