Air Transport Services Group (NASDAQ: ATSG) reported Q1 EPS of $0.43, $0.11 better than the analyst estimate of $0.32. Revenue for the quarter came in at $389.3 million versus the consensus estimate of $368.39 million.

Joe Hete, Chief Executive Officer of ATSG, said, "The flexibility and resilience of ATSG’s business model again proved its value, as the company responded to rapidly changing business conditions with the speed and attention to detail that its customers demand, while generating solid financial results overall. As an example, our aircraft maintenance technicians on short notice completed avionics adjustments to the New England Patriot's 767 aircraft that enabled it to fly to China to pick up more than 1 million masks for health care workers in Massachusetts. Similarly, our airlines' pilots, flight attendants and line maintenance techs are answering the call from their global customers to maintain the flow of vital supplies and personnel under very challenging conditions. Despite the pandemic, we remain cautiously optimistic about the rest of 2020, as we deploy more 767 converted freighters for customers responding to expanded e-commerce shopping, and operate passenger aircraft to support the U.S. military’s evolving requirements."

Outlook

Due to uncertainties brought about by the global pandemic, ATSG is no longer able to provide specific guidance for its Adjusted EBITDA for the full year 2020, as the level and duration of COVID-19 impacts, primarily on our passenger business, is difficult to forecast. However, based on our current outlook, we expect 2020 Adjusted EBITDA to exceed our 2019 total of $452 million.

During the current second quarter, ATSG expects that its Adjusted EBITDA will range from $110 million to $115 million, compared with $105 million in the second quarter of 2019. The second quarter results will include the impact of ATI flight crew training expenses necessary to begin CMI operations for Amazon on at least four additional 767-300 aircraft they will begin leasing from CAM during the second half of 2020.

Rich Corrado, President, said that "We are staying in constant contact with our principal customers as the pandemic continues. Today, they are telling us that they intend to continue to use our aircraft and other resources largely in line with their earlier expectations, including plans to lease seven to nine more of our newly converted 767s this year. Most of our cargo aircraft continue to operate within expanding time-definite express networks as e-commerce transactions accelerate during the pandemic. Demand for our passenger aircraft, however, is expected to remain sensitive to pandemic-driven changes in the U.S. military’s troop deployment and rotation plans, and reductions in operations for Omni commercial customers through 2020."

2020 capital expenditures, principally to purchase and modify Boeing 767-300 aircraft for freighter deployment, are projected to be $420 million. That includes expected purchases of eight Boeing 767-300 aircraft including two freighters and six passenger aircraft for freighter conversion. Five of the eight Boeing 767-300 aircraft were purchased in the first quarter.

“We take pride in providing essential air transport services to the global economy, and we are confident that ATSG will support the needs of its customers no matter how the pandemic requires us to adapt,” Corrado said. “That includes our ability to meet stringent requirements to prevent the spread of the coronavirus among our own employees and those of our customers. Better days are ahead for all of us, including our shareholders.”

For earnings history and earnings-related data on Air Transport Services Group (ATSG) click here.