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Air Transport Services (ATSG) Q1 Earnings Miss, Decrease Y/Y

Air Transport Services Group’s ATSG first-quarter 2021 earnings (excluding 30 cents from non-recurring items) of 19 cents per share fell short of the Zacks Consensus Estimate of 26 cents. Moreover, the bottom line deteriorated 55.8% year over year due to its disappointing revenue performance. Additionally, revenues dipped 3.4% year over year to $376.1 million. The top line also fell short of the Zacks Consensus Estimate of $379.5 million.

The top line was hurt by lower revenues from the ACMI (aircraft, crew, maintenance & insurance) services segment. Before eliminations, revenues from the ACMI services unit declined 13% to $247.13 million. Cargo Aircraft Management (CAM) segment increased 12.2% to $83.27 million while revenues from other operations rose 17.1% to $93.69 million.

Notably, revenues from the CAM segment in the reported quarter were bumped up by the external leases of 15 more 767-300 freighters in the reported quarter. Segmental revenues from external customers rose 30% in the March quarter. However, the downside in revenues from the ACMI unit was due to the ramped-down charter passenger operations for the commercial customers of Omni Air and lower 757 combi operations for the military besides the retirement of four Boeing 757 freighters (operated by the company for DHL) in 2020. Due to the coronavirus-induced restrictions, total block hours in the reported quarter declined 5% to approximately 38,000 hours.

The company’s total fleet included 104 aircraft (19 passenger and 85 freighter) in service at the end of the March quarter of 2021 compared with 96 at the end of the first quarter of 2020. Of the 104 planes, 98 were owned by CAM, four were leased to Omni Air by third parties and the remaining two were subleased from a customer.

Total operating expenses dipped 6% in the March quarter to $319.23 million, mainly owing to a 30.6% reduction in expenses on fuel. Capital expenditure declined 12.8% to $125.4 million. The amount included $84.7 million for the purchase of four Boeing 767-300 jets.


The company, currently carrying a Zacks Rank #3 (Hold), still expects 2021 adjusted EBITDA to be at least $525 million, indicating an improvement of 6% from the 2020 reported figure of $497 million. Capital expenditures for 2021 are still projected at around $500 million. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.


Sectorial Snapshots

Let’s glance through some of the other recently-released earnings reports from companies within the Zacks Transportation sector.

Canadian National Railway Co.  CNI reported first-quarter 2021 earnings (excluding 11 cents from non-recurring items) of 97 cents per share (C$1.23), missing the Zacks Consensus Estimate of 99 cents. Quarterly revenues of $2,791.6 million (C$3,535 million) also lagged the Zacks Consensus Estimate of $2,813.1 million.

Landstar System  LSTR reported first-quarter 2021 earnings of $2.01 per share, surpassing the Zacks Consensus Estimate of $1.61. Revenues of $1,287.5 million also outperformed the Zacks Consensus Estimate of $1,142.5 million.

Southwest Airlines  LUV incurred a loss of $1.72 per share (excluding $1.91 from non-recurring items) in the first quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.82. Moreover, operating revenues of $2,052 million surpassed the Zacks Consensus Estimate of $2,031.7 million.

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