Wed, Nov 15, 2023
Freight Downturn Putting an End to the Post-Pandemic Highs
Air Transport Services Group, a cargo jet lessor and operations provider, said that weakening interest from international airlines has led to a drop in its 2025 profit expectations to the tune of $45 million.
Its 3rd quarter earnings call served as a small bellwether for the greater air cargo market at large, given the firm's involvement across the air cargo market. Adjusted earnings sat 16% lower than 2022 for the same quarter, with incoming CEO Joe Hete saying “Our new reality is that growth will be more difficult to achieve than before," thanks to conflicts abroad, continued inflation, and unexpected maintenance costs in addition to the cooling parcel market.
Worryingly for the firm, customers with leased freighter aircraft are throttling back on future business, with ATSG's leasing arm, Cargo Aircraft Management, dropping total freighter conversions to 16 for 2023, 3 fewer than originally planned. Next year, CAM has 14 conversions on the books, continuing the slide. Hete said the firm wouldn't be sending any more Boeing 767-300s into the conversion pipeline, with 7 already in the works.
The excitement and optimism of the lockdown era has waned, with ATSG planning to park 6 of its secondhand 767 passenger aircraft until the market waxes once again. The parked aircraft won't be entirely inert on the books, with Hete planning to lease out their engines should they fail to find a needy lessee for a passenger plane.
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