ATSG exceeds guidance targets in Q4

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Wilmington, Ohio-based Air Transport Services Group (ATSG) has set guidance of $175 and $180 million in baseline adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for 2013, says executives today on an earnings call.

The carrier saw an EBITDA of $42.6 million in the fourth quarter, which slightly exceeded its projection of $40 million.

EBITDA for the full year 2012 also slightly exceeded expectations at $163.2 million. In the third quarter, ATSG predicted that number to be $160 million.

That number is based on its existing customer agreements and includes the synergies it expects to save from merging carriers Air Transport International and Capital Cargo International Airlines, a transaction that the carrier plans to complete by the end of the first quarter of 2013 pending regulatory approval. Those synergies are expected to total $5 to $6 million and come mostly from staff reductions, say executives.

"I am optimistic that we can grow adjusted EBITDA significantly this year from our current base of business alone, and will do even better if we achieve our aircraft deployment targets," says Joe Hete, ATSG chief executive.

Hete says that even though the company is seeing "little evidence of improvements in cargo markets", it predicts that 2013 will be a solid year.

The expected EBITDA range could increase 8% to 10% if new business comes forward.

The carrier is electing to update its fleet with all Boeing 757 and 767 aircraft. As of January, all of ATSG's Boeing 727 and DC-8 freighter aircraft have been returned from leases, and ATSG says it will "be disposing of them as quickly as possible" through either scrapping or selling the airframes and related engines.

In 2013, ATSG plans to add four Boeing 757 combi aircraft and an additional Boeing 757-200. It will also add two more Boeing 767-300s. The carrier says it is planning to maintain existing levels of service with its partners and actively seek new opportunities in Asia and Europe for additional customers.

"Overall, we think that 2013 will be a good year for us, certainly better than 2012," says Hete, explaining that ATSG is working to make improvements ahead of the cargo market turning around. Some of those will include the synergies from the merger and lower operating expenses from newer aircraft entering the fleet.