10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

Commission file number 000-50368

________________________________________________________________

(Exact name of registrant as specified in its charter)

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Delaware	26-1631624
(State of Incorporation)	(I.R.S. Employer Identification No.)

145 Hunter Drive, Wilmington, OH 45177

(Address of principal executive offices)

937-382-5591

(Registrant’s telephone number, including area code)

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Securities registered pursuant to Section 12(b) of the Act:

Common Stock, Par Value $.01 per share

(Title of class)

Name of each exchange on which registered: NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES o NO  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o NO x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO  x

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, as of the last business day of the registrant’s most recently completed second fiscal quarter: $344,217,832. As of March 7, 2014, 64,654,537 shares of the registrant’s common stock, par value $0.01, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Stockholders scheduled to be held May 8, 2014 are incorporated by reference into Part III.

FORWARD LOOKING STATEMENTS

Statements contained in this annual report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 7, that are not historical facts are considered forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995). Words such as “projects,” “believes,” “anticipates,” “will,” “estimates,” “plans,” “expects,” “intends” and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements are based on expectations, estimates and projections as of the date of this filing, and involve risks and uncertainties that are inherently difficult to predict. Actual results may differ materially from those expressed in the forward-looking statements for any number of reasons, including those described in “Risk Factors” starting on page 11 and in “Results of Operations” starting on page 23.

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

2013 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	16
Item 3.	Legal Proceedings	17
Item 4.	Mine Safety Disclosures	18
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
Item 6.	Selected Consolidated Financial Data	21
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 8.	Financial Statements and Supplementary Data	41
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	73
Item 9A.	Controls and Procedures	73
Item 9B.	Other Information	75
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	75
Item 11.	Executive Compensation	76
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	76
Item 13.	Certain Relationships and Related Transactions, and Director Independence	76
Item 14.	Principal Accounting Fees and Services	76
PART IV
Item 15.	Exhibits and Financial Statement Schedules	76
SIGNATURES		82

PART I

ITEM 1. BUSINESS

General Development of Business

Air Transport Services Group, Inc. ("ATSG"), through its subsidiaries, provides airline operations, aircraft leases, aircraft maintenance and other support services primarily to the air cargo transportation and package delivery industries. ATSG's leasing subsidiary, Cargo Aircraft Management, Inc. (“CAM”) leases cargo aircraft to our airlines and to external customers. ATSG wholly owns two airlines, ABX Air, Inc. (“ABX”) and Air Transport International, Inc. (“ATI”), each independently certificated by the U.S. Department of Transportation. (When the context requires, we may use the terms “Company” and “ATSG” in this report to refer to the business of ATSG and its subsidiaries on a consolidated basis.)

ATSG is incorporated in Delaware and its headquarters is in Wilmington, Ohio. ATSG's common shares are publicly traded on the NASDAQ Stock Market under the symbol ATSG. ATSG was formed on December 31, 2007, from the reorganization of ABX for the purpose of creating a holding company structure. ABX was incorporated in 1980. Between 1980 and August 2003, ABX was an affiliate of Airborne, Inc. (“Airborne”), a publicly traded, integrated delivery service provider. On August 15, 2003, ABX was separated from Airborne and became an independent publicly traded company, in conjunction with the acquisition of Airborne by an indirect wholly-owned subsidiary of DHL Worldwide Express, B.V. The Company acquired CAM, ATI and Capital Cargo International Airlines, Inc. ("CCIA") on December 31, 2007. ATI began operations in 1979 and was an affiliate of BAX Global, Inc. (“BAX/Schenker”) prior to 2006. During 2013, the Company completed the merger of CCIA with and into ATI, with ATI as the surviving entity.

We offer a range of complementary services to delivery companies, freight forwarders, airlines and government customers. Our services are summarized below:

Aircraft leasing: CAM services global demand for medium range and medium capacity airlift by offering Boeing 767 and 757 aircraft leases. CAM is able to provide competitive lease rates by monitoring the related passenger aircraft sale markets, acquiring passenger aircraft based on projected into-service costs and rate of return targets, then managing the modification of passenger aircraft into freighters. As a result, the converted freighters can be deployed into regional markets more economically than larger capacity aircraft or competing alternatives. CAM's aircraft leases are typically under multi-year agreements.

ACMI Services: The Company's airlines contract directly with customers to supply a combination of aircraft, crews and maintenance services. ABX operates Boeing 767 freighter aircraft, while ATI operates Boeing 767 and Boeing 757 freighter aircraft and Boeing 757 "combi" aircraft. Combi aircraft are capable of carrying passengers and cargo containers on the main flight deck. The airlines can conduct cargo operations worldwide.

Support services: Customers who lease our aircraft typically need related services, such as scheduled aircraft maintenance, aircraft line maintenance, crew training and other transportation related solutions which our subsidiaries can provide. The support services we provide to freight forwarders and other airlines provide us with a competitive advantage for diversification and incremental revenues. Our businesses and subsidiaries providing support services are summarized below.

• ABX provides flight crew training, flight simulator rental and aircraft line maintenance services;

• Airborne Maintenance and Engineering Services, Inc. (“AMES”), is an aircraft maintenance, repair and overhaul business;

• AMES Material Services, Inc. ("AMS"), resells and brokers aircraft parts;

• LGSTX Services, Inc. (“LGSTX”), provides facility and ground equipment maintenance and ground equipment rentals for aircraft support;

• LGSTX Distribution Services, Inc. ("LDS"), operates mail sorting centers for the U.S Postal Service ("USPS");

• Global Flight Source ("GFS"), provides aircraft dispatch and flight tracking services.

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Customer revenues for 2013 are summarized as follows:

	ACMI Services	Aircraft leasing	Support services
External revenues(in thousands)	$444,504	$71,604	$63,915
Subsidiaries and businesses	ABX, ATI	CAM	ABX, AMES, AMS, GFS, LDS, LGSTX

Airborne Global Solutions, Inc. ("AGS") is our subsidiary that assists our businesses in achieving their sales and marketing plans. AGS provides sales leads to our subsidiaries by identifying customers' business and operational requirements and leveraging the capabilities of our subsidiaries and other third party service providers to develop a customized air cargo solution for customers.

In January 2014, the Company acquired a 25 percent equity interest in West Atlantic AB of Gothenburg, Sweden. West Atlantic AB, through its two airlines, Atlantic Airlines Ltd. and West Air Sweden AB, operates a fleet of approximately 40 aircraft and is Europe’s largest regional cargo aircraft operator. West Atlantic AB operates its aircraft on behalf of European regional mail carriers and express logistics providers. The airlines operate a combined fleet of British Aerospace ATPs, Bombardier CRJ-200-PFs, and Boeing 737 aircraft. In addition, Atlantic Airlines Ltd. is adding the Boeing 767 aircraft to its operating capability.

Description of Business

The Company has two reportable segments,“ACMI Services" and "CAM." Due to the similarities among the Company's airline operations, the airline operations are aggregated into a single reportable segment - ACMI Services. The Company’s other business operations, including aircraft maintenance and modification services, aircraft part sales, equipment leasing and maintenance and mail handling for the USPS do not constitute reportable segments due to their size. Financial information about our segments and geographical revenues is presented in Note N to the accompanying consolidated financial statements.

DHL Network Operations (USA), Inc. and its affiliates (individually and collectively, "DHL"), is the Company's largest customer. Business with DHL totaled 54% of the Company's consolidated revenues in 2013, while the U.S. Military comprised 17% of the Company's consolidated revenues in 2013.

CAM

CAM’s fleet of 49 serviceable freighter aircraft as of December 31, 2013, consisted of Boeing 767 and Boeing 757. A list of the Company's aircraft is included in Item 2, Properties.

CAM leases aircraft to ATSG's airlines and to external customers, including DHL, usually under multi-year contracts with a schedule of fixed monthly payments. Under a typical lease arrangement, the customer maintains the aircraft in serviceable condition at its own cost. At the end of the lease term, the customer is typically required to return the aircraft in approximately the same maintenance condition that it was in at the inception of the lease, as measured by airframe and engine time since the last scheduled maintenance event. CAM examines the credit worthiness of potential customers, their short and long term growth prospects, their financial condition and backing, the experience of their management and the impact of governmental regulation when determining the lease rate that is offered to the customer. In addition, CAM monitors the customer’s business and financial status throughout the term of the lease.

Through CAM, we have expanded in recent years the Company's combined fleet of Boeing 767 and 757 aircraft and retired less efficient Boeing 727 and McDonnell Douglas DC-8 freighter aircraft. Since 2011, CAM has acquired 11 Boeing 767-300 and Boeing 757 aircraft and managed the modification of those aircraft into Boeing 767-300 freighters, Boeing 757 freighters and Boeing 757 combi variants.

ACMI Services

Through the Company's two airline subsidiaries, we provide airline operations to DHL, other airlines, freight forwarders and the U.S. Military. A typical operating agreement requires our airline to supply, at a specific rate per block hour and/or per month, the aircraft, crew, maintenance and insurance ("ACMI") for specified cargo operations,

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while the customer is responsible for substantially all other aircraft operating expenses, including fuel, landing fees, parking fees and ground and cargo handling expenses. The airlines also operate charter agreements, including with the U.S. Military, which require the airline to provide full service, including fuel and other operating expenses, in addition to aircraft, crew, maintenance and insurance for a fixed, all-inclusive price.

Demand for air cargo services correlates closely with general economic conditions and the level of commercial activity in a geographic area. Stronger general economic conditions and growth in a region typically increase the need for product transportation. Historically, the cargo industry has experienced higher volumes during the fourth calendar quarter of each year due to increased shipments during the holiday season. Generally, time-critical delivery needs, such as just-in-time inventory management, increase the demand for air cargo delivery, while higher costs of aviation fuel generally reduces the demand for air delivery services. When aviation fuel prices increase, shippers will consider using ground transportation if the delivery time allows.

Our airlines operate medium payload and medium wide-body aircraft freighters usually on intra-continental flights and medium range inter-continental flights. The airlines typically operate our aircraft in the customers' regional networks that connect to and from global cargo networks. We do not operate larger capacity, long haul inter-continental freighters such as the Boeing 747 or Airbus A380 aircraft. The freighter types we operate have lower investment and ongoing maintenance costs and can operate cost efficiently with smaller loads on shorter routes than the larger capacity freighters.

The Company, through ABX, has had long term contracts with DHL since August 15, 2003. Under the current agreements which began in March of 2010, DHL committed to lease 13 Boeing 767 freighter aircraft from CAM, each for a term of seven years. ABX was separately contracted to operate those aircraft for DHL in a U.S. network under a five year crew, maintenance and insurance agreement ("CMI agreement"). As of December 31, 2013, DHL was leasing 13 aircraft from CAM, all of which ABX operates for DHL under the CMI agreement. Additionally, ABX operates four DHL owned Boeing 767 aircraft as well as seven ABX leased aircraft for DHL's U.S network as of December 31, 2013. ATI operates four Boeing 757 aircraft under ACMI agreements in DHL's U.S network.

ATI provides airlift to the Air Mobility Command ("AMC"), through contracts awarded by the U.S. Transportation Command ("USTC"), both of which are organized under the U.S. Military. ATI contracts with the AMC for the operation of its unique fleet of four Boeing 757 "combi" aircraft,which are capable of simultaneously carrying passengers and cargo containers on the main flight deck. ATI has been operating combi aircraft for the U.S. Military since 1993. During 2013, ATI retired its four DC-8 combi aircraft and replaced the aircraft with the more modern Boeing 757 combi aircraft. The USTC awards flights to U.S. certificated airlines through annual contracts. During 2012, USTC awarded ATI three international routes for combi aircraft through September of 2014. These routes are not based on or related to the current conflicts in the Middle East. Additionally, ATI often operates temporary "expansion" routes for the U.S Military using its Boeing 757 combi and Boeing 767 freighter aircraft.

CCIA and ATI each provided airlift to BAX/Schenker's North American network through ACMI agreements using Boeing 727 and DC-8 aircraft, respectively. During 2011, BAX/Schenker totaled 26% of the Company's consolidated revenues. However, on July 22, 2011, BAX/Schenker announced its decision to phase out its dedicated air cargo network in North America, which was supported by the Company. Instead of a dedicated aircraft network, BAX/Schenker began to utilize DHL and other delivery services for its air transportation delivery requirements. We provided limited airlift directly to BAX/Schenker through the peak delivery season, until late December 2011. Beginning in January 2012, the Company contracted with DHL to supplement DHL's U.S. air network to service BAX/Schenker's freight volumes on DHL's expanded air network. By the end of 2012, we retired the remaining Boeing 727 and DC-8 freighter aircraft, replacing their capacity with Boeing 767 aircraft.

To further streamline the operations impacted by the loss of the BAX/Schenker business, we began to merge the airline operations of ATI and CCIA during 2012. In September 2012, ATI and CCIA flight crewmembers, as represented by the Air Line Pilots Association International ("ALPA"), ratified a collective bargaining agreement which allowed for an integrated seniority list. The airlines and ALPA completed the integration of the seniority lists in 2012. We completed the merger of ATI and CCIA's airline operations in the first quarter of 2013. The combined operation benefits from standardized fleet, two person flight crew, common pilot type rating and improved reliability of the Boeing 767 and Boeing 757 aircraft compared to the Boeing 727 and DC-8 freighter aircraft formerly operated by the airlines.

Approximately 14% of the Company's consolidated revenues for 2013 were derived from providing airline operations for customers other than DHL and the U.S. Military. These ACMI and charter operations are typically provided to freight forwarders or other airlines and have non U.S. destinations.

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We have limited exposure to fluctuations in the price of aviation fuel under contracts with our customers. DHL, like most of our ACMI customers, procures the aircraft fuel and fueling services necessary for their flights. Our charter agreements with the U.S. Military are based on a preset pegged fuel price and include a subsequent true-up to the actual fuel prices.

Aircraft Maintenance and Modification Services

We provide aircraft maintenance and modification services to other air carriers through our ABX and AMES subsidiaries. ABX and AMES have technical expertise related to aircraft modifications as a result of ABX’s long history in aviation. They own many Supplemental Type Certificates (“STCs”). An STC is granted by the FAA and represents an ownership right, similar to an intellectual property right, which authorizes the alteration of an airframe, engine or component.

AMES operates a Federal Aviation Administration (“FAA”) certificated 145 repair station in Wilmington, Ohio, including hangars, a component shop and engineering capabilities. AMES is AS9100 quality certified for the aerospace industry. AMES markets its capabilities by identifying aviation-related maintenance and modification opportunities and matching them to its capabilities. AMES’ marketable capabilities include the installation of avionics systems and flat panel displays for Boeing 757 and Boeing 767 aircraft. The flat panel display modernizes aircraft avionics equipment and reduces maintenance costs by combining multiple display units into a single instrumentation panel. AMES has the capability to perform line maintenance and airframe maintenance on McDonnell Douglas DC-9, MD-80, Boeing 767, 757, 737 and 727 aircraft. AMES also has the capability to refurbish airframe components, including approximately 60% of the components for Boeing 767 aircraft.

DHL contracts with the Company to provide scheduled airframe maintenance for the 13 Boeing 767 aircraft that it leases from CAM. The Company also provides scheduled maintenance for four DHL-owned aircraft operated by ABX under the CMI agreement.

Aircraft Parts Sales and Brokerage

AMS is an Aviation Suppliers Association 100 Certified reseller and broker of aircraft parts. AMS carries an inventory of Boeing 767, DC-9 and DC-8 spare parts and also maintains inventory on consignment from original equipment manufacturers, resellers, lessors and other airlines. AMS customers include the commercial air cargo industry, passenger airlines, aircraft manufacturers and contract maintenance companies serving the commercial aviation industry, as well as other resellers.

Equipment and Facility Maintenance

LGSTX provides contract maintenance services for aviation ground support equipment and facility services throughout the U.S. LGSTX has a large inventory of ground support equipment, such as power units, airstarts, deicers and pushback vehicles that it rents to airports, airlines and other customers. LGSTX is also licensed to resell aircraft fuel.

U.S. Postal Service

Since September 2004, we have provided mail sorting services under contracts with the USPS. Our subsidiary, LDS, manages USPS mail sort centers in Indianapolis, Dallas and Memphis. Under each of these three contracts, we are compensated at a firm price for fixed costs and an additional amount based on the volume of mail handled at each sort center. The contracts for these three USPS facilities were renewed in 2012 with similar economic terms through September 2014. LDS also provides labor for load transfer services to the USPS at two facilities under short term contracts. Additionally, LDS provides international mail forwarding services through the Miami International Airport and the Los Angles International Airport.

Flight Support

ABX is FAA-certificated to offer flight crew training to customers and rent usage of its flight simulators for outside training programs. ABX has three flight simulators in operation. ABX’s Boeing 767 and DC-9 flight simulators are level C certified. The level C flight simulators allow ABX to qualify flight crewmembers under FAA requirements

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without performing check flights in an aircraft. The DC-8 simulator is level B certified, which allows ABX to qualify flight crewmembers by performing a minimum number of flights in an aircraft.

The Company's GFS business provides aircraft dispatch and flight monitoring to ABX and ATI. GFS can provide these services to U.S certificated supplemental air carriers and foreign air carriers.

Discontinued operations

Discontinued operations relate to hub operations, package sorting and aircraft fuel services that ABX provided to DHL under previous agreements. Beginning in August 2003, ABX operated primarily under two commercial agreements with DHL; an aircraft, crew, maintenance and insurance agreement (“DHL ACMI agreement”) and a hub services agreement (“Hub Services agreement”), both of which had become effective in conjunction with DHL's acquisition of Airborne. Under these agreements, ABX and DHL generally operated under a cost-plus pricing structure. ABX provided staff to conduct package sorting, as well as airport, facilities and equipment maintenance services for DHL under the Hub Services agreement. In 2008, DHL began to restructure its U.S. operations. Pursuant to its restructuring plan, DHL discontinued intra-U.S. domestic pickup and delivery services and now provides only international services to and from the U.S. In the third quarter of 2009, ABX ceased all remaining sort operations for DHL and the Hub Services agreement expired. Additionally, in the third quarter of 2009, DHL assumed the management of aircraft fuel services for its U.S. network that were previously provided by ABX. These former business activities are reported as discontinued operations. The financial results of discontinued operations since 2010, primarily reflect pension expense for the former hub employees and costs related to legal claims involving ABX's use of temporary workers in its hub services operation (See Item 3, Legal Proceedings).

Competitive Conditions

Our airline subsidiaries compete with other cargo airlines to place aircraft under ACMI arrangements and charter contracts. Other cargo airlines include Amerijet International, Inc., Atlas Air Worldwide Holdings, Inc., National Air Cargo Group, Inc., Southern Air Inc. and World Airways, Inc. The primary competitive factors in the air cargo industry are price, fuel efficiency, geographic coverage, aircraft range, aircraft reliability and capacity. Cargo airlines also compete for cargo volumes with passenger airlines that have substantial belly cargo capacity. The air cargo industry is capital intensive and highly competitive, especially during periods of excess capacity of aircraft compared to cargo volumes.

The scheduled delivery industry is dominated by integrated door-to-door carriers including DHL, TNT Holdings B.V., the USPS, FedEx Corporation and United Parcel Service, Inc. Although the volume of our business is impacted by competition among these integrated carriers, we do not usually compete directly with them.

Competition for aircraft lease placements is generally affected by aircraft type, aircraft availability and lease rates. We target our leases to cargo airlines and delivery companies seeking medium widebody airlift. The Airbus A300-600 and A330 aircraft can provide capabilities similar to the Boeing 767 for medium widebody airlift.

The aircraft maintenance industry is labor intensive and typically competes based on cost, capabilities and reputation for quality. U.S. airlines may contract for aircraft maintenance with maintenance and repair organizations ("MROs") in other countries or geographies with a lower labor wage base, making the industry highly cost competitive.

Airline Operations

Flight Operations and Control

Each of the Company's airline operations are conducted pursuant to authority granted to them by the FAA. Airline flight operations, including aircraft dispatching, flight tracking and crew scheduling, are planned and controlled by personnel within each airline. The Company staffs aircraft dispatching and flight tracking 24 hours per day, 7 days per week.

Aircraft Maintenance

Our airlines’ operations are regulated by the FAA for aircraft safety and maintenance. Each airline performs routine inspections and airframe maintenance, including Airworthiness Directive and Service Bulletin compliance on all of their aircraft. The airlines’ maintenance and engineering personnel coordinate routine and non-routine maintenance

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requirements. Each airline’s maintenance program includes tracking the maintenance status of each aircraft, consulting with manufacturers and suppliers about procedures to correct irregularities and training maintenance personnel on the requirements of its FAA-approved maintenance program. The airlines contract with MROs, including AMES, to perform heavy airframe maintenance on airframes and engines. Each airline owns and maintains an inventory of spare aircraft engines, auxiliary power units, aircraft parts and consumable items. The number of spare items maintained is based on the fleet size, engine type operated and the reliability history of the item types.

Insurance

Our airline subsidiaries are required by the Department of Transportation (“DOT”) to carry a minimum amount of aircraft liability insurance. Their aircraft leases, loan agreements and ACMI agreements also require them to carry such insurance. The Company currently maintains public liability and property damage insurance, and our airline subsidiaries currently maintain aircraft hull and liability insurance and war risk insurance for their respective aircraft fleets in amounts consistent with industry standards. CAM’s customers are also required to maintain similar insurance coverage.

Employees

As of December 31, 2013, the Company had approximately 1,800 employees, including 1,600 full-time employees and 200 part-time employees. The Company employed approximately 415 flight crewmembers, 865 aircraft maintenance technicians and flight support personnel, 235 warehousing, sorting and logistics personnel, 100 employees for airport maintenance and logistics, 20 employees for sales and marketing and 165 employees for administrative functions. On December 31, 2012, the Company had approximately 1,900 employees.

Labor Agreements

The Company’s flight crewmembers are unionized employees. The table below summarizes the representation of the Company’s flight crewmembers at December 31, 2013.

Airline	Labor Agreement Unit	Contract Amendable Date	Percentage of the Company’s Employees
ABX	International Brotherhood of Teamsters	12/31/2014	14.4%
ATI	Air Line Pilots Association	5/28/2014	8.7%

Under the Railway Labor Act (“RLA”), as amended, the crewmember labor agreements do not expire, so the existing contract remains in effect throughout any negotiation process. If required, mediation under the RLA is conducted by the National Mediation Board, which has the sole discretion as to how long mediation can last and when it will end. In addition to direct negotiations and mediation, the RLA includes a provision for potential arbitration of unresolved issues and a 30-day “cooling-off” period before either party can resort to self-help, including, but not limited to, a work stoppage.

Training

The flight crewmembers are required to be licensed in accordance with Federal Aviation Regulations (“FARs”), with specific ratings for the aircraft type to be flown, and to be medically certified as physically fit to operate aircraft. Licenses and medical certifications are subject to recurrent requirements as set forth in the FARs, to include recurrent training and minimum amounts of recent flying experience.

The FAA mandates initial and recurrent training for most flight, maintenance and engineering personnel. Mechanics and quality control inspectors must also be licensed and qualified to perform maintenance on Company operated and maintained aircraft. Our airline subsidiaries pay for all of the recurrent training required for their flight crewmembers and provide training for their ground service and maintenance personnel. Their training programs have received all required FAA approvals. Similarly, our flight dispatcher's and flight followers receive FAA approved training on the airlines' requirements and specific aircraft.

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Intellectual Property

The Company owns a small number of U.S. patents that have a nominal commercial value. The Company also owns many STCs issued by the FAA. The Company uses these STCs mainly in support of its own fleets; however, AMES has marketed certain STCs to other airlines.

Information Systems

The Company has invested significant management and financial resources in the development of information systems to facilitate flight and maintenance operations. We utilize systems to maintain records about the maintenance status and history of each major aircraft component, as required by FAA regulations. Using the systems, we track and control inventories and costs associated with each maintenance task, including the personnel performing those tasks. In addition, the Company’s flight operations systems coordinate flight schedules and crew schedules. We have developed and procured systems to track crewmember flight and duty times, and crewmember training status.

Regulation

Our subsidiaries’ airline operations are generally regulated by the DOT, the FAA and the Transportation Security Administration (“TSA”). Those operations must comply with numerous security and environmental laws, ordinances and regulations. In addition, they must also comply with various other federal, state, local and foreign laws and regulations.

Environment

Under current federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or clean-up of hazardous or toxic substances on, under, or in such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In addition, the presence of contamination from hazardous or toxic substances, or the failure to properly clean up such contaminated property, may adversely affect the ability of the owner of the property to use such property as collateral for a loan or to sell such property. Environmental laws also may impose restrictions on the manner in which a property may be used or transferred or in which a business located thereon may be operated and may impose remediation or compliance costs. Under its former air park sublease with DHL, ABX and DHL are required to defend, indemnify and hold each other harmless from and against certain environmental claims associated with the Air Park in Wilmington, Ohio.

The U.S. Environmental Protection Agency is authorized to regulate aircraft emissions and has historically implemented emissions control standards adopted by the International Civil Aviation Organization ("ICAO"). Our subsidiaries’ aircraft currently meet all known requirements for engine emission levels as applicable by engine design date. Under the Clean Air Act, individual states or the U.S. Environmental Protection Agency may adopt regulations requiring reductions in emissions for one or more localities based on the measured air quality at such localities. Such regulations may seek to limit or restrict emissions by restricting the use of emission-producing ground service equipment or aircraft auxiliary power units. Further, the U.S. Congress has, in the past, considered legislation that would regulate greenhouse gas emissions, and some form of federal climate change legislation is possible in the future.

In addition, the European Commission has approved the extension of the European Union Emissions Trading Scheme ("ETS") for greenhouse gas emissions to the airline industry. Beginning in 2012, all Company airline subsidiary flights to and from any airport in any member state of the European Union ("EU") are covered by the ETS requirements. Each year our airlines are required to submit emission allowances in an amount equal to the carbon dioxide emissions from such flights. If the airlines flight activity during the year produced carbon emissions exceeding the number of carbon emissions allowances that it had been awarded, the airline must acquire allowances from other airlines in the open market.

For 2013, the European Commission deferred application of the ETS except as it applies to intra-EU flights. The deferral expired at the end of 2013. In April 2013, the European Commission deferred application of the ETS until April 2014 for flights operated to and from non-EU destinations. Unless the European Commission acts, the ETS will be applicable for all flights to or from Europe beginning in April 2014. ABX currently operates intra-EU flights, and both ABX and ATI have operated intra-EU flights since the beginning of 2012. Management believes that ABX's and ATI's intra-EU flights are operated in compliance with ETS requirements.

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In October 2013, at the 38th ICAO Assembly, the ICAO reached a non-binding agreement committing ICAO to develop a global market-based measure to assist in achieving carbon neutral growth by 2020.

The U.S. government, working through the ICAO, has in the past adopted more stringent aircraft engine emissions regulations with regard to newly certificated engines and aircraft noise regulations applicable to newly certificated aircraft. Although these rules will not apply to any of our airline subsidiaries’ existing aircraft, additional rules could be adopted in the future that would either apply these more stringent noise and emissions standards to aircraft already in operation or require that some portion of the fleet be converted over time to comply with these new standards.

The federal government generally regulates aircraft engine noise at its source. However, local airport operators may, under certain circumstances, regulate airport operations based on aircraft noise considerations. The Airport Noise and Capacity Act of 1990 provides that, in the case of Stage 3 aircraft (all of our operating aircraft satisfy Stage 3 noise compliance requirements), an airport operator must obtain the carriers’ consent to, or the government’s approval of, the rule prior to its adoption. We believe the operation of our airline subsidiaries’ aircraft either complies with or is exempt from compliance with currently applicable local airport rules. However, some airport authorities have adopted local noise regulations, and, to the extent more stringent aircraft operating regulations are adopted on a widespread basis, our airline subsidiaries may be required to spend substantial funds, make schedule changes or take other actions to comply with such local rules.

Department of Transportation

The DOT maintains authority over certain aspects of domestic air transportation, such as requiring a minimum level of insurance and the requirement that a person be “fit” to hold a certificate to engage in air transportation. In addition, the DOT continues to regulate many aspects of international aviation, including the award of international routes. The DOT has issued ABX a Domestic All-Cargo Air Service Certificate for air cargo transportation between all points within the U.S., the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. The DOT has issued ATI certificate authority to engage in scheduled interstate air transportation, which is currently limited to all-cargo operations. ATI's DOT certificate authority also authorizes it to engage in interstate and foreign charter air transportation of persons, property and mail.  Additionally, the DOT has issued ABX and ATI Certificates of Public Convenience and Necessity authorizing each of them to engage in scheduled foreign air transportation of cargo and mail between the U.S. and all current and future U.S. open-skies partner countries, which currently consists of over 100 foreign countries.  ABX also holds exemption authorities issued by the DOT to conduct scheduled all-cargo operations between the U.S. and certain foreign countries with which the U.S. does not have an open-skies air transportation agreement. 

By maintaining these certificates, the Company, through its airline subsidiaries, can conduct all-cargo charter operations worldwide. Prior to issuing such certificates, and periodically thereafter, the DOT examines a company’s managerial competence, financial resources and plans, compliance, disposition and citizenship in order to determine whether the carrier is fit, willing and able to engage in the transportation services it has proposed to undertake.

The DOT has the authority to impose civil penalties, or to modify, suspend or revoke our certificates for cause, including failure to comply with federal laws or DOT regulations. A corporation holding the above-referenced certificates must qualify as a citizen of the United States, which, pursuant to federal law, requires that (1) it be organized under the laws of the U.S. or a state, territory or possession thereof, (2) that its president and at least two-thirds of its Board of Directors and other managing officers be U.S. citizens, (3) that less than 25% of its voting interest be owned or controlled by non-U.S. citizens, and (4) that it not otherwise be subject to foreign control. We believe our airline subsidiaries possess all necessary DOT-issued certificates and authorities to conduct our current operations and continue to qualify as a citizen of the United States.

Federal Aviation Administration

The FAA regulates aircraft safety and flight operations generally, including equipment, ground facilities, maintenance, flight dispatch, training, communications, the carriage of hazardous materials and other matters affecting air safety. The FAA issues operating certificates and operations specifications to carriers that possess the technical competence to conduct air carrier operations. In addition, the FAA issues certificates of airworthiness to each aircraft that meets the requirements for aircraft design and maintenance. ABX and ATI believe they hold all airworthiness and other FAA certificates and authorities required for the conduct of their business and the operation of their aircraft,

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although the FAA has the power to suspend, modify or revoke such certificates for cause, or to impose civil penalties for any failure to comply with federal laws and FAA regulations.

The FAA has the authority to issue airworthiness directives and other mandatory orders relating to, among other things, the inspection and maintenance of aircraft and the replacement of aircraft structures, components and parts, based on the age of the aircraft and other factors. For example, the FAA has required ABX to perform inspections of its Boeing 767 aircraft to determine if certain of the aircraft structures and components meet all aircraft certification requirements. If the FAA were to determine that the aircraft structures or components are not adequate, it could order operators to take certain actions, including but not limited to, grounding aircraft, reducing cargo loads, strengthening any structure or component shown to be inadequate, or making other modifications to the aircraft. New mandatory directives could also be issued requiring the Company’s airline subsidiaries to inspect and replace aircraft components based on their age or condition. As a routine matter, the FAA issues airworthiness directives applicable to the aircraft operated by our airline subsidiaries, and our airlines comply, sometimes at considerable cost, as part of their aircraft maintenance program. In addition to the FAA practice of issuing Airworthiness Directives as conditions warrant, the FAA has adopted new policies to address issues involving older, but still economically viable, aircraft on a more systematic basis. FAA regulations mandate that aircraft manufacturers establish limits on aircraft flight cycles before which widespread fatigue damage might occur. The Boeing Company has provided its recommendation to the FAA, which is reviewing those limits. Once these limits are approved by the FAA, carriers must then incorporate them into their maintenance programs over time. After the limits are reached, airlines will be unable to continue to operate the aircraft without the FAA first granting an extension of time to the operator. As the FAA has not yet set the new limits, the Company cannot yet estimate the impact of the new rule on any of its airline subsidiaries.

The FAA has adopted a policy regarding the proper application of airport rates and charges imposed on airlines. The policy provides greater flexibility to airport operators to impose charges that would expressly allow for the imposition of “congestion fees” rather than uniform airport fees. If airports in the U.S. seek to use the flexibility offered by this policy, it could have an impact on the cost of conducting our flight operations.

The FAA requires each of the airline subsidiaries to implement a drug and alcohol testing program with respect to all employees that engage in safety sensitive functions. Each of the airlines comply with these regulations.

Transportation Security Administration

The TSA, an administration within the Department of Homeland Security, is responsible for the screening of passengers, baggage and cargo and the security of aircraft and airports. Our airline subsidiaries comply with all applicable aircraft and cargo security requirements. The TSA has adopted cargo security-related rules that have imposed additional burdens on our airlines and our customers. Among other things, the TSA requires each airline to perform criminal history background checks on all employees. In addition, we may be required to reimburse the TSA for the cost of security services it may provide to the Company’s airline subsidiaries in the future.

Department of Defense

ABX and ATI participate in the Department of Defense ("DOD") Civil Reserve Air Fleet ("CRAF") program. Our participation in the CRAF program allows the DOD to requisition specified aircraft for military use during a national defense emergency. The DOD compensates us for the use of aircraft under the CRAF program. In addition, participation in CRAF entitles our airlines to bid for military cargo charter operations.

International Regulations

When operating in other countries, our airlines are subject to aviation agreements between the U.S. and the respective countries or, in the absence of such an agreement, by principles of reciprocity. International aviation agreements are periodically subject to renegotiation, and changes in U.S. or foreign governments could result in the alteration or termination of the agreements affecting our international operations. Commercial arrangements such as ACMI agreements, between our airlines and our customers in other countries, may require the approval of foreign governmental authorities. Foreign authorities may limit or restrict the use of our aircraft in certain countries. Also, foreign government authorities often require licensing and business registration before beginning operations.

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Other Regulations

Various regulatory authorities have jurisdiction over significant aspects of our business, and it is possible that new laws or regulations or changes in existing laws or regulations or the interpretations thereof could have a material adverse effect on our operations. In addition to the above, other laws and regulations to which we are subject, and the agencies responsible for compliance with such laws and regulations, include the following:

• The labor relations of our airline subsidiaries are generally regulated under the Railway Labor Act, which vests in the National Mediation Board certain regulatory powers with respect to disputes between airlines and labor unions arising under collective bargaining agreements;

• The Federal Communications Commission regulates our airline subsidiaries’ use of radio facilities pursuant to the Federal Communications Act of 1934, as amended;

• U.S. Customs and Border Protection inspects cargo imported from our subsidiaries’ international operations;

• Our airlines must comply with U.S. Citizenship and Immigration Services regulations regarding the citizenship of our employees;

• The Company and its subsidiaries must comply with wage, work conditions and other regulations of the Department of Labor regarding our employees.

Security and Safety

Security

The Company’s subsidiaries have instituted various security procedures and protocols to comply with FAA and TSA regulations. The airline subsidiaries’ customers are required to inform them in writing of the nature and composition of any freight which is classified as “Dangerous Goods” by the DOT. In addition, the Company and its subsidiaries conduct background checks on our respective employees, restrict access to aircraft, inspect aircraft for suspicious persons or cargo, and inspect all dangerous goods. Notwithstanding these procedures, our airline subsidiaries could unknowingly transport contraband or undeclared hazardous materials for customers, which could result in fines and penalties and possible damage to the aircraft.

Safety and Inspections

Management is committed to the safe operation of its aircraft. In compliance with FAA regulations, our subsidiaries’ aircraft are subject to various levels of scheduled maintenance or “checks” and periodically go through phased overhauls. In addition, a comprehensive internal audit and evaluation program is in place and active. Our subsidiaries’ aircraft maintenance efforts are monitored closely by the FAA. They also conduct extensive safety checks on a regular basis.

Executive Officers of the Registrant

Information about executive officers of the Company is provided in Item 10. Directors, Executive Officers and Corporate Governance, of this report.

Available Information

Our filings with the Securities and Exchange Commission ("SEC"), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports, are available free of charge from our website at www.atsginc.com as soon as reasonably practicable after filing with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding Air Transport Services Group, Inc. at www.sec.gov.

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ITEM 1A. RISK FACTORS

The risks described below could adversely affect our financial condition or results of operations. The risks below are not the only risks that the Company faces. Additional risks that are currently unknown to us or that we currently consider immaterial or unlikely could also adversely affect the Company.

The economic conditions in the U.S. and throughout the globe may negatively impact the demand for the Company’s aircraft and services.

Air cargo transportation volumes are strongly correlated to general economic conditions, including the price of aviation fuel. An economic downturn could reduce the demand for delivery services offered by DHL and other delivery businesses, in particular expedited services shipped via aircraft. Accordingly, an economic downturn could reduce the demand for airlift and cargo aircraft leases. Further, during an economic slowdown, customers generally prefer to use ground-based or marine delivery services instead of more expensive air delivery services. Additionally, if the price of aviation fuel rises significantly, the demand for cargo aircraft and air delivery services may decline below expectations. During periods of downward economic trends and uncertainty, freight forwarders and integrated delivery businesses are more likely to defer market expansion plans. As a result, we may experience delays in the deployment of available aircraft with customers under lease, ACMI or charter arrangements.

The rate of aircraft deployments may impact the Company’s operating results and financial condition.

The Company's future operating results and financial condition will depend in part on our subsidiaries’ ability to successfully deploy aircraft in operations that provide a positive return on investment. Our success will depend, in part, on their ability to secure additional cargo volumes from customers, in both U.S. and international markets. Deploying aircraft in international markets can pose additional risks, regulatory requirements and costs.

The actual demand for Boeing 767 and 757 aircraft may be less than we anticipate. The actual lease rates for aircraft available for lease may be less than we projected, or new leases may start later than we expect. Further, other airlines and lessors may be willing to offer aircraft to the market under terms more favorable to lessees.

Our costs incurred in providing airline services could be more than the contractual revenues generated.

Each airline develops business plans for ACMI, charter and other operating contracts by projecting operating costs, crew productivity and maintenance expenses. Projections contain key assumptions, including flight hours, aircraft reliability, crewmember productivity and crewmember compensation and benefits. We may overestimate revenues, the level of crewmember productivity, and/or underestimate the actual costs of providing services when preparing for new business opportunities. If actual costs are higher than projected or aircraft reliability is less than expected, future operating results may be negatively impacted.

The Company’s airlines rely on flight crews that are unionized. If collective bargaining agreements increase our costs and we cannot recover such increases, it may be necessary for us to terminate customer contracts or curtail planned growth. If disagreements arise, airline operations could be interrupted and business could be adversely affected until agreements are reached with the crewmembers.

Our airline operating agreements include on-time reliability requirements which can impact the Company's operating results and financial condition.

Our airline operating agreements may contain monthly incentive payments for reaching specific on-time reliability thresholds. Additionally, our airline operating agreements may contain monetary penalties if aircraft reliability falls below certain monthly thresholds. As a result, our operating revenues may vary from period to period depending on the achievement of monthly incentives or the imposition of penalties. Further, an airline could be found in default of an agreement if it does not maintain minimum thresholds over an extended period of time.

If ABX fails to maintain aircraft reliability above a minimum threshold in DHL's U.S. domestic network for two consecutive calendar months or three months in a rolling twelve month period, ABX would be in default of the CMI agreement with DHL. In that event, DHL may elect to terminate the CMI agreement, unless ABX maintains the minimum reliability threshold during a 60-day cure period. If DHL terminates the CMI agreement due to an ABX event of default, ABX would be subject to a monetary penalty payable to DHL. The penalty through the remaining initial term of the CMI agreement would be $10 million.

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Under provisions of the CMI and lease agreements with DHL, DHL can terminate the CMI or lease agreements subject to early termination provisions.

DHL may terminate the CMI agreement for convenience at any time during the initial five-year term (through March 30, 2015) on the date that it ceases operating or causing to be operated the aircraft on air routes for which the origin and destination are within the United States, subject to providing six months notice and paying to ABX a termination fee. The termination fee started at $70 million on March 31, 2011, and amortizes to zero during the remaining four year initial term of the CMI agreement. DHL may terminate one or more of the aircraft leases for convenience, upon providing six months' notice and paying to CAM a lump sum amount equal to six months' rent. DHL may also terminate one or more aircraft leases at any time after the first 54 months of the term of the CMI agreement, in the event that DHL desires to transfer operational control of such aircraft, but is effectively restricted from doing so by the terms of the collective bargaining agreement between ABX and its pilots' union providing that members of the pilots' union have the right to follow the aircraft to another operator, subject to providing six months' notice and paying to CAM a lump sum amount equal to two months rent.

The U.S. Military may not renew our contracts or may reduce the number of routes that we operate.

Our contracts with the U.S. Military are typically for one year and are not required to be renewed. The U.S. Military may terminate the contracts for convenience or in the event we were to default for failure to satisfy reliability requirements or for other reasons. The number and frequency of routes is sensitive to changes in military priorities and U.S. defense budgets.

Our business could be negatively impacted by adverse audit findings by the U.S. Government.

Our U.S. Military contracts are subject to audit by government agencies, including with respect to performance, costs, internal controls and compliance with applicable laws and regulations. If an audit uncovers improprieties, we may be subject to civil or criminal penalties, including termination of such contracts, forfeiture of profits, fines and suspension from doing business with the U.S. Military.

Proposed rules from the DOT, FAA and TSA could increase the Company's operating costs and reduce customer utilization of airfreight.

New FAA rules for Flightcrew Member Duty and Rest Requirements (FMDRR) for passenger airline operations became effective in January 2014. The new rules apply to our operation of combi aircraft for the U.S military and impact the required amount and timing of rest periods for pilots between work assignments and modified duty and rest requirements based on the time of day, number of scheduled segments, flight types, time zones and other factors. Compliance with these rules may increase our costs more than expected, while failure to remain in compliance with these rules may subject us to fines or other enforcement action.

If applied to cargo carriers, the new rules would require a pilot to have the opportunity to rest for nine hours before reporting to flight duty and place other restrictions on the number of duty hours in particular time periods. In May 2012, the FAA indicated that it would reconsider its initial decision to exclude cargo pilots from these new requirements. While not currently required for the Company's cargo operations, if such rest requirements and restrictions were imposed on our cargo operations, these rules could have a significant impact on the costs incurred by our airlines. The airlines would attempt to pass such additional costs onto their customers in the form of price increases. Customers, as a result, may seek to reduce their utilization of aircraft in favor of less expensive transportation alternatives.

The concentration of aircraft types and engines in the Company's airlines could adversely affect our operating and financial results.

The combined aircraft fleet is concentrated in two aircraft types. If any of these aircraft types encounter technical difficulties that resulted in significant FAA Airworthiness Directives or grounding, our ability to lease the aircraft would be adversely impacted, as would our airlines' operations. The market growth in demand for the Boeing 767 and 757 aircraft types and configurations may be less than we anticipate. Customers may develop preferences for the Airbus A300-600 and A330 aircraft or other mid size aircraft types, instead of the Boeing 767 and 757 aircraft.

The cost of aircraft repairs and unexpected delays in the time required to complete aircraft maintenance could negatively affect our operating results.

Our aircraft provide ACMI services throughout the world, sometimes operating in remote regions. Our aircraft may experience maintenance events in locations that do not have the necessary repair capabilities or are difficult to

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reach. As a result, we may incur additional expenses and lose billable revenues that we would have otherwise earned. Under the CMI agreement with DHL, AMES provides scheduled airframe maintenance for the 13 Boeing 767 aircraft that DHL leases from CAM and we are required to provide a spare aircraft while the scheduled maintenance is completed. If delays occur in the completion of aircraft maintenance, we may incur additional expense to provide airlift capacity and forego revenues.

We rely on third parties to modify aircraft and provide aircraft and engine maintenance.

We rely on certain third party aircraft modification service providers and aircraft and engine maintenance service providers that have expertise or resources that we do not have. Third party service providers may seek to impose price increases that could negatively affect our competitiveness in the airline markets. An unexpected termination or delay involving service providers could have a material adverse effect on our operations and financial results. A delay in an aircraft modification could adversely impact our revenues and our ability to place the aircraft in the market. We must manage third party service providers to meet schedules and turn-times and to control costs in order to remain competitive to our customers.

Delta TechOps, a division of Delta Airlines, Inc, is the sole engine maintenance provider for the Company's General Electric CF6 engines that power our fleet of Boeing 767-200 aircraft. If Delta TechOps does not complete the refurbishment of our engines within the contractual turn-times or if we must replace DeltaTechOps as the maintenance provider for some or all of the Company's CF6 engines, our operations and financial results may be adversely impacted.

The Company's operating results could be negatively impacted by disruptions of its information technology and communication systems.

Our businesses depend heavily on information technology and computerized systems to communicate and operate effectively. The Company's systems and technologies, or those of third party's on which we rely, could fail or become unreliable due to equipment failures, software viruses, cyberattacks, natural disasters, power failures or other causes. Certain disruptions could prevent our airlines from flying as scheduled, possibly for an extended period of time, which could have a negative impact on our operating results and reliability. We continually monitor the risks of disruption, take preventative measures, develop backup plans and maintain redundancy capabilities. However, the measures we use may not prevent the causes of disruptions we could experience or help us recover failed systems quickly.

The costs incurred in expanding our aircraft maintenance facilities could negatively impact our financial results.

We have agreed to a long term lease of a new 100,000 square foot maintenance hangar, in Wilmington, Ohio that is currently under construction and expected to be completed in 2014. The new hangar is being built in anticipation of additional aircraft maintenance contracts, including the ability to house Boeing 747 and 777 aircraft. As construction agent, we are responsible for managing the construction costs of the project. Additionally, we could incur incremental operating costs associated with the new hangar, including costs associated with employing additional aircraft maintenance personnel, before it is completed. Further, we will need to grow the Company's aircraft maintenance revenues utilizing the expanded capabilities by securing additional business. Those anticipated level of revenues may not coincide with our costs of operating the new facility.

The Company could violate debt covenants.

The Senior Credit Agreement contains covenants including, among other requirements, limitations on certain additional indebtedness and guarantees of indebtedness. The Senior Credit Agreement is collateralized by certain of the Company's Boeing 767 and 757 aircraft that are not collateralized under aircraft loans. Under the terms of the Senior Credit Agreement, the Company is required to maintain aircraft collateral coverage equal to 150% of the outstanding balance of the term loan and the maximum capacity of the revolving credit facility. The Senior Credit Agreement stipulates events of default, including unspecified events that may have material adverse effects on the Company. The Senior Credit Agreement and aircraft loans cross default. If an event of default occurs, the Company may be forced to repay, renegotiate or replace the Senior Credit Agreement and loans. In such an event, the Company’s cost of borrowings could increase, and our ability to modify and deploy aircraft could be limited as a result.

The Company's existing sources of liquidity may not be sufficient if opportunities to expand the aircraft fleet arise.

While we have not planned for additional aircraft acquisitions for 2014, opportunities to grow revenues could arise that require more aircraft or an aircraft type that we do not currently have. As of December 31, 2013, the Company's liquidity included $31.7 million of cash balance and $74.3 million available under the revolving credit facility through

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the Senior Credit Agreement. The existing sources of liquidity may not be sufficient to support a fleet expansion. We may need additional sources of credit to acquire and modify additional aircraft. If sources of credit are not available when we need the funds, the fleet expansion could be delayed. Further, additional sources of credit could result in an increase in our borrowing costs and additional covenant requirements.

Operating results may be affected by fluctuations in interest rates.

Effective March 31, 2011, in conjunction with our decision to refinance the unsubordinated term loan, we ceased hedge accounting for certain interest rate swaps which we continue to hold. In addition to these interest rate swaps, the Company's Senior Credit Agreement requires the Company to maintain derivative instruments for fluctuating interest rates for at least 50% of the outstanding balance of the new unsubordinated term loan. Accordingly, in July 2011, the Company entered into new derivative instruments. Also, in June 2013, the Company entered into an interest rate swap with a forward start date of December 31, 2013. We did not designate the derivative instruments as hedges. Future fluctuations in LIBOR interest rates will result in the recording of gains and losses on interest rate derivatives that the Company holds.

Under the Senior Credit Agreement, interest rates are adjusted quarterly based on the prevailing LIBOR or prime rates and a ratio of the Company's outstanding debt level to earnings before interest, taxes, depreciation and amortization expenses ("EBITDA"). At the Company's current debt-to-EBITDA ratio, the unsubordinated term loan and the revolving credit facility both bear a variable interest rate of 2.55%. Additional debt or lower EBITDA may result in higher interest rates on the variable rate portion of the Company's debt.

The Company sponsors defined benefit pension plans and post-retirement healthcare plans for certain eligible employees. The Company's related pension expense and funding requirements are sensitive to changes in interest rates used to discount the estimated future benefits payments that have been earned by participants in the plans. The annual pension expense is recalculated at the beginning of each calendar year using market interest rates at that point in time. Future fluctuations in interest rates could result in the recording of additional expense for pension and other post-retirement healthcare plans.

The costs of insurance coverage or changes to our reserves for self insured claims could affect our operating results and cash flows.

U.S. government has been offering war risk insurance to U.S. airlines following the terrorist attack of September 11, 2001. The U.S. government has committed to offer war risk insurance to airlines through 2014 after which it may be necessary to procure war risk insurance in the commercial market. The war risk insurance available to airlines in the commercial market may be more limited in coverage and/or may be more expensive than the premiums currently being paid.

The Company is self-insured for certain claims related to workers’ compensation, aircraft, automobile, general liability and employee healthcare. We record a liability for reported claims and an estimate for incurred claims that have not yet been reported. Accruals for these claims are estimated utilizing historical paid claims data and recent claims trends. Changes in claim severity and frequency could impact our results of operations and cash flows.

The ability to use net operating loss carryforwards to offset future taxable income for U.S. federal income tax purposes may be further limited.

Limitations imposed on the ability to use net operating losses (“NOLs”) to offset future taxable income could cause U.S. federal income taxes to be paid earlier than otherwise would be paid if such limitations were not in effect and could cause such NOLs to expire unused, in each case reducing or eliminating the benefit of such NOLs. Similar rules and limitations may apply for state income tax purposes.

Changes in the ownership of the Company on the part of significant shareholders could limit our ability to use NOLs to offset future taxable income. In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of significant stockholders increases by more than 50 percentage points over such stockholders’ lowest percentage ownership during the testing period (generally three years).

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We may need to reduce the carrying value of the Company’s assets.

The Company owns a significant amount of aircraft, aircraft parts and related equipment. Additionally, the balance sheet reflects assets for income tax carryforwards and other deferred tax assets. The removal of aircraft from service or continual losses from aircraft operations could require us to evaluate the recoverability of the carrying value of those aircraft, related parts and equipment and record an impairment charge through earnings to reduce the carrying value.

We have recorded goodwill and other intangible assets related to acquisitions. If we are unable to achieve the projected levels of operating results, it may be necessary to record an impairment charge to reduce the carrying value of goodwill and related intangible assets. Similarly, if we were to lose a key customer or one of our airlines were to lose its authority to operate, it could be necessary to record an impairment charge.

If the Company incurs operating losses or our estimates of expected future earnings indicate a decline, it may be necessary to reassess the need for a valuation allowance for some or all of the Company’s net deferred tax assets.

Penalties, fines and sanctions levied by governmental agencies or the costs of complying with government regulations could negatively affect our results of operations.

The operations of the Company’s subsidiaries are subject to complex aviation, transportation, security, environmental, labor, employment and other laws and regulations. These laws and regulations generally require our subsidiaries to maintain and comply with a wide variety of certificates, permits, licenses and other approvals. Their inability to maintain required certificates, permits or licenses, or to comply with applicable laws, ordinances or regulations could result in substantial fines or, in the case of DOT and FAA requirements, possible suspension or revocation of their authority to conduct operations.

The costs of maintaining our aircraft in compliance with government regulations could negatively affect our results of operations and require further investment in our aircraft fleet.

All aircraft in the Company’s fleet were manufactured prior to 1995. Manufacturer Service Bulletins and FAA Airworthiness Directives issued under its “Aging Aircraft” program cause operators of such aged aircraft to be subject to extensive aircraft examinations and require such aircraft to undergo structural inspections and modifications to address problems of corrosion and structural fatigue at specified times. The FAA may issue Airworthiness Directives that could require significant inspections and major modifications to such aircraft. The FAA may issue Airworthiness Directives that could limit the usability of certain aircraft types. In 2012, the FAA issued an Airworthiness Directive that requires the replacement of the aft pressure bulkhead on Boeing 767-200 aircraft based on a certain number of landing cycles. As a result, we expect that 24 of the Company's Boeing 767-200 aircraft will be affected. The cost of compliance is estimated to be $0.5 to $0.7 million per aircraft over the next ten years.

In addition, FAA regulations require that aircraft manufacturers establish limits on aircraft flight cycles to address issues involving older, but still economically viable, aircraft, as described in Item 1 of this report, under "Federal Aviation Administration." These regulations may increase our maintenance costs and eventually limit the use of our aircraft.

The FAA and ICAO are in the process of developing programs to modernize air traffic control and management systems. The FAA's program, Next Generation Air Transportation Systems, is an integrated system that requires updating aircraft navigation and communication equipment. The FAA has mandated the replacement of current ground based radar systems with more accurate satellite based systems on our aircraft by 2020. The ICAO is phasing in similar requirements for aircraft operating in Europe, beginning in 2015. These programs may increase our costs and limit the use of our aircraft. Aircraft not equipped with advanced communication systems may be restricted to certain airspace.

Failure to maintain the operating certificates and authorities of our airlines would adversely affect our business.

The airline subsidiaries have the necessary authority to conduct flight operations pursuant to the economic authority issued by the DOT and the safety based authority issued by the FAA. The continued effectiveness of such authority is subject to their compliance with applicable statutes and DOT, FAA and TSA rules and regulations, including any new rules and regulations that may be adopted in the future. The loss of such authority by an airline subsidiary could cause a default of covenants within the Senior Credit Agreement and would materially and adversely affect its airline operations, effectively eliminating the airline's ability to operate air services.

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The Company may be affected by global climate change or by legal, regulatory or market responses to such potential climate change.

The Company is subject to the regulations of the U.S. Environmental Protection Agency and state and local governments regarding air quality and other matters. In part, because of the highly industrialized nature of many of the locations where the Company operates, there can be no assurance that we have discovered all environmental contamination or other matters for which the Company may be responsible.

Concern over climate change, including the impact of global warming, has led to significant federal, state and international legislative and regulatory efforts to limit greenhouse gas emissions. The European Commission has mandated the extension of the European Union Emissions Trading Scheme ("ETS") for greenhouse gas emissions to the airline industry. Beginning in 2012, all Company airline subsidiary flights to and from any airport in any member state of the European Union is covered by the ETS requirements, and each year we are required to submit emission allowances in an amount equal to the carbon dioxide emissions from such flights. Exceedance of the airlines' emission allowances would require the airlines to purchase additional emission allowances on the open market.

The U.S. Congress and certain states have also considered the regulation of greenhouse gas emissions. In addition, the U.S. Environmental Protection Agency could regulate greenhouse gas emissions, especially aircraft engine emissions. The cost to comply with potential new laws and regulations could be substantial for the Company. These costs could include an increase in the cost of the fuel and capital costs associated with updating aircraft. Until the timing, scope and extent of any future regulation becomes known, we cannot predict its effect on the Company’s cost structure or operating results.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The Company leases portions of the air park in Wilmington, Ohio, under a lease agreement with a regional port authority, the term of which expires in May of 2019 with options to extend the lease at the Company's discretion. The lease includes corporate offices, 210,000 square feet of maintenance hangars and a 100,000 square foot component repair shop at the air park. ABX also has the non-exclusive right to use the airport, which includes one active runway, taxi ways and ramp space.

As of December 31, 2013, the Company and its subsidiaries' in-service aircraft fleet consisted of 49 owned aircraft and six leased aircraft on an operating basis, for a total of 55 aircraft. The aircraft were all formerly passenger aircraft that have been modified for cargo operations. The aircraft are generally described as having mid-size to medium wide-body cargo capabilities. The cargo aircraft carry gross payloads ranging from approximately 58,000 to 129,000 pounds. These aircraft are well suited for intra-continental flights and medium range inter-continental flights. Because an airline's flight operations can be hindered by inclement weather, sophisticated landing systems and other equipment are utilized to minimize the effect that weather may have on flight operations. For example, ABX’s Boeing 767-200 and 767-300 aircraft are operated for Category III landings. This allows their crews to land under weather conditions with runway visibility of only 600 feet at airports with Category III Instrument Landing Systems.

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The table below shows the combined fleet of aircraft in service condition.

	In-service Aircraft as of December 31, 2013
Aircraft Type	Total	Owned	Operating Lease	Year of Manufacture	Gross Payload (Lbs.)	Still Air Range (Nautical Miles)
767-200 SF (1)	40	36	4	1982 - 1987	85,000 - 100,000	1,700 - 5,300
767-300 SF (1)	8	6	2	1988 - 1991	121,000 - 129,000	3,200 - 7,100
757-200 PCF (1)	4	4	—	1984 - 1991	68,000	2,100 - 4,800
757-200 Combi (2)	3	3	—	1989 - 1992	58,000	2,600 - 4,300
Total in-service	55	49	6

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(1) These aircraft are configured for standard cargo containers, including large standard main deck cargo doors.

(2) These aircraft are configured as “combi” aircraft capable of carrying passenger and cargo containers on the main flight deck.

In addition, as of December 31, 2013, CAM had one Boeing 767-300 aircraft that was completing its modification to a standard freighter configuration and one Boeing 757-200 aircraft that was completing certification as a combi aircraft. These aircraft are expected to be completed in the first quarter of 2014 and are not reflected in the table above. CAM also has one Boeing 767-200 passenger aircraft, not reflected in the table above, under lease to an external airline during 2014.

We believe that our existing facilities and aircraft fleet are appropriate for our current operations and growth plans. We may make additional investments in aircraft and facilities if we identify favorable opportunities in the markets that we serve.

ITEM 3. LEGAL PROCEEDINGS

Civil Action Alleging Violations of Immigration Laws

On December 31, 2008, a former ABX employee filed a complaint against ABX, a total of four current and former executives and managers of ABX, Garcia Labor Company of Ohio, and three former executives of the Garcia Labor companies, in the U.S. District Court for the Southern District of Ohio. The case was filed as a putative class action against the defendants, and asserts violations of the Racketeer Influenced and Corrupt Practices Act (RICO). The complaint, which was later amended to include a second former employee plaintiff, seeks damages in an unspecified amount and alleges that the defendants engaged in a scheme to hire illegal immigrant workers to depress the wages paid to hourly wage employees during the period from December 1999 to January 2005.

On December 2, 2011, the plaintiffs agreed to settle this matter in exchange for the payment by ABX to plaintiffs and the putative class members of a monetary amount, which amount management believes to be less than it would have cost to defend the case at trial. The final settlement was approved by the Court on July 9, 2013 and following a 30-day appeal period during which no objections were received, the settlement funds were paid to the class administrator for distribution in accordance with the terms of the settlement agreement. This litigation is now concluded.

Brussels Noise Ordinance

The Brussels Instituut voor Milieubeheer ("BIM"), a governmental authority in the Brussels-Capital Region of Belgium that oversees the enforcement of environmental matters, imposed four separate administrative penalties on ABX in the approximate aggregate amount of €0.4 million ($0.5 million) for numerous alleged violations of an ordinance limiting the noise caused by aircraft overflying the Brussels-Capital Region (which is located near the Brussels Airport) during the period from May 2009 through December 2010. ABX has exhausted its appeals with respect to three of the administrative penalties.

The ordinance in question is controversial for the reason that it was adopted by the Brussels-Capital Region and is more restrictive than the noise limitations in effect in the Flemish Region, which is where the Brussels Airport is

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located. The ordinance is the subject of several court cases currently pending in the Belgian courts and numerous airlines have been levied fines thereunder.

Other

In addition to the foregoing matters, we are also currently a party to legal proceedings, including FAA enforcement actions, in various federal and state jurisdictions arising out of the operation of the Company's business. The amount of alleged liability, if any, from these proceedings cannot be determined with certainty; however, we believe that the Company's ultimate liability, if any, arising from the pending legal proceedings, as well as from asserted legal claims and known potential legal claims which are probable of assertion, taking into account established accruals for estimated liabilities, should not be material to our financial condition or results of operations.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock

Our common stock is publicly traded on the NASDAQ Global Select Market under the symbol ATSG. The following table shows the range of high and low prices per share of our common stock for the periods indicated:

2013 Quarter Ended:	Low		High
December 31, 2013	$	6.64	$	8.20
September 30, 2013	$	5.95	$	7.70
June 30, 2013	$	5.23	$	6.85
March 31, 2013	$	4.08	$	6.09
2012 Quarter Ended:	Low		High
December 31, 2012	$	3.38	$	4.56
September 30, 2012	$	3.88	$	5.75
June 30, 2012	$	4.67	$	5.88
March 31, 2012	$	4.71	$	6.88

On March 7, 2014, there were 1,620 stockholders of record of the Company’s common stock. The closing price of the Company’s common stock was $7.02 on March 7, 2014.

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Performance Graph

The graph below compares the cumulative total stockholder return on a $100 investment in the Company’s common stock with the cumulative total return of a $100 investment in the NASDAQ Composite Index and the cumulative total return of a $100 investment in the NASDAQ Transportation Index for the period beginning on December 31, 2008 and ending on December 31, 2013.

	12/31/2008	12/31/2009	12/31/2010	12/31/2011	12/31/2012	12/31/2013
Air Transport Services Group, Inc.	100.00	1,466.67	4,388.89	2,622.22	2,227.78	4,494.44
NASDAQ Composite Index	100.00	144.88	170.58	171.30	199.99	283.39
NASDAQ Transportation Index	100.00	102.37	131.79	113.27	123.81	162.78

Dividends

The Company is restricted from paying dividends on its common stock in excess of $50.0 million during any calendar year under the provisions of its Senior Credit Agreement. Under the provisions of ABX's promissory note due to DHL, the Company is required to prepay the DHL note in the amount of $0.20 for each dollar of dividend distributed to the stockholders of ATSG. The same prepayment stipulation applies to stock repurchases. No cash dividends have been paid or declared and no stock repurchases have been made or declared.

Securities authorized for issuance under equity compensation plans

For the response to this Item, see Item 12.

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction with the consolidated financial statements and the notes thereto and the information contained in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The selected consolidated financial data and the consolidated operations data below are derived from the Company’s audited consolidated financial statements.

	As of and for the Years Ended December 31
	2013			2012			2011			2010			2009
	(In thousands, except per share data)
OPERATING RESULTS:
Continuing revenues	$	580,023		$	607,438		$	730,133		$	667,382		$	823,483
Operating expenses (1)	566,838			528,750			667,504			585,706			751,693
Net interest expense and other non operating charges (3)	13,544			12,368			21,769			18,359			26,432
Earnings from continuing operations before income taxes (1)	(359		)	66,320			40,860			63,317			45,358
Income tax expense	(19,266		)	(24,672		)	(16,995		)	(23,413		)	(17,156		)
Earnings (loss) from continuing operations	(19,625		)	41,648			23,865			39,904			28,202
Earnings (loss) from discontinued operations, net of taxes (2)	(3		)	(774		)	(673		)	(70		)	6,247
Net earnings (loss)	$	(19,628	)	$	40,874		$	23,192		$	39,834		$	34,449
EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS:
Basic	$	(0.31	)	$	0.66		$	0.38		$	0.64		$	0.45
Diluted	$	(0.31	)	$	0.65		$	0.37		$	0.62		$	0.44
WEIGHTED AVERAGE SHARES:
Basic	63,992			63,461			63,284			62,807			62,674
Diluted	63,992			64,420			64,085			64,009			63,279
SELECTED CONSOLIDATED
FINANCIAL DATA:
Cash and cash equivalents	$	31,699		$	15,442		$	30,503		$	46,543		$	83,229
Deferred income tax asset	13,957			19,154			31,548			12,879			31,597
Property and equipment, net (1)	838,172			818,924			748,913			658,756			636,089
Goodwill and intangible assets (1)	39,291			92,126			93,376			99,036			99,890
Total assets	1,033,139			1,035,611			993,719			900,654			1,002,773
Post-retirement liabilities (4)	32,865			187,533			188,110			119,746			155,720
Capital lease obligations	—			—			—			6,103			12,918
Long term debt and current maturities, other than leases	384,515			364,481			346,904			296,425			364,509
Deferred income tax liability	109,869			46,422			42,530			39,746			50,044
Stockholders’ equity	368,968			299,256			270,147			302,077			245,982

____________________ 

(1) In the third quarter of 2011, the Company recorded an impairment charge of $22.1 million on aircraft, $2.8 million on goodwill and $2.3 million on acquired intangibles. In the fourth quarter of 2013, the Company recorded an impairment charge of $52.6 million on goodwill (See Notes C and E to the accompanying consolidated financial statements.)

(2) In the third quarter of 2009, ABX ceased providing hub services and fuel services for DHL. Accordingly, these business activities are reflected as discontinued operations for all years presented.

(3) During 2011, in conjunction with the execution of the Senior Credit Agreement (see Note F to the accompanying consolidated financial statements) the Company terminated its previous credit agreement, which resulted in the write-off of $2.9 million of unamortized debt issuance costs associated with that credit agreement and recognized $3.9 million of losses for certain interest rate swaps previously designated as cash flow hedges of interest payments stemming from the former term loan.

(4) As a result of higher interest rates and strong investment returns, the funded status of the Company's defined benefit pension and retiree medical plans improved during 2013. (See notes H and K to the accompanying consolidated financial statements.)

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis has been prepared with reference to the historical financial condition and results of operations of Air Transport Services Group, Inc., and its subsidiaries and should be read in conjunction with the “Risk Factors” in Item 1A of this report, our historical financial statements, and the related notes contained in this report.

BACKGROUND

The Company provides airline operations, aircraft leases, aircraft maintenance and other support services primarily to the air cargo transportation and package delivery industries. Through the Company's subsidiaries, we offer a range of complementary services to delivery companies, freight forwarders, airlines and government customers. The Company's principal subsidiaries include two independently certificated airlines, ABX Air, Inc. (“ABX”) and Air Transport International, Inc. (“ATI”), and an aircraft leasing company, Cargo Aircraft Management, Inc. (“CAM”).

At December 31, 2013, the Company owned 49 cargo aircraft in service condition and leased six more under operating leases. The combined fleets consisted of forty Boeing 767-200 aircraft, eight Boeing 767-300 aircraft, four Boeing 757-200 aircraft and three Boeing 757 "combi" aircraft. In recent years, we have modernized the Company's aircraft fleet, retiring less efficient Boeing 727 and DC-8 aircraft and adding Boeing 767-200, Boeing 767-300 and Boeing 757 freighter and combi aircraft to the fleet. The Boeing 757 combi aircraft are capable of simultaneously carrying passengers and cargo containers on the main flight deck.

The Company's largest customer is DHL Network Operations (USA), Inc. and its affiliates ("DHL"), which accounted for 54%, 53% and 36% of the Company's consolidated revenues during the years ended December 31, 2013, 2012 and 2011, respectively. The Company has had long term contracts with DHL since August 2003. Commencing March 31, 2010, the Company and DHL executed commercial agreements under which DHL leases 13 Boeing 767 freighter aircraft from CAM and contracted with ABX to operate those aircraft under a separate crew, maintenance and insurance (“CMI”) agreement. The CMI agreement pricing is based on pre-defined fees, scaled for the number of aircraft operated and the number of flight crews provided to DHL for its U.S. network. The initial term of the CMI agreement is five years and the terms of the aircraft leases are seven years, with early termination provisions. In addition to the 13 CAM-owned Boeing 767 aircraft, ABX also operates four DHL-owned Boeing 767 aircraft under the CMI agreement. ATI provides four Boeing 757 aircraft to DHL's U.S. network. Additionally ABX provides seven other Boeing 767 aircraft primarily to DHL's U.S network under contracts and arrangements having durations of one year or less. During 2013, ATI provided three Boeing 767 aircraft to DHL's Middle East operations, however, these agreements were terminated during the first quarter of 2014.

The U.S. Military comprised 17%, 16% and 12% of the Company's consolidated revenues during the years ended December 31, 2013, 2012 and 2011, respectively. The Company's airlines contract their services to the Air Mobility Command ("AMC"), through the U.S. Transportation Command ("USTC"), both of which are organized under the U.S. Military. During 2013, ATI retired its four DC-8 combi aircraft and replaced them with three Boeing 757 combi aircraft operating for the U.S. Military. Our fourth and final Boeing 757 combi aircraft entered service in February 2014 after completing the necessary regulatory certification.

A substantial portion of the Company’s revenues and cash flows was historically derived from providing airlift in North America to BAX Global, Inc., an affiliate of DB Schenker ("BAX/Schenker"). BAX/Schenker is a specialized heavy weight, business to business shipper. In July 2011, BAX/Schenker announced its plans to adopt a new operating model that phased out the dedicated air cargo network in North America supported by the Company. In September 2011, BAX/Schenker ceased air cargo operations at its air hub in Toledo, Ohio and began to conduct air operations from the Cincinnati/Northern Kentucky airport, utilizing DHL's U.S. air hub. Instead of dedicated aircraft, BAX/Schenker now utilizes DHL and other delivery services for its air transportation delivery requirements.

The Company ceased providing services to BAX/Schenker as of the end of 2011. The Company's revenues from the services performed for BAX/Schenker, derived primarily by providing Boeing 727 and DC-8 airlift, were $187.0 million for the year ended December 31, 2011. The Company's revenues from BAX/Schenker comprised approximately 26% of the Company's total revenues during the year ended December 31, 2011 (15% of total revenues, excluding directly reimbursable revenues).

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At the end of 2012, we ceased Boeing 727 operations at the Company's former airline, Capital Cargo International Airlines, Inc. ("CCIA"), and DC-8 freighter operations at ATI. During the first quarter of 2013, we completed the merger of CCIA with and into ATI, with ATI as the surviving entity. The combined operation benefits from a standardized fleet, two person flight crew, improved reliability of the Boeing 767 and 757 aircraft and from a common pilot type rating. Additionally, we have reduced administrative and overhead costs as a result of combining positions, information technology and facilities.

The Company has two reportable segments: ACMI Services, which primarily includes the cargo transportation operations of its airlines, and the CAM segment. The Company's other business operations, which primarily provide support services to the transportation industry, include aircraft maintenance, aircraft parts sales, ground equipment leasing and mail handling services. These operations do not constitute reportable segments due to their size.

RESULTS OF OPERATIONS

Summary

The consolidated net loss from continuing operations was $19.6 million for 2013 compared with net earnings of $41.6 million for 2012. The pre-tax loss from continuing operations was $0.4 million for 2013 compared with pre-tax earnings from continuing operations of $66.3 million for 2012. The decrease in earnings from continuing operations in 2013 as compared to 2012 was primarily due to the recognition of a goodwill impairment charge of $52.6 million that is not deductible for U.S. federal income tax purposes. Adjusted pre-tax earnings from continuing operations, a non-GAAP measure (a definition and reconciliation of adjusted pre-tax earnings follows), after removing the impairment charges was $51.6 million for 2013 compared to $64.4 million for 2012. Adjusted pre-tax earnings from continuing operations for 2013 declined compared to 2012 due to lower revenues, primarily in the ACMI Services segment, as well as higher depreciation expenses, due to additional aircraft in service condition.

Total customer revenues from continuing operations decreased by $27.4 million to $580.0 million during 2013 compared to 2012. Revenues were negatively impacted by FAA requirements which delayed the deployment of Boeing 757 aircraft and the training of the related flight crews, as well as continued softness in international cargo markets. Excluding directly reimbursed revenues, customer revenues decreased 4%, or by $20.4 million during 2013 compared with 2012. Total operating expenses, without impairment charges, declined as we restructured the ATI airline, falling 3% during 2013 compared with 2012.

Due to recent events and market changes, we do not expect ATI to generate as much net cash flow from ATI's Boeing 767 operations as previously expected. In December 2013 and in January 2014, the Company received notification from DHL that it would cease using three ATI Boeing 767 aircraft for services in the Middle East by the end of February 2014. Further, as a result of persistent stagnant growth conditions and excess airlift capacity, including the recent projections published by the U.S. Military that reflect continued reductions in their demand for cargo (non combi) airlift, we plan to allocate fewer Boeing 767 aircraft to ATI than previously projected. We expect instead to deploy more Boeing 767 aircraft with other airlines, including Atlantic Airline Ltd., an airline owned by West Atlantic, AB, for which the Company acquired a 25% equity interest in January 2014. As a result, we recorded an impairment charge of $52.6 million at the end of 2013 to write-off ATI's goodwill.

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A summary of our revenues and pre-tax earnings from continuing operations is shown below (in thousands):

	Years Ending December 31
	2013			2012			2011
Revenues from Continuing Operations:
CAM	$	160,342		$	154,565		$	140,469
ACMI Services
Airline services	376,592			404,053			444,268
Reimbursable	67,912			74,940			160,683
Total ACMI Services	444,504			478,993			604,951
Other Activities	117,292			112,343			105,284
Total Revenues	722,138			745,901			850,704
Eliminate internal revenues	(142,115		)	(138,463		)	(120,571		)
Customer Revenues	$	580,023		$	607,438		$	730,133
Pre-Tax Earnings from Continuing Operations:
CAM, inclusive of interest expense and impairment charges of $6.8 million in 2011	$	66,208		$	68,499		$	53,221
ACMI Services
Airline services	(25,601		)	(14,503		)	6,576
Asset impairment charges	(52,585		)	—			(20,383		)
Total ACMI Services	(78,186		)	(14,503		)	(13,807		)
Other Activities	12,200			11,650			11,331
Net unallocated interest expense	(1,212		)	(1,205		)	(2,118		)
Net gain (loss) on derivative instruments	631			1,879			(4,881		)
Write-off of unamortized debt issuance costs	—			—			(2,886		)
Pre-Tax Earnings (Loss) from Continuing Operations	(359		)	66,320			40,860
Add Asset impairment charges	52,585			—			27,144
Less Net (gain) loss on derivative instruments	(631		)	(1,879		)	4,881
Add Write-off of unamortized debt issuance costs	—			—			2,886
Adjusted Pre-Tax Earnings	$	51,595		$	64,441		$	75,771

Reimbursable revenues include certain operating costs that are reimbursed to the airlines by their customers. Such costs include fuel expense, landing fees and certain aircraft maintenance expenses. The types of costs that are reimbursed varies by customer operating agreement.

Adjusted pre-tax earnings, a non-GAAP measure, is pre-tax earnings excluding asset impairment charges, interest rate derivative gains and losses and the write-off of debt issuance costs. Management uses adjusted pre-tax earnings to compare the performance of core operating results between periods. Adjusted pre-tax earnings should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP.

CAM

Through the CAM subsidiary, we offer aircraft leasing to external customers and also lease aircraft internally to the Company's airlines. Aircraft leases normally cover a term of five to seven years. In a typical leasing agreement, customers pay rent and maintenance deposits on a monthly basis.

As of December 31, 2013, CAM had 49 freighter aircraft in service condition, 29 of them leased internally to the Company's airlines. CAM's revenues grew $5.8 million during 2013 compared to 2012, as a result of additional internal aircraft leases. CAM's revenues from the Company's airlines totaled $88.7 million during 2013, compared to $80.0 million for 2012. Since the beginning of 2012, CAM has placed one Boeing 767-200 freighter aircraft, four Boeing 767-300 freighter aircraft, one Boeing 757-200 freighter aircraft and three Boeing 757 combi aircraft under leases with internal airlines. As of December 31, 2013 and 2012, CAM leased 20 aircraft to external customers. Revenues from external customers decreased $3.0 million for 2013 compared to 2012. During the fourth quarter of 2012, a regional

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carrier returned a Boeing 767-200 aircraft to CAM before the end of the original lease term. The aircraft was redeployed internally within ACMI services.

CAM's pre-tax earnings, inclusive of an interest expense allocation were $66.2 million and $68.5 million during 2013 and 2012, respectively. Reduced earnings reflect additional internal lease revenues offset by higher depreciation expense for Boeing 767 and Boeing 757 aircraft, increased expenses to place and support the larger fleet of Boeing 767 and 757 aircraft and higher allocated interest expense compared to 2012.

During 2014, CAM's fourth and final Boeing 757 combi aircraft completed its airworthiness certification and began operations for ATI. Additionally, we expect CAM to complete the modification of a Boeing 767-300 in the first quarter of 2014. While we do not have a customer commitment for this Boeing 767 aircraft, interest in the Boeing 767 aircraft for its reliability and cost effectiveness in medium range markets remains strong. The lease of additional aircraft, however, could be affected by continued low growth economic conditions and excess industry airlift capacity.

ACMI Services Segment

The ACMI Services segment provides airline operations to its customers, typically under contracts providing for a combination of aircraft, crews, maintenance and insurance ("ACMI"). Our customers are usually responsible for supplying the necessary aviation fuel and cargo handling services and reimbursing our airline for other operating expenses, such as landing fees, ramp expenses and certain aircraft maintenance expenses. Aircraft charter agreements, including those for the U.S. Military, usually require the airline to provide full service, including fuel and other operating expenses for a fixed, all-inclusive price. As of December 31, 2013, ACMI Services included 48 in-service aircraft, including 29 leased internally from CAM, six leased from external providers and 13 CAM-owned freighter aircraft which are under lease to DHL and operated by ABX under the CMI agreement.

Revenues from ACMI Services were $444.5 million and $479.0 million during 2013 and 2012, respectively. ACMI Services incurred pre-tax losses of $78.2 million during 2013, compared to pre-tax losses of $14.5 million for 2012. Excluding asset impairment charges of $52.6 million recorded during 2013, ACMI Services incurred pre-tax losses of $25.6 million in 2013. Larger pre-tax losses in 2013 compared to 2012 were primarily a result of lower revenues. Revenues from ACMI Services declined $34.5 million during 2013 compared with 2012. Airline services revenues from external customers, which do not include revenues for the reimbursement of fuel and certain operating expenses, declined $26.2 million. Lower revenues resulted from operating fewer international cargo lanes for our customers, including the U.S. Military, as well as fewer ad hoc charters. Since mid 2012, some of our aircraft have been replaced by our customer's own airlift capacity on certain international cargo lanes. Block hours flown for the U.S. Military were down 4% compared to 2012, primarily due to the phase-in of the Boeing 757 combi aircraft, which replaced the DC-8 combi aircraft operated by ATI. Revenues for the U.S. Military were negatively impacted by delays in FAA approvals for the Boeing 757 combi aircraft and the pilot training program. Before the Boeing 757 combi aircraft could begin operations, the aircraft had to be certified by the FAA and our pilots trained to conduct Boeing 757 passenger operations. Additionally, during the phase-in of the Boeing 757 aircraft, we experienced reduced availability of combi aircraft as the DC-8 combi airframe maintenance requirements became due. In addition, expenses for non-reimbursed airframe maintenance checks increased $3.6 million compared to 2012. The increase is primarily due to a larger required work scope for the checks scheduled in 2013 compared to 2012.

Billable block hours declined 13% for 2013 compared to 2012. Revenues declined relatively less than block hours declined because a larger portion of our 2013 revenues were derived from shorter express routes instead of longer international routes flown during 2012. The effective average revenue rates per block hour paid by non-military customers are higher for express routes in which aircraft utilization is lower, compared to lower rates per block hour for longer, international routes.

Operating expense for ACMI Services declined $15.1 million during 2013 compared to 2012, excluding impairment charges, due partially to combining the ATI and CCIA operations, which resulted in a 28% reduction in airline related headcount compared to the beginning of 2012. Operating expenses for landings, ramp and travel declined due to the lower level of international block hours flown. These expense reductions, which were related to personnel and the level of flights, were partially offset by higher aircraft depreciation expense and aircraft rent expense, which increased due to the addition of Boeing 767-300 aircraft.

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As noted above, during the first quarter of 2014, DHL ended ACMI agreements for three Boeing 767 aircraft that we provided to its Middle East operation. Since the third quarter of 2013, three Boeing 767 aircraft have been redeployed under agreements with customers. We deployed an additional aircraft for DHL, connecting Panama to their domestic network, another was deployed for a European airline on a transatlantic route, and the third was deployed for a Miami based airline serving the Caribbean. Two of these operations could be converted into aircraft leases between CAM and the customer.

Currently, the ACMI Services segment has five aircraft that are underutilized. Improved aircraft utilization and revenue growth for ACMI Services depends on the cost competitiveness of the airlines, aircraft reliability, market preferences for the type of aircraft that we operate, airlift capacity in the markets, regulatory approvals and general economic conditions. Continued stagnant economic conditions and market uncertainty may slow the pace of aircraft deployments into incremental revenue operations. When new deployments of aircraft begin, typically start-up expenses are incurred, including those for proving flights, route authorities, overfly rights, travel and other activities which may impact future operating results. Revenue-generating service may begin sometime later; however, depending on the satisfaction of a number of conditions, including international regulations and laws, contract negotiations, flight crew availability, and arranging resources for aircraft handling. The ability of the ACMI Services segment to generate operating profits will also depend on the timing of retraining of crewmembers for the Boeing 767 and 757 operations and continued cost controls.

Other Activities

The Company sells aircraft parts and provides aircraft maintenance and modification services primarily through its aircraft maintenance and repair business, Airborne Maintenance and Engineering Services, Inc. ("AMES"). The Company also provides services to the U.S. Postal Service (“USPS”), which mainly consists of sorting services at five USPS facilities. The Company also leases and maintains ground support equipment and provides facility maintenance services. Other activities also include the management of workers' compensation claims under an agreement with DHL and gains from the reduction in employee post-retirement obligations.

External customer revenues from all other activities were $63.9 million and $55.1 million for 2013 and 2012, respectively. Revenues from services provided to the USPS increased $6.4 million during 2013 primarily due to increased volumes at the facilities that we operate for the USPS. In addition to the increased revenues from the USPS, aircraft maintenance revenues from external customers increased by $1.5 million.

The pre-tax earnings from other activities were $12.2 million and $11.7 million for 2013 and 2012, respectively. The increase of $0.5 million of pre-tax earnings for 2013 compared to 2012 primarily reflects additional volumes processed for the USPS during the year and additional aircraft maintenance revenues for external customers.

In 2013, the Company, as construction agent for the Clinton County Port Authority ("CCPA") in Wilmington, Ohio, began construction of a 100,000 square foot aircraft hangar facility adjacent to the existing aircraft maintenance facility currently utilized by AMES. While the current facility houses aircraft as large as the Boeing 767, the new facility will provide AMES the capability of servicing aircraft as large as a Boeing 747-400 and the Boeing 777. The hangar is anticipated to cost approximately $15.7 million and due to adverse weather conditions, is not expected to be completed until May 2014. The Company leases the facility from the CCPA and began to make related rent payments beginning in 2014. We could incur incremental costs associated with the new hangar, including the costs of aircraft maintenance personnel before the hangar is completed. Further, we will need to grow aircraft maintenance revenues utilizing the expanded hangar capabilities by expanding business with current customers and contracting with new customers. Our future operating results could be adversely impacted if anticipated revenues do not coincide with our costs of operating the new facility.

Discontinued Operations

Discontinued operations are a result of DHL's decision in 2008 to restructure its U.S. operations. DHL discontinued intra-U.S. domestic pickup and delivery services and now provides only international services to and from the U.S. In the third quarter of 2009, ABX ceased all remaining hub and parcel sorting operations for DHL. Additionally, in the third quarter of 2009, DHL assumed management of aircraft fuel services for its U.S. network previously provided by ABX. Pre-tax losses related to the former sorting operations were less than $0.1 million for 2013 compared to $1.2 million for 2012. The results of discontinued operations primarily contain pension expense for former employees that

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supported sort operations under a hub services agreement with DHL. During 2013, pension expense for discontinued operations decreased approximately $1.2 million due primarily to the effects of recent investment returns used to actuarially calculate the Company's annual pension expense.

Fleet Summary 2013

The Company’s aircraft fleet is summarized below as of December 31, 2013 ($'s in thousands):

	ACMI Services	CAM	Total
In-service aircraft
Aircraft owned
Boeing 767-200	16	20	36
Boeing 767-300	6	—	6
Boeing 757-200	4	—	4
Boeing 757-200 Combi	3	—	3
Total	29	20	49
Carrying value			$	714,835
Operating lease
Boeing 767-200	4	—	4
Boeing 767-300	2	—	2
Total	6	—	6
Carrying value			$	1,275
Aircraft for freighter and combi modification
Boeing 767-300	—	1	1
Boeing 757-200 Combi	—	1	1
Total	—	2	2
Carrying value			$	58,533

As of December 31, 2013, ACMI Services leased 29 of its in-service aircraft internally from CAM. As of December 31, 2013, 13 of CAM's 20 Boeing 767-200 aircraft shown above were leased to DHL and operated by ABX. CAM leased the other seven Boeing 767-200 aircraft to external airlines.

Aircraft fleet activity during 2013 is summarized below:

- CAM completed the modification of one Boeing 767-300 freighter aircraft and leased the aircraft internally to ABX.

- CAM completed the modification of one Boeing 757 freighter aircraft and leased the aircraft internally to ATI.

- CAM purchased two Boeing 757 combi aircraft that had not been certified for airworthiness. CAM completed the airworthiness requirements for three Boeing 757 combi aircraft and leased them internally to ATI, which deployed the aircraft for the U.S. Military.

- We removed four DC-8 combi aircraft from the in-service fleet.

CAM also has a Boeing 767-200 passenger aircraft that had been placed in temporary storage when its airframe maintenance cycle expired. In 2013, CAM reached an agreement to lease the aircraft to an external airline during 2014.As of December 31, 2013, the Company had Boeing 727 and DC-8 airframes and engines with a carrying value of $3.0 million that were available for sale. This carrying value is based on fair market values less the estimated costs to sell the airframes, engines and parts.

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Expenses from Continuing Operations

Salaries, wages and benefits expense decreased $9.3 million during 2013 compared to 2012. The lower expenses are the result of the lower number of employees after merging and restructuring ATI and CCIA. Headcount declined 10% between the beginning of 2012 and the end of 2013. Pension expense for continuing operations decreased $4.4 million during 2013 due to strong investment returns on pension plan assets.

Fuel expense decreased by $4.6 million during 2013 compared to 2012. Fuel expense primarily reflects the costs of fuel to operate U.S. Military charters, position aircraft for service and for maintenance purposes. The decrease during 2013 compared to 2012 reflects a decline in the number of flights flown for the U.S. Military, fewer ad hoc charter flights and the use of the more fuel efficient Boeing 757 combi aircraft instead of DC-8 combi aircraft.

Maintenance, materials and repairs expense decreased by $0.5 million during 2013 compared to 2012. The decline in maintenance expense reflects fewer customer reimbursed airframe heavy maintenance events, offset by higher engine maintenance expenses compared to the previous year. Engine maintenance expenses increased during 2013 due to higher costs for engine parts and engine maintenance services. Aircraft maintenance expenses can vary among periods due to the number of scheduled airframe maintenance checks and the scope of the checks that are performed.

Depreciation and amortization expense increased $7.3 million during 2013 compared to 2012. The increase in depreciation expense reflects the removal of the Boeing 727 aircraft and the DC-8 aircraft from service, offset by incremental depreciation expense for one Boeing 767 aircraft, one Boeing 757 freighter aircraft and three Boeing 757 combi aircraft added to the in-service fleet since December 2012.

Travel expense decreased by $4.0 million during 2013 compared to 2012. The decrease reflects the lower level of employee headcount and less international travel needed to support fewer international flight operations during 2013.

Rent expense increased by $1.5 million during 2013 compared to 2012. Rent expense increased primarily due to the lease of an additional Boeing 767-300 aircraft beginning in May 2012.

Landing and ramp expense, which includes the cost of deicing chemicals, decreased by $4.8 million during 2013 compared to 2012. The decrease was due to the reduction in block hours and flights operated in 2013 compared to 2012.

Insurance expense decreased by $1.5 million during 2013 compared to 2012, primarily due to the reduction in Boeing 727 and DC-8 aircraft.

Other operating expenses increased by $1.3 million during 2013 compared to 2012. Other operating expenses include professional fees, navigational services, employee training, utilities and the cost of parts sold to customers. Operating expenses also includes the net gains from the sales of spare aircraft engines. The increase was primarily due to lower gains from the sales of spare equipment in 2013 compared to 2012.

Interest expense decreased by $0.1 million during 2013 compared to 2012. Lower interest expense on interest rate swaps held by the Company was partially offset by higher interest expense on additional borrowings under the Senior Credit Agreement and lower capitalized interest during 2013 compared to 2012.

The Company recorded pre-tax net gains on derivatives of $0.6 million during the year ended December 31, 2013 compared to pre-tax net gains on derivatives of $1.9 million during 2012, reflecting the impact of fluctuating market interest rates.

Income tax expense from continuing operations decreased $5.4 million for 2013 compared to 2012, due to lower pre-tax earnings. The Company's effective income tax rate from continuing operations was approximately 36.9% for the year ended December 31, 2013 after adjusting for $52.6 million of non-deductible impairment charges. The effective tax rate from continuing operations for the year ended December 31, 2012 was to 37.2%. for 2012.

We estimate that the Company's effective tax rate for 2014 will be approximately 37.6%. As of December 31, 2013, the Company had operating loss carryforwards for U.S. federal income tax purposes of approximately $97.5million, which will begin to expire in 2024 if not utilized before then. We expect to utilize the loss carryforwards to offset federal income tax liabilities in the future. As a result, we do not expect to pay federal income taxes until 2016 or later. The Company may, however, be required to pay alternative minimum taxes and certain state and local income taxes before then. The Company's taxable income earned from international flights are primarily sourced to the United

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States under international aviation agreements and treaties. If we begin to operate in countries without such agreements, the Company could incur additional foreign income taxes.

2012 compared to 2011

Summary

The consolidated net earnings from continuing operations were $41.6 million and $23.9 million for 2012 and 2011, respectively. The pre-tax earnings from continuing operations were $66.3 million and $40.9 million for 2012 and 2011, respectively. The increase in earnings from continuing operations in 2012 as compared to 2011 was primarily due to the 2011 recognition of asset impairment charges of $27.1 million, interest rate derivative losses of $4.9 million and the write-off of $2.9 million of unamortized debt issuance related to the refinancing of the Company's debt in 2011. Adjusted pre-tax earnings from continuing operations, a non-GAAP measure (a definition and reconciliation of adjusted pre-tax earnings is shown above), after removing impairment charges, net derivative gains or losses and charges related to debt refinancing was $64.4 million for 2012 compared to $75.8 million for 2011. The adjusted pre-tax earnings in 2012 compared to 2011 was bolstered by increased operations for the Company's Boeing 767 and Boeing 757 aircraft, but were negatively impacted by the discontinuation of the BAX/Schenker North American air network in the fourth quarter of 2011.

Total customer revenues from continuing operations decreased by $122.7 million to $607.4 million during 2012 compared to 2011. The decline reflects $187.0 million of revenues during 2011 from services for the BAX/Schenker air network which was discontinued. Revenues from reimbursed fuel and other reimbursed operating expenses declined by $85.7 million during 2012 compared to 2011. These declines were also primarily due to the discontinuation of the BAX/Schenker air network. Excluding directly reimbursed revenues, customer revenues decreased by $37.0 million during 2012 compared to 2011. Revenue from the deployment of additional Boeing 767 and Boeing 757 aircraft by ACMI Services during 2012, was more than offset by the revenue decline from the discontinuation of the BAX/Schenker air network.

During the third quarter of 2011, in conjunction with the phase-out of BAX/Schenker's dedicated airlift in North America, which relied on operations provided by ATI and CCIA, we tested the carrying values of aircraft, spare parts, goodwill and other intangibles. As a result, we recorded pre-tax impairment charges totaling $27.1 million to reduce the carrying values of the Company's Boeing 727 and DC-8 freighters, goodwill and customer relationship intangible assets to their individual fair values. The lower fair value of these aircraft and BAX/Schenker's July 2011 decision to terminate its dedicated air network were the result of prolonged recessionary conditions and trends toward higher fuel prices. Demand for Boeing 727 and DC-8 aircraft had diminished because these older aircraft are less fuel efficient and generally not as reliable as more modern aircraft.

CAM

As of December 31, 2012, CAM had 48 aircraft in serviceable condition, 28 of them leased internally to the Company's airlines. CAM's revenues grew $14.1 million during 2012 compared to 2011, as a result of additional aircraft leases executed over the previous two years. During 2012, CAM completed the modification of one Boeing 767-200 freighter aircraft and three Boeing 767-300 freighter aircraft, and placed those aircraft under leases with internal customers. As of December 31, 2012 and 2011, CAM leased 20 and 21 aircraft to external customers, respectively. Revenues from external customers accounted for $6.8 million of the increased revenue for 2012, due primarily to four additional aircraft leases placed with external customers throughout 2011. During the fourth quarter of 2012, a regional carrier returned a Boeing 767-200 aircraft to CAM before the end of the original lease term. The aircraft was subsequently redeployed in ACMI Services.

CAM's revenues from the Company's airlines totaled $80.0 million during 2012, compared to $72.7 million for 2011. CAM's revenues from internal leases of Boeing 727 and DC-8 freighter aircraft for 2012 declined $15.0 million compared to 2011 due to the retirement of Boeing 727 and DC-8 aircraft previously operated for BAX/Schenker, but the decline was more than offset by the additional Boeing 767 aircraft leases.

CAM's pre-tax earnings, inclusive of an interest expense allocation and a $6.8 million charge for aircraft impairment in 2011, were $68.5 million and $53.2 million during 2012 and 2011, respectively. CAM's pre-tax earnings, excluding the aircraft impairment charges, increased by $8.5 million for 2012 compared to 2011. Improved earnings reflected additional Boeing 767 aircraft placed under leases during 2011 and 2012.

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ACMI Services Segment

As of December 31, 2012, ACMI Services included 47 in-service aircraft, including 28 leased internally from CAM, six leased from external providers and 13 CAM-owned freighter aircraft which are under lease to DHL and operated by ABX under the CMI agreement.

Revenues from ACMI Services were $479.0 million and $605.5 million during 2012 and 2011, respectively. The decrease of $126.5 million is primarily the result of the discontinuation of services for BAX/Schenker's North American air network. Since June 30, 2011, we have retired all of our Boeing 727 and DC-8 freighter aircraft in response to the discontinuation of BAX/Schenker's North American air network in 2011. Airline services revenues, which do not include revenues for the reimbursement of fuel and certain operating expenses, declined 9% during 2012 compared to 2011, reflecting the loss of BAX/Schenker revenues of $85.7 million during 2011. During 2011, ACMI Services revenues also included $100.9 million for the reimbursement of fuel and other operating expenses for the BAX/Schenker air network.

Revenue declines from BAX/Schenker were partially offset by revenues from additional Boeing 767 aircraft added to the ACMI Services fleet during 2012. Since December 31, 2011, ACMI Services has added two Boeing 767-200 and four Boeing 767-300 aircraft into the operating fleet. Airline service revenues, excluding those from BAX/Schenker, increased $44.9 million during 2012 compared to 2011, driven by these additional Boeing 767 aircraft. Aircraft block hours flown for customers other than BAX/Schenker increased 9% during 2012, compared to 2011.

ACMI Services incurred pre-tax losses of $14.5 million during 2012, compared to pre-tax losses of $13.8 million for 2011. Excluding asset impairment charges of $20.4 million incurred during 2011, ACMI Services achieved pre-tax earnings of $6.6 million in 2011. The operating results during 2012 were negatively impacted by the discontinuation of BAX/Schenker's North American air network, the cost of training flight crew members for the Boeing 767 aircraft, increased pension expenses, higher engine maintenance expenses and delays in placing aircraft into revenue service. While ATI and CCIA reduced the number of crew members and other employees in the ACMI Services segment due to the termination of the BAX/Schenker network, salaries and benefits expenses during 2012 included the costs of training senior, former DC-8 and Boeing 727 crewmembers to operate Boeing 767 aircraft and 757 aircraft.

During 2012, four Boeing 767-300 aircraft and two Boeing 767-200 aircraft were added into the ACMI Services in-service fleet. Due to sluggish economic conditions, initial deployment and redeployment of aircraft into incremental revenue generating services were delayed, thereby adversely impacting operating results for 2012. In December 2012, DHL discontinued an ACMI contract for a Boeing 767 on a transatlantic flight.

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Fleet Summary 2012

The Company’s aircraft fleet is summarized below as of December 31, 2012 ($'s in thousands):

	ACMI Services	CAM	Total
In-service aircraft
Aircraft owned
Boeing 767-200	16	20	36
Boeing 767-300	5	—	5
Boeing 757	3	—	3
DC-8 combi	4	—	4
Total	28	20	48
Carrying value			$	656,388
Operating lease
Boeing 767-200	4	—	4
Boeing 767-300	2	—	2
Total	6	—	6
Carrying value			$	1,134
Aircraft for freighter and combi modification
Boeing 767-300	—	2	2
Boeing 757	—	3	3
Total	—	5	5
Carrying value			$	108,697

As of December 31, 2012, ACMI Services leased 28 of its in-service aircraft internally from CAM. As of December 31, 2012, 13 of CAM's 20 Boeing 767-200 aircraft shown above were leased to DHL and operated by ABX. CAM leased the other seven Boeing 767-200 aircraft to external airlines.

Aircraft fleet activity during 2012 is summarized below:

- CAM completed the standard freighter modification of one Boeing 767-200 aircraft and leased the aircraft internally to an airline affiliate.

- A Boeing 767-200 passenger aircraft was placed in temporary storage when its airframe maintenance cycle expired.

- ABX began to lease a Boeing 767-300 aircraft from an external lessor.

- CAM purchased two Boeing 767-300 passenger aircraft for modification into standard freighter aircraft.

- CAM completed the freighter modification of three Boeing 767-300 aircraft and leased the aircraft internally to an airline affiliate.

- CAM received a Boeing 767-200 aircraft, returned from a lessee, and placed the aircraft internally with an airline affiliate.

- CAM purchased a Boeing 757 combi aircraft.

- We removed three DC-8 freighter aircraft and four Boeing 727 aircraft from the in-service fleet.

As of December 31, 2012, the Company had Boeing 727 and DC-8 airframes and engines with a carrying value of $3.4 million that were available for sale. This carrying value is based on fair market values less the estimated costs to sell the airframes, engines and parts.

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Other Activities

External customer revenues from all other activities were $55.1 million and $57.4 million for 2012 and 2011, respectively. Revenues from services provided to the USPS increased $2.1 million during 2012 primarily due to two additional USPS facilities that we started in mid 201l. Increased revenues from the USPS, however, were more than offset by lower aircraft maintenance revenues from external customers, which declined $4.2 million. Maintenance services revenues for external customers declined during 2012 compared to 2011 because the Company's aircraft maintenance and repair business, AMES, has limited hangar facilities and used those facilities for more internal contracts for the Company's own airlines and CAM instead of external customer projects during 2012.

The pre-tax earnings from other activities were $11.7 million and $11.3 million for 2012 and 2011, respectively. The increase of $0.4 million of pre-tax earnings for 2012 compared to 2011 primarily reflects process streamlining initiatives at the sorting facilities.

Discontinued Operations

Pre-tax losses related to the former sorting operations were $1.2 million for 2012 compared to $1.1 million for 2011. The results of discontinued operations primarily contain pension expense for former employees that supported sort operations under a hub services agreement with DHL and expenses for certain legal matters associated with those former sorting operations. During 2011, the Company recorded $0.9 million of charges related to a civil action alleging that ABX violated immigration labor laws while managing the sort operations in Wilmington, Ohio. The matter is described further under Item 3, Legal Proceedings, of this report.

Expenses from Continuing Operations

Salaries, wages and benefits expense decreased $4.2 million during 2012 compared to 2011. Reductions in the number of employees, including Boeing 727 and DC-8 crew members, since 2011 were partially offset by costs of additional crew members for the expanded number of Boeing 767 aircraft operated by the Company and by increased pension expense compared to 2011. Pension expense for continuing operations increased $5.7 million during 2012 when compared to 2011 due to the effects of lower discount rates used to actuarially calculate the Company's annual pension expense.

Fuel expense decreased by $96.1 million during 2012 compared to 2011. The decrease occurred in conjunction with BAX/Schenker's discontinuation of its North American air network in the fourth quarter of 2011. During 2011, while under contract with BAX/Schenker, ATI provided aviation fuel for the BAX/Schenker air network and was reimbursed by BAX/Schenker for the costs of fuel. The Company is no longer incurring aviation fuel expenses or recording a related reimbursable revenue for the BAX/Schenker network. Fuel expense during 2012 primarily reflects the costs of fuel to operate U.S. Military charters, position aircraft for service and for maintenance purposes.

Maintenance, materials and repairs expense increased by $10.6 million during 2012 compared to 2011. During 2012, maintenance expense reductions stemming from the discontinuation of Boeing 727 aircraft and DC-8 freighter aircraft since 2011 were offset by higher maintenance expenses to support the larger fleet of Boeing 767 and 757 aircraft. The Company expensed 20 and 14 scheduled airframe heavy maintenance events during 2012 and 2011, respectively.

Depreciation and amortization expense decreased $6.6 million during 2012 compared to 2011. The decline in depreciation expense reflects the removal of the Boeing 727 aircraft and the DC-8 freighter aircraft from service, offset by incremental depreciation expense for four Boeing 767 aircraft added to the in-service fleet since December 2011. The Boeing 727 aircraft and DC-8 freighter aircraft were removed from service in conjunction with BAX/Schenker's discontinuation of its North American air network in 2011.

Travel expense decreased by $5.7 million during 2012 compared to 2011. The decrease is a result of the discontinuation of the BAX/Schenker North American air network in the fourth quarter of 2011.

Rent expense increased by $0.8 million during 2012 compared to 2011. Rent expense increased primarily due to the lease of an additional Boeing 767-300 aircraft beginning in May 2012. Rent expense was not significantly affected by the discontinuation of the BAX/Schenker North American air network because the Company did not lease the aircraft used in that network.

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Landing and ramp expense, which includes the cost of deicing chemicals, decreased by $6.7 million during 2012 compared to 2011. The decrease during 2012 reflects the discontinuation of the BAX/Schenker North American air network in the fourth quarter of 2011.

Insurance expense decreased by $1.6 million during 2012 compared to 2011, primarily due to the reduction in Boeing 727 and DC-8 aircraft during 2012 and the fourth quarter of 2011.

Other operating expenses include professional fees, navigational services, employee training, utilities and the cost of parts sold to customers. Other operating expenses decreased by $2.2 million during 2012 compared to 2011. During 2012, increased expenses for international aircraft operations were offset by lower costs stemming from the discontinuation of the BAX/Schenker North American air network.

Interest expense increased by $0.2 million during 2012 compared to 2011. Interest expense was higher in 2012 compared to 2011 primarily due to an increase in the amount of borrowings under the revolving credit loan offset by lower interest rates. Interest rates on the Company’s variable interest, unsubordinated term loan decreased to 2.47% at December 31, 2012 from 2.58% at December 31, 2011.

During 2012, the Company recorded pre-tax net gains on derivatives of $1.9 million compared to pre-tax net losses on derivatives of $4.9 million during 2011, reflecting the impact of higher market interest rates since December 31, 2011 on the interest rate swaps held by the Company at December 31, 2012.

In 2011, the Company executed a Senior Credit Agreement replacing its previous credit agreement. During 2011, the Company wrote off $2.9 million of unamortized debt issuance costs associated with the former credit agreement. During 2011, the Company terminated its hedge accounting of interest rate swaps related to the former term loan, which resulted in the recognition of $3.9 million of pre-tax losses which had previously been reflected in other comprehensive income.

The effective tax rate from continuing operations for the year ended December 31, 2012 was 37.2% compared to 41.6% for 2011. The effective tax rate from continuing operations in 2011 was affected by impairment charges that are not deductible for federal income tax purposes. The Company's effective tax rate from continuing operations was approximately 39% for the year ended December 31, 2011 after adjusting for $2.8 million of non-deductible impairment charges. The decline in the effective tax rate from continuing operations for 2012 compared to 2011 was also a result of decreased state income taxes for 2012, resulting from the discontinuation of services for BAX/Schenker's North American air network during 2011.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Net cash generated from operating activities totaled $94.4 million, $110.6 million and $136.1 million in 2013, 2012 and 2011, respectively. Cash flows generated from operating activities decreased in 2013 compared to 2012 primarily due to lower payments received from DHL, increased pension contributions and lower operating profitability partially offset by lower payments to vendors. Cash outlays for pension contributions were $27.5 million, $24.7 million and $18.0 million in 2013, 2012 and 2011, respectively.

Capital spending levels were primarily the result of aircraft modification costs and the acquisition of aircraft for freighter modification. Cash payments for capital expenditures were $112.7 million, $155.2 million and $213.1 million in 2013, 2012 and 2011, respectively. Capital expenditures in 2013 included $79.0 million for the acquisition of two Boeing 757 combi aircraft and the costs of Boeing 757 and Boeing 767 aircraft modifications, $23.9 million for required heavy maintenance, $6.7 million for construction of the new aircraft hangar and $3.1 million for other equipment costs. Our capital expenditures in 2012 included $134.9 million for the acquisition and modification of aircraft, $11.3 million for required heavy maintenance and $9.0 million for other equipment costs. Our capital expenditures in 2011 included $184.3 million for the acquisition and modification of aircraft, $21.9 million for required heavy maintenance and $6.9 million for other equipment costs.

Cash proceeds of $1.5 million, $5.8 million and $11.1 million were received in 2013, 2012 and 2011, respectively, for the sale of aircraft engines, airframes and parts.

Net cash provided by financing activities was $33.0 million, $23.8 million and $48.0 million in 2013, 2012 and 2011, respectively. Our borrowing activities were necessary to finance our strategy to acquire and modify aircraft for

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deployment into air cargo markets and modernize the combi fleet deployed for the U.S. Military. During 2013, we drew $80.0 million from the revolving credit facility under the Senior Credit Agreement to fund capital spending and we made debt principal payments of $53.8 million. Additionally, $6.2 million of the principal balance of the DHL promissory note was extinguished during 2013, pursuant to the CMI agreement with DHL.

Commitments

The table below summarizes the Company's contractual obligations and commercial commitments (in thousands) as of December 31, 2013.

	Payments Due By Period
Contractual Obligations	Total		Less Than 1 Year		2-3 Years		4-5 Years		After 5 Years
Long term debt, including interest payments	$	423,769	$	36,439	$	79,706	$	299,874	$	7,750
Operating leases	53,244		22,561		21,306		7,845		1,532
Hangar lease	18,303		592		1,434		1,667		14,610
Total contractual cash obligations	$	495,316	$	59,592	$	102,446	$	309,386	$	23,892

The long term debt bears interest at 2.55% to 7.36% per annum.

In 2012, the Company entered into agreements with the CCPA to construct and lease an aircraft hangar in Wilmington, Ohio, adjacent to the existing aircraft maintenance facility currently leased by the Company. The Company acts as construction agent for the CCPA and began construction of the 100,000 square foot aircraft hangar in 2013. The hangar is projected to cost approximately $15.7 million and is expected to be completed in May 2014. The CCPA is financing the construction of the hangar primarily through a State of Ohio bond program and a State of Ohio loan on incremental taxes. The table above does not include the costs to build the hangar because the projected costs will be reimbursed by the State of Ohio during the construction period. We began to make lease payments for the hangar directly to the trustee for the State of Ohio in 2014. The initial term of the hangar lease expires in 2036.

The Company provides defined benefit pension plans to certain employee groups. The table above does not include cash contributions for pension funding, due to the absence of scheduled maturities. The timing of pension and post-retirement healthcare payments cannot be reasonably determined, except for $7.2 million expected to be funded in 2014. In January 2014, we drew $15.0 million from the revolving credit facility to help fund the Company's 25 percent equity interest in West Atlantic AB of Gothenburg, Sweden.

We estimate that capital expenditures for 2014 will be $45 million for airframe and engine maintenance, hangar construction and other expenditures. Actual capital spending for any future period will be impacted by aircraft maintenance and modification processes and hangar construction. We expect to finance the capital expenditures from current cash balances, future operating cash flow and the Senior Credit Agreement.

Liquidity

The Company has a Senior Credit Agreement with a consortium of banks that includes an unsuborinated term loan of $131.3 million and a revolving credit facility from which the Company has drawn $190.5 million, net of repayments as of December 31, 2013. On July 20, 2012, the Company executed the first amendment to the Senior Credit Agreement ("Credit Amendment"). The Credit Amendment increased the amount available under the revolving credit facility by $50 million to $225 million, extended the maturity of the term loan and revolving credit facility to July 20, 2017, and provided for an accordion feature whereby the Company could draw up to an additional $50 million, subject to the lenders' consent. The Credit Amendment did not affect the EBITDA based pricing or covenants of the Senior Credit Agreement. In October 2013, the lenders agreed to make the accordion funds of $50.0 million available to the Company, increasing the capacity of the revolving credit facility to $275.0 million. While we do not anticipate a need to draw the additional funds in the near future, the added capacity provides management additional flexibility during the remaining term of the Senior Credit Agreement which ends on July 20, 2017. Additional debt or lower EBITDA may result in higher interest rates. Under the Senior Credit Agreement, interest rates are adjusted quarterly based on the prevailing LIBOR or prime rates and a ratio of the Company's outstanding debt level to earnings before interest, taxes, depreciation and amortization expenses ("EBITDA"). At the Company's current debt-to-EBITDA ratio, the unsubordinated term loan and the revolving credit facility both bear a variable interest rate of 2.55%.

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The Senior Credit Agreement is collateralized by certain of the Company's Boeing 767 and 757 aircraft that are not collateralized under aircraft loans. Under the terms of the Senior Credit Agreement, the Company is required to maintain collateral coverage equal to 150% of the outstanding balance of the term loan and the total revolving credit facility. Under the Senior Credit Agreement, the Company is subject to covenants and warranties that are usual and customary, including among other things, limitations on certain additional indebtedness, guarantees of indebtedness, as well as a total debt to EBITDA ratio and a fixed charge coverage ratio. The Senior Credit Agreement stipulates events of default including unspecified events that may have a material adverse effect on the Company. If an event of default occurs, the Company may be forced to repay, renegotiate or replace the Senior Credit Agreement.

At December 31, 2013, the Company had $31.7 million of cash balances. The Company had $74.3 million available under the revolving credit facility, net of outstanding letters of credit, which totaled $10.2 million. As specified under the terms of ABX's CMI agreement with DHL, the $7.8 million balance at December 31, 2013 of the unsecured note payable to DHL will be extinguished ratably without payment through March 31, 2015. We believe that the Company's current cash balances and forecasted cash flows provided from its operating agreements, combined with its Senior Credit Agreement, will be sufficient to fund operations, scheduled debt payments, required pension funding and planned capital expenditures for at least the next 12 months.

Off-Balance Sheet Arrangements

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (“SPEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of December 31, 2012 and 2011, we were not involved in any material unconsolidated SPE transactions.

Certain of our operating leases and agreements contain indemnification obligations to the lessor or one or more other parties that are considered usual and customary (e.g. use, tax and environmental indemnifications), the terms of which range in duration and are often limited. Such indemnification obligations may continue after the expiration of the respective lease or agreement. No amounts have been recognized in our financial statements for the underlying fair value of guarantees and indemnifications.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as certain disclosures included elsewhere in this report, are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to select appropriate accounting policies and make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingencies. In certain cases, there are alternative policies or estimation techniques which could be selected. On an ongoing basis, we evaluate our selection of policies and the estimation techniques we use, including those related to revenue recognition, post-retirement liabilities, bad debts, self-insurance reserves, valuation of spare parts inventory, useful lives, salvage values and impairment of property and equipment, income taxes, contingencies and litigation. We base our estimates on historical experience, current conditions and on various other assumptions that are believed to be reasonable under the circumstances. Those factors form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources, as well as for identifying and assessing our accounting treatment with respect to commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions. We believe the following significant and critical accounting policies involve the more significant judgments and estimates used in preparing the consolidated financial statements.

Revenue Recognition

Revenues generated from airline service agreements are typically recognized based on hours flown or the amount of aircraft and crew resources provided during a reporting period. Certain agreements include provisions for incentive payments based upon on-time reliability. These incentives are typically measured on a monthly basis and recorded to revenue in the corresponding month earned. Revenues for operating expenses that are reimbursed through customer agreements, including consumption of aircraft fuel, are generally recognized as the costs are incurred. Revenues from

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charter service agreements are recognized on scheduled and non-scheduled flights when the specific flight has been completed. Revenues from the sale of aircraft parts are recognized when the parts are delivered. Revenues earned and expenses incurred in providing aircraft-related maintenance, repair or technical services are recognized in the period in which the services are completed and delivered to the customer. Revenues derived from transporting freight and sorting parcels are recognized upon delivery of shipments and completion of services. Aircraft lease revenues are recognized as operating lease revenue on a straight-line basis over the term of the applicable lease agreements.

Goodwill and Intangible Assets

In accordance with the Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 350-20 Intangibles—Goodwill and Other, we assess in the fourth quarter of each year whether the Company’s goodwill acquired in acquisitions is impaired. Additional assessments may be performed on an interim basis whenever events or changes in circumstances indicate an impairment may have occurred. Indefinite-lived intangible assets are not amortized but are assessed for impairment annually, or more frequently if impairment indicators occur. Finite-lived intangible assets are amortized over their estimated useful economic lives and are periodically reviewed for impairment.

Application of the goodwill impairment test requires significant judgment, including the determination of the fair value of each reporting unit that has goodwill. The Company has two reporting units, ATI and CAM, that have goodwill. We estimate the fair value of ATI and CAM separately using a market approach and an income approach utilizing discounted cash flows applied to a market-derived rate of return. The market approach utilizes market multiples from comparable publicly traded companies. The market multiples include revenues, EBIT (earnings before interest and taxes), EBITDA (earnings before interest, taxes, depreciation and amortization) and EBITDAR (earnings before interest, taxes, depreciation, amortization and rent). We derive cash flow assumptions from many factors including recent market trends, expected revenues, cost structure, aircraft maintenance schedules and long term strategic plans for the deployment of aircraft. Key assumptions under the discounted cash flow models include projections for the number of aircraft in service, capital expenditures, long term growth rates, operating cash flows and market-derived discount rates.

The first step of the goodwill impairment test requires a comparison of the fair value of the reporting unit to its respective carrying value. If the carrying value of a reporting unit is less than its fair value, no indication of impairment exists and a second step is not performed. If the carrying amount of a reporting unit is higher than its fair value, there is an indication that an impairment may exist and a second step is performed. In the second step, fair values are assigned to all of the assets and liabilities of a reporting unit, including any unrecognized intangible assets, and the implied fair value of goodwill is calculated. If the implied fair value of goodwill is less than the recorded goodwill, an impairment loss is recorded for the difference and charged to operations.

We have used the assistance of an independent business valuation firm in estimating an expected market rate of return, and in the development of a market approach for ATI and CAM using multiples of EBITDAR, EBITDA, EBIT and revenues from comparable publicly traded companies. Based on our analysis, as of December 31, 2013, CAM's fair value exceeded its carrying value by more than 25%. However, the carrying amount of ATI was higher than its fair value at December 31, 2013. Further, based on the results of the second step of the goodwill test, we recorded a charge as of December 31, 2013, to write-off ATI's goodwill.

The Company's key assumptions used for goodwill testing include uncertainties. Those uncertainties include the level of demand for cargo aircraft by shippers, the U.S. Military and freight forwarders and CAM's ability to lease aircraft and the lease rates that will be realized. For 2014, we project that CAM's fleet will be under lease approximately 90 percent of the total months that such aircraft are available for lease. We project that ATI will operate four combi aircraft for the U.S. Military, four Boeing 757 aircraft for DHL and up to three Boeing 767 aircraft for other customers during 2014.

The demand for customer airlift is projected based on input from customers, the volume of bids requested by the U.S. Military, management's interface with customer planning personnel and aircraft utilization trends. Certain events or changes in circumstances could negatively impact our key assumptions. Customer preferences for cargo aircraft may be impacted by changes in aviation fuel prices. Key customers, including the U.S. Military, may decide that they do not need as many aircraft as projected, or they may find alternative airlift.

The Company's finite lived intangible asset is for customer relationships acquired with ATI. This asset is amortized over the estimated useful economic life and reviewed for impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. The fair value of the asset was derived using projected revenues

36

from existing customers and related attrition rates using the guidance under FASB ASC Topic 360-10 Property, Plant and Equipment, and separately from a discounted cash flow model used for goodwill impairment. The projected net cash flows attributed to existing customers were discounted using an estimated cost of capital, based on market participant assumptions.

Long-lived assets

Aircraft and other long-lived assets are tested for impairment whenever events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Factors which may cause an impairment include termination of aircraft from a customer's network, extended operating cash flow losses from the assets and management's decisions regarding the future use of assets. To conduct impairment testing, we group assets and liabilities at the lowest level for which identifiable cash is largely independent of cash flows of other assets and liabilities. For assets that are to be held and used, impairment is recognized when the estimated undiscounted cash flows associated with an asset group is less than the carrying value. If impairment exists, an adjustment is made to write the assets down to fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined considering quoted market values, discounted cash flows or internal and external appraisals, as applicable. In conjunction with the impairment of ATI's goodwill (discussed above) as of December 31, 2013, we tested the related asset group for recoverability using undiscounted cash flows and concluded that the projected cash flows support the recoverability of the assets' carrying value.

Depreciation

Depreciation of property and equipment is provided on a straight-line basis over the lesser of an asset’s useful life or lease term. We periodically evaluate the estimated service lives and residual values used to depreciate our property and equipment. The acceleration of depreciation expense or the recording of significant impairment losses could result from changes in the estimated useful lives of our assets. We may change the estimated useful lives due to a number of reasons, such as the existence of excess capacity in our air networks, or changes in regulations grounding or limiting the use of aircraft.

Self-Insurance

We self-insure certain claims related to workers’ compensation, aircraft, automobile, general liability and employee healthcare. We record a liability for reported claims and an estimate for incurred claims that have not yet been reported. Accruals for these claims are estimated utilizing historical paid claims data and recent claims trends. Changes in claim severity and frequency could result in actual claims being materially different than the costs provided for in our results of operations. We maintain excess claim coverage with common insurance carriers to mitigate our exposure to large claim losses.

Contingencies

We are involved in legal matters that have a degree of uncertainty associated with them. We continually assess the likely outcomes of these matters and the adequacy of amounts, if any, provided for these matters. There can be no assurance that the ultimate outcome of these matters will not differ materially from our assessment of them. There also can be no assurance that we know all matters that may be brought against us at any point in time.

Income Taxes

We account for income taxes under the provisions of FASB ASC Topic 740-10 Income Taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Judgment is required in assessing the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Fluctuations in the actual outcome of expected future tax consequences could materially impact the Company’s financial position or its results of operations.

37

The Company has significant deferred tax assets including net operating loss carryforwards (“NOL CFs”) for federal income tax purposes which begin to expire in 2024. Based upon projections of taxable income, we determined that it was more likely than not that the NOL CF’s will be realized prior to their expiration. Accordingly, we do not have an allowance against these deferred tax assets at this time.

We recognize the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position.

Post-retirement Obligations

The Company sponsors qualified defined benefit pension plans for ABX’s flight crewmembers and other eligible employees. The Company also sponsors non-qualified, unfunded excess plans that provide benefits to executive management and crewmembers that are in addition to amounts permitted to be paid through our qualified plans under provisions of the tax laws. Employees are no longer accruing benefits under any of the defined benefit pension plans. The Company also sponsors unfunded post-retirement healthcare plans for ABX’s flight crewmembers and non-flight crewmember employees.

The accounting and valuation for these post-retirement obligations are determined by prescribed accounting and actuarial methods that consider a number of assumptions and estimates. The selection of appropriate assumptions and estimates is significant due to the long time period over which benefits will be accrued and paid. The long term nature of these benefit payouts increases the sensitivity of certain estimates on our post-retirement costs. In actuarially valuing our pension obligations and determining related expense amounts, assumptions we consider most sensitive are discount rates and expected long term investment returns on plan assets. Other assumptions concerning retirement ages and mortality also affect the valuations. Actual results and future changes in these assumptions could result in future costs that are materially different than those recorded in our annual results of operations.

Our actuarial valuation includes an assumed long term rate of return on pension plan assets of 6.25%. Our assumed rate of return is based on a targeted long term investment allocation of 50% equity securities, 45% fixed income securities and 5% real estate. The actual asset allocation at December 31, 2013 was 50% equities, 47% fixed income, 3% real estate and 0% cash. The pension trust includes $48.9 million of investments (7% of the plans' assets) whose fair values have been estimated in the absence of readily determinable fair values. Such investments include private equity, hedge fund investments and real estate funds. Management’s estimates are based on information provided by the fund managers or general partners of those funds.

In evaluating our assumptions regarding expected long term investment returns on plan assets, we consider a number of factors, including our historical plan returns in connection with our asset allocation policies, assistance from investment consultants hired to provide oversight over our actively managed investment portfolio, and long term inflation assumptions. The selection of the expected return rate materially affects our pension costs. Our expected long term rate of return was 6.25% after analyzing expected returns on investment vehicles and considering our long term asset allocation expectations. If we were to lower our long term rate of return assumption by a hypothetical 100 basis points, expense in 2013 would be increased by approximately $7.4 million. We use a market value of assets as of the measurement date for determining pension expense.

In selecting the interest rate to discount estimated future benefit payments that have been earned to date to their net present value (defined as the projected benefit obligation), we match the plan’s benefit payment streams to high-quality bonds of similar maturities. The selection of the discount rate not only affects the reported funded status information as of December 31 (as shown in Note H to the accompanying consolidated financial statements), but also affects the succeeding year’s pension and post-retirement healthcare costs. The discount rates selected for December 31, 2013, based on the method described above, were 5.25% for crewmembers and 5.35% for non-crewmembers. If we were to lower our discount rates by a hypothetical 50 basis points, pension expense in 2013 would be increased by approximately $1.2 million.

The assumed future increase in salaries and wages is no longer a significant estimate in determining pension costs because each defined benefit pension plan was frozen during 2009 with respect to additional benefit accruals.

38

The following table illustrates the sensitivity of the aforementioned assumptions on our pension expense, pension obligation and accumulated other comprehensive income (in thousands):

	Effect of change
			December 31, 2013
Change in assumption	2013 Pension expense		Pension obligation			Accumulated other comprehensive income (pre-tax)
100 basis point decrease in rate of return	$	7,378	$	—		$	—
50 basis point decrease in discount rate	1,225		(51,721		)	51,721
Aggregate effect of all the above changes	8,603		(51,721		)	51,721

Discontinued Operations

In accordance with the guidance of FASB ASC Topic 205-20 Presentation of Financial Statements, a business component whose operations are discontinued is reported as discontinued operations if the cash flows of the component have been eliminated from the ongoing operations of the Company and the Company will no longer have any significant continuing involvement in the business component. The results of discontinued operations are aggregated and presented separately in the consolidated statement of operations. FASB ASC Topic 205-20 requires the reclassification of amounts presented for prior years to reflect their classification as discontinued operations.

Exit Activities

We account for the costs associated with exit activities in accordance with FASB ASC Topic 420-10 Exit or Disposal Cost Obligations. One-time, involuntary employee termination benefits are generally expensed when the Company communicates the benefit arrangement to the employee that it will no longer require the services of the employee beyond a minimum retention period. Liabilities for contract termination costs associated with exit activities are recognized in the period incurred and measured initially at fair value.

New Accounting Pronouncements

In July 2013, the FASB issued Accounting Standard Update No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" (ASU 2013-11"). ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This new guidance is effective for annual reporting periods beginning on or after December 15, 2013, and subsequent interim periods. The Company is currently assessing the impact, if any, that this pronouncement will have on the condensed consolidated financial statements.

In September 2013, the United States Treasury Department and the Internal Revenue Service (“IRS”) issued final and proposed regulations (the “Tangible Property Regulations”) effective for tax years beginning on or after January 1, 2014, that provided guidance on a number of matters with regard to tangible property, including whether expenditures qualified as deductible repairs, the treatment of materials and supplies, capitalization of tangible property, dispositions of property, and related elections.  The Company is assessing the financial impact as a result of these regulations and as a result of such assessment, no material impact is expected.  Future transitional guidance in the form of revenue procedures issued by the IRS, and the finalization of the proposed regulations, could impact our current estimates.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk for changes in interest rates and changes in the price of jet fuel. The risk associated with jet fuel, however, is largely mitigated by reimbursement through the agreements with our customers.

On May 9, 2011, the Company executed a syndicated credit agreement ("Senior Credit Agreement"). The Senior Credit Agreement includes a term loan of $150 million. On July 20, 2012, the Company executed the first amendment to the Senior Credit Agreement (“Credit Amendment”). The Credit Amendment increased the amount available under the revolving credit loan by $50 million, extended the maturity of the term loan and revolving credit loan to July 20, 2017, and provided for an accordion feature whereby the Company may draw up to an additional $50.0 million, subject

39

to the lenders' consent. In October 2013, the lenders agreed to make the accordion funds of $50.0 million available to the Company, increasing the capacity of the revolving credit facility to $275.0 million. Under the terms of the Senior Credit Agreement, interest rates will be adjusted quarterly based on the Company's earnings before interest, taxes, depreciation and amortization expenses ("EBITDA"), its outstanding debt level and prevailing LIBOR or prime rates (see Note F to the consolidated financial statements). The Company's Senior Credit Agreement requires the Company to maintain derivative instruments for fluctuating interest rates, for at least fifty percent of the outstanding balance of the unsubordinated term loan. Accordingly, in July 2011, the Company entered into an interest rate swap instrument. Additionally, the Company entered into another interest rate swap in June 2013. As a result, future fluctuations in LIBOR interest rates will result in the recording of unrealized gains and losses on interest rate derivatives held by the Company. The notional values were $131.3 million as of December 31, 2013. See Note J in the accompanying consolidated financial statements for a discussion of our accounting treatment for these hedging transactions.

As of December 31, 2013, the Company has $62.8 million of fixed interest rate debt and $321.7 million of variable interest rate debt outstanding. Variable interest rate debt exposes us to differences in future cash flows resulting from changes in market interest rates. Variable interest rate risk can be quantified by estimating the change in annual cash flows resulting from a hypothetical 20% increase in interest rates. A hypothetical 20% increase or decrease in interest rates would have resulted in a change in interest expense of approximately $1.6 million for the year ended December 31, 2013.

The debt issued at fixed interest rates is exposed to fluctuations in fair value resulting from changes in market interest rates. Fixed interest rate risk can be quantified by estimating the increase in fair value of our long term debt through a hypothetical 20% increase in interest rates. As of December 31, 2013, a 20% increase in interest rates would have decreased the fair value of our fixed interest rate debt by approximately $0.9 million.

The Company is exposed to concentration of credit risk primarily through cash deposits, cash equivalents, marketable securities and derivatives. As part of our risk management process, we monitor and evaluate the credit standing of the financial institutions with which we do business. The financial institutions with which we do business are generally highly rated. The Company is exposed to counterparty risk, which is the loss we could incur if a counterparty to a derivative contract defaulted.

At December 31, 2013, ABX's defined benefit pension plans had total investment assets of $751.2 million under investment management. See Note H in the accompanying consolidated financial statements for further discussion of these assets.

40

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	42
Consolidated Balance Sheets	43
Consolidated Statements of Operations	44
Consolidated Statements of Comprehensive Income	45
Consolidated Statements of Cash Flows	46
Consolidated Statements of Stockholders’ Equity	47
Notes to Consolidated Financial Statements	48

41

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Air Transport Services Group, Inc.

Wilmington, Ohio

We have audited the accompanying consolidated balance sheets of Air Transport Service Group, Inc. and subsidiaries (the "Company") as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2013. Our audits also included the financial statement schedules listed in the Table of Contents at Item 15a(2). These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in Note B to the consolidated financial statements, the Company’s two principal customers account for a substantial portion of the Company’s revenue. The Company’s financial security is dependent on its ongoing relationship with its principal customers existing as of December 31, 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10, 2014 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Dayton, Ohio

March 10, 2014

42

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	December 31,			December 31,
	2013			2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	31,699		$	15,442
Accounts receivable, net of allowance of $717 in 2013 and $749 in 2012	52,247			47,858
Inventory	9,050			9,430
Prepaid supplies and other	9,730			8,855
Deferred income taxes	13,957			19,154
Aircraft and engines held for sale	2,995			3,360
TOTAL CURRENT ASSETS	119,678			104,099
Property and equipment, net	838,172			818,924
Other assets	21,143			20,462
Pension assets, net of obligations	14,855			—
Intangibles	4,896			5,146
Goodwill	34,395			86,980
TOTAL ASSETS	$	1,033,139		$	1,035,611
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	34,818		$	36,521
Accrued salaries, wages and benefits	23,163			22,917
Accrued expenses	9,695			8,502
Current portion of debt obligations	23,721			21,265
Unearned revenue	8,733			10,311
TOTAL CURRENT LIABILITIES	100,130			99,516
Long term debt	360,794			343,216
Post-retirement obligations	30,638			185,097
Other liabilities	62,740			62,104
Deferred income taxes	109,869			46,422
TOTAL LIABILITIES	664,171			736,355
Commitments and contingencies (Note G)
STOCKHOLDERS’ EQUITY:
Preferred stock, 20,000,000 shares authorized, including 75,000 Series A Junior Participating Preferred Stock	—			—
Common stock, par value $0.01 per share; 75,000,000 shares authorized; 64,618,305 and 64,130,056 shares issued and outstanding in 2013 and 2012, respectively	646			641
Additional paid-in capital	524,953			523,087
Accumulated deficit	(126,813		)	(107,185		)
Accumulated other comprehensive loss	(29,818		)	(117,287		)
TOTAL STOCKHOLDERS’ EQUITY	368,968			299,256
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,033,139		$	1,035,611

See notes to consolidated financial statements.

43

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Year Ended December 31
	2013			2012			2011
REVENUES	$	580,023		$	607,438		$	730,133
OPERATING EXPENSES
Salaries, wages and benefits	175,383			184,644			188,884
Fuel	49,376			53,928			150,003
Maintenance, materials and repairs	97,053			97,540			86,929
Depreciation and amortization	91,749			84,477			91,063
Travel	18,693			22,683			28,335
Rent	27,468			25,970			25,201
Landing and ramp	11,204			15,973			22,630
Insurance	6,216			7,716			9,309
Impairment of goodwill	52,585			—			2,797
Impairment of acquired intangibles	—			—			2,282
Impairment of aircraft	—			—			22,065
Other operating expenses	37,111			35,819			38,006
	566,838			528,750			667,504
OPERATING INCOME	13,185			78,688			62,629
OTHER INCOME (EXPENSE)
Interest income	74			136			179
Interest expense	(14,249		)	(14,383		)	(14,181		)
Net gain (loss) on derivative instruments	631			1,879			(4,881		)
Write-off of unamortized debt issuance costs	—			—			(2,886		)
	(13,544		)	(12,368		)	(21,769		)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(359		)	66,320			40,860
INCOME TAX EXPENSE	(19,266		)	(24,672		)	(16,995		)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS	(19,625		)	41,648			23,865
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES	(3		)	(774		)	(673		)
NET EARNINGS (LOSS)	$	(19,628	)	$	40,874		$	23,192
BASIC EARNINGS (LOSS) PER SHARE
Continuing operations	$	(0.31	)	$	0.66		$	0.38
Discontinued operations	—			(0.02		)	(0.01		)
TOTAL BASIC EARNINGS (LOSS) PER SHARE	$	(0.31	)	$	0.64		$	0.37
DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations	$	(0.31	)	$	0.65		$	0.37
Discontinued operations	—			(0.02		)	(0.01		)
TOTAL DILUTED EARNINGS (LOSS) PER SHARE	$	(0.31	)	$	0.63		$	0.36
WEIGHTED AVERAGE SHARES
Basic	63,992			63,461			63,284
Diluted	63,992			64,420			64,085

See notes to consolidated financial statements.

44

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Years Ended December 31
	2013			2012			2011
NET EARNINGS (LOSS)	$	(19,628	)	$	40,874		$	23,192
OTHER COMPREHENSIVE INCOME (LOSS):
Defined Benefit Pension	90,530			(10,976		)	(56,301		)
Defined Benefit Post-Retirement	(3,032		)	(3,227		)	(3,257		)
Gains and Losses on Derivatives	(29		)	(37		)	2,745
TOTAL COMPREHENSIVE INCOME (LOSS), net of tax	$	67,841		$	26,634		$	(33,621	)

See notes to consolidated financial statements.

45

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years Ended December 31
	2013			2012			2011
OPERATING ACTIVITIES:
Net earnings (loss) from continuing operations	$	(19,625	)	$	41,648		$	23,865
Net loss from discontinued operations	(3		)	(774		)	(673		)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Impairment of aircraft	—			—			22,065
Impairment of goodwill and acquired intangibles	52,585			—			5,079
Depreciation and amortization	91,749			84,477			91,063
Pension and post-retirement	7,061			5,562			(2,641		)
Deferred income taxes	18,772			23,749			17,126
Amortization of stock-based compensation	2,732			3,231			2,877
Amortization of DHL promissory note	(6,200		)	(6,200		)	(6,200		)
Net (gain) loss on derivative instruments	(631		)	(1,879		)	4,881
Write-off of unamortized debt issuance costs	—			—			2,886
Changes in assets and liabilities:
Accounts receivable	(4,994		)	(4,328		)	1,980
Inventory and prepaid supplies	(900		)	(1,759		)	(13		)
Accounts payable	2,012			(5,688		)	(1,715		)
Unearned revenue	(6,205		)	654			9,337
Accrued expenses, salaries, wages, benefits and other liabilities	(112		)	4,898			(8,209		)
Pension and post-retirement assets	(38,352		)	(27,926		)	(23,159		)
Other	(3,478		)	(5,032		)	(2,443		)
NET CASH PROVIDED BY OPERATING ACTIVITIES	94,411			110,633			133,220
INVESTING ACTIVITIES:
Capital expenditures	(112,712		)	(155,243		)	(213,083		)
Proceeds from property and equipment	1,521			5,772			11,147
Proceeds from the redemption of interest-bearing investments	—			—			1,750
Reimbursement of hangar construction costs	6,803			—			—
NET CASH (USED IN) INVESTING ACTIVITIES	(104,388		)	(149,471		)	(200,186		)
FINANCING ACTIVITIES:
Principal payments on long term obligations	(53,766		)	(26,223		)	(214,424		)
Proceeds from borrowings	80,000			50,000			265,000
Financing fees	—			—			(2,536		)
NET CASH PROVIDED BY FINANCING ACTIVITIES	26,234			23,777			48,040
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	16,257			(15,061		)	(16,040		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	15,442			30,503			46,543
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	31,699		$	15,442		$	30,503
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of amount capitalized	$	13,752		$	13,195		$	12,985
Federal alternative minimum and state income taxes paid	$	1,313		$	377		$	2,448
SUPPLEMENTAL NON-CASH INFORMATION:
Debt extinguished	$	6,200		$	6,200		$	6,200
Accrued capital expenditures	$	1,055		$	4,770		$	10,921

See notes to consolidated financial statements.

46

AIR TRANSPORT SERVICES GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

	Common Stock					Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total
	Number		Amount
BALANCE AT JANUARY 1, 2011	63,652,228		$	637		$	518,925		$	(171,251	)	$	(46,234	)	$	302,077
Stock-based compensation plans
Grant of restricted stock	313,300		3			(3		)							—
Issuance of common shares, net of withholdings	161,161		1			(1,187		)							(1,186		)
Forfeited restricted stock	(110,900	)	(1		)	1									—
Amortization of stock awards and restricted stock						2,877									2,877
Total comprehensive income (loss)									23,192			(56,813		)	(33,621		)
BALANCE AT DECEMBER 31, 2011	64,015,789		$	640		$	520,613		$	(148,059	)	$	(103,047	)	$	270,147
Stock-based compensation plans
Grant of restricted stock	254,200		3			(3		)							—
Withholdings of common shares, net of issuances	(83,933	)	(1		)	(755		)							(756		)
Forfeited restricted stock	(56,000	)	(1		)	1									—
Amortization of stock awards and restricted stock						3,231									3,231
Total comprehensive income (loss)									40,874			(14,240		)	26,634
BALANCE AT DECEMBER 31, 2012	64,130,056		$	641		$	523,087		$	(107,185	)	$	(117,287	)	$	299,256
Stock-based compensation plans
Grant of restricted stock	258,800		3			(3		)							—
Issuance of common shares, net of withholdings	238,049		2			(1,050		)							(1,048		)
Forfeited restricted stock	(8,600	)	—			—									—
Tax benefit from common stock compensation						187									187
Amortization of stock awards and restricted stock						2,732									2,732
Total comprehensive income (loss)									(19,628		)	87,469			67,841
BALANCE AT DECEMBER 31, 2013	64,618,305		$	646		$	524,953		$	(126,813	)	$	(29,818	)	$	368,968

See notes to consolidated financial statements.

47

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A—SUMMARY OF FINANCIAL STATEMENT PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Air Transport Services Group, Inc. is a holding company whose principal subsidiaries include an aircraft leasing company and two independently certificated airlines. The Company provides airline operations, aircraft leases, aircraft maintenance and other support services primarily to the cargo transportation and package delivery industries. Through the Company's subsidiaries, it offers a range of complementary services to delivery companies, freight forwarders, airlines and government customers.

The airlines, ABX Air, Inc. (“ABX”) and Air Transport International, Inc. (“ATI”), each have the authority, through their separate U.S. Department of Transportation ("DOT") and Federal Aviation Administration ("FAA") certificates, to transport cargo worldwide. The Company's leasing subsidiary, Cargo Aircraft Management, Inc. (“CAM”), leases aircraft to each of the Company's airlines as well as to non-affiliated airlines and other lessees.

The Company provides aircraft and airline operations to its customers, typically under contracts providing for a combination of aircraft, crews, maintenance and insurance ("ACMI") services. The Company serves a base of concentrated customers who have a diverse line of international cargo traffic. DHL Network Operations (USA), Inc. and its affiliates, “DHL,” is the Company's largest customer. ATI provides passenger transportation, primarily to the U.S. Military, using "combi" aircraft, which are certified to carry passengers as well as cargo on the main deck.

In addition to its airline operations and aircraft leasing services, the Company sells aircraft parts, provides aircraft and equipment maintenance services, and operates mail sorting facilities for the U.S. Postal Service (“USPS”).

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Air Transport Services Group, Inc. and its wholly-owned subsidiaries. Inter-company balances and transactions have been eliminated. The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

Subsequent Events

In January 2014, the Company acquired a 25 percent equity interest in West Atlantic AB of Gothenburg, Sweden. West Atlantic AB, through its two airlines, Atlantic Airlines Ltd. and West Air Sweden AB, operates a fleet of approximately 40 aircraft and is Europe’s largest regional cargo aircraft operator. West Atlantic AB operates its aircraft on behalf of European regional mail carriers and express logistics providers. The airlines operate a combined fleet of British Aerospace ATPs, Bombardier CRJ-200-PFs, and Boeing 737 aircraft. In addition, Atlantic Airlines Ltd. is currently adding the Boeing 767 aircraft to its operating capability.

In January 2014, the Company drew $15.0 million from the revolving credit facility to help fund its 25 percent ownership of West Atlantic AB.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements. Estimates and assumptions are used to record allowances for uncollectible amounts, self-insurance reserves, spare parts inventory, depreciation and impairments of property, equipment, goodwill and intangibles, post-retirement obligations, income taxes, contingencies and litigation. Changes in estimates and assumptions may have a material impact on the consolidated financial statements.

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Cash and Cash Equivalents

The Company classifies short-term, highly liquid investments with maturities of three months or less at the time of purchase as cash and cash equivalents. These investments, consisting of money market funds, are recorded at cost, which approximates fair value. Substantially all deposits of the Company’s cash are held in accounts that exceed federally insured limits. The Company deposits cash in common financial institutions which management believes are financially sound.

Accounts Receivable and Allowance for Uncollectible Accounts

The Company's accounts receivable is primarily due from its significant customers (see Note B), other airlines, the USPS and freight forwarders. The Company performs a quarterly evaluation of the accounts receivable and the allowance for uncollectible accounts by reviewing specific customers' recent payment history, growth prospects, financial condition and other factors that may impact a customer's ability to pay. The Company establishes an allowance for uncollectible accounts for probable losses due to a customer's potential inability or unwillingness to make contractual payments. Account balances are written off against the allowance when the Company ceases collection efforts.

Inventory

The Company’s inventory is comprised primarily of expendable aircraft parts and supplies used for aircraft maintenance. Inventory is generally charged to expense when issued for use on a Company aircraft. The Company values its inventory of aircraft parts and supplies at weighted-average cost and maintains a related obsolescence reserve. The Company records an obsolescence reserve on a base stock of inventory for each fleet type. The amortization of base stock for the obsolescence reserve corresponds to the expected life of each fleet type. Additionally, the Company monitors the usage rates of inventory parts and segregates parts that are technologically outdated or no longer used in its fleet types. Slow moving and segregated items are actively marketed and written down to their estimated net realizable values based on market conditions.

Management analyzes the inventory reserve for reasonableness at the end of each quarter. That analysis includes consideration of the expected fleet life, amounts expected to be on hand at the end of a fleet life, and recent events and conditions that may impact the usability or value of inventory. Events or conditions that may impact the expected life, usability or net realizable value of inventory include additional aircraft maintenance directives from the FAA, changes in DOT regulations, new environmental laws and technological advances.

Goodwill and Intangible Assets

The Company assesses, during the fourth quarter of each year, the carrying value of goodwill. Finite-lived intangible assets are amortized over their estimated useful economic lives. The Company also conducts impairment assessments of goodwill, indefinite-lived intangible assets and finite-lived intangible assets whenever events or changes in circumstance indicate an impairment may have occurred.

Property and Equipment

Property and equipment held for use is stated at cost, net of any impairment recorded. The cost and accumulated depreciation of disposed property and equipment are removed from the accounts with any related gain or loss reflected in earnings from operations.

Depreciation of property and equipment is provided on a straight-line basis over the lesser of the asset’s useful life or lease term. Depreciable lives are summarized as follows:

Boeing 767 and 757 aircraft and flight equipment	10 to 20 years
Support equipment	5 to 10 years
Vehicles and other equipment	3 to 8 years

The Company periodically evaluates the useful lives, salvage values and fair values of property and equipment. Acceleration of depreciation expense or the recording of significant impairment losses could result from changes in

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the estimated useful lives of assets due to a number of reasons, such as excess aircraft capacity or changes in regulations governing the use of aircraft.

Aircraft and other long-lived assets are tested for impairment when circumstances indicate the carrying value of the assets may not be recoverable. To conduct impairment testing, the Company groups assets and liabilities at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. For assets that are to be held and used, impairment is recognized when the estimated undiscounted cash flows associated with the asset group is less than the carrying value. If impairment exists, an adjustment is made to write the assets down to fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined considering quoted market values, discounted cash flows or internal and external appraisals, as applicable. For assets held for sale, impairment is recognized when the fair value less the cost to sell the asset is less than the carrying value.

The Company’s accounting policy for major airframe and engine maintenance varies by subsidiary and aircraft type. The costs for ABX's Boeing 767-200 airframe maintenance, which is the majority of the Company's aircraft fleet, are expensed as they are incurred. The costs of major airframe maintenance for the Company's other aircraft are capitalized and amortized over the useful life of the overhaul. The Company's General Electric CF6 engines that power the Boeing 767-200 aircraft are maintained under “power by the hour” agreements with an engine maintenance provider. Under the power by the hour agreements, the engines are maintained by the service provider for a fixed fee per flight hour; accordingly, the cost of engine maintenance is generally expensed as flight hours occur. Maintenance for the airlines’ other aircraft engines, including those on the Boeing 767-300 and Boeing 757 aircraft, are typically contracted to service providers on a time and material basis and the costs of those engine overhauls are capitalized and amortized over the useful life of the overhaul.

Under certain leases, the Company is required to make periodic payments to the lessor for future maintenance events such as engine overhauls and major airframe maintenance. These payments are recorded as deposits until drawn for qualifying maintenance costs. The maintenance costs are expensed or capitalized in accordance with the airline's accounting policy for major airframe and engine maintenance. The Company evaluates at the balance sheet date, whether it is probable that an amount on deposit will be returned by the lessor to reimburse the costs of the maintenance activities. When an amount on deposit is less than probable of being returned, it is recognized as additional maintenance expense. 

Capitalized Interest

Interest costs incurred while aircraft are being modified are capitalized as an additional cost of the aircraft until the date the asset is placed in service. Capitalized interest was $1.1 million, $2.8 million and $2.2 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Discontinued Operations

A business component whose operations are discontinued is reported as discontinued operations if the cash flows of the component have been eliminated from the ongoing operations of the Company, and the Company will no longer have any significant continuing involvement in the business component. The results of discontinued operations are aggregated and presented separately in the consolidated statements of operations.

Exit Activities

The Company accounts for the costs associated with exit activities in accordance with FASB ASC Topic 420-10 Exit or Disposal Cost Obligations. One-time, involuntary employee termination benefits are generally expensed when the Company communicates the benefit arrangement to the employee that it will no longer require the services of the employee beyond a minimum retention period. Liabilities for contract termination costs associated with exit activities are recognized in the period incurred and measured initially at fair value.

Self-Insurance

The Company is self-insured for certain workers’ compensation, employee healthcare, automobile, aircraft, and general liability claims. The Company maintains excess claim coverage with common insurance carriers to mitigate

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its exposure to large claim losses. The Company records a liability for reported claims and an estimate for incurred claims that have not yet been reported. Accruals for these claims are estimated utilizing historical paid claims data and recent claims trends. Other liabilities included $28.3 million and $31.6 million at December 31, 2013 and December 31, 2012, respectively, for self-insured reserves. Changes in claim severity and frequency could result in actual claims being materially different than the costs accrued.

Pension and Post-Retirement Benefits

The costs of benefits provided by defined benefits pension and post-retirement health care plans are recorded in the period the employees provide service. Costs adjustments for plan amendments are amortized over the expected working life or the life expectancy of plan participants. The funded status of the Company's plans is measured as the difference between the fair value of plan assets and the accumulated benefit obligations to plan participants. The overfunded or underfunded status of a plan is recorded as an asset or liability. The funded status is ordinarily measured annually at year end.

Income Taxes

Income taxes have been computed using the asset and liability method, under which deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. Deferred taxes are measured using provisions of currently enacted tax laws. A valuation allowance against net deferred tax assets is recorded when it is more likely than not that such assets will not be fully realized. Tax credits are accounted for as a reduction of income taxes in the year in which the credit originates.

The Company recognizes the benefit of a tax position taken on a tax return, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. An uncertain income tax benefit is not recognized if it has a less than a 50% likelihood of being sustained. The Company recognizes interest and penalties accrued related to uncertain tax positions in operating expense.

Comprehensive Income

Comprehensive income includes net earnings and other comprehensive income or loss. Other comprehensive income or loss results from certain changes in the Company’s liabilities for pension and other post retirement benefits and gains and losses associated with interest rate hedging instruments.

Fair Value Information

Assets or liabilities that are required to be measured at fair value are reported using the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC Topic 820-10 Fair Value Measurements and Disclosures establishes three levels of input that may be used to measure fair value:

• Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

• Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include items where the determination of fair value requires significant management judgment or estimation.

Revenue Recognition

Revenues generated from airline service agreements are typically recognized based on hours flown or the amount of aircraft and crew resources provided during a reporting period. Certain agreements include provisions for incentive payments based upon on-time reliability. These incentives are typically measured on a monthly basis and recorded to

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revenue in the corresponding month earned. Revenues for operating expenses that are reimbursed through customer agreements, including consumption of aircraft fuel, are generally recognized as the costs are incurred. Revenues from charter service agreements are recognized on scheduled and non-scheduled flights when the specific flight has been completed. Aircraft lease revenues are recognized as operating lease revenues on a straight-line basis over the term of the applicable lease agreements. Revenues from the sale of aircraft parts and engines are recognized when the parts are delivered. Revenues earned and expenses incurred in providing aircraft-related maintenance, repair or technical services are recognized in the period in which the services are completed and delivered to the customer. Revenues derived from sorting parcels are recognized in the reporting period in which the services are performed.

New Accounting Pronouncements

In July 2013, the FASB issued Accounting Standard Update No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" (ASU 2013-11"). ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This new guidance is effective for annual reporting periods beginning on or after December 15, 2013, and subsequent interim periods. The Company is currently assessing the impact, if any, that this pronouncement will have on the condensed consolidated financial statements.

In September 2013, the United States Treasury Department and the Internal Revenue Service (“IRS”) issued final and proposed regulations (the “Tangible Property Regulations”) effective for tax years beginning on or after January 1, 2014, that provided guidance on a number of matters with regard to tangible property, including whether expenditures qualified as deductible repairs, the treatment of materials and supplies, capitalization of tangible property, dispositions of property, and related elections.  The Company is assessing the financial impact as a result of these regulations and as a result of such assessment, no material impact is expected.  Future transitional guidance in the form of revenue procedures issued by the IRS, and the finalization of the proposed regulations, could impact our current estimates.

NOTE B—SIGNIFICANT CUSTOMERS

DHL

The Company's largest customer is DHL Network Operations (USA), Inc. and its affiliates ("DHL"). The Company has had long term contracts with DHL since August 2003. Revenues from continuing operations performed for DHL were approximately 54%, 53% and 36% of the Company's consolidated revenues from continuing operations for the years ended December 31, 2013, 2012 and 2011, respectively. The Company’s balance sheets include accounts receivable with DHL of $24.1 million and $18.3 million as of December 31, 2013 and December 31, 2012, respectively.

The Company leases Boeing 767 aircraft to DHL under both long-term and short-term lease agreements. Under a separate crew, maintenance and insurance (“CMI”) agreement, the Company operates Boeing 767 aircraft that DHL leases from the Company and Boeing 767 aircraft that DHL owns. Pricing for services provided through the CMI agreement is based on pre-defined fees, scaled for the number of aircraft operated and the number of flight crews provided to DHL for its U.S. network. The Company provides DHL with scheduled maintenance services for aircraft that DHL leases or owns. The Company also provides Boeing 767 and Boeing 757 air cargo transportation services for DHL through additional ACMI agreements in which the Company provides the aircraft, crews, maintenance and insurance under a single contract. Revenues generated from the ACMI agreements are typically based on hours flown. The Company also provides ground equipment, such as power units, air starts and related maintenance services to DHL under separate agreements.

U.S. Military

A substantial portion of the Company's revenues are also derived from the U.S. Military. The U.S. Military awards flights to U.S. certificated airlines through annual contracts and through temporary "expansion" routes. Revenues from services performed for the U.S. Military were approximately 17%, 16% and 12% of the Company's total revenues from continuing operations for the years ended December 31, 2013, 2012 and 2011, respectively. The Company's balance sheets included accounts receivable with the U.S. Military of $4.8 million and $4.2 million as of December 31, 2013 and December 31, 2012, respectively.

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BAX/Schenker

The Company had contracts to provide airlift to BAX Global, Inc.'s network in North America ("BAX/Schenker"). Revenues from the services performed for BAX/Schenker were approximately 26% of the Company’s total revenues from continuing operations for the year ended December 31, 2011. BAX/Schenker provided freight transportation and supply chain management services, specializing in the heavy freight market for business-to-business shipping.

On July 22, 2011, BAX/Schenker announced its plan to adopt a new operating model that phased-out the dedicated air cargo network in North America supported by the Company. To execute that plan, on September 2, 2011, BAX/Schenker ceased air cargo operations at its air hub in Toledo, Ohio and began to conduct air operations from the Cincinnati/Northern Kentucky airport, utilizing DHL's U.S. air hub. The Company provided limited airlift directly to BAX/Schenker through the peak delivery season, until late December 2011. Beginning in January 2012, DHL contracted with the Company's airlines to supplement DHL's U.S. air network to service BAX/Schenker freight volumes on its expanded air network without the use of the Company's DC-8 aircraft and with only limited use of the Company's Boeing 727 aircraft.

No services were performed for Bax/Schenker during 2013 and 2012. The Company’s balance sheets had no accounts receivable with BAX/Schenker as of December 31, 2013 and 2012.

NOTE C—GOODWILL AND OTHER INTANGIBLES

The Company has two reporting units that have goodwill, ATI (a component of the ACMI Services segment) and CAM. In conjunction with the phase-out of BAX/Schenker's dedicated airlift in North America (see Note B), which relied on operations provided by the Company, the Company tested the carrying values of goodwill and related intangible assets as of July 31, 2011. The Company recognized an impairment charge in 2011 to reduce the value of the recorded goodwill and customer relationship intangible associated with ATI to $52.6 million and $2.5 million, respectively. BAX/Schenker's decision to discontinue a dedicated U.S. air network using ATI's DC-8 aircraft was precipitated by prolonged recessionary conditions and trends toward higher fuel prices. ATI's goodwill and related intangible assets were not impaired further at the time because of expected future net cash flows from its growing fleet of Boeing 767 aircraft and combi aircraft services that it provides to the U.S. Military.

As of December 31, 2013, 2012 and 2011, the goodwill amounts were retested for impairment. The CAM goodwill was not impaired. The ATI goodwill was found to be impaired as of December 31, 2013. The Company recorded an impairment charge of $52.6 million in 2013 to write-off the ATI goodwill. As a result of recent events and market changes, the Company does not expect ATI to generate the forecasted net cash flows from ATI's Boeing 767 operations as previously expected. In December 2013 and in January 2014, the Company received notification from DHL that it would cease using ATI's Boeing 767 services in the Middle East by the end of February 2014. Further, as a result of persistent stagnant growth conditions and excess airlift capacity, including the recent projections published by the U.S. Military that reflect continued reductions in their demand for cargo (non combi) airlift, the Company plans to allocate fewer Boeing 767 aircraft to ATI than previously expected. The Company expects instead to deploy more Boeing 767 aircraft with other airlines, including Atlantic Airline Ltd., an airline owned by West Atlantic, AB for which the Company acquired a 25% equity interest in January 2014.

The Company determined the fair values of ATI and CAM separately using industry market multiples and discounted cash flows utilizing a market-derived rate of return (level 3 fair value inputs).

The carrying amounts of goodwill by reportable segment, are as follows (in thousands):

	ACMI Services			CAM		Total
Carrying value as of December 31, 2011	$	52,585		$	34,395	$	86,980
Impairment	—			—		—
Carrying value as of December 31, 2012	$	52,585		$	34,395	$	86,980
Impairment	$	(52,585	)	$	—	$	(52,585	)
Carrying value as of December 31, 2013	$	—		$	34,395	$	34,395

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The Company's intangible assets relate to the ACMI Services segment and are as follows (in thousands):

	Customer			Airline
	Relationships			Certificates			Total
Carrying value as of December 31, 2011	$	2,396		$	4,000		$	6,396
Amortization	(250		)	(1,000		)	(1,250		)
Carrying value as of December 31, 2012	$	2,146		$	3,000		$	5,146
Amortization	(250		)	—			(250		)
Carrying value as of December 31, 2013	$	1,896		$	3,000		$	4,896

The customer relationship intangible amortizes over seven more years. The Company recorded amortization expense for the customer relationship intangible asset of $0.3 million, $0.3 million and $0.6 million for the years ending December 31, 2013, 2012 and 2011, respectively. The airline certificate related to Capital Cargo International Airlines, Inc.'s ("CCIA") Boeing 727 aircraft operations amortized through December 31, 2012. The remaining airline certificates have an indefinite life and therefore are not amortized.

NOTE D—FAIR VALUE MEASUREMENTS

The Company’s money market funds and interest rate swaps are reported on the Company’s consolidated balance sheets at fair values based on market values from identical or comparable transactions. The fair value of the Company’s money market funds and interest rate swaps are based on observable inputs (Level 2) from comparable market transactions. The use of significant unobservable inputs (Level 3) was not necessary in determining the fair value of the Company’s financial assets and liabilities.

The following table reflects assets and liabilities that are measured at fair value on a recurring basis (in thousands):

As of December 31, 2013	Fair Value Measurement Using							Total
	Level 1		Level 2			Level 3
Assets
Cash equivalents—money market	$	20	$	301		$	—	$	321
Total Assets	$	20	$	301		$	—	$	321
Liabilities
Interest rate swap	$	—	$	(2,515	)	$	—	$	(2,515	)
Total Liabilities	$	—	$	(2,515	)	$	—	$	(2,515	)

As of December 31, 2012	Fair Value Measurement Using							Total
	Level 1		Level 2			Level 3
Assets
Cash equivalents—money market	$	18	$	339		$	—	$	357
Total Assets	$	18	$	339		$	—	$	357
Liabilities
Interest rate swap	$	—	$	(3,146	)	$	—	$	(3,146	)
Total Liabilities	$	—	$	(3,146	)	$	—	$	(3,146	)

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As a result of lower market interest rates compared to the stated interest rates of the Company’s fixed and variable rate debt obligations, the fair value of the Company’s debt obligations, based on Level 2 observable inputs, was approximately $6.3 million more than the carrying value, which was $384.5 million at December 31, 2013. As of December 31.2012, the fair value of the Company’s debt obligations was approximately $3.8 million more than the carrying value, which was $364.5 million. The non-financial assets, including goodwill, intangible assets and property and equipment are measured at fair value on a non-recurring basis.

NOTE E—PROPERTY AND EQUIPMENT

The Company's property and equipment consists primarily of cargo aircraft, aircraft engines and flight equipment. Property and equipment, to be held and used, is summarized as follows (in thousands):

	December 31, 2013			December 31, 2012
Aircraft and flight equipment	$	1,236,225		$	1,148,781
Support equipment	51,179			52,209
Vehicles and other equipment	1,771			1,597
Leasehold improvements	1,154			814
	1,290,329			1,203,401
Accumulated depreciation	(452,157		)	(384,477		)
Property and equipment, net	$	838,172		$	818,924

CAM owned aircraft with a carrying value of $250.9 million and $273.4 million that were under leases to external customers as of December 31, 2013 and 2012, respectively. Minimum future lease payments for aircraft and equipment leased to external customers as of December 31, 2013 is scheduled to be $54.8 million, $54.8 million, $48.2 million, $23.1 million and $4.2 million for each of the next five years ending December 31, 2018.

Stagnant economic growth and higher fuel prices precipitated BAX/Schenker's decision to phase-out its North American air network in 2011 and diminished the demand for the Company's Boeing 727 and DC-8 freighter aircraft. These aircraft are less fuel efficient and generally require higher maintenance costs to maintain acceptable levels of reliability compared to more modern aircraft. As a result of these conditions and BAX/Schenker's decision in July 2011 to phase-out its North American air network, the Company decided to retire the Boeing 727 and DC-8 freighter fleets. During the third quarter of 2011, the Company recorded a pre-tax impairment charge totaling $22.1 million to reduce the carrying values of its Boeing 727 and DC-8 freighters, engines and related parts to their estimated fair value. The Company determined the fair values of these aircraft with the assistance of an independent appraiser using comparable market sales (level 2 fair value inputs).

The carrying value of Boeing 727 and DC-8 freighter aircraft and engines available for sale totaled $3.0 million and $3.4 million as of December 31, 2013 and 2012, respectively. Cash flows generated from sales of aircraft and engines totaled $1.5 million, $5.8 million and $11.1 million for the years ended December 31, 2013, 2012 and 2011, respectively. During the fourth quarter of 2011, the Company received $10.7 million from BAX/Schenker for the reimbursement of capitalized maintenance costs for aircraft removed from service.

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NOTE F—DEBT OBLIGATIONS

Long term obligations consisted of the following (in thousands):

	December 31,			December 31,
	2013			2012
Unsubordinated term loan	$	131,250		$	144,375
Revolving credit facility	190,500			143,000
Aircraft loans	55,015			63,156
Promissory note due to DHL, unsecured	7,750			13,950
Total long term obligations	384,515			364,481
Less: current portion	(23,721		)	(21,265		)
Total long term obligations, net	$	360,794		$	343,216

The Company executed a syndicated credit agreement ("Senior Credit Agreement") in May 2011 which includes an unsubordinated term loan and a revolving credit facility. In July 2012, the Company executed the first amendment to the Senior Credit Agreement (“Credit Amendment”). The Credit Amendment increased the amount available under the revolving credit facility by $50.0 million to $225.0 million, extended the maturity of the term loan and revolving credit facility to July 20, 2017, and provided for an accordion feature whereby the Company may draw up to an additional $50.0 million, subject to the lenders' consent. In October 2013, the lenders agreed to make the accordion funds of $50.0 million available to the Company, increasing the capacity of the revolving credit facility to $275.0 million.

Under the terms of the Senior Credit Agreement, interest rates are adjusted quarterly based on the Company's earnings before interest, taxes, depreciation and amortization expenses ("EBITDA"), its outstanding debt level and prevailing LIBOR or prime rates. At the Company's current debt-to-EBITDA ratio, the LIBOR based financing for the unsubordinated term loan and revolving credit facility bear a variable interest rate of 2.545% and 2.545%, respectively. The Credit Amendment did not affect the EBITDA based pricing or covenants of the Senior Credit Agreement. The Senior Credit Agreement provides for the issuance of letters of credit on the Company's behalf. As of December 31, 2013, the unused revolving credit facility totaled $74.3 million, net of draws of $190.5 million and outstanding letters of credit of $10.2 million.

The aircraft loans are collateralized by six aircraft, and amortize monthly with a balloon payment of approximately 20% with maturities between 2016 and early 2018. Interest rates range from 6.74% to 7.36% per annum payable monthly.

The scheduled annual principal payments on long term debt, as of December 31, 2013, for the next five years are as follows (in thousands):

	Principal Payments
2014	$	23,721
2015	24,344
2016	33,865
2017	291,195
2018	3,640
2019 and beyond	7,750
	$	384,515

The promissory note payable to DHL becomes due in August 2028 as a balloon payment, unless it is extinguished sooner under the terms of the CMI agreement. Beginning April 1, 2010 and extending through the term of the CMI agreement, the balance of the note is amortized ratably without cash payment in exchange for services provided and, thus, is expected to be completely amortized by April 2015. The promissory note bears interest at a rate of 5% per annum, and DHL reimburses ABX the interest expense from the note through the term of the CMI agreement.

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The Senior Credit Agreement is collateralized by certain of the Company's Boeing 767 and 757 aircraft that are not collateralized under aircraft loans. Under the terms of the Senior Credit Agreement, the Company is required to maintain collateral coverage equal to 150% of the outstanding balance of the term loan and total capacity of the revolving credit facility. The Senior Credit Agreement contains covenants including, among other things, limitations on certain additional indebtedness, guarantees of indebtedness, as well as a total debt to EBITDA ratio and a fixed charge coverage ratio. The Senior Credit Agreement stipulates events of default, including unspecified events that may have material adverse effects on the Company. If an event of default occurs, the Company may be forced to repay, renegotiate or replace the Senior Credit Agreement. The Senior Credit Agreement limits the amount of dividends the Company can pay and the amount of common stock it can repurchase to $50.0 million during any calendar year, provided the Company's total debt to EBITDA ratio is under two times, after giving effect to the dividend or repurchase. Under the provisions of its promissory note due to DHL, the Company is required to prepay the DHL note in the amount of $0.20 for each dollar of dividend distributed to its stockholders. The same prepayment stipulation applies to stock repurchases.

In conjunction with the execution of the Senior Credit Agreement in 2011, the Company terminated its previous credit agreement, which resulted in the write-off of unamortized debt issuance costs associated with that credit agreement and losses for certain interest rate swaps which had previously been designated as cash flow hedges of interest payments required by the former debt. These charges, which totaled $6.8 million before income taxes, were recorded in March 2011.

NOTE G—COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases six Boeing 767 aircraft, airport facilities, office space, maintenance facilities and certain equipment under operating leases. In December 2012, the Company entered into agreements with the Clinton County Port Authority ("CCPA") to construct and lease an aircraft hangar in Wilmington, Ohio, adjacent to the existing aircraft maintenance facility currently leased by the Company. The Company acts as construction agent for the CCPA and began construction of a 100,000 square foot aircraft hangar in 2013. While the current facility houses aircraft as large as the Boeing 767, the new hangar will provide the capability of servicing aircraft as large as a Boeing 747 and a Boeing 777. The hangar is anticipated to cost approximately $15.7 million and due to adverse weather conditions, is not expected to be completed until May 2014. The CCPA is financing the construction of the hangar primarily through a State of Ohio bond program and a State of Ohio loan on incremental taxes. The costs incurred to build the hangar are included in "Property and equipment" and the amounts that are reimbursed through the State of Ohio and the CCPA are included in "Other liabilities" on the Company's balance sheet. The Company began to make lease payments for the hangar directly to the trustee for the State of Ohio beginning in 2014.

The future minimum lease payments of the Company as of December 31, 2013 are scheduled below (in thousands):

	Operating Leases		Hangar Lease
2014	$	22,561	$	592
2015	12,499		602
2016	8,807		832
2017	4,733		834
2018	3,113		833
2019 and beyond	1,533		14,610
Total minimum lease payments	$	53,246	$	18,303

Guarantees and Indemnifications

Certain leases and agreements of the Company contain guarantees and indemnification obligations to the lessor, or one or more other parties that are considered reasonable and customary (e.g. use, tax and environmental indemnifications), the terms of which range in duration and are often limited. Such indemnification obligations may continue after expiration of the respective lease or agreement.

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Civil Action Alleging Violations of Immigration Laws

On December 31, 2008, a former ABX employee filed a complaint against ABX, a total of four current and former executives and managers of ABX, Garcia Labor Company of Ohio, and three former executives of the Garcia Labor companies, in the U.S. District Court for the Southern District of Ohio. The case was filed as a putative class action against the defendants, and asserts violations of the Racketeer Influenced and Corrupt Practices Act (RICO). The complaint, which was later amended to include a second former employee plaintiff, seeks damages in an unspecified amount and alleges that the defendants engaged in a scheme to hire illegal immigrant workers to depress the wages paid to hourly wage employees during the period from December 1999 to January 2005.

On December 2, 2011, the plaintiffs agreed to settle this matter in exchange for the payment by ABX to plaintiffs and the putative class members of a monetary amount, which amount management believes to be less than it would have cost to defend the case at trial. The final settlement was approved by the Court on July 9, 2013 and following a 30-day appeal period during which no objections were received, the settlement funds were paid to the class administrator for distribution in accordance with the terms of the settlement agreement. This litigation is now concluded.

Brussels Noise Ordinance

The Brussels Instituut voor Milieubeheer ("BIM"), a governmental authority in the Brussels-Capital Region of Belgium that oversees the enforcement of environmental matters, imposed four separate administrative penalties on ABX in the approximate aggregate amount of €0.4 million ($0.5 million) for numerous alleged violations of an ordinance limiting the noise caused by aircraft overflying the Brussels-Capital Region (which is located near the Brussels Airport) during the period from May 2009 through December 2010. ABX has exhausted its appeals with respect to three of the administrative penalties.

The ordinance in question is controversial for the reason that it was adopted by the Brussels-Capital Region and is more restrictive than the noise limitations in effect in the Flemish Region, which is where the Brussels Airport is located. The ordinance is the subject of several court cases currently pending in the Belgian courts and numerous airlines have been levied fines thereunder.

Other

In addition to the foregoing matters, we are also currently a party to legal proceedings, including FAA enforcement actions, in various federal and state jurisdictions arising out of the operation of the Company's business. The amount of alleged liability, if any, from these proceedings cannot be determined with certainty; however, we believe that the Company's ultimate liability, if any, arising from the pending legal proceedings, as well as from asserted legal claims and known potential legal claims which are probable of assertion, taking into account established accruals for estimated liabilities, should not be material to our financial condition or results of operations.

Employees Under Collective Bargaining Agreements

As of December 31, 2013, the flight crewmember employees of ABX and ATI were represented by the labor unions listed below:

Airline	Labor Agreement Unit	Percentage of the Company’s Employees
ABX	International Brotherhood of Teamsters	14.4%
ATI	Air Line Pilots Association	8.7%

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NOTE H—PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS

Defined Benefit and Post-retirement Healthcare Plans

ABX sponsors a qualified defined benefit pension plan for ABX crewmembers and a qualified defined benefit pension plan for a major portion of its other ABX employees that meet minimum eligibility requirements. ABX also sponsors non-qualified defined benefit pension plans for certain employees. These non-qualified plans are unfunded. Employees are no longer accruing benefits under any of the defined benefit pension plans. ABX also sponsors a post-retirement healthcare plan for its ABX employees, which is unfunded.

The accounting and valuation for these post-retirement obligations are determined by prescribed accounting and actuarial methods that consider a number of assumptions and estimates. The selection of appropriate assumptions and estimates is significant due to the long time period over which benefits will be accrued and paid. The long term nature of these benefit payouts increases the sensitivity of certain estimates of our post-retirement costs. The assumptions considered most sensitive in actuarially valuing ABX’s pension obligations and determining related expense amounts are discount rates and expected long term investment returns on plan assets. Additionally, other assumptions concerning retirement ages, mortality and employee turnover also affect the valuations. Actual results and future changes in these assumptions could result in future costs significantly higher than those recorded in our results of operations.

ABX measures plan assets and benefit obligations as of December 31 of each year. Information regarding ABX’s sponsored defined benefit pension plans and post-retirement healthcare plans follow below. The accumulated benefit obligation reflects pension benefit obligations based on the actual earnings and service to-date of current employees.

Funded Status(in thousands):

	Pension Plans						Post-retirement Healthcare Plans
	2013			2012			2013			2012
Accumulated benefit obligation	$	761,774		$	860,463		$	7,482		$	8,781
Change in benefit obligation
Obligation as of January 1	$	860,463		$	772,612		$	8,781		$	9,275
Service cost	—			—			275			269
Interest cost	35,957			37,089			264			379
Curtailment gain	—			—			—			—
Special termination benefits	—			—			—			—
Plan amendment	—			—			—			(460		)
Plan transfers	2,448			1,657			—			—
Benefits paid	(28,966		)	(26,130		)	(1,364		)	(974		)
Actuarial (gain) loss	(108,128		)	75,235			(474		)	292
Obligation as of December 31	$	761,774		$	860,463		$	7,482		$	8,781
Change in plan assets
Fair value as of January 1	$	682,553		$	594,697		$	—		$	—
Actual gain on plan assets	67,719			87,598			—			—
Plan transfers	2,448			1,657			—			—
Employer contributions	27,492			24,731			1,364			974
Benefits paid	(28,966		)	(26,130		)	(1,364		)	(974		)
Fair value as of December 31	$	751,246		$	682,553		$	—		$	—
Funded status
Overfunded plans, net asset	$	14,855		$	—		$	—		$	—
Underfunded plans
Current liabilities	$	(1,339	)	$	(1,331	)	$	(888	)	$	(1,105	)
Non-current liabilities	$	(24,044	)	$	(176,579	)	$	(6,594	)	$	(7,676	)

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Components of Net Periodic Benefit Cost

ABX’s net periodic benefit costs for its defined benefit pension plans and post-retirement healthcare plans for the years ended December 31, 2013, 2012 and 2011, are as follows (in thousands):

	Pension Plans									Post-Retirement Healthcare Plan
	2013			2012			2011			2013			2012			2011
Service cost	$	—		$	—		$	—		$	275		$	269		247
Interest cost	35,957			37,089			37,163			264			379			389
Expected return on plan assets	(45,990		)	(39,882		)	(39,027		)	—			—			—
Amortization of prior service cost	—			—			—			419			433			529
Amortization of net (gain) loss	12,296			10,681			2,700			(5,654		)	(5,552		)	(5,552		)
Net periodic benefit cost	$	2,263		$	7,888		$	836		$	(4,696	)	$	(4,471	)	$	(4,387	)

In 2010, the Company modified the post-retirement health plans for ABX employees. Benefits for covered individuals now terminates upon reaching age 65 under the modified post-retirement healthcare plans.

Unrecognized Net Periodic Benefit Expense

The pre-tax amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit expense at December 31 are as follows (in thousands):

	Pension Plans				Post-Retirement Healthcare Plans
	2013		2012		2013			2012
Unrecognized prior service cost	$	—	$	—	$	(4,182	)	$	(9,836	)
Unrecognized net actuarial loss	40,190		182,342		2,027			2,920
Accumulated other comprehensive (income) loss	$	40,190	$	182,342	$	(2,155	)	$	(6,916	)

The following table sets forth the amounts of unrecognized net actuarial loss and (gain) recorded in accumulated other comprehensive loss that is expected to be recognized as components of net periodic benefit expense during 2014 (in thousands):

	Pension Plans			Post- Retirement Healthcare Plans
Amortization of actuarial loss	$	(2	)	$	320
Prior Service Cost	—			(3,487		)

Assumptions

Assumptions used in determining the funded status of ABX’s pension plans at December 31 were as follows:

	Pension Plans
	2013	2012	2011
Discount rate - crewmembers	5.25%	4.25%	5.10%
Discount rate - non-crewmembers	5.35%	4.25%	4.65%
Expected return on plan assets	6.25%	6.75%	6.75%

Net periodic benefit cost was based on the discount rate assumptions at the end of the previous year.

60

The discount rate used to determine post-retirement healthcare obligations was 4.15% for pilots and 3.85% for non-pilots at December 31, 2013. The discount rate used to determine post-retirement healthcare obligations was 3.35% for pilots and 2.95% for non-pilots at December 31, 2012. The discount rate used to determine post-retirement healthcare obligations was 4.60% for pilots and 4.05% for non-pilots at December 31, 2011. Post-retirement healthcare plan obligations have not been funded. The Company's retiree healthcare contributions have been fixed for each participant, accordingly, healthcare cost trend rates do not effect the post-retirement healthcare obligations.

Plan Assets

The weighted-average asset allocations by asset category are as shown below:

	Composition of Plan Assets as of December 31
Asset category	2013		2012
Cash	—	%	—	%
Equity securities	50	%	48	%
Fixed income securities	47	%	49	%
Real estate	3	%	3	%
	100	%	100	%

ABX uses an investment management firm to advise it in developing and executing an investment policy. The portfolio is managed with consideration for diversification, quality and marketability. The investment policy permits the following ranges of asset allocation: equities – 22.5% to 69.3%; fixed income securities – 38.0% to 76.5%; real estate – 3% to 7%; cash – 0% to 10%. Except for U.S. Treasuries, no more than 10% of the fixed income portfolio and no more than 5% of the equity portfolio can be invested in securities of any single issuer.

The overall expected long term rate of return was developed using various market assumptions in conjunction with the plans’ targeted asset allocation. The assumptions were based on historical market returns.

Cash Flows

In 2013 and 2012, the Company made contributions to its defined benefit plans of $27.5 million and $24.7 million, respectively. The Company estimates that its contributions in 2014 will be approximately $6.3 million for its defined benefit pension plans and $0.9 million for its post-retirement healthcare plans.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid out of the respective plans as follows (in thousands):

	Pension Benefits		Post-retirement Healthcare Benefits
2014	$	31,260	$	888
2015	33,144		844
2016	37,769		764
2017	37,332		755
2018	39,860		749
Years 2019 to 2023	232,378		3,775

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Fair Value Measurements

The pension plan assets are valued at fair value. The following is a description of the valuation methodologies used for the investments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.

Temporary Cash Investments—These investments consist of U.S. dollars and foreign currencies held in master trust accounts at The Northern Trust Company. Foreign currencies held are reported in terms of U.S. dollars based on currency exchange rates readily available in active markets. These temporary cash investments are classified as Level 1 investments.

Corporate Stock—This investment category consists of common and preferred stock issued by domestic and international corporations that are regularly traded on exchanges and price quotes for these shares are readily available. These investments are classified as Level 1 investments.

Common Trust Funds—Common trust funds are composed of shares or units in non-publicly traded funds whereby the underlying assets in these funds (cash, cash equivalents, fixed income securities and equity securities) are publicly traded on exchanges and price quotes for the assets held by these funds are readily available. Holdings of common trust funds are classified as Level 2 investments.

Mutual Funds—Investments in this category include shares in registered mutual funds, unit trust and commingled funds. These funds consist of domestic equity, international equity and fixed income strategies. Investments in this category that are publicly traded on an exchange and have a share price published at the close of each business day are classified as Level 1 investments and holdings in the other mutual funds are classified as Level 2 investments.

Fixed Income Investments—Securities in this category consist of U.S. Government or Agency securities, state and local government securities, corporate fixed income securities or pooled fixed income securities. Securities in this category that are valued utilizing published prices at the close of each business day are classified as Level 1 investments. Those investments valued by bid data prices provided by independent pricing sources are classified as Level 2 investments.

Real Estate—The real estate investment in a commingled trust account consists of publicly traded real estate investment trusts and collateralized mortgage backed securities as well as private market direct property investments. The valuations for the holdings in these investments are not based on readily observable inputs and are classified as Level 3 investments.

Hedge Funds and Private Equity—These investments are not readily tradeable and have valuations that are not based on readily observable data inputs. The fair value of these assets is estimated based on information provided by the fund managers or the general partners. Therefore, these assets are classified as Level 3.

The pension plan assets measured at fair value on a recurring basis were as follows (in thousands):

As of December 31, 2013	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Plan assets
Temporary cash investments	$	—	$	—	$	—	$	—
Common trust funds	—		10,503		—		10,503
Corporate stock	63,313		—		—		63,313
Mutual funds	107,635		164,230		—		271,865
Fixed income investments	6,761		349,904		—		356,665
Real estate	—		—		19,561		19,561
Hedge funds and private equity	—		—		29,339		29,339
Total plan assets	$	177,709	$	524,637	$	48,900	$	751,246

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As of December 31, 2012	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Plan assets
Temporary cash investments	$	—	$	—	$	—	$	—
Common trust funds	—		5,720		—		5,720
Corporate stock	63,396		2,123		—		65,519
Mutual funds	96,008		138,846		—		234,854
Fixed income investments	5,832		326,478		—		332,310
Real estate	—		—		17,181		17,181
Hedge funds and private equity	—		—		26,969		26,969
Total plan assets	$	165,236	$	473,167	$	44,150	$	682,553

ABX’s pension investments include hedge funds, private equity and real estate funds whose fair values have been estimated in the absence of readily determinable fair values. Management’s estimates are based on information provided by the fund managers or general partners of those funds. The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant Level 3 unobservable inputs (in thousands):

	Hedge Funds & Private Equity			Real Estate Investments		Total
January 1, 2012	$	25,759		$	14,557	$	40,316
Unrealized gains	3,612			2,624		6,236
Purchases & settlements	(2,402		)	—		(2,402		)
December 31, 2012	$	26,969		$	17,181	$	44,150
Unrealized gains	3,884			2,380		6,264
Purchases & settlements	(1,514		)	—		(1,514		)
December 31, 2013	$	29,339		$	19,561	$	48,900

Defined Contribution Plans

The Company sponsors defined contribution capital accumulation plans (401k) that are funded by both voluntary employee salary deferrals and by employer contributions. Expenses for defined contribution retirement plans were as follows (in thousands):

	Years Ended December 31
	2013		2012		2011
Capital accumulation plans	$	5,131	$	5,300	$	4,938
Total expense	$	5,131	$	5,300	$	4,938

NOTE I—INCOME TAXES

At December 31, 2013, the Company had cumulative net operating loss carryforwards (“NOL CFs”) for federal income tax purposes of approximately $97.5 million, which begin to expire in 2024 if not utilized before then. The deferred tax asset balance includes $2.0 million net of a $0.2 million valuation allowance related to state NOL CFs, which have remaining lives ranging from one to twenty years. These NOL CFs are attributable to excess tax deductions related primarily to the accelerated tax depreciation of fixed assets.

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The significant components of the deferred income tax assets and liabilities as of December 31, 2013 and 2012 are as follows (in thousands):

	December 31
	2013			2012
Deferred tax assets:
Net operating loss carryforward and federal credits	$	36,624		$	34,401
Capital and operating leases	2,841			1,742
Post-retirement employee benefits	6,470			62,823
Employee benefits other than post-retirement	16,667			18,010
Inventory reserve	3,050			3,181
Deferred revenue	8,903			10,770
Other	1,262			458
Deferred tax assets	75,817			131,385
Deferred tax liabilities:
Accelerated depreciation	(155,769		)	(147,282		)
Partnership items	(9,466		)	(9,418		)
State taxes	(6,265		)	(1,724		)
Valuation allowance against deferred tax assets	(229		)	(229		)
Deferred tax liabilities	(171,729		)	(158,653		)
Net deferred tax (liability)	$	(95,912	)	$	(27,268	)

The following summarizes the Company’s income tax provisions (benefits) (in thousands):

	Years Ended December 31
	2013			2012			2011
Current taxes:
Federal	$	67		$	—		$	(950	)
Foreign	—			337			—
State	425			145			426
Deferred taxes:
Federal	17,902			23,454			15,968
Foreign	—			—			—
State	872			736			1,551
Total deferred tax expense	18,774			24,190			17,519
Total income tax expense from continuing operations	$	19,266		$	24,672		$	16,995
Income tax expense (benefit) from discontinued operations	$	(2	)	$	(441	)	$	(393	)

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The reconciliation of income tax from continuing operations computed at the U.S. statutory federal income tax rates to effective income tax rates is as follows:

	Years Ended December 31
	2013		2012		2011
Statutory federal tax rate	35.0	%	35.0	%	35.0	%
Foreign income taxes	—	%	0.3	%	—	%
State income taxes, net of federal tax benefit	(234.7	)%	0.9	%	3.1	%
Tax effect of non-deductible goodwill	(5,121.2	)%	—	%	2.4	%
Tax effect of other non-deductible expenses	(26.4	)%	1.1	%	1.7	%
Other	(19.3	)%	(0.1	)%	(0.6	)%
Effective income tax rate	(5,366.6	)%	37.2	%	41.6	%

The reconciliation of income tax from discontinued operations computed at the U.S. statutory federal income tax rates to effective income tax rates is as follows:

	Years Ended December 31
	2013		2012		2011
Statutory federal tax rate	(35.0	)%	(35.0	)%	(35.0	)%
State income taxes, net of federal tax benefit	(1.3	)%	(1.3	)%	(1.8	)%
Effective income tax rate	(36.3	)%	(36.3	)%	(36.8	)%

The Company files income tax returns in the U.S. federal jurisdiction and various international, state and local jurisdictions. The returns may be subject to audit by the Internal Revenue Service (“IRS”) and other jurisdictional authorities. International returns consist of disclosure returns where the Company is covered by the sourcing rules of U.S. international treaties. The Company recognizes the impact of an uncertain income tax position in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. At December 31, 2013, 2012 and 2011, the Company's unrecognized tax benefits were $0.0 million, $0.0 million and $0.0 million respectively. Accrued interest and penalties on tax positions are recorded as a component of interest expense. Interest and penalties expense was immaterial for 2013, 2012 and 2011.

The Company began to file, effective in 2008, federal tax returns under a common parent of the consolidated group that includes ABX and all the wholly-owned subsidiaries. All returns related to the current consolidated group remain open to examination with the exception of the 2008. The consolidated federal tax returns prior to 2007 remain open to federal examination only to the extent of net operating loss carryforwards carried over from or utilized in those years. State and local returns filed for 2005 through 2012 are generally also open to examination by their respective jurisdictions.

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NOTE J—DERIVATIVE INSTRUMENTS

The Company's Senior Credit Agreement requires the Company to maintain derivative instruments for protection from fluctuating interest rates, for at least fifty percent of the outstanding balance of term loan. As a result, the Company entered into an interest rate swap in July of 2011 having an initial notional value of $75.0 million and a forward start date of December 31, 2011. Under this swap, the Company pays a fixed rate of 2.02% and receives a floating rate that resets quarterly based on LIBOR. In addition to the interest rate swap above, the Company entered into an interest rate swap in June of 2013 having an initial notional value of $65.6 million and a forward start date of December 31, 2013. Under this swap, the Company will pay a fixed rate of 1.1825% and receive a floating rate that resets monthly based on LIBOR.

The outstanding interest rate swaps are not designated as hedges for accounting purposes. The effects of future fluctuations in LIBOR interest rates on derivatives held by the Company will result in the recording of unrealized gains and losses into the statement of operations. The Company recorded an unrealized gain on derivatives of $0.6 million and $1.9 million for the years ending December 31, 2013 and 2012, respectively, to reflect the interest rate swaps at market value. The Company recorded an unrealized loss on derivatives of $4.9 million for the year ending December 31, 2011, which includes a $3.9 million pre-tax charge in 2011 to recognize the losses previously recorded in accumulated other comprehensive income for certain interest rate swaps which had previously been designated as cash flow hedges. The liability for outstanding derivatives is recorded in other liabilities and in accrued expenses. The table below provides information about the Company’s interest rate swaps (in thousands):

			December 31, 2013			December 31, 2012
Expiration Date	Stated Interest Rate		Notional Amount	Market Value (Liability)		Notional Amount	Market Value (Liability)
May 9, 2016	2.020	%	65,625	(1,988	)	72,188	(3,146	)
June 30, 2017	1.183	%	65,625	(527	)	—	—

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NOTE K—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) includes the following items by components for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	Defined Benefit Pension		Defined Benefit Post-Retirement		Gains and Losses on Derivative		Total
Balance as of January 1, 2011	(54,325	)	10,761		(2,670	)	(46,234	)
Other comprehensive income (loss) before reclassifications:
Actuarial gain (loss) for retiree liabilities	(91,715	)	192		—		(91,523	)
Unrealized gain (loss) for derivative instruments	—		—		631		631
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	2,700		211		—		2,911
Negative prior service cost (reclassified to salaries, wages and benefits)	—		(5,552	)	—		(5,552	)
Hedging gain (reclassified to interest expense)	—		—		(223	)	(223	)
Unrealized loss on derivative instruments (reclassified to net gain (loss) on derivative instruments)	—		—		3,932		3,932
Income Tax (Expense) or Benefit	32,714		1,892		(1,595	)	33,011
Other comprehensive income (loss), net of tax	(56,301	)	(3,257	)	2,745		(56,813	)
Balance as of December 31, 2011	(110,626	)	7,504		75		(103,047	)
Other comprehensive income (loss) before reclassifications:
Actuarial gain (loss) for retiree liabilities	(27,518	)	168		—		(27,350	)
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	10,681		433		—		11,114
Negative prior service cost (reclassified to salaries, wages and benefits)	—		(5,552	)	—		(5,552	)
Hedging gain (reclassified to interest expense)	—		—		(57	)	(57	)
Income Tax (Expense) or Benefit	5,861		1,724		20		7,605
Other comprehensive income (loss), net of tax	(10,976	)	(3,227	)	(37	)	(14,240	)
Balance as of December 31, 2012	(121,602	)	4,277		38		(117,287	)
Other comprehensive income (loss) before reclassifications:
Actuarial gain for retiree liabilities	129,856		474		—		130,330
Amounts reclassified from accumulated other comprehensive income
Actuarial costs (reclassified to salaries, wages and benefits)	12,296		419		—		12,715
Negative prior service cost (reclassified to salaries, wages and benefits)	—		(5,654	)	—		(5,654	)
Hedging gain (reclassified to interest expense)	—		—		(50	)	(50	)
Income Tax (Expense) or Benefit	(51,622	)	1,729		21		(49,872	)
Other comprehensive income (loss), net of tax	90,530		(3,032	)	(29	)	87,469
Balance as of December 31, 2013	(31,072	)	1,245		9		(29,818	)

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NOTE L—STOCK-BASED COMPENSATION

The Company's Board of Directors has granted stock incentive awards to certain employees and board members pursuant to a long term incentive plan which was approved by the Company's stockholders in May 2005. Employees have been awarded non-vested stock units with performance conditions, non-vested stock units with market conditions and non-vested restricted stock. The restrictions on the non-vested restricted stock awards lapse at the end of a specified service period, which is typically approximately three years from the date of grant. Restrictions could lapse sooner upon a business combination, death, disability or after an employee qualifies for retirement. The non-vested stock units will be converted into a number of shares of Company stock depending on performance and market conditions at the end of a specified service period, lasting approximately three years. The performance condition awards will be converted into a number of shares of Company stock based on the Company's average return on invested capital during the service period. Similarly, the market condition awards will be converted into a number of shares depending on the appreciation of the Company's stock compared to the NASDAQ Transportation Index. Board members were granted time-based awards with approximately a six-month vesting period, which will settle when the board member ceases to be a director of the Company. The Company expects to settle all of the stock unit awards by issuing new shares of stock. The table below summarizes award activity.

	Year Ended December 31
	2013				2012				2011
	Number of Awards		Weighted average grant-date fair value		Number of Awards		Weighted average grant-date fair value		Number of Awards		Weighted average grant-date fair value
Outstanding at beginning of period	1,463,272		$	5.97	1,458,037		$	5.77	1,514,300		$	3.55
Granted	627,488		5.73		601,647		5.93		555,237		8.72
Converted	(526,848	)	5.72		(472,112	)	5.25		(443,300	)	2.45
Expired	(68,950	)	8.25		—		—		—		—
Forfeited	(17,200	)	7.07		(124,300	)	6.24		(168,200	)	4.22
Outstanding at end of period	1,477,762		$	5.83	1,463,272		$	5.97	1,458,037		$	5.77
Vested	506,644		$	4.47	736,541		$	4.90	390,037		$	4.45

The average grant-date fair value of each performance condition award, non-vested restricted stock award and time-based award granted by the Company was $5.46, $5.63 and $8.25 for 2013, 2012 and 2011, respectively, the fair value of the Company’s stock on the date of grant. The average grant-date fair value of each market condition award granted was $6.78, $7.05 and $11.17 for 2013, 2012 and 2011, respectively. The market condition awards were valued using a Monte Carlo simulation technique based on volatility over three years for the awards granted in 2013, 2012 and 2011 using daily stock prices and using the following variables:

	2013	2012	2011
Risk-free interest rate	0.4%	0.4%	1.3%
Volatility	61.0%	90.1%	1.3%

For the years ended December 31, 2013, 2012 and 2011, the Company recorded expense of $2.7 million, $3.2 million and $2.9 million, respectively, for stock incentive awards. At December 31, 2013, there was $2.8 million of unrecognized expense related to the stock incentive awards that is expected to be recognized over a weighted-average period of 1.6 years. As of December 31, 2013, none of the awards were convertible, 441,812 units of the Board members time-based awards had vested and none of the outstanding shares of the restricted stock had vested. These awards could result in a maximum number of 1,754,787 additional outstanding shares of the Company’s common stock depending on service, performance and market results through December 31, 2015.

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NOTE M—EARNINGS PER SHARE

The calculation of basic and diluted earnings per common share follows (in thousands, except per share amounts):

	December 31
	2013			2012		2011
Earnings (loss) from continuing operations	$	(19,625	)	$	41,648	$	23,865
Weighted-average shares outstanding for basic earnings per share	63,992			63,461		63,284
Common equivalent shares:
Effect of stock-based compensation awards	—			959		801
Weighted-average shares outstanding assuming dilution	63,992			64,420		64,085
Basic earnings (loss) per share from continuing operations	$	(0.31	)	$	0.66	$	0.38
Diluted earnings (loss) per share from continuing operations	$	(0.31	)	$	0.65	$	0.37

Basic weighted average shares outstanding for purposes of basic earnings per share are less than the shares outstanding due to 481,900 shares, 370,400 shares and 584,700 shares of restricted stock for 2013, 2012 and 2011, respectively, which are accounted for as part of diluted weighted average shares outstanding in diluted earnings per share. The number of equivalent shares that were not included in weighted average shares outstanding assuming dilution, because their effect would have been anti-dilutive, was none, 229,000 and 176,000 at December 31, 2013, 2012 and 2011, respectively.

NOTE N—SEGMENT INFORMATION

The Company operates in two reportable segments. The CAM segment consists of the Company's aircraft leasing operations and its segment earnings includes an allocation of interest expense. The ACMI Services segment consists of the Company's airline operations, including the CMI agreement with DHL as well as ACMI and charter service agreements that the Company has with other customers. Due to the similarities among the Company's airline operations, the airline operations are aggregated into a single reportable segment, ACMI Services. The Company's other activities, which include contracts with the USPS, the sale of aircraft parts and maintenance services, facility and ground equipment maintenance services and management services for workers' compensation do not constitute reportable segments and are combined in “All other” with inter-segment profit eliminations. Inter-segment revenues are valued at arms-length, market rates. Cash, cash equivalents and deferred tax assets are reflected in Assets - All other below. The Company's segment information from continuing operations is presented below (in thousands):

69

	Year Ended December 31
	2013			2012			2011
Total revenues:
CAM	$	160,342		$	154,565		$	140,469
ACMI Services	444,504			478,993			604,951
All other	117,292			112,343			105,284
Eliminate inter-segment revenues	(142,115		)	(138,463		)	(120,571		)
Total	$	580,023		$	607,438		$	730,133
Customer revenues:
CAM	$	71,604		$	74,599		$	67,791
ACMI Services	444,504			477,722			604,951
All other	63,915			55,117			57,391
Total	$	580,023		$	607,438		$	730,133
Depreciation and amortization expense:
CAM	$	64,096		$	59,351		$	54,897
ACMI Services	27,546			24,599			36,136
All other	107			527			30
Total	$	91,749		$	84,477		$	91,063
Impairment Charges
CAM - aircraft impairment	—			—			6,761
ACMI Services - aircraft impairment	—			—			15,304
ACMI Services - customer relationship impairment	—			—			2,282
ACMI Services - goodwill impairment	52,585			—			2,797
Total	$	52,585		$	—		$	27,144
Segment earnings (loss):
CAM	$	66,208		$	68,499		$	53,221
ACMI Services	(78,186		)	(14,503		)	(13,807		)
All other	12,200			11,650			11,331
Net unallocated interest expense	(1,212		)	(1,205		)	(2,118		)
Net gain (loss) on derivative instruments	631			1,879			(4,881		)
Write-off of unamortized debt issuance costs	—			—			(2,886		)
Pre-tax earnings from continuing operations	$	(359	)	$	66,320		$	40,860

The Company's assets are presented below by segment (in thousands):

	December 31,		December 31,		December 31,
	2013		2012		2011
Assets:
CAM	$	808,987	$	810,664	$	760,588
ACMI Services	141,664		161,650		137,640
Discontinued operations	294		—		—
All other	82,194		63,297		95,491
Total	$	1,033,139	$	1,035,611	$	993,719

70

Interest expense of $0.6 million, $0.9 million and $1.2 million for 2013, 2012 and 2011, respectively, was reimbursed through the commercial agreements with DHL and included in the ACMI Services segment earnings above. Interest expense allocated to CAM was $12.4 million, $12.2 million and $10.7 million for the years ending December 31, 2013, 2012 and 2011, respectively.

During 2013, the Company had capital expenditures of $30.9 million and $74.1 million for the ACMI Services and CAM segments, respectively. The ACMI Services segment reflects a goodwill impairment charge of $52.6 million recorded in the fourth quarter of 2013. Additionally, the ACMI Services segment reflects impairment charges of $2.8 million on the goodwill, $2.3 million on its acquired intangibles and $15.3 million on its aircraft which were recorded in the third quarter of 2011. The CAM segment reflects an impairment charge of $6.8 million on its aircraft recorded in the third quarter of 2011.

Entity-Wide Disclosures

The Company's international revenues were approximately $235.1 million, $314.2 million and $291.3 million for 2013, 2012 and 2011, respectively, derived primarily from international flights departing from or arriving in foreign countries. All revenues from the CMI agreement with DHL are attributed to U.S. operations.

The Company's external customers revenues from other activities for the years ended December 31, 2013, 2012 and 2011 are presented below (in thousands):

	December 31,
	2013		2012		2011
Aircraft maintenance and part sales	$	23,175	$	21,669	$	25,845
Mail handling services	30,117		23,671		21,613
Facility and ground equipment maintenance	10,030		8,304		8,465
Other	593		1,473		1,468
Total customer revenues	$	63,915	$	55,117	$	57,391

NOTE O—DISCONTINUED OPERATIONS

The Company's results of discontinued operations consist primarily of pension expenses and other benefits for former employees previously associated with ABX's former freight sorting and aircraft fueling services provided to DHL. Pursuant to its restructuring plan, DHL discontinued intra-U.S. domestic pickup and delivery services and now provides only international services to and from the U.S. In the third quarter of 2009, ABX ceased any remaining sort operations for DHL and the related hub service agreement with DHL expired. Additionally, in the third quarter of 2009, DHL assumed management of aircraft fuel services for its U.S. network previously provided by ABX. The revenues and results of the DHL hub services operations and the aircraft fuel services are reported as discontinued operations.

ABX sponsors defined benefit plans for retirees that include the former employees of the hub operations. Additionally, ABX is self insured for medical coverage and workers' compensation. The Company may incur expenses and cash outlays in the future related to pension obligations, reserves for medical expenses and wage loss for former employees. Carrying amounts of significant assets and liabilities of the discontinued operations are below (in thousands):

	December 31
	2013		2012
Assets
Pension assets, net of obligations	294		—
Total Assets	294		—
Liabilities
Employee compensation and benefits	$	34,007	$	35,703
Post-retirement	—		36,887
Total Liabilities	$	34,007	$	72,590

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The revenues and pre-tax earnings of the discontinued operations are below (in thousands):

	December 31
	2013			2012			2011
Pre-tax loss	$	(5	)	$	(1,215	)	$	(1,066	)

NOTE P—QUARTERLY RESULTS (Unaudited)

The following is a summary of quarterly results of operations (in thousands, except per share amounts):

	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
2013
Revenues from continuing operations	$	143,279		$	138,904		$	140,877		$	156,963
Net earnings (loss) from continuing operations	8,501			6,915			7,799			(42,840		)
Net loss from discontinued operations	(1		)	(1		)	—			(1		)
Weighted average shares:
Basic	63,810			64,050			64,052			64,054
Diluted	64,524			64,859			65,036			64,054
Earnings (loss) per share from continuing operations
Basic	$	0.13		$	0.11		$	0.12		$	(0.67	)
Diluted	$	0.13		$	0.11		$	0.12		$	(0.67	)
2012
Revenues from continuing operations	$	145,506		$	153,554		$	153,826		$	154,552
Net earnings from continuing operations	6,662			11,219			11,556			12,211
Net loss from discontinued operations	(230		)	(160		)	(186		)	(198		)
Weighted average shares:
Basic	63,431			63,431			63,456			63,525
Diluted	64,374			64,393			64,667			64,244
Earnings per share from continuing operations
Basic	$	0.11		$	0.18		$	0.18		$	0.19
Diluted	$	0.10		$	0.17		$	0.18		$	0.19

72

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

As of December 31, 2013, the Company carried out an evaluation, under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based upon the evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported within time periods specified in the Securities and Exchange Commission rules and forms and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls

There were no changes in internal control over financial reporting during the most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Management’s Annual Report on Internal Controls over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (1992).

Based on management’s assessment of those criteria, management believes that, as of December 31, 2013, the Company’s internal control over financial reporting was effective.

March 10, 2014

73

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Air Transport Services Group, Inc.

Wilmington, Ohio

We have audited the internal control over financial reporting of Air Transportation Service Group, Inc. and subsidiaries (the "Company") as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework(1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2013 of the Company and our report dated March 10, 2014 expressed an unqualified opinion on those financial statements and financial statement schedule and included an explanatory paragraph regarding the Company’s two principal customers.

/s/ DELOITTE & TOUCHE LLP

Dayton, Ohio

March 10, 2014

74

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The response to this Item is incorporated herein by reference to the definitive Proxy Statement for the 2014 Annual Meeting of Stockholders under the captions “Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Corporate Governance and Board Matters.”

Executive Officers

The following table sets forth information about the Company’s executive officers. The executive officers serve at the pleasure of the Company’s Board of Directors.

Name	Age	Information
Joseph C. Hete	59	President and Chief Executive Officer, Air Transport Services Group, Inc., since December 2007 and Chief Executive Officer, ABX Air, Inc., since August 2003. Mr. Hete was President of ABX Air, Inc. from January 2000 to February 2008. Mr. Hete was Chief Operating Officer of ABX Air, Inc. from January 2000 to August 2003. From 1997 until January 2000, Mr. Hete held the position of Senior Vice President and Chief Operating Officer of ABX Air, Inc. Mr. Hete served as Senior Vice President, Administration of ABX Air, Inc. from 1991 to 1997 and Vice President, Administration of ABX Air, Inc. from 1986 to 1991. Mr. Hete joined ABX Air, Inc. in 1980.
Quint O. Turner	51	Chief Financial Officer, Air Transport Services Group, Inc., since February 2008 and Chief Financial Officer, ABX Air, Inc. since December 2004. Mr. Turner was Vice President of Administration of ABX Air, Inc. from February 2002 to December 2004. Mr. Turner was Corporate Director of Financial Planning and Accounting of ABX Air, Inc. from 1997 to 2002. Prior to 1997, Mr. Turner held positions of Manager of Planning and Director of Financial Planning of ABX Air, Inc. Mr. Turner joined ABX Air, Inc. in 1988.
Richard F. Corrado	54	Chief Commercial Officer, Air Transport Services Group, Inc., and President of Cargo Aircraft Management, Inc. since April 2010. President of Airborne Global Solutions, Inc. since July 2010.
		Before joining ATSG, Mr. Corrado was President of Transform Consulting Group from July 2006 through March 2010 and Chief Operating Officer of AFMS Logistics Management from February 2008 through March 2010. He was Executive Vice President of Air Services and Business Development for DHL Express from September 2003 through June of 2006; and Senior Vice President of Marketing for Airborne Express from August 2000 through August 2003.
W. Joseph Payne	50	Senior Vice President, Corporate General Counsel and Secretary, Air Transport Services Group, Inc., since February 2008 and Vice President, General Counsel and Secretary ABX Air, Inc. since January 2004. Mr. Payne was Corporate Secretary/Counsel of ABX Air, Inc. from January 1999 to January 2004, and Assistant Corporate Secretary from July 1996 to January 1999. Mr. Payne joined ABX Air, Inc. in April 1995.

75

The executive officers of the Company are appointed annually at the Board of Directors meeting held in conjunction with the annual meeting of stockholders. There are no family relationships between any directors or executive officers of the Company.

ITEM 11. EXECUTIVE COMPENSATION

The response to this Item is incorporated herein by reference to the definitive Proxy Statement for the 2014 Annual Meeting of Stockholders under the captions “Executive Compensation” and “Director Compensation.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The responses to this Item are incorporated herein by reference to the definitive Proxy Statement for the 2014 Annual Meeting of Stockholders under the captions “Equity Compensation Plan Information,” “Voting at the Meeting,” “Stock Ownership of Management” and “Common Stock Ownership of Certain Beneficial Owners.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The response to this Item is incorporated herein by reference to the definitive Proxy Statement for the 2014 Annual Meeting of Stockholders under the captions “Related Person Transactions” and “Independence.”

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The response to this Item is incorporated herein by reference to the definitive Proxy Statement for the 2014 Annual Meeting of Stockholders under the caption “Fees of the Independent Registered Public Accounting Firm.”

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) List of Documents filed as part of this report:

(1) Consolidated Financial Statements

The following are filed in Part II, item 8 of this Form 10-K Annual Report:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Cash Flows

Consolidated Statements of Stockholders’ Equity

Notes to Consolidated Financial Statements

(2) Financial Statement Schedules

76

Schedule II—Valuation and Qualifying Account

Description	Balance at beginning of period		Additions charged to cost and expenses		Deductions		Balance at end of period
Accounts receivable reserve:
Year ended:
December 31, 2013	$	748,929	$	193,046	$	225,062	$	716,913
December 31, 2012	433,671		347,686		32,428		748,929
December 31, 2011	1,090,042		316,873		973,244		433,671

All other schedules are omitted because they are not applicable or are not required, or because the required information is included in the consolidated financial statements or notes thereto.

(3) Exhibits

The following exhibits are filed with or incorporated by reference into this report.

Exhibit No.	Description of Exhibit
	Articles of Incorporation
3.1	Certificate of Incorporation of Air Transport Services Group, Inc. (formerly known as ABX Holdings, Inc.). (6)
3.2	Bylaws of Air Transport Services Group, Inc. (formerly known as ABX Holdings, Inc.). (6)
3.3	Amended and Restated Certificate of Incorporation of Air Transport Services Group, Inc. reflecting corrections and amendments through May 17, 2013. [This document represents the Amended and Restated Certificate of Incorporation of Air Transport Services Group, Inc. in compiled form, incorporating all corrections and amendments. This compiled document has not been filed with the Delaware Secretary of State.] (20)
3.4	Amended and Restated Bylaws of Air Transport Services Group, Inc., reflecting amendments through May 10, 2013. (20)
3.5	Amended and Restated Certificate of Incorporation of Air Transport Services Group, Inc. reflecting corrections and amendments through August 16, 2013. [This document represents the Amended and Restated Certificate of Incorporation of Air Transport Services Group, Inc. in compiled form, incorporating all corrections and amendments. This compiled document has not been filed with the Delaware Secretary of State.] (21)

	Material Contracts
10.1	Director compensation fee summary. (10)
10.2	Aircraft Loan and Security Agreement and related promissory note, dated August 24, 2006, by and among ABX Air, Inc. and Chase Equipment Leasing, Inc. (2)
10.3	Aircraft Loan and Security Agreement and related promissory note, dated October 10, 2006, by and among ABX Air, Inc. and Chase Equipment Leasing, Inc. (3)
10.4	Aircraft Loan and Security Agreement and related promissory note, dated February 16, 2007, by and among ABX Air, Inc. and Chase Equipment Leasing, Inc. (4)
10.5	Aircraft Loan and Security Agreement and related promissory note, dated April 25, 2007, by and among ABX Air, Inc. and Chase Equipment Leasing, Inc. (5)

77

10.6	Aircraft Loan and Security Agreement and related promissory note, dated October 26, 2007, by and among ABX Air, Inc. and Chase Equipment Leasing, Inc. (8)
10.7	Aircraft Loan and Security Agreement and related promissory note, dated December 19, 2007, by and among ABX Air, Inc. and Chase Equipment Leasing, Inc. (8)

10.8	Amended and Restated First Non-Negotiable Promissory Note between ABX Air, Inc., as maker, and DHL Express (USA), Inc., as holder, dated May 8, 2009. (7)
10.9	Guaranty by Air Transport Services Group, Inc. in favor of DHL Express (USA), Inc., dated May 8, 2009. (7)
10.10	Lease Assumption and Option Agreement between DHL Network Operations (USA), Inc. and ABX Air, Inc., dated May 29, 2009. (7)
10.11	Air Transportation Services Agreement between DHL Network Operations (USA), Inc. and ABX Air, Inc, dated March 29, 2010. (10)
10.12	Mutual Termination Agreement and Release, made among DPWN Holdings (USA), Inc., DHL Network Operations (USA), Inc., DHL Express (USA), Inc., Air Transport Services Group, Inc., and ABX Air, Inc., dated March 29, 2010. (10)
10.13	Second Amendment to Lease Assumption and Option Agreement and Exercise of Lease Option, between DHL Network Operations (USA), Inc. and ABX Air, Inc., dated March 29, 2010. (10)
10.14	Form of Time-Based Restricted Stock Award Agreement under Air Transport Services Group, Inc. 2005 Amended and Restated Long-Term Incentive Plan. (11)
10.15	Form of Performance-Based Stock Unit Award Agreement under Air Transport Services Group, Inc. 2005 Amended and Restated Long-Term Incentive Plan. (11)
10.16	Form of Restricted Stock Unit Award Agreement under Air Transport Services Group, Inc. 2005 Amended and Restated Long-Term Incentive Plan. (11)
10.17	Conversion Agreement dated August 3, 2010, between Cargo Aircraft Management, Inc., M&B Conversions Limited and Israel Aerospace Industries Ltd. (12)
10.18	Letter Agreement, dated October 15, 2010, between Precision Conversions, LLC and Cargo Aircraft Management, Inc. (13)
10.19	Credit Agreement, dated as of May 9, 2011, among Cargo Aircraft Management, Inc., as Borrower, Air Transport Services Group, Inc., the Lenders from time to time party thereto, SunTrust Bank, as Administrative Agent, Regions Bank and JPMorgan Chase Bank, N.A., as Syndication Agents, and Bank of America, N.A., as Documentation Agent. (14)
10.20	Guarantee and Collateral Agreement, dated as of May 9, 2011, made by Cargo Aircraft Management, Inc. and certain of its Affiliates in favor of SunTrust Bank, as Administrative Agent. (14)
10.21	Amendment to Confidentiality and Standstill Agreement, dated as of June 11, 2012, between Air Transport Services Group, Inc. and Red Mountain Capital Partners LLC. (15)
10.22	Form of amended and restated change-in-control agreement in effect between Air Transport Services Group, Inc. and its executive officers. (17)
10.23	Amendment to the Credit Agreement, dated July 20, 2012, among Cargo Aircraft Management, Inc., as Borrower, Air Transport Services Group, Inc., the Lenders from time to time party thereto, SunTrust Bank, as Administrative Agent, Regions Bank and JPMorgan Chase Bank, N.A., as Syndication Agents, and Bank of America, N.A., as Documentation Agent. (16)

78

10.24	Purchase and sale agreement, dated December 17, 2012, between Cargo Aircraft Management, Inc., and National Air Cargo Group, Inc. for the purchase of three Boeing 757-200 aircraft. Those portions of the Agreement marked with an [*] have been omitted pursuant to a request for confidential treatment and have been filed separately with the SEC. (18)
10.25	Amended and Restated Lease Agreement, dated December 27, 2012, between Clinton County Port Authority and Air Transport Services Group, Inc. (18)
10.26	Loan Agreement, Chapter 166, Ohio Revised Code, dated December 1, 2012, between the Director of Development Services Agency of Ohio and Clinton County Port Authority. (18)
10.27	Guaranty Agreement, dated December 1, 2012, among Air Transport Services Group, Inc., Airborne Maintenance and Engineering Services, Inc., Air Transport International, LLC, Clinton County Port Authority, the Directory of Development Services Agency of Ohio, and the Huntington National Bank. (18)
10.28	Lease Agreement for the Jump Hangar Facility, dated December 1, 2012, between Clinton County Port Authority and Air Transport International, LLC. (18)
10.29	Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and Financing Statement, dated December 1, 2012, among Air Transport International, LLC and the Director of Development Services Agency of Ohio. (18)
10.30	Bond Purchase Agreement, dated December 13, 2012, among the State of Ohio, acting by and through its Treasurer of State, the Development Services Agency of Ohio, acting by and through a duly authorized representative, Clinton County Port Authority, Air Transport International, LLC and Stifel, Niolaus & Company, Inc. (18)
10.31	Air Transport Services Group, Inc. Executive Incentive Compensation Plan, last modified March 18, 2013. (19)
10.32	Air Transport Services Group, Inc. Nonqualified Deferred Compensation Plan, dated October 31, 2013. (21)
10.33	Second Amendment to the Credit Agreement, dated October 22, 2013, among Cargo Aircraft Management, Inc., as Borrower, Air Transport Services Group, Inc., the Lenders from time to time party thereto, SunTrust Bank, as Administrative Agent, Regions Bank and JPMorgan Chase Bank, N.A., as Syndication Agents, and Bank of America, N.A., as Documentation Agents. (21)

	Code of Ethics
14.1	Code of Ethics—CEO and CFO. (1)
	List of Significant Subsidiaries
21.1	List of Significant Subsidiaries of Air Transport Services Group, Inc., filed within.
	Consent of experts and counsel
23.1	Consent of independent registered public accounting firm, filed herewith.
	Certifications
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

79

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

____________________

(1) The Company's Code of Ethics can be accessed from the Company's Internet website at www.atsginc.com.

(2) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 9, 2006.

(3) Incorporated by reference to the Company’s Annual Report of Form 10-K/A filed on August 14, 2007 with the Securities and Exchange Commission.

(4) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q/A, filed with the Securities and Exchange Commission on August 14, 2007.

(5) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 14, 2007.

(6) Incorporated by reference to the Form 8-A/A of ABX Holdings, Inc. filed with the Securities and Exchange on January 2, 2008.

(7) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 10, 2009.

(8) Incorporated by reference to the Company’s Annual Report of Form 10-K filed on March 17, 2008 with the Securities and Exchange Commission.

(9) Incorporated by reference to the Company's Proxy Statement for the 2013 Annual Meeting of Stockholders, Corporate Governance and Board Matters, filed March 28, 2013 with the Securities and Exchange Commission.

(10) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2010. Those portions of the Agreement marked with an [*] have been omitted pursuant to a request for confidential treatment and have been filed separately with the SEC.

(11) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2010.

(12) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 3, 2010. Those portions of the Agreement marked with an [*] have been omitted pursuant to a request for confidential treatment and have been filed separately with the SEC.

(13) Incorporated by reference to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 8, 2011. Those portions of the Agreement marked with an [*] have been omitted pursuant to a request for confidential treatment and have been filed separately with the SEC.

(14) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 3, 2011.

(15) Incorporated by reference to the Company's Form 8-K filed with the Securities and Exchange Commission on June 18, 2012.

(16) Incorporated by reference to the Company's Form 8-K filed with the Securities and Exchange Commission on July 24, 2012.

(17) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 2, 2012.

(18) Incorporated by reference to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 4, 2013. Those portions of the Agreement marked with an [*] have been omitted pursuant to a request for confidential treatment and have been filed separately with the SEC.

(19) Incorporated by reference to the Company's Form 8-K filed with the Securities and Exchange Commission on March 18, 2013.

(20) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 8, 2013.

80

(21) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 6, 2013.

81

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Air Transport Services Group, Inc.

Signature	Title	Date
/S/    JOSEPH C. HETE	President and Chief Executive Officer (Principal Executive Officer)	March 10, 2014
Joseph C. Hete

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the date indicated:

Signature	Title	Date
/S/    JAMES H. CAREY	Director and Chairman of the Board	March 10, 2014
James H. Carey
/S/    RICHARD M. BAUDOUIN	Director	March 10, 2014
Richard M. Baudouin
/S/    JOHN D. GEARY	Director	March 10, 2014
John D. Geary
/S/    JOSEPH C. HETE	Director, President and Chief Executive Officer (Principal Executive Officer)	March 10, 2014
Joseph C. Hete
/S/    ARTHUR J. LICHTE	Director	March 10, 2014
Arthur J. Lichte
/S/    RANDY D. RADEMACHER	Director	March 10, 2014
Randy D. Rademacher
/S/    J. CHRISTOPHER TEETS	Director	March 10, 2014
J. Christopher Teets
/S/    JEFFREY J. VORHOLT	Director	March 10, 2014
Jeffrey J. Vorholt
/S/    QUINT O. TURNER	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	March 10, 2014
Quint O. Turner

82

EX-21.1

Exhibit 21.1

Air Transport Services Group, Inc.

List of Significant Subsidiaries

December 31, 2013

1. ABX Air, Inc., a Delaware Corporation

2. Airborne Global Solutions, Inc., a Delaware Corporation

3. Airborne Maintenance and Engineering Services, Inc., a Delaware Corporation

4. Air Transport International, Inc., a Delaware Corporation

5. Air Transport International Limited Liability Company, a Nevada Limited Liability Company

6. AMES Material Services, Inc., an Ohio Corporation

7. Capital Cargo International Airlines, Inc., a Florida Corporation

8. Cargo Aircraft Management, Inc., a Florida Corporation

9. Cargo Holdings International, Inc., a Florida Corporation

10. LGSTX Services, Inc., a Delaware Corporation

11. LGSTX Distribution Services, Inc., an Ohio Corporation

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Post-Effective Amendment No. 1 to Registration Statement No. 333-125679 on Form S-8 and Registration Statement No. 333-167253 on Form S-8 of our reports dated March 10, 2014, relating to the consolidated financial statements and financial statement schedule of Air Transport Services Group, Inc. and subsidiaries (the “Company”) (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the Company's two principal customers), and the effectiveness of the Company's internal control over financial reporting, appearing in the Annual Report on Form 10-K of the Company for the year ended December 31, 2013.

/s/ DELOITTE & TOUCHE LLP

Dayton, Ohio

March 10, 2014

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph C. Hete, certify that:

1. I have reviewed this report on Form 10-K of Air Transport Services Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 10, 2014

/s/ JOSEPH C. HETE

Joseph C. Hete

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Quint O. Turner, certify that:

1. I have reviewed this report on Form 10-K of Air Transport Services Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 10, 2014

/s/ QUINT O. TURNER

Quint O. Turner

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Air Transport Services Group, Inc. (the “Company”) on Form 10-K for the year ending December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph C. Hete, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as enacted by § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Air Transport Services Group, Inc. and will be retained by Air Transport Services Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

/S/ JOSEPH C. HETE

Joseph C. Hete

Chief Executive Officer

Date: March 10, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Air Transport Services Group, Inc. (the “Company”) on Form 10-K for the year ending December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Quint O. Turner, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as enacted by § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Air Transport Services Group, Inc. and will be retained by Air Transport Services Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ QUINT O. TURNER

Quint O. Turner

Chief Financial Officer

Date: March 10, 2014

XML

Quarterly Results (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2013

Selected Quarterly Financial Information [Abstract]

Schedule of Quarterly Financial Information

The following is a summary of quarterly results of operations (in thousands, except per share amounts):

	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
2013
Revenues from continuing operations	$	143,279		$	138,904		$	140,877		$	156,963
Net earnings (loss) from continuing operations	8,501			6,915			7,799			(42,840		)
Net loss from discontinued operations	(1		)	(1		)	—			(1		)
Weighted average shares:
Basic	63,810			64,050			64,052			64,054
Diluted	64,524			64,859			65,036			64,054
Earnings (loss) per share from continuing operations
Basic	$	0.13		$	0.11		$	0.12		$	(0.67	)
Diluted	$	0.13		$	0.11		$	0.12		$	(0.67	)
2012
Revenues from continuing operations	$	145,506		$	153,554		$	153,826		$	154,552
Net earnings from continuing operations	6,662			11,219			11,556			12,211
Net loss from discontinued operations	(230		)	(160		)	(186		)	(198		)
Weighted average shares:
Basic	63,431			63,431			63,456			63,525
Diluted	64,374			64,393			64,667			64,244
Earnings per share from continuing operations
Basic	$	0.11		$	0.18		$	0.18		$	0.19
Diluted	$	0.10		$	0.17		$	0.18		$	0.19

XML

Pension and Other Post-Retirement Benefit Plans (Net Periodic Benefit Costs) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Pension Plans [Member]
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost	$ 0	$ 0	$ 0
Interest cost	35,957	37,089	37,163
Expected return on plan assets	(45,990)	(39,882)	(39,027)
Amortization of prior service cost	0	0	0
Amortization of net (gain) loss	12,296	10,681	2,700
Net periodic benefit cost	2,263	7,888	836
Post-Retirement Healthcare Plans [Member]
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost	275	269	247
Interest cost	264	379	389
Expected return on plan assets	0	0	0
Amortization of prior service cost	419	433	529
Amortization of net (gain) loss	(5,654)	(5,552)	(5,552)
Net periodic benefit cost	$ (4,696)	$ (4,471)	$ (4,387)

XML

Debt Obligations (Schedule of Long Term Debt Maturities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Long-term Debt, Fiscal Year Maturity [Abstract]
2013	$ 23,721
2014	24,344
2015	33,865
2016	291,195
2017	3,640
2018 and beyond	7,750
Total long term obligations	$ 384,515	$ 364,481

XML

Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Pension Plans [Member]	Dec. 31, 2012 Pension Plans [Member]	Dec. 31, 2011 Pension Plans [Member]	Dec. 31, 2013 Post-Retirement Plans [Member]	Dec. 31, 2012 Post-Retirement Plans [Member]	Dec. 31, 2011 Post-Retirement Plans [Member]	Dec. 31, 2013 Derivative [Member]	Dec. 31, 2012 Derivative [Member]	Dec. 31, 2011 Derivative [Member]	Dec. 31, 2010 Derivative [Member]
Schedule of Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income (loss), beginning balance	$ (117,287)	$ (103,047)	$ (46,234)	$ (121,602)	$ (110,626)	$ (54,325)	$ 4,277	$ 7,504	$ 10,761	$ 9	$ 38	$ 75	$ (2,670)
Other comprehensive income (loss) before reclassifications:
Actuarial gain (loss) for retiree liabilities	130,330	(27,350)	(91,523)	129,856	(27,518)	(91,715)	474	168	192
Unrealized gain (loss) for derivative instruments			631
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	12,715	11,114	2,911	12,296	10,681	2,700	419	433	211
Negative prior service cost (reclassified to salaries, wages and benefits)	(5,654)	(5,552)	(5,552)				(5,654)	(5,552)	(5,552)
Hedging gain (reclassified to interest expense)	(50)	(57)	(223)
Unrealized loss on derivative instruments			3,932
Income Tax (Expense) or Benefit				(51,622)	5,861	32,714	1,729	1,724	1,892
Income Tax (Expense) or Benefit	21	20	(1,595)
Income Tax (Expense) or Benefit	(49,872)	7,605	33,011
Other comprehensive income (loss), net of tax				90,530	(10,976)	(56,301)	(3,032)	(3,227)	(3,257)
Other comprehensive income (loss), net of tax	(29)	(37)	2,745
Other comprehensive income (loss), net of tax	87,469	(14,240)	(56,813)
Accumulated other comprehensive income (loss), ending balance	$ (29,818)	$ (117,287)	$ (103,047)	$ (31,072)	$ (121,602)	$ (110,626)	$ 1,245	$ 4,277	$ 7,504	$ 9	$ 38	$ 75	$ (2,670)

XML

Pension and Other Post-Retirement Benefit Plans (Unrecognized Net Periodic Benefit Expense) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Unrecognized prior service cost	$ 0	$ 0
Unrecognized net actuarial loss	40,190	182,342
Accumulated other comprehensive (income) loss	40,190	182,342
Post-Retirement Healthcare Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Unrecognized prior service cost	(4,182)	(9,836)
Unrecognized net actuarial loss	2,027	2,920
Accumulated other comprehensive (income) loss	$ (2,155)	$ (6,916)

XML

Property and Equipment (Narrative) (Details) (USD $)	12 Months Ended											3 Months Ended			12 Months Ended	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Aircraft and flight equipment [Member]	Dec. 31, 2012 Aircraft and flight equipment [Member]	Dec. 31, 2011 Aircraft and flight equipment [Member]	Dec. 31, 2013 CAM [Member]	Dec. 31, 2012 CAM [Member]	Dec. 31, 2011 CAM [Member]	Dec. 31, 2013 CAM [Member] Aircraft and flight equipment [Member]	Dec. 31, 2012 CAM [Member] Aircraft and flight equipment [Member]	Sep. 30, 2011 Boeing 727 and DC-8 aircraft and flight equipment [Member] Aircraft and flight equipment [Member]	Dec. 31, 2013 Boeing 727 and DC-8 aircraft and flight equipment [Member] Aircraft and flight equipment [Member]	Dec. 31, 2012 Boeing 727 and DC-8 aircraft and flight equipment [Member] Aircraft and flight equipment [Member]	Dec. 31, 2011 Boeing 727 and DC-8 aircraft and flight equipment [Member] CAM [Member] Aircraft and flight equipment [Member]	Dec. 31, 2011 BAX/Schenker [Member]
Property, Plant and Equipment [Line Items]
Leased aircraft, carrying value										$ 250,900,000	$ 273,400,000
Operating Leases, Future Minimum Payments Receivable [Abstract]
Minimum future lease payments, Due within next 12 months				54,800,000
Minimum future lease payments, Due within next 2 years				54,800,000
Minimum future lease payments, Due within next 3 years				48,200,000
Minimum future lease payments, Due within next 4 years				23,100,000
Minimum future lease payments, Due within next 5 years				4,200,000
Impairment of aircraft	0	0	22,065,000				0	0	6,761,000			22,100,000			(6,800,000)
Aircraft and engines held for sale	2,995,000	3,360,000											3,000,000	3,400,000
Proceeds from sale of flight equipment				1,500,000	5,800,000	11,100,000
Proceeds from maintenance cost reimbursement																$ 10,700,000

XML

Derivative Instruments (Tables)

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Derivatives

The table below provides information about the Company’s interest rate swaps (in thousands):

			December 31, 2013			December 31, 2012
Expiration Date	Stated Interest Rate		Notional Amount	Market Value (Liability)		Notional Amount	Market Value (Liability)
May 9, 2016	2.020	%	65,625	(1,988	)	72,188	(3,146	)
June 30, 2017	1.183	%	65,625	(527	)	—	—

XML

Segment Information (Segment Reconciliation) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended									12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
REVENUES	$ 156,963	$ 140,877	$ 138,904	$ 143,279	$ 154,552	$ 153,826	$ 153,554	$ 145,506		$ 580,023	$ 607,438	$ 730,133
Customer revenues	156,963	140,877	138,904	143,279	154,552	153,826	153,554	145,506		580,023	607,438	730,133
Depreciation and amortization expense										91,749	84,477	91,063
Impairment of aircraft										0	0	22,065
Impairment of acquired intangibles										0	0	2,282
Impairment of goodwill										52,585	0	2,797
Impairment Charges										52,585	0	27,144
Net unallocated interest expense										(14,249)	(14,383)	(14,181)
Net gain (loss) on derivative instruments										631	1,879	(4,881)
Write-off of unamortized debt issuance costs									(6,800)	0	0	(2,886)
Pre-tax earnings from continuing operations										(359)	66,320	40,860
Assets	1,033,139				1,035,611					1,033,139	1,035,611	993,719
Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES										580,023	607,438	730,133
Customer revenues										580,023	607,438	730,133
CAM [Member]
Segment Reporting Information [Line Items]
REVENUES										160,342	154,565	140,469
Customer revenues										160,342	154,565	140,469
Depreciation and amortization expense										64,096	59,351	54,897
Impairment of aircraft										0	0	6,761
Impairment of goodwill										0	0
Segment earnings (loss)										66,208	68,499	53,221
Net unallocated interest expense										(12,400)	(12,200)	(10,700)
Assets	808,987				810,664					808,987	810,664	760,588
CAM [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES										71,604	74,599	67,791
Customer revenues										71,604	74,599	67,791
ACMI Services [Member]
Segment Reporting Information [Line Items]
REVENUES										444,504	478,993	604,951
Customer revenues										444,504	478,993	604,951
Depreciation and amortization expense										27,546	24,599	36,136
Impairment of aircraft										0	0	15,304
Impairment of acquired intangibles										0	0	2,282
Impairment of goodwill										52,585	0	2,797
Segment earnings (loss)										(78,186)	(14,503)	(13,807)
Net unallocated interest expense										(600)	(900)	(1,200)
Assets	141,664				161,650					141,664	161,650	137,640
ACMI Services [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES										444,504	477,722	604,951
Customer revenues										444,504	477,722	604,951
All other [Member]
Segment Reporting Information [Line Items]
REVENUES										117,292	112,343	105,284
Customer revenues										117,292	112,343	105,284
Depreciation and amortization expense										107	527	30
Segment earnings (loss)										12,200	11,650	11,331
Assets	82,194				63,297					82,194	63,297	95,491
All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES										63,915	55,117	57,391
Customer revenues										63,915	55,117	57,391
Discontinued operations [Member]
Segment Reporting Information [Line Items]
Assets	294				0					294	0	0
Significant Reconciling Items [Member]
Segment Reporting Information [Line Items]
Net unallocated interest expense										(1,212)	(1,205)	(2,118)
Eliminate inter-segment revenues [Member]
Segment Reporting Information [Line Items]
REVENUES										(142,115)	(138,463)	(120,571)
Customer revenues										$ (142,115)	$ (138,463)	$ (120,571)

XML

Pension and Other Post-Retirement Benefit Plans (Schedule of Assumptions) (Details)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Pension Plans [Member]
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
Expected return on plan assets	6.25%	6.75%	6.75%
Crewmembers [Member] | Pension Plans [Member]
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
Discount rate	5.25%	4.25%	5.10%
Non-crewmembers [Member] | Pension Plans [Member]
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
Discount rate	5.35%	4.25%	4.65%
Pilots [Member] | Post-Retirement Healthcare Plans [Member]
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
Discount rate	4.15%	3.35%	4.60%
Non-pilots [Member] | Post-Retirement Healthcare Plans [Member]
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
Discount rate	3.85%	2.95%	4.05%

XML

Discontinued Operations (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Discontinued Operations and Disposal Groups [Abstract]
Assets of Disposal Group, Including Discontinued Operation, Noncurrent	$ 294	$ 0
Assets of Disposal Group, Including Discontinued Operation	294	0
Liabilities
Employee compensation and benefits	34,007	35,703
Post-retirement	0	36,887
Total Liabilities	34,007	72,590
Pre-tax loss	$ (5)	$ (1,215)	$ (1,066)

XML

Quarterly Results (Unaudited) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Selected Quarterly Financial Information [Abstract]
Revenues from continuing operations	$ 156,963	$ 140,877	$ 138,904	$ 143,279	$ 154,552	$ 153,826	$ 153,554	$ 145,506	$ 580,023	$ 607,438	$ 730,133
Net earnings from continuing operations	(42,840)	7,799	6,915	8,501	12,211	11,556	11,219	6,662	(19,625)	41,648	23,865
Net loss from discontinued operations	$ (1)	$ 0	$ (1)	$ (1)	$ (198)	$ (186)	$ (160)	$ (230)	$ (3)	$ (774)	$ (673)
Weighted average shares:
Basic (in shares)	64,054	64,052	64,050	63,810	63,525	63,456	63,431	63,431	63,992	63,461	63,284
Diluted (in shares)	64,054	65,036	64,859	64,524	64,244	64,667	64,393	64,374	63,992	64,420	64,085
Earnings per share from continuing operations
Basic (in dollars per share)	$ (0.67)	$ 0.12	$ 0.11	$ 0.13	$ 0.19	$ 0.18	$ 0.18	$ 0.11	$ (0.31)	$ 0.66	$ 0.38
Diluted (in dollars per share)	$ (0.67)	$ 0.12	$ 0.11	$ 0.13	$ 0.19	$ 0.18	$ 0.17	$ 0.10	$ (0.31)	$ 0.65	$ 0.37

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Stock-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2009
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at beginning of period (in shares)	1,463,272	1,458,037		1,514,300
Granted (in shares)	627,488	601,647	555,237
Converted (in shares)	(526,848)	(472,112)	(443,300)
Expired (in shares)	(68,950)	0	0
Forfeited (in shares)	(17,200)	(124,300)	(168,200)
Outstanding at end of period (in shares)	1,477,762	1,463,272	1,458,037	1,514,300
Vested (in shares)	506,644	736,541	390,037
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Outstanding at beginning of period, Weighted average grant-date fair value (in dollars per share)	$ 5.97	$ 5.77		$ 3.55
Granted, Weighted average grant-date fair value (in dollars per share)	$ 5.73	$ 5.93	$ 8.72
Converted, Weighted average grant-date fair value (in dollars per share)	$ 5.72	$ 5.25	$ 2.45
Expired, Weighted average grant-date fair value (in dollars per share)	$ 8.25	$ 0.00	$ 0.00
Forfeited, Weighted average grant-date fair value (in dollars per share)	$ 7.07	$ 6.24	$ 4.22
Outstanding at end of period, Weighted average grant-date fair value (in dollars per share)	$ 5.83	$ 5.97	$ 5.77	$ 3.55
Vested (in dollars per share)	$ 4.47	$ 4.90	$ 4.45
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Share-based compensation expense	$ 2.7	$ 3.2	$ 2.9
Unrecognized share-based compensation expense	$ 2.8
Unrecognized share-based compensation, weighted average recognition period	1 year 7 months
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Granted, Weighted average grant-date fair value (in dollars per share)	$ 5.46	$ 5.63	$ 8.25
Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Historical volatility period	3 years	3 years	3 years
Risk-free interest rate	0.40%	0.40%	1.30%
Expected volatility rate	61.00%	90.10%	1.30%
Market Condition Award [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Granted, Weighted average grant-date fair value (in dollars per share)	$ 6.78	$ 7.05	$ 11.17
Performance Condition Award [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Granted, Weighted average grant-date fair value (in dollars per share)	$ 5.46	$ 5.63	$ 8.25
Time-Based Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Granted, Weighted average grant-date fair value (in dollars per share)	$ 5.46	$ 5.63	$ 8.25
Time-Based Awards [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Number of additional outstanding shares issued (in shares)	1,754,787
Director [Member] | Time-Based Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period	6 months
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Vested (in shares)	441,812

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Summary of Financial Statement Preparation and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Property, Plant and Equipment

Depreciable lives are summarized as follows:

Boeing 767 and 757 aircraft and flight equipment	10 to 20 years
Support equipment	5 to 10 years
Vehicles and other equipment	3 to 8 years

Property and equipment, to be held and used, is summarized as follows (in thousands):

	December 31, 2013			December 31, 2012
Aircraft and flight equipment	$	1,236,225		$	1,148,781
Support equipment	51,179			52,209
Vehicles and other equipment	1,771			1,597
Leasehold improvements	1,154			814
	1,290,329			1,203,401
Accumulated depreciation	(452,157		)	(384,477		)
Property and equipment, net	$	838,172		$	818,924

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Commitments and Contingencies (Operating Lease Payments) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013 sqft
Operating Leased Assets [Line Items]
Aircraft hanger square feet	100,000
Cost of aircraft hanger	$ 15,700,000
Other Leases [Member]
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2013	22,561,000
2014	12,499,000
2015	8,807,000
2016	4,733,000
2017	3,113,000
2018 and beyond	1,533,000
Total minimum lease payments	53,246,000
Hanger Lease [Member]
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2013	592,000
2014	602,000
2015	832,000
2016	834,000
2017	833,000
2018 and beyond	14,610,000
Total minimum lease payments	$ 18,303,000
Boeing 767 Aircraft [Member]
Operating Leased Assets [Line Items]
Number of leased aircrafts	6

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Goodwill and Other Intangibles (Schedule of Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Jul. 31, 2011
Goodwill [Roll Forward]
Carrying value, beginning balance	$ 86,980	$ 86,980
Impairment	(52,585)	0	(2,797)
Carrying value, ending balance	34,395	86,980	86,980
ACMI Services [Member]
Goodwill [Roll Forward]
Carrying value, beginning balance	52,585	52,585		52,600
Impairment	(52,585)	0	(2,797)
Carrying value, ending balance	0	52,585	52,585	52,600
CAM [Member]
Goodwill [Roll Forward]
Carrying value, beginning balance	34,395	34,395
Impairment	0	0
Carrying value, ending balance	$ 34,395	$ 34,395

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Segment Information (Entity-Wide Disclosures) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Customer revenues	$ 156,963	$ 140,877	$ 138,904	$ 143,279	$ 154,552	$ 153,826	$ 153,554	$ 145,506	$ 580,023	$ 607,438	$ 730,133
Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues									580,023	607,438	730,133
All other [Member]
Segment Reporting Information [Line Items]
Customer revenues									117,292	112,343	105,284
All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues									63,915	55,117	57,391
Aircraft maintenance and part sales [Member] | All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues									23,175	21,669	25,845
Mail handling services [Member] | All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues									30,117	23,671	21,613
Facility and ground equipment maintenance [Member] | All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues									10,030	8,304	8,465
Other [Member] | All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues									$ 593	$ 1,473	$ 1,468

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The Company's segment information from continuing operations is presented below (in thousands):

	Year Ended December 31
	2013			2012			2011
Total revenues:
CAM	$	160,342		$	154,565		$	140,469
ACMI Services	444,504			478,993			604,951
All other	117,292			112,343			105,284
Eliminate inter-segment revenues	(142,115		)	(138,463		)	(120,571		)
Total	$	580,023		$	607,438		$	730,133
Customer revenues:
CAM	$	71,604		$	74,599		$	67,791
ACMI Services	444,504			477,722			604,951
All other	63,915			55,117			57,391
Total	$	580,023		$	607,438		$	730,133
Depreciation and amortization expense:
CAM	$	64,096		$	59,351		$	54,897
ACMI Services	27,546			24,599			36,136
All other	107			527			30
Total	$	91,749		$	84,477		$	91,063
Impairment Charges
CAM - aircraft impairment	—			—			6,761
ACMI Services - aircraft impairment	—			—			15,304
ACMI Services - customer relationship impairment	—			—			2,282
ACMI Services - goodwill impairment	52,585			—			2,797
Total	$	52,585		$	—		$	27,144
Segment earnings (loss):
CAM	$	66,208		$	68,499		$	53,221
ACMI Services	(78,186		)	(14,503		)	(13,807		)
All other	12,200			11,650			11,331
Net unallocated interest expense	(1,212		)	(1,205		)	(2,118		)
Net gain (loss) on derivative instruments	631			1,879			(4,881		)
Write-off of unamortized debt issuance costs	—			—			(2,886		)
Pre-tax earnings from continuing operations	$	(359	)	$	66,320		$	40,860

Reconciliation of Assets from Segment to Consolidated

The Company's assets are presented below by segment (in thousands):

	December 31,		December 31,		December 31,
	2013		2012		2011
Assets:
CAM	$	808,987	$	810,664	$	760,588
ACMI Services	141,664		161,650		137,640
Discontinued operations	294		—		—
All other	82,194		63,297		95,491
Total	$	1,033,139	$	1,035,611	$	993,719

Revenue from External Customers by Products and Services

The Company's external customers revenues from other activities for the years ended December 31, 2013, 2012 and 2011 are presented below (in thousands):

	December 31,
	2013		2012		2011
Aircraft maintenance and part sales	$	23,175	$	21,669	$	25,845
Mail handling services	30,117		23,671		21,613
Facility and ground equipment maintenance	10,030		8,304		8,465
Other	593		1,473		1,468
Total customer revenues	$	63,915	$	55,117	$	57,391

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Commitments and Contingencies (Labor Unions) (Details) (Workforce Subject to Collective Bargaining Arrangements [Member], Labor Unions [Member])	12 Months Ended
	Dec. 31, 2013
ABX [Member]
Concentration Risk [Line Items]
Percentage of the Company's Employees	14.40%
ATI [Member]
Concentration Risk [Line Items]
Percentage of the Company's Employees	8.70%

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Income Taxes (Tax Rate Reconciliation - Discontinued Operations) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Statutory federal tax rate	(35.00%)	(35.00%)	(35.00%)
State income taxes, net of federal tax benefit	(1.30%)	(1.30%)	(1.80%)
Effective income tax rate	(36.30%)	(36.30%)	(36.80%)

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Pension and Other Post-Retirement Benefit Plans (Fair Value Measurements Using Significant Level 3 Unobservable Inputs) (Details) (Level 3 [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Schedule of Level Three Defined Benefit Plan Assets [Roll Forward]
Plan assets, beginning balance	$ 44,150	$ 40,316
Unrealized gains	6,264	6,236
Purchases & settlements	(1,514)	(2,402)
Plan assets, ending balance	48,900	44,150
Hedge Funds & Private Equity [Member]
Schedule of Level Three Defined Benefit Plan Assets [Roll Forward]
Plan assets, beginning balance	26,969	25,759
Unrealized gains	3,884	3,612
Purchases & settlements	(1,514)	(2,402)
Plan assets, ending balance	29,339	26,969
Real Estate Investments [Member]
Schedule of Level Three Defined Benefit Plan Assets [Roll Forward]
Plan assets, beginning balance	17,181	14,557
Unrealized gains	2,380	2,624
Purchases & settlements	0	0
Plan assets, ending balance	$ 19,561	$ 17,181

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Debt Obligations (Schedule of Long Term Obligations) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Total long term obligations	$ 384,515	$ 364,481
Less: current portion	(23,721)	(21,265)
Total long term obligations, net	360,794	343,216
Unsubordinated term loan [Member]
Debt Instrument [Line Items]
Total long term obligations	131,250	144,375
Revolving credit facility [Member]
Debt Instrument [Line Items]
Total long term obligations	190,500	143,000
Aircraft loans [Member]
Debt Instrument [Line Items]
Total long term obligations	55,015	63,156
Promissory note due to DHL, unsecured [Member]
Debt Instrument [Line Items]
Total long term obligations	$ 7,750	$ 13,950

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Significant Customers

12 Months Ended

Dec. 31, 2013

Significant Customers [Abstract]

Significant Customers

SIGNIFICANT CUSTOMERS

DHL

The Company's largest customer is DHL Network Operations (USA), Inc. and its affiliates ("DHL"). The Company has had long term contracts with DHL since August 2003. Revenues from continuing operations performed for DHL were approximately 54%, 53% and 36% of the Company's consolidated revenues from continuing operations for the years ended December 31, 2013, 2012 and 2011, respectively. The Company’s balance sheets include accounts receivable with DHL of $24.1 million and $18.3 million as of December 31, 2013 and December 31, 2012, respectively.

The Company leases Boeing 767 aircraft to DHL under both long-term and short-term lease agreements. Under a separate crew, maintenance and insurance (“CMI”) agreement, the Company operates Boeing 767 aircraft that DHL leases from the Company and Boeing 767 aircraft that DHL owns. Pricing for services provided through the CMI agreement is based on pre-defined fees, scaled for the number of aircraft operated and the number of flight crews provided to DHL for its U.S. network. The Company provides DHL with scheduled maintenance services for aircraft that DHL leases or owns. The Company also provides Boeing 767 and Boeing 757 air cargo transportation services for DHL through additional ACMI agreements in which the Company provides the aircraft, crews, maintenance and insurance under a single contract. Revenues generated from the ACMI agreements are typically based on hours flown. The Company also provides ground equipment, such as power units, air starts and related maintenance services to DHL under separate agreements.

U.S. Military

A substantial portion of the Company's revenues are also derived from the U.S. Military. The U.S. Military awards flights to U.S. certificated airlines through annual contracts and through temporary "expansion" routes. Revenues from services performed for the U.S. Military were approximately 17%, 16% and 12% of the Company's total revenues from continuing operations for the years ended December 31, 2013, 2012 and 2011, respectively. The Company's balance sheets included accounts receivable with the U.S. Military of $4.8 million and $4.2 million as of December 31, 2013 and December 31, 2012, respectively.

BAX/Schenker

The Company had contracts to provide airlift to BAX Global, Inc.'s network in North America ("BAX/Schenker"). Revenues from the services performed for BAX/Schenker were approximately 26% of the Company’s total revenues from continuing operations for the year ended December 31, 2011. BAX/Schenker provided freight transportation and supply chain management services, specializing in the heavy freight market for business-to-business shipping.

On July 22, 2011, BAX/Schenker announced its plan to adopt a new operating model that phased-out the dedicated air cargo network in North America supported by the Company. To execute that plan, on September 2, 2011, BAX/Schenker ceased air cargo operations at its air hub in Toledo, Ohio and began to conduct air operations from the Cincinnati/Northern Kentucky airport, utilizing DHL's U.S. air hub. The Company provided limited airlift directly to BAX/Schenker through the peak delivery season, until late December 2011. Beginning in January 2012, DHL contracted with the Company's airlines to supplement DHL's U.S. air network to service BAX/Schenker freight volumes on its expanded air network without the use of the Company's DC-8 aircraft and with only limited use of the Company's Boeing 727 aircraft.

No services were performed for Bax/Schenker during 2013 and 2012. The Company’s balance sheets had no accounts receivable with BAX/Schenker as of December 31, 2013 and 2012.

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Pension and Other Post-Retirement Benefit Plans (Defined Contribution Plan Expense) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Schedule of Defined Contribution Plans [Line Items]
Defined contribution plan expense	$ 5,131	$ 5,300	$ 4,938
Capital accumulation plans [Member]
Schedule of Defined Contribution Plans [Line Items]
Defined contribution plan expense	$ 5,131	$ 5,300	$ 4,938

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Goodwill and Other Intangibles (Schedule Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Jul. 31, 2011
Finite and Indefinite-lived Intangible Assets by Major Class [Line Items]
Number of business units reporting goodwill (in reporting units)	2
Finite and Indefinite-lived Intangible Assets [Roll Forward]
Carrying value at beginning of period	$ 5,146
Impairment	0	0	(2,282)
Carrying value at end of period	4,896	5,146
ACMI Services [Member]
Finite and Indefinite-lived Intangible Assets [Roll Forward]
Carrying value at beginning of period	5,146	6,396
Amortization expense	(250)	(1,250)
Impairment	0	0	(2,282)
Carrying value at end of period	4,896	5,146	6,396
ACMI Services [Member] | Customer Relationships [Member]
Finite and Indefinite-lived Intangible Assets [Roll Forward]
Carrying value at beginning of period	2,146	2,396		2,500
Amortization expense	(250)	(250)	(600)
Carrying value at end of period	1,896	2,146	2,396	2,500
Intangibles useful life	7 years
ACMI Services [Member] | Airline Certificates [Member]
Finite and Indefinite-lived Intangible Assets [Roll Forward]
Carrying value at beginning of period	3,000	4,000
Amortization expense	0	(1,000)
Carrying value at end of period	$ 3,000	$ 3,000

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Debt Obligations (Tables)

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long term obligations consisted of the following (in thousands):

	December 31,			December 31,
	2013			2012
Unsubordinated term loan	$	131,250		$	144,375
Revolving credit facility	190,500			143,000
Aircraft loans	55,015			63,156
Promissory note due to DHL, unsecured	7,750			13,950
Total long term obligations	384,515			364,481
Less: current portion	(23,721		)	(21,265		)
Total long term obligations, net	$	360,794		$	343,216

Schedule of Maturities of Long-term Debt

The scheduled annual principal payments on long term debt, as of December 31, 2013, for the next five years are as follows (in thousands):

	Principal Payments
2014	$	23,721
2015	24,344
2016	33,865
2017	291,195
2018	3,640
2019 and beyond	7,750
	$	384,515

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Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Depreciable lives are summarized as follows:

Boeing 767 and 757 aircraft and flight equipment	10 to 20 years
Support equipment	5 to 10 years
Vehicles and other equipment	3 to 8 years

Property and equipment, to be held and used, is summarized as follows (in thousands):

	December 31, 2013			December 31, 2012
Aircraft and flight equipment	$	1,236,225		$	1,148,781
Support equipment	51,179			52,209
Vehicles and other equipment	1,771			1,597
Leasehold improvements	1,154			814
	1,290,329			1,203,401
Accumulated depreciation	(452,157		)	(384,477		)
Property and equipment, net	$	838,172		$	818,924

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Pension and Other Post-Retirement Benefit Plans (Accumulated Other Comprehensive Income (Loss) to be Recognized within 12 Months) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Pension Plans [Member]
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year [Abstract]
Amortization of actuarial loss	$ (2)
Prior Service Cost	0
Post-Retirement Healthcare Plans [Member]
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year [Abstract]
Amortization of actuarial loss	320
Prior Service Cost	$ (3,487)

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Fair Value Measurements (Details) (Fair Value, Measurements, Recurring [Member], USD $)	Dec. 31, 2013	Dec. 31, 2012
Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents - money market	$ 20,000	$ 18,000
Total Assets	20,000	18,000
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap	0	0
Total Liabilities	0	0
Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents - money market	301,000	339,000
Total Assets	301,000	339,000
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap	(2,515,000)	(3,146,000)
Total Liabilities	(2,515,000)	(3,146,000)
Difference between fair value and carrying value, debt	6,300,000	3,800,000
Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents - money market	0	0
Total Assets	0	0
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap	0	0
Total Liabilities	0	0
Total [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents - money market	321,000	357,000
Total Assets	321,000	357,000
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap	(2,515,000)	(3,146,000)
Total Liabilities	(2,515,000)	(3,146,000)
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Liabilities, Fair Value Disclosure [Abstract]
Carrying value, debt	$ 384,500,000	$ 364,500,000

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

The future minimum lease payments of the Company as of December 31, 2013 are scheduled below (in thousands):

	Operating Leases		Hangar Lease
2014	$	22,561	$	592
2015	12,499		602
2016	8,807		832
2017	4,733		834
2018	3,113		833
2019 and beyond	1,533		14,610
Total minimum lease payments	$	53,246	$	18,303

Schedules of Concentration of Risk, by Risk Factor

As of December 31, 2013, the flight crewmember employees of ABX and ATI were represented by the labor unions listed below:

Airline	Labor Agreement Unit	Percentage of the Company’s Employees
ABX	International Brotherhood of Teamsters	14.4%
ATI	Air Line Pilots Association	8.7%

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Pension and Other Post-Retirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Funded Status

Funded Status(in thousands):

	Pension Plans						Post-retirement Healthcare Plans
	2013			2012			2013			2012
Accumulated benefit obligation	$	761,774		$	860,463		$	7,482		$	8,781
Change in benefit obligation
Obligation as of January 1	$	860,463		$	772,612		$	8,781		$	9,275
Service cost	—			—			275			269
Interest cost	35,957			37,089			264			379
Curtailment gain	—			—			—			—
Special termination benefits	—			—			—			—
Plan amendment	—			—			—			(460		)
Plan transfers	2,448			1,657			—			—
Benefits paid	(28,966		)	(26,130		)	(1,364		)	(974		)
Actuarial (gain) loss	(108,128		)	75,235			(474		)	292
Obligation as of December 31	$	761,774		$	860,463		$	7,482		$	8,781
Change in plan assets
Fair value as of January 1	$	682,553		$	594,697		$	—		$	—
Actual gain on plan assets	67,719			87,598			—			—
Plan transfers	2,448			1,657			—			—
Employer contributions	27,492			24,731			1,364			974
Benefits paid	(28,966		)	(26,130		)	(1,364		)	(974		)
Fair value as of December 31	$	751,246		$	682,553		$	—		$	—
Funded status
Overfunded plans, net asset	$	14,855		$	—		$	—		$	—
Underfunded plans
Current liabilities	$	(1,339	)	$	(1,331	)	$	(888	)	$	(1,105	)
Non-current liabilities	$	(24,044	)	$	(176,579	)	$	(6,594	)	$	(7,676	)

Schedule of Net Benefit Costs

ABX’s net periodic benefit costs for its defined benefit pension plans and post-retirement healthcare plans for the years ended December 31, 2013, 2012 and 2011, are as follows (in thousands):

	Pension Plans									Post-Retirement Healthcare Plan
	2013			2012			2011			2013			2012			2011
Service cost	$	—		$	—		$	—		$	275		$	269		247
Interest cost	35,957			37,089			37,163			264			379			389
Expected return on plan assets	(45,990		)	(39,882		)	(39,027		)	—			—			—
Amortization of prior service cost	—			—			—			419			433			529
Amortization of net (gain) loss	12,296			10,681			2,700			(5,654		)	(5,552		)	(5,552		)
Net periodic benefit cost	$	2,263		$	7,888		$	836		$	(4,696	)	$	(4,471	)	$	(4,387	)

Schedule of Net Periodic Benefit Cost Not yet Recognized

The pre-tax amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit expense at December 31 are as follows (in thousands):

	Pension Plans				Post-Retirement Healthcare Plans
	2013		2012		2013			2012
Unrecognized prior service cost	$	—	$	—	$	(4,182	)	$	(9,836	)
Unrecognized net actuarial loss	40,190		182,342		2,027			2,920
Accumulated other comprehensive (income) loss	$	40,190	$	182,342	$	(2,155	)	$	(6,916	)

Schedule of Amounts in Accumulated Other Comprehensive Income (Loss) to be Recognized over Next Fiscal Year

The following table sets forth the amounts of unrecognized net actuarial loss and (gain) recorded in accumulated other comprehensive loss that is expected to be recognized as components of net periodic benefit expense during 2014 (in thousands):

	Pension Plans			Post- Retirement Healthcare Plans
Amortization of actuarial loss	$	(2	)	$	320
Prior Service Cost	—			(3,487		)

Schedule of Assumptions Used

Assumptions used in determining the funded status of ABX’s pension plans at December 31 were as follows:

	Pension Plans
	2013	2012	2011
Discount rate - crewmembers	5.25%	4.25%	5.10%
Discount rate - non-crewmembers	5.35%	4.25%	4.65%
Expected return on plan assets	6.25%	6.75%	6.75%

Schedule of Allocation of Plan Assets

The pension plan assets measured at fair value on a recurring basis were as follows (in thousands):

As of December 31, 2013	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Plan assets
Temporary cash investments	$	—	$	—	$	—	$	—
Common trust funds	—		10,503		—		10,503
Corporate stock	63,313		—		—		63,313
Mutual funds	107,635		164,230		—		271,865
Fixed income investments	6,761		349,904		—		356,665
Real estate	—		—		19,561		19,561
Hedge funds and private equity	—		—		29,339		29,339
Total plan assets	$	177,709	$	524,637	$	48,900	$	751,246

As of December 31, 2012	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Plan assets
Temporary cash investments	$	—	$	—	$	—	$	—
Common trust funds	—		5,720		—		5,720
Corporate stock	63,396		2,123		—		65,519
Mutual funds	96,008		138,846		—		234,854
Fixed income investments	5,832		326,478		—		332,310
Real estate	—		—		17,181		17,181
Hedge funds and private equity	—		—		26,969		26,969
Total plan assets	$	165,236	$	473,167	$	44,150	$	682,553

The weighted-average asset allocations by asset category are as shown below:

	Composition of Plan Assets as of December 31
Asset category	2013		2012
Cash	—	%	—	%
Equity securities	50	%	48	%
Fixed income securities	47	%	49	%
Real estate	3	%	3	%
	100	%	100	%

Schedule of Expected Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid out of the respective plans as follows (in thousands):

	Pension Benefits		Post-retirement Healthcare Benefits
2014	$	31,260	$	888
2015	33,144		844
2016	37,769		764
2017	37,332		755
2018	39,860		749
Years 2019 to 2023	232,378		3,775

Schedule of Level Three Defined Benefit Plan Assets Roll Forward

The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant Level 3 unobservable inputs (in thousands):

	Hedge Funds & Private Equity			Real Estate Investments		Total
January 1, 2012	$	25,759		$	14,557	$	40,316
Unrealized gains	3,612			2,624		6,236
Purchases & settlements	(2,402		)	—		(2,402		)
December 31, 2012	$	26,969		$	17,181	$	44,150
Unrealized gains	3,884			2,380		6,264
Purchases & settlements	(1,514		)	—		(1,514		)
December 31, 2013	$	29,339		$	19,561	$	48,900

Schedule of Retirement Plans

Expenses for defined contribution retirement plans were as follows (in thousands):

	Years Ended December 31
	2013		2012		2011
Capital accumulation plans	$	5,131	$	5,300	$	4,938
Total expense	$	5,131	$	5,300	$	4,938

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Summary of Financial Statement Preparation and Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Financial Statement Preparation and Significant Accounting Policies

SUMMARY OF FINANCIAL STATEMENT PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Air Transport Services Group, Inc. is a holding company whose principal subsidiaries include an aircraft leasing company and two independently certificated airlines. The Company provides airline operations, aircraft leases, aircraft maintenance and other support services primarily to the cargo transportation and package delivery industries. Through the Company's subsidiaries, it offers a range of complementary services to delivery companies, freight forwarders, airlines and government customers.

The airlines, ABX Air, Inc. (“ABX”) and Air Transport International, Inc. (“ATI”), each have the authority, through their separate U.S. Department of Transportation ("DOT") and Federal Aviation Administration ("FAA") certificates, to transport cargo worldwide. The Company's leasing subsidiary, Cargo Aircraft Management, Inc. (“CAM”), leases aircraft to each of the Company's airlines as well as to non-affiliated airlines and other lessees.

The Company provides aircraft and airline operations to its customers, typically under contracts providing for a combination of aircraft, crews, maintenance and insurance ("ACMI") services. The Company serves a base of concentrated customers who have a diverse line of international cargo traffic. DHL Network Operations (USA), Inc. and its affiliates, “DHL,” is the Company's largest customer. ATI provides passenger transportation, primarily to the U.S. Military, using "combi" aircraft, which are certified to carry passengers as well as cargo on the main deck.

In addition to its airline operations and aircraft leasing services, the Company sells aircraft parts, provides aircraft and equipment maintenance services, and operates mail sorting facilities for the U.S. Postal Service (“USPS”).

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Air Transport Services Group, Inc. and its wholly-owned subsidiaries. Inter-company balances and transactions have been eliminated. The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

Subsequent Events

In January 2014, the Company acquired a 25 percent equity interest in West Atlantic AB of Gothenburg, Sweden. West Atlantic AB, through its two airlines, Atlantic Airlines Ltd. and West Air Sweden AB, operates a fleet of approximately 40 aircraft and is Europe’s largest regional cargo aircraft operator. West Atlantic AB operates its aircraft on behalf of European regional mail carriers and express logistics providers. The airlines operate a combined fleet of British Aerospace ATPs, Bombardier CRJ-200-PFs, and Boeing 737 aircraft. In addition, Atlantic Airlines Ltd. is currently adding the Boeing 767 aircraft to its operating capability.

In January 2014, the Company drew $15.0 million from the revolving credit facility to help fund its 25 percent ownership of West Atlantic AB.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements. Estimates and assumptions are used to record allowances for uncollectible amounts, self-insurance reserves, spare parts inventory, depreciation and impairments of property, equipment, goodwill and intangibles, post-retirement obligations, income taxes, contingencies and litigation. Changes in estimates and assumptions may have a material impact on the consolidated financial statements.

Cash and Cash Equivalents

The Company classifies short-term, highly liquid investments with maturities of three months or less at the time of purchase as cash and cash equivalents. These investments, consisting of money market funds, are recorded at cost, which approximates fair value. Substantially all deposits of the Company’s cash are held in accounts that exceed federally insured limits. The Company deposits cash in common financial institutions which management believes are financially sound.

Accounts Receivable and Allowance for Uncollectible Accounts

The Company's accounts receivable is primarily due from its significant customers (see Note B), other airlines, the USPS and freight forwarders. The Company performs a quarterly evaluation of the accounts receivable and the allowance for uncollectible accounts by reviewing specific customers' recent payment history, growth prospects, financial condition and other factors that may impact a customer's ability to pay. The Company establishes an allowance for uncollectible accounts for probable losses due to a customer's potential inability or unwillingness to make contractual payments. Account balances are written off against the allowance when the Company ceases collection efforts.

Inventory

The Company’s inventory is comprised primarily of expendable aircraft parts and supplies used for aircraft maintenance. Inventory is generally charged to expense when issued for use on a Company aircraft. The Company values its inventory of aircraft parts and supplies at weighted-average cost and maintains a related obsolescence reserve. The Company records an obsolescence reserve on a base stock of inventory for each fleet type. The amortization of base stock for the obsolescence reserve corresponds to the expected life of each fleet type. Additionally, the Company monitors the usage rates of inventory parts and segregates parts that are technologically outdated or no longer used in its fleet types. Slow moving and segregated items are actively marketed and written down to their estimated net realizable values based on market conditions.

Management analyzes the inventory reserve for reasonableness at the end of each quarter. That analysis includes consideration of the expected fleet life, amounts expected to be on hand at the end of a fleet life, and recent events and conditions that may impact the usability or value of inventory. Events or conditions that may impact the expected life, usability or net realizable value of inventory include additional aircraft maintenance directives from the FAA, changes in DOT regulations, new environmental laws and technological advances.

Goodwill and Intangible Assets

The Company assesses, during the fourth quarter of each year, the carrying value of goodwill. Finite-lived intangible assets are amortized over their estimated useful economic lives. The Company also conducts impairment assessments of goodwill, indefinite-lived intangible assets and finite-lived intangible assets whenever events or changes in circumstance indicate an impairment may have occurred.

Property and Equipment

Property and equipment held for use is stated at cost, net of any impairment recorded. The cost and accumulated depreciation of disposed property and equipment are removed from the accounts with any related gain or loss reflected in earnings from operations.

Depreciation of property and equipment is provided on a straight-line basis over the lesser of the asset’s useful life or lease term. Depreciable lives are summarized as follows:

Boeing 767 and 757 aircraft and flight equipment	10 to 20 years
Support equipment	5 to 10 years
Vehicles and other equipment	3 to 8 years

The Company periodically evaluates the useful lives, salvage values and fair values of property and equipment. Acceleration of depreciation expense or the recording of significant impairment losses could result from changes in the estimated useful lives of assets due to a number of reasons, such as excess aircraft capacity or changes in regulations governing the use of aircraft.

Aircraft and other long-lived assets are tested for impairment when circumstances indicate the carrying value of the assets may not be recoverable. To conduct impairment testing, the Company groups assets and liabilities at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. For assets that are to be held and used, impairment is recognized when the estimated undiscounted cash flows associated with the asset group is less than the carrying value. If impairment exists, an adjustment is made to write the assets down to fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined considering quoted market values, discounted cash flows or internal and external appraisals, as applicable. For assets held for sale, impairment is recognized when the fair value less the cost to sell the asset is less than the carrying value.

The Company’s accounting policy for major airframe and engine maintenance varies by subsidiary and aircraft type. The costs for ABX's Boeing 767-200 airframe maintenance, which is the majority of the Company's aircraft fleet, are expensed as they are incurred. The costs of major airframe maintenance for the Company's other aircraft are capitalized and amortized over the useful life of the overhaul. The Company's General Electric CF6 engines that power the Boeing 767-200 aircraft are maintained under “power by the hour” agreements with an engine maintenance provider. Under the power by the hour agreements, the engines are maintained by the service provider for a fixed fee per flight hour; accordingly, the cost of engine maintenance is generally expensed as flight hours occur. Maintenance for the airlines’ other aircraft engines, including those on the Boeing 767-300 and Boeing 757 aircraft, are typically contracted to service providers on a time and material basis and the costs of those engine overhauls are capitalized and amortized over the useful life of the overhaul.

Under certain leases, the Company is required to make periodic payments to the lessor for future maintenance events such as engine overhauls and major airframe maintenance. These payments are recorded as deposits until drawn for qualifying maintenance costs. The maintenance costs are expensed or capitalized in accordance with the airline's accounting policy for major airframe and engine maintenance. The Company evaluates at the balance sheet date, whether it is probable that an amount on deposit will be returned by the lessor to reimburse the costs of the maintenance activities. When an amount on deposit is less than probable of being returned, it is recognized as additional maintenance expense. 

Capitalized Interest

Interest costs incurred while aircraft are being modified are capitalized as an additional cost of the aircraft until the date the asset is placed in service. Capitalized interest was $1.1 million, $2.8 million and $2.2 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Discontinued Operations

A business component whose operations are discontinued is reported as discontinued operations if the cash flows of the component have been eliminated from the ongoing operations of the Company, and the Company will no longer have any significant continuing involvement in the business component. The results of discontinued operations are aggregated and presented separately in the consolidated statements of operations.

Exit Activities

The Company accounts for the costs associated with exit activities in accordance with FASB ASC Topic 420-10 Exit or Disposal Cost Obligations. One-time, involuntary employee termination benefits are generally expensed when the Company communicates the benefit arrangement to the employee that it will no longer require the services of the employee beyond a minimum retention period. Liabilities for contract termination costs associated with exit activities are recognized in the period incurred and measured initially at fair value.

Self-Insurance

The Company is self-insured for certain workers’ compensation, employee healthcare, automobile, aircraft, and general liability claims. The Company maintains excess claim coverage with common insurance carriers to mitigate its exposure to large claim losses. The Company records a liability for reported claims and an estimate for incurred claims that have not yet been reported. Accruals for these claims are estimated utilizing historical paid claims data and recent claims trends. Other liabilities included $28.3 million and $31.6 million at December 31, 2013 and December 31, 2012, respectively, for self-insured reserves. Changes in claim severity and frequency could result in actual claims being materially different than the costs accrued.

Pension and Post-Retirement Benefits

The costs of benefits provided by defined benefits pension and post-retirement health care plans are recorded in the period the employees provide service. Costs adjustments for plan amendments are amortized over the expected working life or the life expectancy of plan participants. The funded status of the Company's plans is measured as the difference between the fair value of plan assets and the accumulated benefit obligations to plan participants. The overfunded or underfunded status of a plan is recorded as an asset or liability. The funded status is ordinarily measured annually at year end.

Income Taxes

Income taxes have been computed using the asset and liability method, under which deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. Deferred taxes are measured using provisions of currently enacted tax laws. A valuation allowance against net deferred tax assets is recorded when it is more likely than not that such assets will not be fully realized. Tax credits are accounted for as a reduction of income taxes in the year in which the credit originates.

The Company recognizes the benefit of a tax position taken on a tax return, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. An uncertain income tax benefit is not recognized if it has a less than a 50% likelihood of being sustained. The Company recognizes interest and penalties accrued related to uncertain tax positions in operating expense.

Comprehensive Income

Comprehensive income includes net earnings and other comprehensive income or loss. Other comprehensive income or loss results from certain changes in the Company’s liabilities for pension and other post retirement benefits and gains and losses associated with interest rate hedging instruments.

Fair Value Information

Assets or liabilities that are required to be measured at fair value are reported using the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC Topic 820-10 Fair Value Measurements and Disclosures establishes three levels of input that may be used to measure fair value:

• Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

• Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include items where the determination of fair value requires significant management judgment or estimation.

Revenue Recognition

Revenues generated from airline service agreements are typically recognized based on hours flown or the amount of aircraft and crew resources provided during a reporting period. Certain agreements include provisions for incentive payments based upon on-time reliability. These incentives are typically measured on a monthly basis and recorded to revenue in the corresponding month earned. Revenues for operating expenses that are reimbursed through customer agreements, including consumption of aircraft fuel, are generally recognized as the costs are incurred. Revenues from charter service agreements are recognized on scheduled and non-scheduled flights when the specific flight has been completed. Aircraft lease revenues are recognized as operating lease revenues on a straight-line basis over the term of the applicable lease agreements. Revenues from the sale of aircraft parts and engines are recognized when the parts are delivered. Revenues earned and expenses incurred in providing aircraft-related maintenance, repair or technical services are recognized in the period in which the services are completed and delivered to the customer. Revenues derived from sorting parcels are recognized in the reporting period in which the services are performed.

New Accounting Pronouncements

In July 2013, the FASB issued Accounting Standard Update No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" (ASU 2013-11"). ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This new guidance is effective for annual reporting periods beginning on or after December 15, 2013, and subsequent interim periods. The Company is currently assessing the impact, if any, that this pronouncement will have on the condensed consolidated financial statements.

In September 2013, the United States Treasury Department and the Internal Revenue Service (“IRS”) issued final and proposed regulations (the “Tangible Property Regulations”) effective for tax years beginning on or after January 1, 2014, that provided guidance on a number of matters with regard to tangible property, including whether expenditures qualified as deductible repairs, the treatment of materials and supplies, capitalization of tangible property, dispositions of property, and related elections.  The Company is assessing the financial impact as a result of these regulations and as a result of such assessment, no material impact is expected.  Future transitional guidance in the form of revenue procedures issued by the IRS, and the finalization of the proposed regulations, could impact our current estimates.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Schedule of Deferred Tax Assets and Liabilities

The significant components of the deferred income tax assets and liabilities as of December 31, 2013 and 2012 are as follows (in thousands):

	December 31
	2013			2012
Deferred tax assets:
Net operating loss carryforward and federal credits	$	36,624		$	34,401
Capital and operating leases	2,841			1,742
Post-retirement employee benefits	6,470			62,823
Employee benefits other than post-retirement	16,667			18,010
Inventory reserve	3,050			3,181
Deferred revenue	8,903			10,770
Other	1,262			458
Deferred tax assets	75,817			131,385
Deferred tax liabilities:
Accelerated depreciation	(155,769		)	(147,282		)
Partnership items	(9,466		)	(9,418		)
State taxes	(6,265		)	(1,724		)
Valuation allowance against deferred tax assets	(229		)	(229		)
Deferred tax liabilities	(171,729		)	(158,653		)
Net deferred tax (liability)	$	(95,912	)	$	(27,268	)

Schedule of Components of Income Tax Expense (Benefit)

The following summarizes the Company’s income tax provisions (benefits) (in thousands):

	Years Ended December 31
	2013			2012			2011
Current taxes:
Federal	$	67		$	—		$	(950	)
Foreign	—			337			—
State	425			145			426
Deferred taxes:
Federal	17,902			23,454			15,968
Foreign	—			—			—
State	872			736			1,551
Total deferred tax expense	18,774			24,190			17,519
Total income tax expense from continuing operations	$	19,266		$	24,672		$	16,995
Income tax expense (benefit) from discontinued operations	$	(2	)	$	(441	)	$	(393	)

Schedule of Effective Income Tax Rate Reconciliation

The reconciliation of income tax from continuing operations computed at the U.S. statutory federal income tax rates to effective income tax rates is as follows:

	Years Ended December 31
	2013		2012		2011
Statutory federal tax rate	35.0	%	35.0	%	35.0	%
Foreign income taxes	—	%	0.3	%	—	%
State income taxes, net of federal tax benefit	(234.7	)%	0.9	%	3.1	%
Tax effect of non-deductible goodwill	(5,121.2	)%	—	%	2.4	%
Tax effect of other non-deductible expenses	(26.4	)%	1.1	%	1.7	%
Other	(19.3	)%	(0.1	)%	(0.6	)%
Effective income tax rate	(5,366.6	)%	37.2	%	41.6	%

Schedule of Effective Income Tax Rate Reconciliation, Discontinued Operations

The reconciliation of income tax from discontinued operations computed at the U.S. statutory federal income tax rates to effective income tax rates is as follows:

	Years Ended December 31
	2013		2012		2011
Statutory federal tax rate	(35.0	)%	(35.0	)%	(35.0	)%
State income taxes, net of federal tax benefit	(1.3	)%	(1.3	)%	(1.8	)%
Effective income tax rate	(36.3	)%	(36.3	)%	(36.8	)%

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Summary of Financial Statement Preparation and Significant Accounting Policies (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Minimum [Member] Support equipment [Member]	Dec. 31, 2013 Minimum [Member] Vehicles and other equipment [Member]	Dec. 31, 2013 Maximum [Member] Support equipment [Member]	Dec. 31, 2013 Maximum [Member] Vehicles and other equipment [Member]	Dec. 31, 2013 Boeing 767 and 757 aircraft and flight equipment [Member] Minimum [Member] Aircraft and Flight Equipment [Member]	Dec. 31, 2013 Boeing 767 and 757 aircraft and flight equipment [Member] Maximum [Member] Aircraft and Flight Equipment [Member]	Jan. 31, 2014 Subsequent Event [Member]
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Line Items]
Line of Credit Facility, Amount Outstanding										$ 15.0
Property, plant and equipment, useful life				5 years	3 years	10 years	8 years	10 years	20 years
Capitalized interest	1.1	2.8	2.2
Other liabilities for self-insured reserves	$ 28.3	$ 31.6

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Pension and Other Post-Retirement Benefit Plans (Funded Status) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Pension Plans [Member]
Change in benefit obligation [Roll Forward]
Obligation, beginning balance	$ 860,463	$ 772,612
Service cost	0	0	0
Interest cost	35,957	37,089	37,163
Curtailment gain	0	0
Special termination benefits	0	0
Plan amendment	0	0
Plan transfers	2,448	1,657
Benefits paid	(28,966)	(26,130)
Actuarial (gain) loss	(108,128)	75,235
Obligation, ending balance	761,774	860,463	772,612
Change in plan assets [Roll Forward]
Plan assets, beginning balance	682,553	594,697
Actual gain on plan assets	67,719	87,598
Employer contributions	27,492	24,731
Plan assets, ending balance	751,246	682,553	594,697
Funded status
Recorded liabilities - net underfunded	14,855	0
Post-Retirement Healthcare Plans [Member]
Change in benefit obligation [Roll Forward]
Obligation, beginning balance	8,781	9,275
Service cost	275	269	247
Interest cost	264	379	389
Curtailment gain	0	0
Special termination benefits	0	0
Plan amendment	0	(460)
Plan transfers	0	0
Benefits paid	(1,364)	(974)
Actuarial (gain) loss	(474)	292
Obligation, ending balance	7,482	8,781	9,275
Change in plan assets [Roll Forward]
Plan assets, beginning balance	0	0
Actual gain on plan assets	0	0
Employer contributions	1,364	974
Plan assets, ending balance	0	0	0
Funded status
Recorded liabilities - net underfunded	0	0
Other Current Liabilities [Member] | Pension Plans [Member]
Funded status
Recorded liabilities - net underfunded	(1,339)	(1,331)
Other Current Liabilities [Member] | Post-Retirement Healthcare Plans [Member]
Funded status
Recorded liabilities - net underfunded	(888)	(1,105)
Other Noncurrent Liabilities [Member] | Pension Plans [Member]
Funded status
Recorded liabilities - net underfunded	(24,044)	(176,579)
Other Noncurrent Liabilities [Member] | Post-Retirement Healthcare Plans [Member]
Funded status
Recorded liabilities - net underfunded	$ (6,594)	$ (7,676)

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Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Earnings Per Share Reconciliation [Abstract]
Earnings from continuing operations	$ (42,840)	$ 7,799	$ 6,915	$ 8,501	$ 12,211	$ 11,556	$ 11,219	$ 6,662	$ (19,625)	$ 41,648	$ 23,865
Weighted-average shares outstanding for basic earnings per share (in shares)	64,054,000	64,052,000	64,050,000	63,810,000	63,525,000	63,456,000	63,431,000	63,431,000	63,992,000	63,461,000	63,284,000
Common equivalent shares:
Effect of stock-based compensation awards (in shares)									0	959,000	801,000
Weighted-average shares outstanding assuming dilution (in shares)	64,054,000	65,036,000	64,859,000	64,524,000	64,244,000	64,667,000	64,393,000	64,374,000	63,992,000	64,420,000	64,085,000
Basic earnings per share from continuing operations (in dollars per share)	$ (0.67)	$ 0.12	$ 0.11	$ 0.13	$ 0.19	$ 0.18	$ 0.18	$ 0.11	$ (0.31)	$ 0.66	$ 0.38
Diluted earnings per share from continuing operations (in dollars per share)	$ (0.67)	$ 0.12	$ 0.11	$ 0.13	$ 0.19	$ 0.18	$ 0.17	$ 0.10	$ (0.31)	$ 0.65	$ 0.37
Restricted stock (in shares)									481,900	370,400	584,700
Anti-dilutive securities excluded from computation of earnings per share (in shares)									0	229,000	176,000

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
CURRENT ASSETS:
Cash and cash equivalents	$ 31,699	$ 15,442
Accounts receivable, net of allowance of $717 in 2013 and $749 in 2012	52,247	47,858
Inventory	9,050	9,430
Prepaid supplies and other	9,730	8,855
Deferred income taxes	13,957	19,154
Aircraft and engines held for sale	2,995	3,360
TOTAL CURRENT ASSETS	119,678	104,099
Property and equipment, net	838,172	818,924
Other assets	21,143	20,462
Pension assets, net of obligations	14,855	0
Intangibles	4,896	5,146
Goodwill	34,395	86,980
TOTAL ASSETS	1,033,139	1,035,611
CURRENT LIABILITIES:
Accounts payable	34,818	36,521
Accrued salaries, wages and benefits	23,163	22,917
Accrued expenses	9,695	8,502
Current portion of debt obligations	23,721	21,265
Unearned revenue	8,733	10,311
TOTAL CURRENT LIABILITIES	100,130	99,516
Long term debt	360,794	343,216
Post-retirement obligations	30,638	185,097
Other liabilities	62,740	62,104
Deferred income taxes	109,869	46,422
TOTAL LIABILITIES	664,171	736,355
Commitments and contingencies (Note G)
STOCKHOLDERS’ EQUITY:
Preferred stock, 20,000,000 shares authorized, including 75,000 Series A Junior Participating Preferred Stock	0	0
Common stock, par value $0.01 per share; 75,000,000 shares authorized; 64,618,305 and 64,130,056 shares issued and outstanding in 2013 and 2012, respectively	646	641
Additional paid-in capital	524,953	523,087
Accumulated deficit	(126,813)	(107,185)
Accumulated other comprehensive loss	(29,818)	(117,287)
TOTAL STOCKHOLDERS’ EQUITY	368,968	299,256
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 1,033,139	$ 1,035,611

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Property and Equipment (Schedule of Property and Equipment) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	$ 1,290,329	$ 1,203,401
Accumulated depreciation	(452,157)	(384,477)
Property and equipment, net	838,172	818,924
Aircraft and flight equipment [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	1,236,225	1,148,781
Support equipment [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	51,179	52,209
Vehicles and other equipment [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	1,771	1,597
Leasehold improvements [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	$ 1,154	$ 814

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
OPERATING ACTIVITIES:
Net earnings (loss) from continuing operations	$ (19,625)	$ 41,648	$ 23,865
Net loss from discontinued operations	(3)	(774)	(673)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Impairment of aircraft	0	0	22,065
Impairment of goodwill and acquired intangibles	52,585	0	5,079
Depreciation and amortization	91,749	84,477	91,063
Pension and post-retirement	7,061	5,562	(2,641)
Deferred income taxes	18,772	23,749	17,126
Amortization of stock-based compensation	2,732	3,231	2,877
Amortization of DHL promissory note	(6,200)	(6,200)	(6,200)
Net (gain) loss on derivative instruments	(631)	(1,879)	4,881
Write-off of unamortized debt issuance costs	0	0	2,886
Changes in assets and liabilities:
Accounts receivable	(4,994)	(4,328)	1,980
Inventory and prepaid supplies	(900)	(1,759)	(13)
Accounts payable	2,012	(5,688)	(1,715)
Unearned revenue	(6,205)	654	9,337
Accrued expenses, salaries, wages, benefits and other liabilities	(112)	4,898	(8,209)
Pension and post-retirement assets	(38,352)	(27,926)	(23,159)
Other	(3,478)	(5,032)	(2,443)
NET CASH PROVIDED BY OPERATING ACTIVITIES	94,411	110,633	133,220
INVESTING ACTIVITIES:
Capital expenditures	(112,712)	(155,243)	(213,083)
Proceeds from property and equipment	1,521	5,772	11,147
Proceeds from the redemption of interest-bearing investments	0	0	1,750
Reimbursement of Hanger Construction Costs	6,803	0	0
NET CASH (USED IN) INVESTING ACTIVITIES	(104,388)	149,471	200,186
FINANCING ACTIVITIES:
Principal payments on long term obligations	(53,766)	(26,223)	(214,424)
Proceeds from borrowings	80,000	50,000	265,000
Financing fees	0	0	(2,536)
NET CASH PROVIDED BY FINANCING ACTIVITIES	26,234	23,777	48,040
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	16,257	(15,061)	(16,040)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	15,442	30,503	46,543
CASH AND CASH EQUIVALENTS AT END OF PERIOD	31,699	15,442	30,503
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of amount capitalized	13,752	13,195	12,985
Federal alternative minimum and state income taxes paid	1,313	377	2,448
SUPPLEMENTAL NON-CASH INFORMATION:
Debt extinguished	6,200	6,200	6,200
Accrued capital expenditures	$ 1,055	$ 4,770	$ 10,921

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Pension and Other Post-Retirement Benefit Plans (Cash Flows) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer contributions	$ 27,492,000	$ 24,731,000
Estimated future employer contributions	6,300,000
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity [Abstract]
2013	31,260,000
2014	33,144,000
2015	37,769,000
2016	37,332,000
2017	39,860,000
Years 2018 to 2022	232,378,000
Post-Retirement Healthcare Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer contributions	1,364,000	974,000
Estimated future employer contributions	900,000
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity [Abstract]
2013	888,000
2014	844,000
2015	764,000
2016	755,000
2017	749,000
Years 2018 to 2022	$ 3,775,000

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Equity Instruments Other Than Options, Activity

The table below summarizes award activity.

	Year Ended December 31
	2013				2012				2011
	Number of Awards		Weighted average grant-date fair value		Number of Awards		Weighted average grant-date fair value		Number of Awards		Weighted average grant-date fair value
Outstanding at beginning of period	1,463,272		$	5.97	1,458,037		$	5.77	1,514,300		$	3.55
Granted	627,488		5.73		601,647		5.93		555,237		8.72
Converted	(526,848	)	5.72		(472,112	)	5.25		(443,300	)	2.45
Expired	(68,950	)	8.25		—		—		—		—
Forfeited	(17,200	)	7.07		(124,300	)	6.24		(168,200	)	4.22
Outstanding at end of period	1,477,762		$	5.83	1,463,272		$	5.97	1,458,037		$	5.77
Vested	506,644		$	4.47	736,541		$	4.90	390,037		$	4.45

Schedule of Share-based Payment Award, Equity Instruments Other Than Options, Valuation Assumptions

The market condition awards were valued using a Monte Carlo simulation technique based on volatility over three years for the awards granted in 2013, 2012 and 2011 using daily stock prices and using the following variables:

	2013	2012	2011
Risk-free interest rate	0.4%	0.4%	1.3%
Volatility	61.0%	90.1%	1.3%

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Income Taxes (Income Tax Provision (Benefit)) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Current taxes:
Federal	$ 67	$ 0	$ (950)
Foreign	0	337	0
State	425	145	426
Deferred taxes:
Federal	17,902	23,454	15,968
Foreign	0	0	0
State	872	736	1,551
Total deferred tax expense	18,774	24,190	17,519
Total income tax expense from continuing operations	19,266	24,672	16,995
Income tax expense (benefit) from discontinued operations	$ (2)	$ (441)	$ (393)

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Discontinued Operations

12 Months Ended

Dec. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

The Company's results of discontinued operations consist primarily of pension expenses and other benefits for former employees previously associated with ABX's former freight sorting and aircraft fueling services provided to DHL. Pursuant to its restructuring plan, DHL discontinued intra-U.S. domestic pickup and delivery services and now provides only international services to and from the U.S. In the third quarter of 2009, ABX ceased any remaining sort operations for DHL and the related hub service agreement with DHL expired. Additionally, in the third quarter of 2009, DHL assumed management of aircraft fuel services for its U.S. network previously provided by ABX. The revenues and results of the DHL hub services operations and the aircraft fuel services are reported as discontinued operations.

ABX sponsors defined benefit plans for retirees that include the former employees of the hub operations. Additionally, ABX is self insured for medical coverage and workers' compensation. The Company may incur expenses and cash outlays in the future related to pension obligations, reserves for medical expenses and wage loss for former employees. Carrying amounts of significant assets and liabilities of the discontinued operations are below (in thousands):

	December 31
	2013		2012
Assets
Pension assets, net of obligations	294		—
Total Assets	294		—
Liabilities
Employee compensation and benefits	$	34,007	$	35,703
Post-retirement	—		36,887
Total Liabilities	$	34,007	$	72,590

The revenues and pre-tax earnings of the discontinued operations are below (in thousands):

	December 31
	2013			2012			2011
Pre-tax loss	$	(5	)	$	(1,215	)	$	(1,066	)

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The calculation of basic and diluted earnings per common share follows (in thousands, except per share amounts):

	December 31
	2013			2012		2011
Earnings (loss) from continuing operations	$	(19,625	)	$	41,648	$	23,865
Weighted-average shares outstanding for basic earnings per share	63,992			63,461		63,284
Common equivalent shares:
Effect of stock-based compensation awards	—			959		801
Weighted-average shares outstanding assuming dilution	63,992			64,420		64,085
Basic earnings (loss) per share from continuing operations	$	(0.31	)	$	0.66	$	0.38
Diluted earnings (loss) per share from continuing operations	$	(0.31	)	$	0.65	$	0.37

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Summary of Financial Statement Preparation and Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Pension and Other Postretirement Plans, Policy [Policy Text Block]

Pension and Post-Retirement Benefits

The costs of benefits provided by defined benefits pension and post-retirement health care plans are recorded in the period the employees provide service. Costs adjustments for plan amendments are amortized over the expected working life or the life expectancy of plan participants. The funded status of the Company's plans is measured as the difference between the fair value of plan assets and the accumulated benefit obligations to plan participants. The overfunded or underfunded status of a plan is recorded as an asset or liability. The funded status is ordinarily measured annually at year end.

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Air Transport Services Group, Inc. and its wholly-owned subsidiaries. Inter-company balances and transactions have been eliminated. The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements. Estimates and assumptions are used to record allowances for uncollectible amounts, self-insurance reserves, spare parts inventory, depreciation and impairments of property, equipment, goodwill and intangibles, post-retirement obligations, income taxes, contingencies and litigation. Changes in estimates and assumptions may have a material impact on the consolidated financial statements.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company classifies short-term, highly liquid investments with maturities of three months or less at the time of purchase as cash and cash equivalents. These investments, consisting of money market funds, are recorded at cost, which approximates fair value. Substantially all deposits of the Company’s cash are held in accounts that exceed federally insured limits. The Company deposits cash in common financial institutions which management believes are financially sound.

Accounts Receivable and Allowance for Uncollectible Accounts

Accounts Receivable and Allowance for Uncollectible Accounts

The Company's accounts receivable is primarily due from its significant customers (see Note B), other airlines, the USPS and freight forwarders. The Company performs a quarterly evaluation of the accounts receivable and the allowance for uncollectible accounts by reviewing specific customers' recent payment history, growth prospects, financial condition and other factors that may impact a customer's ability to pay. The Company establishes an allowance for uncollectible accounts for probable losses due to a customer's potential inability or unwillingness to make contractual payments. Account balances are written off against the allowance when the Company ceases collection efforts.

Inventory

Inventory

The Company’s inventory is comprised primarily of expendable aircraft parts and supplies used for aircraft maintenance. Inventory is generally charged to expense when issued for use on a Company aircraft. The Company values its inventory of aircraft parts and supplies at weighted-average cost and maintains a related obsolescence reserve. The Company records an obsolescence reserve on a base stock of inventory for each fleet type. The amortization of base stock for the obsolescence reserve corresponds to the expected life of each fleet type. Additionally, the Company monitors the usage rates of inventory parts and segregates parts that are technologically outdated or no longer used in its fleet types. Slow moving and segregated items are actively marketed and written down to their estimated net realizable values based on market conditions.

Management analyzes the inventory reserve for reasonableness at the end of each quarter. That analysis includes consideration of the expected fleet life, amounts expected to be on hand at the end of a fleet life, and recent events and conditions that may impact the usability or value of inventory. Events or conditions that may impact the expected life, usability or net realizable value of inventory include additional aircraft maintenance directives from the FAA, changes in DOT regulations, new environmental laws and technological advances.

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The Company assesses, during the fourth quarter of each year, the carrying value of goodwill. Finite-lived intangible assets are amortized over their estimated useful economic lives. The Company also conducts impairment assessments of goodwill, indefinite-lived intangible assets and finite-lived intangible assets whenever events or changes in circumstance indicate an impairment may have occurred

Property and Equipment

Property and Equipment

Property and equipment held for use is stated at cost, net of any impairment recorded. The cost and accumulated depreciation of disposed property and equipment are removed from the accounts with any related gain or loss reflected in earnings from operations.

Depreciation of property and equipment is provided on a straight-line basis over the lesser of the asset’s useful life or lease term. Depreciable lives are summarized as follows:

Boeing 767 and 757 aircraft and flight equipment	10 to 20 years
Support equipment	5 to 10 years
Vehicles and other equipment	3 to 8 years

The Company periodically evaluates the useful lives, salvage values and fair values of property and equipment. Acceleration of depreciation expense or the recording of significant impairment losses could result from changes in the estimated useful lives of assets due to a number of reasons, such as excess aircraft capacity or changes in regulations governing the use of aircraft.

Aircraft and other long-lived assets are tested for impairment when circumstances indicate the carrying value of the assets may not be recoverable. To conduct impairment testing, the Company groups assets and liabilities at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. For assets that are to be held and used, impairment is recognized when the estimated undiscounted cash flows associated with the asset group is less than the carrying value. If impairment exists, an adjustment is made to write the assets down to fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined considering quoted market values, discounted cash flows or internal and external appraisals, as applicable. For assets held for sale, impairment is recognized when the fair value less the cost to sell the asset is less than the carrying value.

The Company’s accounting policy for major airframe and engine maintenance varies by subsidiary and aircraft type. The costs for ABX's Boeing 767-200 airframe maintenance, which is the majority of the Company's aircraft fleet, are expensed as they are incurred. The costs of major airframe maintenance for the Company's other aircraft are capitalized and amortized over the useful life of the overhaul. The Company's General Electric CF6 engines that power the Boeing 767-200 aircraft are maintained under “power by the hour” agreements with an engine maintenance provider. Under the power by the hour agreements, the engines are maintained by the service provider for a fixed fee per flight hour; accordingly, the cost of engine maintenance is generally expensed as flight hours occur. Maintenance for the airlines’ other aircraft engines, including those on the Boeing 767-300 and Boeing 757 aircraft, are typically contracted to service providers on a time and material basis and the costs of those engine overhauls are capitalized and amortized over the useful life of the overhaul.

Under certain leases, the Company is required to make periodic payments to the lessor for future maintenance events such as engine overhauls and major airframe maintenance. These payments are recorded as deposits until drawn for qualifying maintenance costs. The maintenance costs are expensed or capitalized in accordance with the airline's accounting policy for major airframe and engine maintenance. The Company evaluates at the balance sheet date, whether it is probable that an amount on deposit will be returned by the lessor to reimburse the costs of the maintenance activities. When an amount on deposit is less than probable of being returned, it is recognized as additional maintenance expense.

Capitalized Interest

Capitalized Interest

Interest costs incurred while aircraft are being modified are capitalized as an additional cost of the aircraft until the date the asset is placed in service.

Discontinued Operations

Discontinued Operations

A business component whose operations are discontinued is reported as discontinued operations if the cash flows of the component have been eliminated from the ongoing operations of the Company, and the Company will no longer have any significant continuing involvement in the business component. The results of discontinued operations are aggregated and presented separately in the consolidated statements of operations.

Exit Activities

Exit Activities

The Company accounts for the costs associated with exit activities in accordance with FASB ASC Topic 420-10 Exit or Disposal Cost Obligations. One-time, involuntary employee termination benefits are generally expensed when the Company communicates the benefit arrangement to the employee that it will no longer require the services of the employee beyond a minimum retention period. Liabilities for contract termination costs associated with exit activities are recognized in the period incurred and measured initially at fair value.

Self-Insurance

Self-Insurance

The Company is self-insured for certain workers’ compensation, employee healthcare, automobile, aircraft, and general liability claims. The Company maintains excess claim coverage with common insurance carriers to mitigate its exposure to large claim losses. The Company records a liability for reported claims and an estimate for incurred claims that have not yet been reported. Accruals for these claims are estimated utilizing historical paid claims data and recent claims trends. Other liabilities included $28.3 million and $31.6 million at December 31, 2013 and December 31, 2012, respectively, for self-insured reserves. Changes in claim severity and frequency could result in actual claims being materially different than the costs accrued.

Income Taxes

Income Taxes

Income taxes have been computed using the asset and liability method, under which deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. Deferred taxes are measured using provisions of currently enacted tax laws. A valuation allowance against net deferred tax assets is recorded when it is more likely than not that such assets will not be fully realized. Tax credits are accounted for as a reduction of income taxes in the year in which the credit originates.

The Company recognizes the benefit of a tax position taken on a tax return, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. An uncertain income tax benefit is not recognized if it has a less than a 50% likelihood of being sustained. The Company recognizes interest and penalties accrued related to uncertain tax positions in operating expense.

Comprehensive Income

Comprehensive Income

Comprehensive income includes net earnings and other comprehensive income or loss. Other comprehensive income or loss results from certain changes in the Company’s liabilities for pension and other post retirement benefits and gains and losses associated with interest rate hedging instruments.

Fair Value Information

Fair Value Information

Assets or liabilities that are required to be measured at fair value are reported using the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC Topic 820-10 Fair Value Measurements and Disclosures establishes three levels of input that may be used to measure fair value:

• Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

• Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include items where the determination of fair value requires significant management judgment or estimation.

Revenue Recognition

Revenue Recognition

Revenues generated from airline service agreements are typically recognized based on hours flown or the amount of aircraft and crew resources provided during a reporting period. Certain agreements include provisions for incentive payments based upon on-time reliability. These incentives are typically measured on a monthly basis and recorded to revenue in the corresponding month earned. Revenues for operating expenses that are reimbursed through customer agreements, including consumption of aircraft fuel, are generally recognized as the costs are incurred. Revenues from charter service agreements are recognized on scheduled and non-scheduled flights when the specific flight has been completed. Aircraft lease revenues are recognized as operating lease revenues on a straight-line basis over the term of the applicable lease agreements. Revenues from the sale of aircraft parts and engines are recognized when the parts are delivered. Revenues earned and expenses incurred in providing aircraft-related maintenance, repair or technical services are recognized in the period in which the services are completed and delivered to the customer. Revenues derived from sorting parcels are recognized in the reporting period in which the services are performed.

New Accounting Pronouncements

New Accounting Pronouncements

In July 2013, the FASB issued Accounting Standard Update No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" (ASU 2013-11"). ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This new guidance is effective for annual reporting periods beginning on or after December 15, 2013, and subsequent interim periods. The Company is currently assessing the impact, if any, that this pronouncement will have on the condensed consolidated financial statements.

In September 2013, the United States Treasury Department and the Internal Revenue Service (“IRS”) issued final and proposed regulations (the “Tangible Property Regulations”) effective for tax years beginning on or after January 1, 2014, that provided guidance on a number of matters with regard to tangible property, including whether expenditures qualified as deductible repairs, the treatment of materials and supplies, capitalization of tangible property, dispositions of property, and related elections.  The Company is assessing the financial impact as a result of these regulations and as a result of such assessment, no material impact is expected.  Future transitional guidance in the form of revenue procedures issued by the IRS, and the finalization of the proposed regulations, could impact our current estimates.

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Income Taxes (Unrecognized Tax Benefits) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
As of January 1	$ 0	$ 0	$ 0
As of December 31	$ 0	$ 0	$ 0

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Consolidated Statements of Stockholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance at at Dec. 31, 2010	$ 302,077	$ 637	$ 518,925	$ (171,251)	$ (46,234)
Balance at (in shares) at Dec. 31, 2010		63,652,228
Stock-based compensation plans
Grant of restricted stock	0	3	(3)
Grant of restricted stock (in shares)		313,300
Issuance of common shares, net of withholdings	(1,186)	1	(1,187)
Withholdings of common shares, net of issuances (in shares)		161,161
Forfeited restricted stock	0	(1)	1
Forfeited restricted stock (in shares)		(110,900)
Amortization of stock awards and restricted stock	2,877		2,877
Total comprehensive income (loss)	(33,621)			23,192	(56,813)
Balance at at Dec. 31, 2011	270,147	640	520,613	(148,059)	(103,047)
Balance at (in shares) at Dec. 31, 2011		64,015,789
Stock-based compensation plans
Grant of restricted stock	0	3	(3)
Grant of restricted stock (in shares)		254,200
Withholdings of common shares, net of issuances	(756)	(1)	(755)
Issuance of common shares, net of withholdings (in shares)		(83,933)
Forfeited restricted stock	0	(1)	1
Forfeited restricted stock (in shares)		(56,000)
Amortization of stock awards and restricted stock	3,231		3,231
Total comprehensive income (loss)	26,634			40,874	(14,240)
Balance at at Dec. 31, 2012	299,256	641	523,087	(107,185)	(117,287)
Balance at (in shares) at Dec. 31, 2012	64,130,056	64,130,056
Stock-based compensation plans
Grant of restricted stock	0	3	(3)
Grant of restricted stock (in shares)		258,800
Issuance of common shares, net of withholdings	(1,048)	2	(1,050)
Withholdings of common shares, net of issuances (in shares)		238,049
Forfeited restricted stock	0	0	0
Adjustments to Additional Paid in Capital, Income Tax Benefit from Share-based Compensation	187		187
Forfeited restricted stock (in shares)		(8,600)
Amortization of stock awards and restricted stock	2,732		2,732
Total comprehensive income (loss)	67,841			(19,628)	87,469
Balance at at Dec. 31, 2013	$ 368,968	$ 646	$ 524,953	$ (126,813)	$ (29,818)
Balance at (in shares) at Dec. 31, 2013	64,618,305	64,618,305

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Assets, Current [Abstract]
Allowance for doubtful accounts	$ 717	$ 749
Stockholders' Equity Attributable to Parent [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	75,000,000	75,000,000
Common stock, shares issued (in shares)	64,618,305	64,130,056
Common stock, shares outstanding (in shares)	64,618,305	64,130,056
Preferred Stock [Member]
Stockholders' Equity Attributable to Parent [Abstract]
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Series A Junior Participating Preferred Stock [Member]
Stockholders' Equity Attributable to Parent [Abstract]
Preferred stock, shares authorized (in shares)	75,000	75,000

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Derivative Instruments

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

The Company's Senior Credit Agreement requires the Company to maintain derivative instruments for protection from fluctuating interest rates, for at least fifty percent of the outstanding balance of term loan. As a result, the Company entered into an interest rate swap in July of 2011 having an initial notional value of $75.0 million and a forward start date of December 31, 2011. Under this swap, the Company pays a fixed rate of 2.02% and receives a floating rate that resets quarterly based on LIBOR. In addition to the interest rate swap above, the Company entered into an interest rate swap in June of 2013 having an initial notional value of $65.6 million and a forward start date of December 31, 2013. Under this swap, the Company will pay a fixed rate of 1.1825% and receive a floating rate that resets monthly based on LIBOR.

The outstanding interest rate swaps are not designated as hedges for accounting purposes. The effects of future fluctuations in LIBOR interest rates on derivatives held by the Company will result in the recording of unrealized gains and losses into the statement of operations. The Company recorded an unrealized gain on derivatives of $0.6 million and $1.9 million for the years ending December 31, 2013 and 2012, respectively, to reflect the interest rate swaps at market value. The Company recorded an unrealized loss on derivatives of $4.9 million for the year ending December 31, 2011, which includes a $3.9 million pre-tax charge in 2011 to recognize the losses previously recorded in accumulated other comprehensive income for certain interest rate swaps which had previously been designated as cash flow hedges. The liability for outstanding derivatives is recorded in other liabilities and in accrued expenses. The table below provides information about the Company’s interest rate swaps (in thousands):

			December 31, 2013			December 31, 2012
Expiration Date	Stated Interest Rate		Notional Amount	Market Value (Liability)		Notional Amount	Market Value (Liability)
May 9, 2016	2.020	%	65,625	(1,988	)	72,188	(3,146	)
June 30, 2017	1.183	%	65,625	(527	)	—	—

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2013	Mar. 07, 2014	Jun. 30, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	Air Transport Services Group, Inc.
Entity Central Index Key	0000894081
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		64,654,537
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 344,217,832

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Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2013

Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) includes the following items by components for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	Defined Benefit Pension		Defined Benefit Post-Retirement		Gains and Losses on Derivative		Total
Balance as of January 1, 2011	(54,325	)	10,761		(2,670	)	(46,234	)
Other comprehensive income (loss) before reclassifications:
Actuarial gain (loss) for retiree liabilities	(91,715	)	192		—		(91,523	)
Unrealized gain (loss) for derivative instruments	—		—		631		631
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	2,700		211		—		2,911
Negative prior service cost (reclassified to salaries, wages and benefits)	—		(5,552	)	—		(5,552	)
Hedging gain (reclassified to interest expense)	—		—		(223	)	(223	)
Unrealized loss on derivative instruments (reclassified to net gain (loss) on derivative instruments)	—		—		3,932		3,932
Income Tax (Expense) or Benefit	32,714		1,892		(1,595	)	33,011
Other comprehensive income (loss), net of tax	(56,301	)	(3,257	)	2,745		(56,813	)
Balance as of December 31, 2011	(110,626	)	7,504		75		(103,047	)
Other comprehensive income (loss) before reclassifications:
Actuarial gain (loss) for retiree liabilities	(27,518	)	168		—		(27,350	)
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	10,681		433		—		11,114
Negative prior service cost (reclassified to salaries, wages and benefits)	—		(5,552	)	—		(5,552	)
Hedging gain (reclassified to interest expense)	—		—		(57	)	(57	)
Income Tax (Expense) or Benefit	5,861		1,724		20		7,605
Other comprehensive income (loss), net of tax	(10,976	)	(3,227	)	(37	)	(14,240	)
Balance as of December 31, 2012	(121,602	)	4,277		38		(117,287	)
Other comprehensive income (loss) before reclassifications:
Actuarial gain for retiree liabilities	129,856		474		—		130,330
Amounts reclassified from accumulated other comprehensive income
Actuarial costs (reclassified to salaries, wages and benefits)	12,296		419		—		12,715
Negative prior service cost (reclassified to salaries, wages and benefits)	—		(5,654	)	—		(5,654	)
Hedging gain (reclassified to interest expense)	—		—		(50	)	(50	)
Income Tax (Expense) or Benefit	(51,622	)	1,729		21		(49,872	)
Other comprehensive income (loss), net of tax	90,530		(3,032	)	(29	)	87,469
Balance as of December 31, 2013	(31,072	)	1,245		9		(29,818	)

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
REVENUES	$ 580,023	$ 607,438	$ 730,133
OPERATING EXPENSES
Salaries, wages and benefits	175,383	184,644	188,884
Fuel	49,376	53,928	150,003
Maintenance, materials and repairs	97,053	97,540	86,929
Depreciation and amortization	91,749	84,477	91,063
Travel	18,693	22,683	28,335
Rent	27,468	25,970	25,201
Landing and ramp	11,204	15,973	22,630
Insurance	6,216	7,716	9,309
Impairment of goodwill	52,585	0	2,797
Impairment of acquired intangibles	0	0	2,282
Impairment of aircraft	0	0	22,065
Other operating expenses	37,111	35,819	38,006
Operating Expenses	566,838	528,750	667,504
OPERATING INCOME	13,185	78,688	62,629
OTHER INCOME (EXPENSE)
Interest income	74	136	179
Interest expense	(14,249)	(14,383)	(14,181)
Net gain (loss) on derivative instruments	631	1,879	(4,881)
Write-off of unamortized debt issuance costs	0	0	(2,886)
Other Nonoperating Income (Expense)	(13,544)	(12,368)	(21,769)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(359)	66,320	40,860
INCOME TAX EXPENSE	(19,266)	(24,672)	(16,995)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS	(19,625)	41,648	23,865
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES	(3)	(774)	(673)
NET EARNINGS (LOSS)	$ (19,628)	$ 40,874	$ 23,192
BASIC EARNINGS (LOSS) PER SHARE
Continuing operations (in dollars per share)	$ (0.31)	$ 0.66	$ 0.38
Discontinued operations (in dollars per share)	$ 0.00	$ (0.02)	$ (0.01)
TOTAL BASIC EARNINGS PER SHARE (in dollars per share)	$ (0.31)	$ 0.64	$ 0.37
DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations (in dollars per share)	$ (0.31)	$ 0.65	$ 0.37
Discontinued operations (in dollars per share)	$ 0.00	$ (0.02)	$ (0.01)
TOTAL DILUTED NET EARNINGS PER SHARE (in dollars per share)	$ (0.31)	$ 0.63	$ 0.36
WEIGHTED AVERAGE SHARES
Basic (in shares)	63,992	63,461	63,284
Diluted (in shares)	63,992	64,420	64,085

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Property and Equipment

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

The Company's property and equipment consists primarily of cargo aircraft, aircraft engines and flight equipment. Property and equipment, to be held and used, is summarized as follows (in thousands):

	December 31, 2013			December 31, 2012
Aircraft and flight equipment	$	1,236,225		$	1,148,781
Support equipment	51,179			52,209
Vehicles and other equipment	1,771			1,597
Leasehold improvements	1,154			814
	1,290,329			1,203,401
Accumulated depreciation	(452,157		)	(384,477		)
Property and equipment, net	$	838,172		$	818,924

CAM owned aircraft with a carrying value of $250.9 million and $273.4 million that were under leases to external customers as of December 31, 2013 and 2012, respectively. Minimum future lease payments for aircraft and equipment leased to external customers as of December 31, 2013 is scheduled to be $54.8 million, $54.8 million, $48.2 million, $23.1 million and $4.2 million for each of the next five years ending December 31, 2018.

Stagnant economic growth and higher fuel prices precipitated BAX/Schenker's decision to phase-out its North American air network in 2011 and diminished the demand for the Company's Boeing 727 and DC-8 freighter aircraft. These aircraft are less fuel efficient and generally require higher maintenance costs to maintain acceptable levels of reliability compared to more modern aircraft. As a result of these conditions and BAX/Schenker's decision in July 2011 to phase-out its North American air network, the Company decided to retire the Boeing 727 and DC-8 freighter fleets. During the third quarter of 2011, the Company recorded a pre-tax impairment charge totaling $22.1 million to reduce the carrying values of its Boeing 727 and DC-8 freighters, engines and related parts to their estimated fair value. The Company determined the fair values of these aircraft with the assistance of an independent appraiser using comparable market sales (level 2 fair value inputs).

The carrying value of Boeing 727 and DC-8 freighter aircraft and engines available for sale totaled $3.0 million and $3.4 million as of December 31, 2013 and 2012, respectively. Cash flows generated from sales of aircraft and engines totaled $1.5 million, $5.8 million and $11.1 million for the years ended December 31, 2013, 2012 and 2011, respectively. During the fourth quarter of 2011, the Company received $10.7 million from BAX/Schenker for the reimbursement of capitalized maintenance costs for aircraft removed from service.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The Company’s money market funds and interest rate swaps are reported on the Company’s consolidated balance sheets at fair values based on market values from identical or comparable transactions. The fair value of the Company’s money market funds and interest rate swaps are based on observable inputs (Level 2) from comparable market transactions. The use of significant unobservable inputs (Level 3) was not necessary in determining the fair value of the Company’s financial assets and liabilities.

The following table reflects assets and liabilities that are measured at fair value on a recurring basis (in thousands):

As of December 31, 2013	Fair Value Measurement Using							Total
	Level 1		Level 2			Level 3
Assets
Cash equivalents—money market	$	20	$	301		$	—	$	321
Total Assets	$	20	$	301		$	—	$	321
Liabilities
Interest rate swap	$	—	$	(2,515	)	$	—	$	(2,515	)
Total Liabilities	$	—	$	(2,515	)	$	—	$	(2,515	)

As of December 31, 2012	Fair Value Measurement Using							Total
	Level 1		Level 2			Level 3
Assets
Cash equivalents—money market	$	18	$	339		$	—	$	357
Total Assets	$	18	$	339		$	—	$	357
Liabilities
Interest rate swap	$	—	$	(3,146	)	$	—	$	(3,146	)
Total Liabilities	$	—	$	(3,146	)	$	—	$	(3,146	)

As a result of lower market interest rates compared to the stated interest rates of the Company’s fixed and variable rate debt obligations, the fair value of the Company’s debt obligations, based on Level 2 observable inputs, was approximately $6.3 million more than the carrying value, which was $384.5 million at December 31, 2013. As of December 31.2012, the fair value of the Company’s debt obligations was approximately $3.8 million more than the carrying value, which was $364.5 million. The non-financial assets, including goodwill, intangible assets and property and equipment are measured at fair value on a non-recurring basis.

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Quarterly Results (Unaudited)

12 Months Ended

Dec. 31, 2013

Selected Quarterly Financial Information [Abstract]

Quarterly Results

QUARTERLY RESULTS (Unaudited)

The following is a summary of quarterly results of operations (in thousands, except per share amounts):

	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
2013
Revenues from continuing operations	$	143,279		$	138,904		$	140,877		$	156,963
Net earnings (loss) from continuing operations	8,501			6,915			7,799			(42,840		)
Net loss from discontinued operations	(1		)	(1		)	—			(1		)
Weighted average shares:
Basic	63,810			64,050			64,052			64,054
Diluted	64,524			64,859			65,036			64,054
Earnings (loss) per share from continuing operations
Basic	$	0.13		$	0.11		$	0.12		$	(0.67	)
Diluted	$	0.13		$	0.11		$	0.12		$	(0.67	)
2012
Revenues from continuing operations	$	145,506		$	153,554		$	153,826		$	154,552
Net earnings from continuing operations	6,662			11,219			11,556			12,211
Net loss from discontinued operations	(230		)	(160		)	(186		)	(198		)
Weighted average shares:
Basic	63,431			63,431			63,456			63,525
Diluted	64,374			64,393			64,667			64,244
Earnings per share from continuing operations
Basic	$	0.11		$	0.18		$	0.18		$	0.19
Diluted	$	0.10		$	0.17		$	0.18		$	0.19

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

The Company's Board of Directors has granted stock incentive awards to certain employees and board members pursuant to a long term incentive plan which was approved by the Company's stockholders in May 2005. Employees have been awarded non-vested stock units with performance conditions, non-vested stock units with market conditions and non-vested restricted stock. The restrictions on the non-vested restricted stock awards lapse at the end of a specified service period, which is typically approximately three years from the date of grant. Restrictions could lapse sooner upon a business combination, death, disability or after an employee qualifies for retirement. The non-vested stock units will be converted into a number of shares of Company stock depending on performance and market conditions at the end of a specified service period, lasting approximately three years. The performance condition awards will be converted into a number of shares of Company stock based on the Company's average return on invested capital during the service period. Similarly, the market condition awards will be converted into a number of shares depending on the appreciation of the Company's stock compared to the NASDAQ Transportation Index. Board members were granted time-based awards with approximately a six-month vesting period, which will settle when the board member ceases to be a director of the Company. The Company expects to settle all of the stock unit awards by issuing new shares of stock. The table below summarizes award activity.

	Year Ended December 31
	2013				2012				2011
	Number of Awards		Weighted average grant-date fair value		Number of Awards		Weighted average grant-date fair value		Number of Awards		Weighted average grant-date fair value
Outstanding at beginning of period	1,463,272		$	5.97	1,458,037		$	5.77	1,514,300		$	3.55
Granted	627,488		5.73		601,647		5.93		555,237		8.72
Converted	(526,848	)	5.72		(472,112	)	5.25		(443,300	)	2.45
Expired	(68,950	)	8.25		—		—		—		—
Forfeited	(17,200	)	7.07		(124,300	)	6.24		(168,200	)	4.22
Outstanding at end of period	1,477,762		$	5.83	1,463,272		$	5.97	1,458,037		$	5.77
Vested	506,644		$	4.47	736,541		$	4.90	390,037		$	4.45

The average grant-date fair value of each performance condition award, non-vested restricted stock award and time-based award granted by the Company was $5.46, $5.63 and $8.25 for 2013, 2012 and 2011, respectively, the fair value of the Company’s stock on the date of grant. The average grant-date fair value of each market condition award granted was $6.78, $7.05 and $11.17 for 2013, 2012 and 2011, respectively. The market condition awards were valued using a Monte Carlo simulation technique based on volatility over three years for the awards granted in 2013, 2012 and 2011 using daily stock prices and using the following variables:

	2013	2012	2011
Risk-free interest rate	0.4%	0.4%	1.3%
Volatility	61.0%	90.1%	1.3%

For the years ended December 31, 2013, 2012 and 2011, the Company recorded expense of $2.7 million, $3.2 million and $2.9 million, respectively, for stock incentive awards. At December 31, 2013, there was $2.8 million of unrecognized expense related to the stock incentive awards that is expected to be recognized over a weighted-average period of 1.6 years. As of December 31, 2013, none of the awards were convertible, 441,812 units of the Board members time-based awards had vested and none of the outstanding shares of the restricted stock had vested. These awards could result in a maximum number of 1,754,787 additional outstanding shares of the Company’s common stock depending on service, performance and market results through December 31, 2015.

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Pension and Other Post-Retirement Benefit Plans

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Pension and Other Post-Retirement Benefit Plans

PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS

Defined Benefit and Post-retirement Healthcare Plans

ABX sponsors a qualified defined benefit pension plan for ABX crewmembers and a qualified defined benefit pension plan for a major portion of its other ABX employees that meet minimum eligibility requirements. ABX also sponsors non-qualified defined benefit pension plans for certain employees. These non-qualified plans are unfunded. Employees are no longer accruing benefits under any of the defined benefit pension plans. ABX also sponsors a post-retirement healthcare plan for its ABX employees, which is unfunded.

The accounting and valuation for these post-retirement obligations are determined by prescribed accounting and actuarial methods that consider a number of assumptions and estimates. The selection of appropriate assumptions and estimates is significant due to the long time period over which benefits will be accrued and paid. The long term nature of these benefit payouts increases the sensitivity of certain estimates of our post-retirement costs. The assumptions considered most sensitive in actuarially valuing ABX’s pension obligations and determining related expense amounts are discount rates and expected long term investment returns on plan assets. Additionally, other assumptions concerning retirement ages, mortality and employee turnover also affect the valuations. Actual results and future changes in these assumptions could result in future costs significantly higher than those recorded in our results of operations.

ABX measures plan assets and benefit obligations as of December 31 of each year. Information regarding ABX’s sponsored defined benefit pension plans and post-retirement healthcare plans follow below. The accumulated benefit obligation reflects pension benefit obligations based on the actual earnings and service to-date of current employees.

Funded Status(in thousands):

	Pension Plans						Post-retirement Healthcare Plans
	2013			2012			2013			2012
Accumulated benefit obligation	$	761,774		$	860,463		$	7,482		$	8,781
Change in benefit obligation
Obligation as of January 1	$	860,463		$	772,612		$	8,781		$	9,275
Service cost	—			—			275			269
Interest cost	35,957			37,089			264			379
Curtailment gain	—			—			—			—
Special termination benefits	—			—			—			—
Plan amendment	—			—			—			(460		)
Plan transfers	2,448			1,657			—			—
Benefits paid	(28,966		)	(26,130		)	(1,364		)	(974		)
Actuarial (gain) loss	(108,128		)	75,235			(474		)	292
Obligation as of December 31	$	761,774		$	860,463		$	7,482		$	8,781
Change in plan assets
Fair value as of January 1	$	682,553		$	594,697		$	—		$	—
Actual gain on plan assets	67,719			87,598			—			—
Plan transfers	2,448			1,657			—			—
Employer contributions	27,492			24,731			1,364			974
Benefits paid	(28,966		)	(26,130		)	(1,364		)	(974		)
Fair value as of December 31	$	751,246		$	682,553		$	—		$	—
Funded status
Overfunded plans, net asset	$	14,855		$	—		$	—		$	—
Underfunded plans
Current liabilities	$	(1,339	)	$	(1,331	)	$	(888	)	$	(1,105	)
Non-current liabilities	$	(24,044	)	$	(176,579	)	$	(6,594	)	$	(7,676	)

Components of Net Periodic Benefit Cost

ABX’s net periodic benefit costs for its defined benefit pension plans and post-retirement healthcare plans for the years ended December 31, 2013, 2012 and 2011, are as follows (in thousands):

	Pension Plans									Post-Retirement Healthcare Plan
	2013			2012			2011			2013			2012			2011
Service cost	$	—		$	—		$	—		$	275		$	269		247
Interest cost	35,957			37,089			37,163			264			379			389
Expected return on plan assets	(45,990		)	(39,882		)	(39,027		)	—			—			—
Amortization of prior service cost	—			—			—			419			433			529
Amortization of net (gain) loss	12,296			10,681			2,700			(5,654		)	(5,552		)	(5,552		)
Net periodic benefit cost	$	2,263		$	7,888		$	836		$	(4,696	)	$	(4,471	)	$	(4,387	)

In 2010, the Company modified the post-retirement health plans for ABX employees. Benefits for covered individuals now terminates upon reaching age 65 under the modified post-retirement healthcare plans.

Unrecognized Net Periodic Benefit Expense

The pre-tax amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit expense at December 31 are as follows (in thousands):

	Pension Plans				Post-Retirement Healthcare Plans
	2013		2012		2013			2012
Unrecognized prior service cost	$	—	$	—	$	(4,182	)	$	(9,836	)
Unrecognized net actuarial loss	40,190		182,342		2,027			2,920
Accumulated other comprehensive (income) loss	$	40,190	$	182,342	$	(2,155	)	$	(6,916	)

The following table sets forth the amounts of unrecognized net actuarial loss and (gain) recorded in accumulated other comprehensive loss that is expected to be recognized as components of net periodic benefit expense during 2014 (in thousands):

	Pension Plans			Post- Retirement Healthcare Plans
Amortization of actuarial loss	$	(2	)	$	320
Prior Service Cost	—			(3,487		)

Assumptions

Assumptions used in determining the funded status of ABX’s pension plans at December 31 were as follows:

	Pension Plans
	2013	2012	2011
Discount rate - crewmembers	5.25%	4.25%	5.10%
Discount rate - non-crewmembers	5.35%	4.25%	4.65%
Expected return on plan assets	6.25%	6.75%	6.75%

Net periodic benefit cost was based on the discount rate assumptions at the end of the previous year.

The discount rate used to determine post-retirement healthcare obligations was 4.15% for pilots and 3.85% for non-pilots at December 31, 2013. The discount rate used to determine post-retirement healthcare obligations was 3.35% for pilots and 2.95% for non-pilots at December 31, 2012. The discount rate used to determine post-retirement healthcare obligations was 4.60% for pilots and 4.05% for non-pilots at December 31, 2011. Post-retirement healthcare plan obligations have not been funded. The Company's retiree healthcare contributions have been fixed for each participant, accordingly, healthcare cost trend rates do not effect the post-retirement healthcare obligations.

Plan Assets

The weighted-average asset allocations by asset category are as shown below:

	Composition of Plan Assets as of December 31
Asset category	2013		2012
Cash	—	%	—	%
Equity securities	50	%	48	%
Fixed income securities	47	%	49	%
Real estate	3	%	3	%
	100	%	100	%

ABX uses an investment management firm to advise it in developing and executing an investment policy. The portfolio is managed with consideration for diversification, quality and marketability. The investment policy permits the following ranges of asset allocation: equities – 22.5% to 69.3%; fixed income securities – 38.0% to 76.5%; real estate – 3% to 7%; cash – 0% to 10%. Except for U.S. Treasuries, no more than 10% of the fixed income portfolio and no more than 5% of the equity portfolio can be invested in securities of any single issuer.

The overall expected long term rate of return was developed using various market assumptions in conjunction with the plans’ targeted asset allocation. The assumptions were based on historical market returns.

Cash Flows

In 2013 and 2012, the Company made contributions to its defined benefit plans of $27.5 million and $24.7 million, respectively. The Company estimates that its contributions in 2014 will be approximately $6.3 million for its defined benefit pension plans and $0.9 million for its post-retirement healthcare plans.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid out of the respective plans as follows (in thousands):

	Pension Benefits		Post-retirement Healthcare Benefits
2014	$	31,260	$	888
2015	33,144		844
2016	37,769		764
2017	37,332		755
2018	39,860		749
Years 2019 to 2023	232,378		3,775

Fair Value Measurements

The pension plan assets are valued at fair value. The following is a description of the valuation methodologies used for the investments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.

Temporary Cash Investments—These investments consist of U.S. dollars and foreign currencies held in master trust accounts at The Northern Trust Company. Foreign currencies held are reported in terms of U.S. dollars based on currency exchange rates readily available in active markets. These temporary cash investments are classified as Level 1 investments.

Corporate Stock—This investment category consists of common and preferred stock issued by domestic and international corporations that are regularly traded on exchanges and price quotes for these shares are readily available. These investments are classified as Level 1 investments.

Common Trust Funds—Common trust funds are composed of shares or units in non-publicly traded funds whereby the underlying assets in these funds (cash, cash equivalents, fixed income securities and equity securities) are publicly traded on exchanges and price quotes for the assets held by these funds are readily available. Holdings of common trust funds are classified as Level 2 investments.

Mutual Funds—Investments in this category include shares in registered mutual funds, unit trust and commingled funds. These funds consist of domestic equity, international equity and fixed income strategies. Investments in this category that are publicly traded on an exchange and have a share price published at the close of each business day are classified as Level 1 investments and holdings in the other mutual funds are classified as Level 2 investments.

Fixed Income Investments—Securities in this category consist of U.S. Government or Agency securities, state and local government securities, corporate fixed income securities or pooled fixed income securities. Securities in this category that are valued utilizing published prices at the close of each business day are classified as Level 1 investments. Those investments valued by bid data prices provided by independent pricing sources are classified as Level 2 investments.

Real Estate—The real estate investment in a commingled trust account consists of publicly traded real estate investment trusts and collateralized mortgage backed securities as well as private market direct property investments. The valuations for the holdings in these investments are not based on readily observable inputs and are classified as Level 3 investments.

Hedge Funds and Private Equity—These investments are not readily tradeable and have valuations that are not based on readily observable data inputs. The fair value of these assets is estimated based on information provided by the fund managers or the general partners. Therefore, these assets are classified as Level 3.

The pension plan assets measured at fair value on a recurring basis were as follows (in thousands):

As of December 31, 2013	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Plan assets
Temporary cash investments	$	—	$	—	$	—	$	—
Common trust funds	—		10,503		—		10,503
Corporate stock	63,313		—		—		63,313
Mutual funds	107,635		164,230		—		271,865
Fixed income investments	6,761		349,904		—		356,665
Real estate	—		—		19,561		19,561
Hedge funds and private equity	—		—		29,339		29,339
Total plan assets	$	177,709	$	524,637	$	48,900	$	751,246

As of December 31, 2012	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Plan assets
Temporary cash investments	$	—	$	—	$	—	$	—
Common trust funds	—		5,720		—		5,720
Corporate stock	63,396		2,123		—		65,519
Mutual funds	96,008		138,846		—		234,854
Fixed income investments	5,832		326,478		—		332,310
Real estate	—		—		17,181		17,181
Hedge funds and private equity	—		—		26,969		26,969
Total plan assets	$	165,236	$	473,167	$	44,150	$	682,553

ABX’s pension investments include hedge funds, private equity and real estate funds whose fair values have been estimated in the absence of readily determinable fair values. Management’s estimates are based on information provided by the fund managers or general partners of those funds. The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant Level 3 unobservable inputs (in thousands):

	Hedge Funds & Private Equity			Real Estate Investments		Total
January 1, 2012	$	25,759		$	14,557	$	40,316
Unrealized gains	3,612			2,624		6,236
Purchases & settlements	(2,402		)	—		(2,402		)
December 31, 2012	$	26,969		$	17,181	$	44,150
Unrealized gains	3,884			2,380		6,264
Purchases & settlements	(1,514		)	—		(1,514		)
December 31, 2013	$	29,339		$	19,561	$	48,900

Defined Contribution Plans

The Company sponsors defined contribution capital accumulation plans (401k) that are funded by both voluntary employee salary deferrals and by employer contributions. Expenses for defined contribution retirement plans were as follows (in thousands):

	Years Ended December 31
	2013		2012		2011
Capital accumulation plans	$	5,131	$	5,300	$	4,938
Total expense	$	5,131	$	5,300	$	4,938

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Pension and Other Post-Retirement Benefit Plans (Fair Value of Plan Assets) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	$ 48,900	$ 44,150	$ 40,316
Real estate [Member] | Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	19,561	17,181	14,557
Hedge funds and private equity [Member] | Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	29,339	26,969	25,759
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	751,246	682,553	594,697
Pension Plans [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	177,709	165,236
Pension Plans [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	524,637	473,167
Pension Plans [Member] | Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	48,900	44,150
Pension Plans [Member] | Total [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	751,246	682,553
Pension Plans [Member] | Temporary cash investments [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Temporary cash investments [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Temporary cash investments [Member] | Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Temporary cash investments [Member] | Total [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Common trust funds [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Common trust funds [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	10,503	5,720
Pension Plans [Member] | Common trust funds [Member] | Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Common trust funds [Member] | Total [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	10,503	5,720
Pension Plans [Member] | Corporate stock [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	63,313	63,396
Pension Plans [Member] | Corporate stock [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	2,123
Pension Plans [Member] | Corporate stock [Member] | Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Corporate stock [Member] | Total [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	63,313	65,519
Pension Plans [Member] | Mutual funds [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	107,635	96,008
Pension Plans [Member] | Mutual funds [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	164,230	138,846
Pension Plans [Member] | Mutual funds [Member] | Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Mutual funds [Member] | Total [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	271,865	234,854
Pension Plans [Member] | Fixed income investments [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	6,761	5,832
Pension Plans [Member] | Fixed income investments [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	349,904	326,478
Pension Plans [Member] | Fixed income investments [Member] | Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Fixed income investments [Member] | Total [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	356,665	332,310
Pension Plans [Member] | Real estate [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Real estate [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Real estate [Member] | Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	19,561	17,181
Pension Plans [Member] | Real estate [Member] | Total [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	19,561	17,181
Pension Plans [Member] | Hedge funds and private equity [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Hedge funds and private equity [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Pension Plans [Member] | Hedge funds and private equity [Member] | Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	29,339	26,969
Pension Plans [Member] | Hedge funds and private equity [Member] | Total [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets	$ 29,339	$ 26,969

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Debt Obligations

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Debt Obligations

DEBT OBLIGATIONS

Long term obligations consisted of the following (in thousands):

	December 31,			December 31,
	2013			2012
Unsubordinated term loan	$	131,250		$	144,375
Revolving credit facility	190,500			143,000
Aircraft loans	55,015			63,156
Promissory note due to DHL, unsecured	7,750			13,950
Total long term obligations	384,515			364,481
Less: current portion	(23,721		)	(21,265		)
Total long term obligations, net	$	360,794		$	343,216

The Company executed a syndicated credit agreement ("Senior Credit Agreement") in May 2011 which includes an unsubordinated term loan and a revolving credit facility. In July 2012, the Company executed the first amendment to the Senior Credit Agreement (“Credit Amendment”). The Credit Amendment increased the amount available under the revolving credit facility by $50.0 million to $225.0 million, extended the maturity of the term loan and revolving credit facility to July 20, 2017, and provided for an accordion feature whereby the Company may draw up to an additional $50.0 million, subject to the lenders' consent. In October 2013, the lenders agreed to make the accordion funds of $50.0 million available to the Company, increasing the capacity of the revolving credit facility to $275.0 million.

Under the terms of the Senior Credit Agreement, interest rates are adjusted quarterly based on the Company's earnings before interest, taxes, depreciation and amortization expenses ("EBITDA"), its outstanding debt level and prevailing LIBOR or prime rates. At the Company's current debt-to-EBITDA ratio, the LIBOR based financing for the unsubordinated term loan and revolving credit facility bear a variable interest rate of 2.545% and 2.545%, respectively. The Credit Amendment did not affect the EBITDA based pricing or covenants of the Senior Credit Agreement. The Senior Credit Agreement provides for the issuance of letters of credit on the Company's behalf. As of December 31, 2013, the unused revolving credit facility totaled $74.3 million, net of draws of $190.5 million and outstanding letters of credit of $10.2 million.

The aircraft loans are collateralized by six aircraft, and amortize monthly with a balloon payment of approximately 20% with maturities between 2016 and early 2018. Interest rates range from 6.74% to 7.36% per annum payable monthly.

The scheduled annual principal payments on long term debt, as of December 31, 2013, for the next five years are as follows (in thousands):

	Principal Payments
2014	$	23,721
2015	24,344
2016	33,865
2017	291,195
2018	3,640
2019 and beyond	7,750
	$	384,515

The promissory note payable to DHL becomes due in August 2028 as a balloon payment, unless it is extinguished sooner under the terms of the CMI agreement. Beginning April 1, 2010 and extending through the term of the CMI agreement, the balance of the note is amortized ratably without cash payment in exchange for services provided and, thus, is expected to be completely amortized by April 2015. The promissory note bears interest at a rate of 5% per annum, and DHL reimburses ABX the interest expense from the note through the term of the CMI agreement.

The Senior Credit Agreement is collateralized by certain of the Company's Boeing 767 and 757 aircraft that are not collateralized under aircraft loans. Under the terms of the Senior Credit Agreement, the Company is required to maintain collateral coverage equal to 150% of the outstanding balance of the term loan and total capacity of the revolving credit facility. The Senior Credit Agreement contains covenants including, among other things, limitations on certain additional indebtedness, guarantees of indebtedness, as well as a total debt to EBITDA ratio and a fixed charge coverage ratio. The Senior Credit Agreement stipulates events of default, including unspecified events that may have material adverse effects on the Company. If an event of default occurs, the Company may be forced to repay, renegotiate or replace the Senior Credit Agreement. The Senior Credit Agreement limits the amount of dividends the Company can pay and the amount of common stock it can repurchase to $50.0 million during any calendar year, provided the Company's total debt to EBITDA ratio is under two times, after giving effect to the dividend or repurchase. Under the provisions of its promissory note due to DHL, the Company is required to prepay the DHL note in the amount of $0.20 for each dollar of dividend distributed to its stockholders. The same prepayment stipulation applies to stock repurchases.

In conjunction with the execution of the Senior Credit Agreement in 2011, the Company terminated its previous credit agreement, which resulted in the write-off of unamortized debt issuance costs associated with that credit agreement and losses for certain interest rate swaps which had previously been designated as cash flow hedges of interest payments required by the former debt. These charges, which totaled $6.8 million before income taxes, were recorded in March 2011.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases six Boeing 767 aircraft, airport facilities, office space, maintenance facilities and certain equipment under operating leases. In December 2012, the Company entered into agreements with the Clinton County Port Authority ("CCPA") to construct and lease an aircraft hangar in Wilmington, Ohio, adjacent to the existing aircraft maintenance facility currently leased by the Company. The Company acts as construction agent for the CCPA and began construction of a 100,000 square foot aircraft hangar in 2013. While the current facility houses aircraft as large as the Boeing 767, the new hangar will provide the capability of servicing aircraft as large as a Boeing 747 and a Boeing 777. The hangar is anticipated to cost approximately $15.7 million and due to adverse weather conditions, is not expected to be completed until May 2014. The CCPA is financing the construction of the hangar primarily through a State of Ohio bond program and a State of Ohio loan on incremental taxes. The costs incurred to build the hangar are included in "Property and equipment" and the amounts that are reimbursed through the State of Ohio and the CCPA are included in "Other liabilities" on the Company's balance sheet. The Company began to make lease payments for the hangar directly to the trustee for the State of Ohio beginning in 2014.

The future minimum lease payments of the Company as of December 31, 2013 are scheduled below (in thousands):

	Operating Leases		Hangar Lease
2014	$	22,561	$	592
2015	12,499		602
2016	8,807		832
2017	4,733		834
2018	3,113		833
2019 and beyond	1,533		14,610
Total minimum lease payments	$	53,246	$	18,303

Guarantees and Indemnifications

Certain leases and agreements of the Company contain guarantees and indemnification obligations to the lessor, or one or more other parties that are considered reasonable and customary (e.g. use, tax and environmental indemnifications), the terms of which range in duration and are often limited. Such indemnification obligations may continue after expiration of the respective lease or agreement.

Civil Action Alleging Violations of Immigration Laws

On December 31, 2008, a former ABX employee filed a complaint against ABX, a total of four current and former executives and managers of ABX, Garcia Labor Company of Ohio, and three former executives of the Garcia Labor companies, in the U.S. District Court for the Southern District of Ohio. The case was filed as a putative class action against the defendants, and asserts violations of the Racketeer Influenced and Corrupt Practices Act (RICO). The complaint, which was later amended to include a second former employee plaintiff, seeks damages in an unspecified amount and alleges that the defendants engaged in a scheme to hire illegal immigrant workers to depress the wages paid to hourly wage employees during the period from December 1999 to January 2005.

On December 2, 2011, the plaintiffs agreed to settle this matter in exchange for the payment by ABX to plaintiffs and the putative class members of a monetary amount, which amount management believes to be less than it would have cost to defend the case at trial. The final settlement was approved by the Court on July 9, 2013 and following a 30-day appeal period during which no objections were received, the settlement funds were paid to the class administrator for distribution in accordance with the terms of the settlement agreement. This litigation is now concluded.

Brussels Noise Ordinance

The Brussels Instituut voor Milieubeheer ("BIM"), a governmental authority in the Brussels-Capital Region of Belgium that oversees the enforcement of environmental matters, imposed four separate administrative penalties on ABX in the approximate aggregate amount of €0.4 million ($0.5 million) for numerous alleged violations of an ordinance limiting the noise caused by aircraft overflying the Brussels-Capital Region (which is located near the Brussels Airport) during the period from May 2009 through December 2010. ABX has exhausted its appeals with respect to three of the administrative penalties.

The ordinance in question is controversial for the reason that it was adopted by the Brussels-Capital Region and is more restrictive than the noise limitations in effect in the Flemish Region, which is where the Brussels Airport is located. The ordinance is the subject of several court cases currently pending in the Belgian courts and numerous airlines have been levied fines thereunder.

Other

In addition to the foregoing matters, we are also currently a party to legal proceedings, including FAA enforcement actions, in various federal and state jurisdictions arising out of the operation of the Company's business. The amount of alleged liability, if any, from these proceedings cannot be determined with certainty; however, we believe that the Company's ultimate liability, if any, arising from the pending legal proceedings, as well as from asserted legal claims and known potential legal claims which are probable of assertion, taking into account established accruals for estimated liabilities, should not be material to our financial condition or results of operations.

Employees Under Collective Bargaining Agreements

As of December 31, 2013, the flight crewmember employees of ABX and ATI were represented by the labor unions listed below:

Airline	Labor Agreement Unit	Percentage of the Company’s Employees
ABX	International Brotherhood of Teamsters	14.4%
ATI	Air Line Pilots Association	8.7%

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Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

At December 31, 2013, the Company had cumulative net operating loss carryforwards (“NOL CFs”) for federal income tax purposes of approximately $97.5 million, which begin to expire in 2024 if not utilized before then. The deferred tax asset balance includes $2.0 million net of a $0.2 million valuation allowance related to state NOL CFs, which have remaining lives ranging from one to twenty years. These NOL CFs are attributable to excess tax deductions related primarily to the accelerated tax depreciation of fixed assets.

The significant components of the deferred income tax assets and liabilities as of December 31, 2013 and 2012 are as follows (in thousands):

	December 31
	2013			2012
Deferred tax assets:
Net operating loss carryforward and federal credits	$	36,624		$	34,401
Capital and operating leases	2,841			1,742
Post-retirement employee benefits	6,470			62,823
Employee benefits other than post-retirement	16,667			18,010
Inventory reserve	3,050			3,181
Deferred revenue	8,903			10,770
Other	1,262			458
Deferred tax assets	75,817			131,385
Deferred tax liabilities:
Accelerated depreciation	(155,769		)	(147,282		)
Partnership items	(9,466		)	(9,418		)
State taxes	(6,265		)	(1,724		)
Valuation allowance against deferred tax assets	(229		)	(229		)
Deferred tax liabilities	(171,729		)	(158,653		)
Net deferred tax (liability)	$	(95,912	)	$	(27,268	)

The following summarizes the Company’s income tax provisions (benefits) (in thousands):

	Years Ended December 31
	2013			2012			2011
Current taxes:
Federal	$	67		$	—		$	(950	)
Foreign	—			337			—
State	425			145			426
Deferred taxes:
Federal	17,902			23,454			15,968
Foreign	—			—			—
State	872			736			1,551
Total deferred tax expense	18,774			24,190			17,519
Total income tax expense from continuing operations	$	19,266		$	24,672		$	16,995
Income tax expense (benefit) from discontinued operations	$	(2	)	$	(441	)	$	(393	)

The reconciliation of income tax from continuing operations computed at the U.S. statutory federal income tax rates to effective income tax rates is as follows:

	Years Ended December 31
	2013		2012		2011
Statutory federal tax rate	35.0	%	35.0	%	35.0	%
Foreign income taxes	—	%	0.3	%	—	%
State income taxes, net of federal tax benefit	(234.7	)%	0.9	%	3.1	%
Tax effect of non-deductible goodwill	(5,121.2	)%	—	%	2.4	%
Tax effect of other non-deductible expenses	(26.4	)%	1.1	%	1.7	%
Other	(19.3	)%	(0.1	)%	(0.6	)%
Effective income tax rate	(5,366.6	)%	37.2	%	41.6	%

The reconciliation of income tax from discontinued operations computed at the U.S. statutory federal income tax rates to effective income tax rates is as follows:

	Years Ended December 31
	2013		2012		2011
Statutory federal tax rate	(35.0	)%	(35.0	)%	(35.0	)%
State income taxes, net of federal tax benefit	(1.3	)%	(1.3	)%	(1.8	)%
Effective income tax rate	(36.3	)%	(36.3	)%	(36.8	)%

The Company files income tax returns in the U.S. federal jurisdiction and various international, state and local jurisdictions. The returns may be subject to audit by the Internal Revenue Service (“IRS”) and other jurisdictional authorities. International returns consist of disclosure returns where the Company is covered by the sourcing rules of U.S. international treaties. The Company recognizes the impact of an uncertain income tax position in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. At December 31, 2013, 2012 and 2011, the Company's unrecognized tax benefits were $0.0 million, $0.0 million and $0.0 million respectively. Accrued interest and penalties on tax positions are recorded as a component of interest expense. Interest and penalties expense was immaterial for 2013, 2012 and 2011.

The Company began to file, effective in 2008, federal tax returns under a common parent of the consolidated group that includes ABX and all the wholly-owned subsidiaries. All returns related to the current consolidated group remain open to examination with the exception of the 2008. The consolidated federal tax returns prior to 2007 remain open to federal examination only to the extent of net operating loss carryforwards carried over from or utilized in those years. State and local returns filed for 2005 through 2012 are generally also open to examination by their respective jurisdictions.

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Income Taxes (Deferred Taxes) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Deferred tax assets:
Net operating loss carryforward and federal credits	$ 36,624	$ 34,401
Capital and operating leases	2,841	1,742
Post-retirement employee benefits	6,470	62,823
Employee benefits other than post-retirement	16,667	18,010
Inventory reserve	3,050	3,181
Deferred revenue	8,903	10,770
Other	1,262	458
Deferred tax assets	75,817	131,385
Deferred tax liabilities:
Accelerated depreciation	(155,769)	(147,282)
Partnership items	(9,466)	(9,418)
State taxes	(6,265)	(1,724)
Valuation allowance against deferred tax assets	(229)	(229)
Deferred tax liabilities	171,729	158,653
Net deferred tax (liability)	$ (95,912)	$ (27,268)

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Income Taxes (Tax Rate Reconciliation) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
Statutory federal tax rate	35.00%	35.00%	35.00%
Foreign income taxes	0.00%	0.30%	0.00%
State income taxes, net of federal tax benefit	(234.70%)	0.90%	3.10%
Tax effect of non-deductible goodwill	(5121.20%)	0.00%	2.40%
Tax effect of other non-deductible expenses	(26.40%)	1.10%	1.70%
Other	(19.30%)	(0.10%)	(0.60%)
Effective income tax rate	(5366.60%)	37.20%	41.60%

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Income Taxes (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Income Tax Disclosure [Line Items]
Deferred tax asset, operating loss carryforwards	$ 2.0
Federal [Member]
Income Tax Disclosure [Line Items]
Net operating loss carryforwards	97.5
State and Local Jurisdiction [Member]
Income Tax Disclosure [Line Items]
Valuation allowance, operating loss carryforwards	$ 0.2
Minimum [Member] | State and Local Jurisdiction [Member]
Income Tax Disclosure [Line Items]
Operating loss carryforwards, remaining life	1 year
Maximum [Member] | State and Local Jurisdiction [Member]
Income Tax Disclosure [Line Items]
Operating loss carryforwards, remaining life	20 years

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Accumulated Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2013

Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) includes the following items by components for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	Defined Benefit Pension		Defined Benefit Post-Retirement		Gains and Losses on Derivative		Total
Balance as of January 1, 2011	(54,325	)	10,761		(2,670	)	(46,234	)
Other comprehensive income (loss) before reclassifications:
Actuarial gain (loss) for retiree liabilities	(91,715	)	192		—		(91,523	)
Unrealized gain (loss) for derivative instruments	—		—		631		631
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	2,700		211		—		2,911
Negative prior service cost (reclassified to salaries, wages and benefits)	—		(5,552	)	—		(5,552	)
Hedging gain (reclassified to interest expense)	—		—		(223	)	(223	)
Unrealized loss on derivative instruments (reclassified to net gain (loss) on derivative instruments)	—		—		3,932		3,932
Income Tax (Expense) or Benefit	32,714		1,892		(1,595	)	33,011
Other comprehensive income (loss), net of tax	(56,301	)	(3,257	)	2,745		(56,813	)
Balance as of December 31, 2011	(110,626	)	7,504		75		(103,047	)
Other comprehensive income (loss) before reclassifications:
Actuarial gain (loss) for retiree liabilities	(27,518	)	168		—		(27,350	)
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	10,681		433		—		11,114
Negative prior service cost (reclassified to salaries, wages and benefits)	—		(5,552	)	—		(5,552	)
Hedging gain (reclassified to interest expense)	—		—		(57	)	(57	)
Income Tax (Expense) or Benefit	5,861		1,724		20		7,605
Other comprehensive income (loss), net of tax	(10,976	)	(3,227	)	(37	)	(14,240	)
Balance as of December 31, 2012	(121,602	)	4,277		38		(117,287	)
Other comprehensive income (loss) before reclassifications:
Actuarial gain for retiree liabilities	129,856		474		—		130,330
Amounts reclassified from accumulated other comprehensive income
Actuarial costs (reclassified to salaries, wages and benefits)	12,296		419		—		12,715
Negative prior service cost (reclassified to salaries, wages and benefits)	—		(5,654	)	—		(5,654	)
Hedging gain (reclassified to interest expense)	—		—		(50	)	(50	)
Income Tax (Expense) or Benefit	(51,622	)	1,729		21		(49,872	)
Other comprehensive income (loss), net of tax	90,530		(3,032	)	(29	)	87,469
Balance as of December 31, 2013	(31,072	)	1,245		9		(29,818	)

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Commitments and Contingencies (Litigation) (Details) In Millions, unless otherwise specified	12 Months Ended		1 Months Ended
	Dec. 31, 2013 Brussels Instituut voor Milieubeheer [Member] USD ($)	Dec. 31, 2013 Brussels Instituut voor Milieubeheer [Member] EUR (€)	Dec. 31, 2008 ABX, Garcia Labor Company of Ohio [Member] Immigration Law [Member] executives	Dec. 31, 2008 Garcia Labor Companies [Member] Immigration Law [Member] executives
Loss Contingencies [Line Items]
Number of defendants (in executives)			4	3
Administrative penalty amount	$ 0.5	€ 0.4

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Segment Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

The Company operates in two reportable segments. The CAM segment consists of the Company's aircraft leasing operations and its segment earnings includes an allocation of interest expense. The ACMI Services segment consists of the Company's airline operations, including the CMI agreement with DHL as well as ACMI and charter service agreements that the Company has with other customers. Due to the similarities among the Company's airline operations, the airline operations are aggregated into a single reportable segment, ACMI Services. The Company's other activities, which include contracts with the USPS, the sale of aircraft parts and maintenance services, facility and ground equipment maintenance services and management services for workers' compensation do not constitute reportable segments and are combined in “All other” with inter-segment profit eliminations. Inter-segment revenues are valued at arms-length, market rates. Cash, cash equivalents and deferred tax assets are reflected in Assets - All other below. The Company's segment information from continuing operations is presented below (in thousands):

	Year Ended December 31
	2013			2012			2011
Total revenues:
CAM	$	160,342		$	154,565		$	140,469
ACMI Services	444,504			478,993			604,951
All other	117,292			112,343			105,284
Eliminate inter-segment revenues	(142,115		)	(138,463		)	(120,571		)
Total	$	580,023		$	607,438		$	730,133
Customer revenues:
CAM	$	71,604		$	74,599		$	67,791
ACMI Services	444,504			477,722			604,951
All other	63,915			55,117			57,391
Total	$	580,023		$	607,438		$	730,133
Depreciation and amortization expense:
CAM	$	64,096		$	59,351		$	54,897
ACMI Services	27,546			24,599			36,136
All other	107			527			30
Total	$	91,749		$	84,477		$	91,063
Impairment Charges
CAM - aircraft impairment	—			—			6,761
ACMI Services - aircraft impairment	—			—			15,304
ACMI Services - customer relationship impairment	—			—			2,282
ACMI Services - goodwill impairment	52,585			—			2,797
Total	$	52,585		$	—		$	27,144
Segment earnings (loss):
CAM	$	66,208		$	68,499		$	53,221
ACMI Services	(78,186		)	(14,503		)	(13,807		)
All other	12,200			11,650			11,331
Net unallocated interest expense	(1,212		)	(1,205		)	(2,118		)
Net gain (loss) on derivative instruments	631			1,879			(4,881		)
Write-off of unamortized debt issuance costs	—			—			(2,886		)
Pre-tax earnings from continuing operations	$	(359	)	$	66,320		$	40,860

The Company's assets are presented below by segment (in thousands):

	December 31,		December 31,		December 31,
	2013		2012		2011
Assets:
CAM	$	808,987	$	810,664	$	760,588
ACMI Services	141,664		161,650		137,640
Discontinued operations	294		—		—
All other	82,194		63,297		95,491
Total	$	1,033,139	$	1,035,611	$	993,719

Interest expense of $0.6 million, $0.9 million and $1.2 million for 2013, 2012 and 2011, respectively, was reimbursed through the commercial agreements with DHL and included in the ACMI Services segment earnings above. Interest expense allocated to CAM was $12.4 million, $12.2 million and $10.7 million for the years ending December 31, 2013, 2012 and 2011, respectively.

During 2013, the Company had capital expenditures of $30.9 million and $74.1 million for the ACMI Services and CAM segments, respectively. The ACMI Services segment reflects a goodwill impairment charge of $52.6 million recorded in the fourth quarter of 2013. Additionally, the ACMI Services segment reflects impairment charges of $2.8 million on the goodwill, $2.3 million on its acquired intangibles and $15.3 million on its aircraft which were recorded in the third quarter of 2011. The CAM segment reflects an impairment charge of $6.8 million on its aircraft recorded in the third quarter of 2011.

Entity-Wide Disclosures

The Company's international revenues were approximately $235.1 million, $314.2 million and $291.3 million for 2013, 2012 and 2011, respectively, derived primarily from international flights departing from or arriving in foreign countries. All revenues from the CMI agreement with DHL are attributed to U.S. operations.

The Company's external customers revenues from other activities for the years ended December 31, 2013, 2012 and 2011 are presented below (in thousands):

	December 31,
	2013		2012		2011
Aircraft maintenance and part sales	$	23,175	$	21,669	$	25,845
Mail handling services	30,117		23,671		21,613
Facility and ground equipment maintenance	10,030		8,304		8,465
Other	593		1,473		1,468
Total customer revenues	$	63,915	$	55,117	$	57,391

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Goodwill and Other Intangibles (Tables)

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The carrying amounts of goodwill by reportable segment, are as follows (in thousands):

	ACMI Services			CAM		Total
Carrying value as of December 31, 2011	$	52,585		$	34,395	$	86,980
Impairment	—			—		—
Carrying value as of December 31, 2012	$	52,585		$	34,395	$	86,980
Impairment	$	(52,585	)	$	—	$	(52,585	)
Carrying value as of December 31, 2013	$	—		$	34,395	$	34,395

Schedule Intangible Assets by Major Class

The Company's intangible assets relate to the ACMI Services segment and are as follows (in thousands):

	Customer			Airline
	Relationships			Certificates			Total
Carrying value as of December 31, 2011	$	2,396		$	4,000		$	6,396
Amortization	(250		)	(1,000		)	(1,250		)
Carrying value as of December 31, 2012	$	2,146		$	3,000		$	5,146
Amortization	(250		)	—			(250		)
Carrying value as of December 31, 2013	$	1,896		$	3,000		$	4,896

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Debt Obligations (Narrative) (Details) (USD $)	3 Months Ended	12 Months Ended						12 Months Ended				12 Months Ended		12 Months Ended		12 Months Ended
	Mar. 31, 2011	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Unsubordinated term loan and Revolving credit facility [Member]	Dec. 31, 2013 Unsubordinated term loan [Member]	Dec. 31, 2012 Unsubordinated term loan [Member]	Dec. 31, 2013 Revolving credit facility [Member]	Oct. 22, 2013 Revolving credit facility [Member]	Dec. 31, 2012 Revolving credit facility [Member]	Jul. 20, 2012 Revolving credit facility [Member]	Dec. 31, 2013 Aircraft loans [Member] aircrafts	Dec. 31, 2012 Aircraft loans [Member]	Dec. 31, 2013 Promissory note due to DHL, unsecured [Member]	Dec. 31, 2012 Promissory note due to DHL, unsecured [Member]	Dec. 31, 2013 Maximum [Member] Unsubordinated term loan and Revolving credit facility [Member]	Jan. 31, 2014 Subsequent Event [Member]
Debt Instrument [Line Items]
Long term obligations		$ 384,515,000	$ 364,481,000			$ 131,250,000	$ 144,375,000	$ 190,500,000		$ 143,000,000		$ 55,015,000	$ 63,156,000	$ 7,750,000	$ 13,950,000
Accordion feature amount									50,000,000		50,000,000
Increased borrowing capacity									275,000,000		225,000,000
Variable interest rate						2.55%		2.55%
Credit facility, revolving credit loan, remaining borrowing capacity								74,300,000
Letters of credit outstanding								10,200,000
Amount borrowed under line of credit																	15,000,000
Collateralized property (in aircrafts)												6
Balloon payment percentage												20.00%
Variable interest rate, minimum												6.74%
Variable interest rate, maximum												7.36%
Promissory note interest rate														5.00%
Collateral coverage percentage					150.00%
Maximum amount of common stock authorized for repurchase																50,000,000
Prepayment of note per dollar of dividend distributed (in dollars per dividend)														0.20
Write-off of unamortized debt issuance costs	$ 6,800,000	$ 0	$ 0	$ 2,886,000

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Significant Customers (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Concentration Risk [Line Items]
Accounts receivable	$ 52,247	$ 47,858
DHL [Member] | Revenues from Leases and Contracted Services [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Percentage of consolidated revenues	54.00%	53.00%	36.00%
DHL [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Accounts receivable	24,100	18,300
BAX/Schenker [Member] | Revenues from Services Performed [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Percentage of consolidated revenues	0.00%		26.00%
BAX/Schenker [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Accounts receivable	0
US Military [Member] | Revenues from Services Performed [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Percentage of consolidated revenues	17.00%	16.00%	12.00%
US Military [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Accounts receivable	$ 4,800	$ 4,200

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
NET EARNINGS (LOSS)	$ (19,628)	$ 40,874	$ 23,192
Other comprehensive income (loss), net of tax	(29)	(37)	2,745
OTHER COMPREHENSIVE INCOME (LOSS):
Actuarial gain (loss) for retiree liabilities	130,330	(27,350)	(91,523)
Unrealized gain (loss) for derivative instruments			631
Income tax (expense) or benefit	21	20	(1,595)
TOTAL COMPREHENSIVE INCOME (LOSS), net of tax	67,841	26,634	(33,621)
Pension Plans [Member]
Other comprehensive income (loss), net of tax	90,530	(10,976)	(56,301)
OTHER COMPREHENSIVE INCOME (LOSS):
Actuarial gain (loss) for retiree liabilities	129,856	(27,518)	(91,715)
Income tax (expense) or benefit	(51,622)	5,861	32,714
Post-Retirement Plans [Member]
Other comprehensive income (loss), net of tax	(3,032)	(3,227)	(3,257)
OTHER COMPREHENSIVE INCOME (LOSS):
Actuarial gain (loss) for retiree liabilities	474	168	192
Income tax (expense) or benefit	$ 1,729	$ 1,724	$ 1,892

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Goodwill and Other Intangibles

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangibles

GOODWILL AND OTHER INTANGIBLES

The Company has two reporting units that have goodwill, ATI (a component of the ACMI Services segment) and CAM. In conjunction with the phase-out of BAX/Schenker's dedicated airlift in North America (see Note B), which relied on operations provided by the Company, the Company tested the carrying values of goodwill and related intangible assets as of July 31, 2011. The Company recognized an impairment charge in 2011 to reduce the value of the recorded goodwill and customer relationship intangible associated with ATI to $52.6 million and $2.5 million, respectively. BAX/Schenker's decision to discontinue a dedicated U.S. air network using ATI's DC-8 aircraft was precipitated by prolonged recessionary conditions and trends toward higher fuel prices. ATI's goodwill and related intangible assets were not impaired further at the time because of expected future net cash flows from its growing fleet of Boeing 767 aircraft and combi aircraft services that it provides to the U.S. Military.

As of December 31, 2013, 2012 and 2011, the goodwill amounts were retested for impairment. The CAM goodwill was not impaired. The ATI goodwill was found to be impaired as of December 31, 2013. The Company recorded an impairment charge of $52.6 million in 2013 to write-off the ATI goodwill. As a result of recent events and market changes, the Company does not expect ATI to generate the forecasted net cash flows from ATI's Boeing 767 operations as previously expected. In December 2013 and in January 2014, the Company received notification from DHL that it would cease using ATI's Boeing 767 services in the Middle East by the end of February 2014. Further, as a result of persistent stagnant growth conditions and excess airlift capacity, including the recent projections published by the U.S. Military that reflect continued reductions in their demand for cargo (non combi) airlift, the Company plans to allocate fewer Boeing 767 aircraft to ATI than previously expected. The Company expects instead to deploy more Boeing 767 aircraft with other airlines, including Atlantic Airline Ltd., an airline owned by West Atlantic, AB for which the Company acquired a 25% equity interest in January 2014.

The Company determined the fair values of ATI and CAM separately using industry market multiples and discounted cash flows utilizing a market-derived rate of return (level 3 fair value inputs).

The carrying amounts of goodwill by reportable segment, are as follows (in thousands):

	ACMI Services			CAM		Total
Carrying value as of December 31, 2011	$	52,585		$	34,395	$	86,980
Impairment	—			—		—
Carrying value as of December 31, 2012	$	52,585		$	34,395	$	86,980
Impairment	$	(52,585	)	$	—	$	(52,585	)
Carrying value as of December 31, 2013	$	—		$	34,395	$	34,395

The Company's intangible assets relate to the ACMI Services segment and are as follows (in thousands):

	Customer			Airline
	Relationships			Certificates			Total
Carrying value as of December 31, 2011	$	2,396		$	4,000		$	6,396
Amortization	(250		)	(1,000		)	(1,250		)
Carrying value as of December 31, 2012	$	2,146		$	3,000		$	5,146
Amortization	(250		)	—			(250		)
Carrying value as of December 31, 2013	$	1,896		$	3,000		$	4,896

The customer relationship intangible amortizes over seven more years. The Company recorded amortization expense for the customer relationship intangible asset of $0.3 million, $0.3 million and $0.6 million for the years ending December 31, 2013, 2012 and 2011, respectively. The airline certificate related to Capital Cargo International Airlines, Inc.'s ("CCIA") Boeing 727 aircraft operations amortized through December 31, 2012. The remaining airline certificates have an indefinite life and therefore are not amortized.

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Pension and Other Post-Retirement Benefit Plans (Plan Asset Allocations) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Weighted-average asset allocation	100.00%	100.00%
Cash [Member]
Defined Benefit Plan Disclosure [Line Items]
Weighted-average asset allocation	0.00%	0.00%
Asset allocation range, minimum	0.00%
Asset allocation range, maximum	10.00%
Equity securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Weighted-average asset allocation	50.00%	48.00%
Asset allocation range, minimum	22.50%
Asset allocation range, maximum	69.30%
Fixed income securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Weighted-average asset allocation	47.00%	49.00%
Asset allocation range, minimum	38.00%
Asset allocation range, maximum	76.50%
Real estate [Member]
Defined Benefit Plan Disclosure [Line Items]
Weighted-average asset allocation	3.00%	3.00%
Asset allocation range, minimum	3.00%
Asset allocation range, maximum	7.00%
US Treasury Securities [Member] | Equity securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Asset allocation range, maximum	5.00%
US Treasury Securities [Member] | Fixed income securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Asset allocation range, maximum	10.00%

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Derivative Instruments (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended			3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Mar. 31, 2011 December 31, 2012 Swap 1 and 2 [Member] Swap [Member]	Dec. 31, 2013 May 9, 2016 [Member] Swap [Member]	Dec. 31, 2012 May 9, 2016 [Member] Swap [Member]	Jul. 31, 2011 May 9, 2016 [Member] Swap [Member]	Dec. 31, 2013 June 30, 2017 [Member] [Member] Swap [Member]	Jun. 30, 2013 June 30, 2017 [Member] [Member] Swap [Member]	Dec. 31, 2012 June 30, 2017 [Member] [Member] Swap [Member]
Derivative [Line Items]
Stated Interest Rate					2.02%	2.02%		1.1825%
Pre-tax (charge) on derivative instruments	$ 631	$ 1,879	$ (4,881)	$ 3,900
Net (gain) loss on derivative instruments	(631)	(1,879)	4,881
Market Value (Liability)					(1,988)	(3,146)		(527)		0
Derivative Liability, Notional Amount					$ 65,625	$ 72,188	$ 75,000	$ 65,625	$ 65,625	$ 0

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table reflects assets and liabilities that are measured at fair value on a recurring basis (in thousands):

As of December 31, 2013	Fair Value Measurement Using							Total
	Level 1		Level 2			Level 3
Assets
Cash equivalents—money market	$	20	$	301		$	—	$	321
Total Assets	$	20	$	301		$	—	$	321
Liabilities
Interest rate swap	$	—	$	(2,515	)	$	—	$	(2,515	)
Total Liabilities	$	—	$	(2,515	)	$	—	$	(2,515	)

As of December 31, 2012	Fair Value Measurement Using							Total
	Level 1		Level 2			Level 3
Assets
Cash equivalents—money market	$	18	$	339		$	—	$	357
Total Assets	$	18	$	339		$	—	$	357
Liabilities
Interest rate swap	$	—	$	(3,146	)	$	—	$	(3,146	)
Total Liabilities	$	—	$	(3,146	)	$	—	$	(3,146	)

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Segment Information (Narrative) (Details) (USD $)	12 Months Ended												3 Months Ended	12 Months Ended
	Dec. 31, 2013 segments	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Customer Revenues [Member]	Dec. 31, 2012 Customer Revenues [Member]	Dec. 31, 2011 Customer Revenues [Member]	Dec. 31, 2013 ACMI Services [Member]	Dec. 31, 2012 ACMI Services [Member]	Dec. 31, 2011 ACMI Services [Member]	Dec. 31, 2013 CAM [Member]	Dec. 31, 2012 CAM [Member]	Dec. 31, 2011 CAM [Member]	Sep. 30, 2011 Boeing 727 and DC-8 Aircraft and Flight Equipment [Member] Aircraft and Flight Equipment [Member]	Dec. 31, 2011 Boeing 727 and DC-8 Aircraft and Flight Equipment [Member] Aircraft and Flight Equipment [Member] ACMI Services [Member]	Dec. 31, 2011 Boeing 727 and DC-8 Aircraft and Flight Equipment [Member] Aircraft and Flight Equipment [Member] CAM [Member]
Segment Reporting Information [Line Items]
Number of reportable segments (in segments)	2
Interest expense	$ 14,249,000	$ 14,383,000	$ 14,181,000				$ 600,000	$ 900,000	$ 1,200,000	$ 12,400,000	$ 12,200,000	$ 10,700,000
Property, Plant and Equipment, Additions							30,900,000			74,100,000
Impairment of goodwill	(52,585,000)	0	(2,797,000)				(52,585,000)	0	(2,797,000)	0	0
Impairment of aircraft	0	0	22,065,000				0	0	15,304,000	0	0	6,761,000	22,100,000	(15,300,000)	(6,800,000)
Impairment of acquired intangibles	$ 0	$ 0	$ (2,282,000)				$ 0	$ 0	$ (2,282,000)
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]				235125	314204	291300

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Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

Carrying amounts of significant assets and liabilities of the discontinued operations are below (in thousands):

	December 31
	2013		2012
Assets
Pension assets, net of obligations	294		—
Total Assets	294		—
Liabilities
Employee compensation and benefits	$	34,007	$	35,703
Post-retirement	—		36,887
Total Liabilities	$	34,007	$	72,590

The revenues and pre-tax earnings of the discontinued operations are below (in thousands):

	December 31
	2013			2012			2011
Pre-tax loss	$	(5	)	$	(1,215	)	$	(1,066	)

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Earnings Per Share

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

The calculation of basic and diluted earnings per common share follows (in thousands, except per share amounts):

	December 31
	2013			2012		2011
Earnings (loss) from continuing operations	$	(19,625	)	$	41,648	$	23,865
Weighted-average shares outstanding for basic earnings per share	63,992			63,461		63,284
Common equivalent shares:
Effect of stock-based compensation awards	—			959		801
Weighted-average shares outstanding assuming dilution	63,992			64,420		64,085
Basic earnings (loss) per share from continuing operations	$	(0.31	)	$	0.66	$	0.38
Diluted earnings (loss) per share from continuing operations	$	(0.31	)	$	0.65	$	0.37

Basic weighted average shares outstanding for purposes of basic earnings per share are less than the shares outstanding due to 481,900 shares, 370,400 shares and 584,700 shares of restricted stock for 2013, 2012 and 2011, respectively, which are accounted for as part of diluted weighted average shares outstanding in diluted earnings per share. The number of equivalent shares that were not included in weighted average shares outstanding assuming dilution, because their effect would have been anti-dilutive, was none, 229,000 and 176,000 at December 31, 2013, 2012 and 2011, respectively.