8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 _____________________

Form 8-K

 _____________________

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 30, 2015

_____________________

(Exact name of registrant as specified in its charter)

 _____________________

DE	000-50368	26-1631624
(State or other jurisdiction of incorporation)	Commission File Number:	(IRS Employer Identification No.)

145 Hunter Drive, Wilmington, OH 45177

(Address of principal executive offices, including zip code)

(937) 382-5591

(Registrant's telephone number, including area code)

_____________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On August 5, 2015, Air Transport Services Group, Inc. issued a press release relating to its results for the second quarter ended June 30, 2015. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

The information in this Item 2.02 is "furnished" and not "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, or otherwise subject to the liabilities of that section.

Item 5.05 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 30, 2015, the Board of Directors of Air Transport Services Group, Inc. (the "Company"), upon the recommendation of the Compensation Committee, amended the Company's Executive Incentive Compensation Plan ("EIC Plan") for the purpose of increasing the target and maximum bonus potentials for the Chief Executive Officer. The Compensation Committee also approved the performance measures under the EIC Plan for fiscal year 2015.

The Company's executives, including the named executive officers, have the potential to earn incentive compensation under the EIC Plan. The purpose of the EIC Plan is to incentivize executive management to achieve short-term corporate goals. Under the EIC Plan, participants are eligible to receive a cash bonus utilizing a non-discretionary formula that establishes a bonus amount, expressed as a percentage of base salary, based upon the extent of achievement of performance measures that are prescribed under the EIC Plan. The performance measures selected, and the relevant weight given to each such performance measure, may vary by participant, provided that, unless otherwise determined by the Compensation Committee, bonuses will be based on at least two performance measures. The EIC Plan provides that one of the performance measures will be net income from continuing operations, while the other performance measures will consist of one or more of the following: revenue growth, return on capital, earnings per share, shipment growth, increase in stock price, return on assets, service or personal goals.

The cash-incentive bonus opportunity for each participant varies depending upon the position held and ranges from 4% to 150% of the participant's base salary earned during the year. The threshold, target and maximum bonus potentials for the participants consist of the following:

Position	Threshold		Target		Maximum
Chief Executive Officer	4	%	100	%	150	%
Chief Financial Officer; Sr. VP, Corporate General Counsel and Secretary; Chief Commercial Officer; Subsidiary President	4	%	60	%	100	%
Vice President; Subsidiary Vice President	4	%	48	%	80	%

The Compensation Committee determines the performance measures, and the extent of the achievement thereof, for the Chief Executive Officer and the other executives, although the latter are determined in consultation with the Chief Executive Officer.

Joseph C. Hete, the Company's President and Chief Executive Officer; Quint O. Turner, the Company's Chief Financial Officer; W. Joseph Payne, the Company's Senior Vice President, Corporate General Counsel and Secretary; and Richard F. Corrado, the Company's Chief Commercial Officer, are participants in the EIC Plan at the levels reflected in the table above. For fiscal year 2015, 80% of their bonus opportunity will be based upon the level of achievement of net income targets established by the Compensation Committee, and 20% of their bonus opportunity will be based upon the level of achievement of strategic objectives, as determined in accordance with the preceding paragraph.

The foregoing description of the amendment to the EIC Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the EIC Plan, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

Exhibit No.	Description
99.1	Press release issued by Air Transport Services Group, Inc. on August 5, 2015, relating to its results for the second quarter ended June 30, 2015.
10.1	Air Transport Services Group, Inc. Executive Incentive Compensation Plan

SIGNATURES

Pursuant to the requirements 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.
By:	/S/  W. JOSEPH PAYNE
	W. Joseph Payne
	Sr. Vice President
	Corporate General Counsel & Secretary
Date:	August 5, 2015

EX-10.1

Exhibit 10.1

Air Transport Services Group, Inc.

Executive Incentive Compensation Plan

Air Transport Services Group, Inc.

Executive Incentive Compensation Plan

1) Purpose

The purpose of this Plan is to achieve corporate goals by providing incentive compensation to eligible key executives who, through industry, ability, and exceptional service, contribute materially to the success of ATSG.

2) Definitions

When used in this Plan, the following words and phrases shall have the following meanings:

a) ATSG - Air Transport Services Group, Inc.

b) Attainment – The actual performance results for a Performance Measure.

c) Beneficiary – The beneficiary or beneficiaries designated to receive the amount, if any, payable under the Plan upon the death of the Participant.

d) Board – The Board of Directors of ATSG.

e) Compensation Committee – The Compensation Committee of the Board.

f) Maximum – The point that represents the maximum payout level for a particular Performance Measure.

g) Minimum – The point that represents the minimum payout level for a particular Performance Measure.

h) Participant – Any employee eligible to receive awards under section 4.

i) Performance Measure – A specific objective measure to assess success in achieving established goals. Permitted Performance Measures are listed in section 5.

j) Plan – The Executive Incentive Compensation Plan (EICP).

k) Plan Year – Each calendar year for which Performance Measures and Targets are established for the Company.

l) Retirement – When an employee leaves active service and qualifies under a regular or early retirement program of the Company or one of its subsidiaries in which the employee is a participant.

m) Target – The point at which performance equals 100% of the stated objective.

n) Threshold – The point below Target at which incentive payout for each Performance Measure begins.

3) Administration

a) The Compensation Committee will have the power to interpret the Plan and to make all determinations necessary or desirable for its administration.

b) The decision of the Compensation Committee on any question concerning the interpretation or administration of the Plan will be final and conclusive. Nothing in the Plan will be deemed to give any officer or employee, or legal representatives or assigns, any right to participate in the Plan except to such extent as the Compensation Committee may determine pursuant to the provisions of the Plan.

c) The Compensation Committee shall determine the extent of achievement of the Performance Measures for the Chief Executive Officer of ATSG. The Chief Executive Officer of ATSG, in consultation with the Compensation Committee, shall determine the extent of achievement of the Performance Measures for each of the other Participants.

4) Eligibility

a) Positions eligible for the Plan are:

Chief Executive Officer

Chief Financial Officer

Chief Commercial Officer

Senior Vice President, Corporate General Counsel

Vice President

Subsidiary President

Subsidiary Vice Presidents that have been elected as officers by the Board of Directors of the pertinent subsidiary.

Except as provided below, Participants for a Plan Year must be employed for the entire Plan Year.

b) With approval of the Compensation Committee, prior to June 30th of each Plan Year, additional employees may be included in the Plan, with any award pro-rated as shall be determined by the Compensation Committee.

c) Participants who retire in good standing during the year will be eligible for a pro-rated award for the year in which they retire, provided that they are on the active payroll on June 30^th or later of the Plan Year.

d) Participants who take a leave of absence will have their awards calculated based on actual salary earnings in calculating awards. Participants who are on a leave of absence for more than 90 days and who continue to receive full or partial salary continuance will have their awards adjusted. Any salary paid while on a leave of absence period over 90 days will not be included in the base salary used to calculate awards.

5) Performance Measures

Unless otherwise determined by the Compensation Committee, bonuses will be based on at least two Performance Measures. One of the Performance Measures will be net income from continuing operations. The other Performance Measures will consist of one or more of the following: revenue growth, return on capital, earnings per share, shipment growth, increase in stock price, return on assets, service or personal goals. Further, with respect to those Participants that are employed by a Company subsidiary that has a substantive agreement with DHL or another customer, one of their Performance Measures may be based on the level of performance under the service incentive associated with that agreement. The Compensation Committee will select the Performance Measures and Targets, and the relevant weight to be given among those selected, for the Chief Executive Officer of ATSG. The Chief Executive Officer of ATSG, in consultation with the Compensation Committee, will select the Performance Measures and Targets, and the relevant weight to be given among those selected, for each of the other Participants. The selection of the Performance Measures and Targets will be made as soon as reasonably practicable after the beginning of each Plan year, and such Performance Measures and Targets may not be changed thereafter.

6) Qualifiers on Performance Measures

a) The bonus percentage is applied to the Participant’s base salary paid in the Plan Year.

b) No bonus will be paid unless the Company achieves profitability.

c) To receive any award under the Plan, a Participant’s individual performance must be evaluated as at least competent.

7) Bonus Amounts

The bonus for each Participant shall be determined by multiplying the Participant’s base salary earned during the calendar year by the applicable bonus amount, expressed as a percentage of base salary, which bonus amount shall be based upon the extent of Attainment of the pertinent Performance Measures described Section 5 hereof. The Threshold, Target and Maximum bonus potentials for the Participants shall consist of the following:

Position	Threshold	Target	Maximum
Chief Executive Officer	4%	100%	150%
CFO; Sr. VP, Corporate General Counsel; Chief Commercial Officer; Subsidiary President	4%	60%	100%
Vice President; Subsidiary Vice President	4%	48%	80%

For the achievement of Performance Measures between the Threshold and Maximum percentages, the actual bonus amount will be interpolated.

8) Form of Payment

Awards shall be paid entirely in cash. Payments will be made as soon as practicable after audited performance results are known and approved by the Compensation Committee, which should be on or about March 1. Award checks will be prepared by the pertinent payroll department for each Participant and will be subject to tax withholding and 401(k) deductions. If a Participant dies before the end of the Plan Year, an amount equal to a pro-rated portion thereof as of the date of death shall be paid in one lump cash sum to the Participant’s Beneficiary.

9) Limitation on Allocation

Notwithstanding any other provision of the Plan, in no circumstances will the total amount allocated as an award to any individual Participant for any plan year exceed $1,000,000.00.

10) Designation of Beneficiaries

Each Participant shall file with the Company a written designation of one or more persons as the Beneficiary who shall be entitled to receive the amount, if any, payable under the Plan upon the Participant’s death. A Participant may, from time to time, revoke or change his Beneficiary designation without the consent of any prior Beneficiary by filing a new designation. The last such designation received shall be controlling, provided, however, that no designation, change or revocation thereof, shall be effective unless received by the Company prior to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt.

11) Absence of Valid Designation

If no such Beneficiary designation is in effect at the time of a Participant’s death, or if no designated Beneficiary survives the Participant, or if such designation conflicts with the law, the Participant shall be deemed to have designated the Participant’s estate as the Participant’s Beneficiary and the Participant’s estate shall receive the payment of the amount, if any, under the

Plan, upon the Participant’s death. If the Compensation Committee is in doubt as to the right of any person to receive such amount, the Compensation Committee may direct the retention of such amount, without liability for any interest thereon, until the rights thereto are determined, or the Compensation Committee may direct the payment of such amount to any court of appropriate jurisdiction and such payment shall be a complete discharge of the liability of the Plan and of ATSG therefore.

12) No Liability of Compensation Committee, Board Members, or Officers

No members of the Compensation Committee, the Board or corporate officers shall be personally liable by reason of any contract or other instrument executed by them or on their behalf nor for any mistake or judgment made in good faith, and ATSG shall indemnify and hold harmless each member of the Board and each other officer, employee or director of ATSG to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Compensation Committee) arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own fraud or bad faith.

13) Right to Amend, Suspend or Terminate Plan

The Board reserves the right at any time to amend, suspend or terminate the Plan in whole or in part and for any or no reason and without the consent of any Participant or Beneficiary; provided that no such amendment shall adversely affect rights to receive any amount to which Participants or Beneficiaries have become entitled prior to such amendment. Unless otherwise provided herein, any amendment, modification, suspension or termination of any provisions of the Plan may be made retroactively.

14) No Rights to Continue Employment or Bonus

Nothing contained in the Plan shall give any employee the right to be retained in the employment of ATSG or affect the right of ATSG to dismiss any employee. The adoption of the Plan shall not constitute a contract between ATSG and any employee. No Participant shall receive any right to be granted an award hereunder nor shall any such award be considered as compensation under any employee benefit plan of ATSG, except as otherwise determined by ATSG.

15) No Right, Title or Interest in Assets

The Participants shall have no right, title or interest whatsoever in or to any investments which ATSG may make to aid in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a fiduciary relationship between ATSG and any Participant or any other person. To the extent that any person acquires a right to receive payments from ATSG under this Plan, such right shall be no greater than the right of an unsecured general creditor of ATSG.

16) Unfunded Plan; Governing Law

The Plan is intended to constitute an incentive compensation arrangement for a select group of management or highly compensated personnel and all rights thereunder shall be governed by and construed in accordance with the laws of the State of Ohio.

Last Reviewed: July 30, 2015

Last Modified: July 30, 2015

EX-99.1

ATSG's Results Reflect Growing Returns From Fleet Investments

Second-Quarter Adjusted EBITDA from Continuing Operations up 13 Percent to $51 Million

WILMINGTON, OH, August 5, 2015 - Air Transport Services Group, Inc. (Nasdaq: ATSG), the leading provider of medium wide-body freighter aircraft leasing, air cargo transportation and related services, today reported consolidated financial results for the quarter ended June 30, 2015.

For the second quarter of 2015, compared with the second quarter of 2014 except as noted:

• Pre-tax earnings from continuing operations increased 17 percent to $17.2 million, including a 35 percent increase in Cargo Aircraft Management's pre-tax earnings, driven by eight additional freighters leased to external customers.

• Net earnings from continuing operations increased 14 percent to $10.6 million, or 16 cents per diluted share. Operating loss carryforwards for U.S. federal income tax purposes offset much of the company’s federal tax liabilities. ATSG does not expect to pay significant federal income taxes until 2017 at the earliest.

• Consolidated revenues were approximately flat at $148.4million. Excluding revenues from reimbursed expenses, revenues increased 3 percent. Revenues from cargo aircraft leasing were up 12 percent.

• Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) increased 13 percent to $51.2 million, and increased 16 percent to $97.7 million year to date. Adjusted EBITDA is a non-GAAP financial measure, defined and reconciled to comparable GAAP results in a table at the end of this release.

Joe Hete, President and Chief Executive Officer of ATSG, said, “Our record first-half Adjusted EBITDA stems from a combination of improved airline operations and continued growth in aircraft leasing, leading us closer to full deployment of our available aircraft and reflects strong appetites from current and new customers for more of our highly efficient Boeing 767 freighters and related services."

The second quarter marked the commencement of a new four-year commercial agreement governing air network services that ATSG provides to DHL. It began with fifteen dry leases for Boeing 767 freighters dedicated to DHL through March 2019, currently operating in its U.S. network. DHL added a sixteenth dry lease, a 767-300 freighter delivered in June, and we expect to place two additional 767-300s, both under eight-year lease terms, during the fourth quarter of 2015. Accordingly, ATSG has purchased two more passenger-configured 767-300s for freighter conversion to meet DHL's requirement.

Segment Results

Cargo Aircraft Management (CAM)

CAM	Second Quarter				Six Months
($ in thousands)	2015		2014		2015		2014
Revenues	$	45,632	$	40,590	$	88,486	$	81,225
Pre-Tax Earnings	$	14,441	$	10,667	$	28,879	$	25,107

Significant Developments:

• The increase in CAM’s second-quarter revenue was driven by eight additional dry-leased 767 freighters to external customers, which increased to 29 as of June 30, 2015 from 21 at June 30, 2014, and from 24 at March 31, 2015.

• The 35 percent increase in pre-tax earnings for the quarter reflects the increased number of dry-leased aircraft, along with increased depreciation costs.

• At June 30, 2015, CAM owned 54 Boeing cargo aircraft in serviceable condition, three more than a year ago. CAM has purchased two additional 767-300 aircraft, one in June and one in July, which will be converted to freighters and dry-leased during the fourth quarter.

ACMI Services

ACMI Services	Second Quarter				Six Months
($ in thousands)	2015		2014		2015			2014
Revenues
Airline services	$	97,897	$	100,288	$	195,592		$	199,805
Reimbursables	$	5,995	$	11,016	$	13,768		$	20,095
Total ACMI Services Revenues	$	103,892	$	111,304	$	209,360		$	219,900
Pre-Tax Earnings (Loss)	$	1,126	$	309	$	(1,445	)	$	(6,737	)

Significant Developments:

• Quarterly results for the segment improved on a year-over-year and sequential quarter basis. Results benefited from a full quarter of 767 ACMI service for Raya Airways of Malaysia, which began in February. West Coast operations for Aloha Airlines, which began in the third quarter of 2014, also contributed to improved year-over-year results.

• The quarter also benefited from fewer heavy maintenance checks for our Boeing 767-200 freighters than a year ago, and from net insurance recoveries of just over $2 million. During the third quarter of 2015, the cost of unreimbursed expensed heavy maintenance checks for 767-200s is expected to be higher than in the second quarter.

• Our airlines leased from CAM and operated on an ACMI basis fifteen Boeing 767 freighters as of June 30, 2015, five fewer than at March 31, 2015 and three fewer than on June 30, 2014, reflecting increasing allocations of our fleet to dry lease opportunities based upon strong customer demand.

Other Activities

Other Activities	Second Quarter				Six Months
($ in thousands)	2015		2014		2015		2014
Revenues	$	32,179	$	36,493	$	67,785	$	63,301
Pre-Tax Earnings	$	1,840	$	4,108	$	4,916	$	7,125

Significant Developments:

• External customer revenues from all other activities in the second quarter were $20 million, down slightly compared to second quarter 2014. The earnings comparison reflects timing variances in revenue recognition for maintenance services for outside customers, offset in part by increased revenues for management of sorting centers for the USPS.

Outlook

As a result of strong first-half performance and a positive outlook for the rest of 2015, ATSG now projects that its baseline Adjusted EBITDA from Continuing Operations for 2015 will be in a range of $190-195 million.

Hete noted that, "In 2015, we are achieving growing returns from the significant investments we have made in our fleet and operations, as customers are stepping up to make major commitments to our assets and operating capabilities. For example, Delta Air Lines recently selected AMES, our maintenance MRO, to provide airframe maintenance services for its fleet of more than eighty Boeing 717 aircraft at AMES's expanded hangar facilities in Wilmington. This new five-year arrangement is expected to be finalized and start in the fourth quarter this year. We are pleased that Delta, our long-term engine maintenance partner, has entrusted us with airframe maintenance support for this portion of their fleet.

"We also have other multi-year commitments in the works with customers that we expect to announce and launch later this year, in addition to the two 767-300s we plan to deliver to DHL in the fourth quarter. At the same time, we will also incur some transition effects in the third quarter as we prepare our aircraft for long-duration dry-lease arrangements. But with continued strong industry demand and continued share repurchases, our shareholders can expect even greater long-term returns under our differentiated business model," Hete said.

Conference Call

ATSG will host a conference call on Thursday, August 6, 2015, at 10 a.m. Eastern time to review its financial results for the second quarter of 2015. Participants should dial (888) 895-5479 and international participants should dial (847) 619-6250 ten minutes before the scheduled start of the call and ask for conference pass code 40193425.

The call will also be webcast live (listen-only mode) via a link at www.atsginc.com.

A replay of the conference call will be available by phone on Thursday, August 6, 2015, beginning at 2 p.m. and continuing through August 13, 2015, at (888) 843-7419 (international callers (630) 652-3042); use pass code 40193425#. The webcast replay will remain available via www.atsginc.com for 30 days.

About ATSG

ATSG is a leading provider of aircraft leasing and air cargo transportation and related services to domestic and foreign air carriers and other companies that outsource their air cargo lift requirements. ATSG, through its leasing and airline subsidiaries, is the world's largest owner and operator of converted Boeing 767 freighter aircraft. Through its principal subsidiaries, including two airlines with separate and distinct U.S. FAA Part 121 Air Carrier certificates, ATSG provides aircraft leasing, air cargo lift, aircraft maintenance services and airport ground services. ATSG's subsidiaries include ABX Air, Inc.; Airborne Global Solutions, Inc.; Air Transport International, Inc.; Cargo Aircraft Management, Inc.; and Airborne Maintenance and Engineering Services, Inc. For more information, please see www.atsginc.com.

Except for historical information contained herein, the matters discussed in this release contain forward-looking statements that involve risks and uncertainties. There are a number of important factors that could cause Air Transport Services Group's ("ATSG's") actual results to differ materially from those indicated by such forward-looking statements. These factors include,

but are not limited to, changes in market demand for our assets and services, the number and timing of deployments of our aircraft, our operating airlines' ability to maintain on-time service and control and reduce costs, and other factors that are contained from time to time in ATSG's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should carefully review this release and should not place undue reliance on ATSG's forward-looking statements. These forward-looking statements were based on information, plans and estimates as of the date of this release. ATSG undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Contact:

Quint O. Turner, ATSG Inc. Chief Financial Officer

937-382-5591

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
REVENUES	$	148,353		$	149,618		$	295,378		$	293,211
OPERATING EXPENSES
Salaries, wages and benefits	42,036			40,895			85,715			83,960
Depreciation and amortization	31,400			27,142			60,393			52,121
Maintenance, materials and repairs	23,993			23,168			46,686			48,047
Fuel	12,275			14,014			23,053			26,274
Rent	2,447			6,924			6,654			14,234
Travel	4,342			4,419			8,765			8,992
Landing and ramp	2,166			2,576			4,874			5,314
Insurance	546			1,573			1,804			2,778
Other operating expenses	9,354			10,790			20,111			19,538
	128,559			131,501			258,055			261,258
OPERATING INCOME	19,794			18,117			37,323			31,953
OTHER INCOME (EXPENSE)
Interest income	24			24			46			43
Interest expense	(2,839		)	(3,481		)	(5,904		)	(7,304		)
Net gain (loss) on derivative instruments	264			31			251			330
	(2,551		)	(3,426		)	(5,607		)	(6,931		)
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	17,243			14,691			31,716			25,022
INCOME TAX EXPENSE	(6,673		)	(5,393		)	(12,251		)	(9,202		)
EARNINGS FROM CONTINUING OPERATIONS	10,570			9,298			19,465			15,820
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAX	214			211			428			422
NET EARNINGS	$	10,784		$	9,509		$	19,893		$	16,242
EARNINGS PER SHARE - Basic
Continuing operations	$	0.16		$	0.14		$	0.30		$	0.25
Discontinued operations	0.01			0.01			0.01			—
NET EARNINGS PER SHARE	$	0.17		$	0.15		$	0.31		$	0.25
EARNINGS PER SHARE - Diluted
Continuing operations	$	0.16		$	0.14		$	0.30		$	0.24
Discontinued operations	—			0.01			—			0.01
NET EARNINGS PER SHARE	$	0.16		$	0.15		$	0.30		$	0.25
WEIGHTED AVERAGE SHARES
Basic	64,541			64,285			64,498			64,217
Diluted	65,471			65,207			65,404			65,174

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	June 30,			December 31,
	2015			2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	22,182		$	30,560
Accounts receivable, net of allowance of $315 in 2015 and $812 in 2014	36,663			43,513
Inventory	10,709			10,665
Prepaid supplies and other	10,583			12,613
Deferred income taxes	19,770			19,770
TOTAL CURRENT ASSETS	99,907			117,121
Property and equipment, net	859,482			847,268
Other assets	26,904			28,230
Goodwill and acquired intangibles	38,870			39,010
TOTAL ASSETS	$	1,025,163		$	1,031,629
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	39,316		$	40,608
Accrued salaries, wages and benefits	20,485			25,633
Accrued expenses	8,022			8,201
Current portion of debt obligations	24,672			24,344
Unearned revenue	12,812			12,914
TOTAL CURRENT LIABILITIES	105,307			111,700
Long term debt	290,781			319,750
Post-retirement obligations	86,102			92,050
Other liabilities	59,266			57,647
Deferred income taxes	115,985			102,993
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; 64,987,351 and 64,854,950 shares issued and outstanding in 2015 and 2014, respectively	650			649
Additional paid-in capital	525,104			526,669
Accumulated deficit	(77,060		)	(96,953		)
Accumulated other comprehensive loss	(80,972		)	(82,876		)
TOTAL STOCKHOLDERS’ EQUITY	367,722			347,489
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,025,163		$	1,031,629

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

PRE-TAX EARNINGS AND ADJUSTED PRE-TAX EARNINGS SUMMARY

FROM CONTINUING OPERATIONS

NON-GAAP RECONCILIATION

(In thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Revenues
CAM	$	45,632		$	40,590		$	88,486		$	81,225
ACMI Services
Airline services	97,897			100,288			195,592			199,805
Reimbursables	5,995			11,016			13,768			20,095
Total ACMI Services	103,892			111,304			209,360			219,900
Other Activities	32,179			36,493			67,785			63,301
Total Revenues	181,703			188,387			365,631			364,426
Eliminate internal revenues	(33,350		)	(38,769		)	(70,253		)	(71,215		)
Customer Revenues	$	148,353		$	149,618		$	295,378		$	293,211
Pre-tax Earnings from Continuing Operations
CAM, inclusive of interest expense	14,441			10,667			28,879			25,107
ACMI Services	1,126			309			(1,445		)	(6,737		)
Other Activities	1,840			4,108			4,916			7,125
Net, unallocated interest expense	(428		)	(424		)	(885		)	(803		)
Net gain on derivative instruments	264			31			251			330
Total Pre-tax Earnings	$	17,243		$	14,691		$	31,716		$	25,022
Adjustments to Pre-tax Earnings
Less net gain on derivative instruments	(264		)	(31		)	(251		)	(330		)
Adjusted Pre-tax Earnings	$	16,979		$	14,660		$	31,465		$	24,692

Adjusted Pre-tax Earnings is defined as Earnings from Continuing Operations Before Income Taxes less derivative gains. Management uses Adjusted Pre-tax Earnings from Continuing Operations to assess the performance of its operating results among periods. Adjusted Pre-tax earnings from Continuing Operations is a non-GAAP financial measure and should not be considered an alternative to Earnings from Continuing Operations Before Income Taxes or any other performance measure derived in accordance with GAAP.

Reimbursable revenues shown above include revenues related to fuel, landing fees, navigation fees, aircraft rent and certain other operating costs that are directly reimbursed to the airlines by their customers. Effective April 1, 2015, the costs of engine and airframe maintenance for all CAM-owned aircraft operated for DHL are the responsibility of the airlines, including Boeing 767-200 maintenance costs previously reimbursed directly by DHL. For all periods presented above, airline service revenues include compensation for maintenance provided by the airlines on aircraft operated for DHL. Reimbursables revenues declined for the three and six month periods ending June 30, 2015 compared to the corresponding periods of 2014 due to lower fuel prices and the return of four DHL-owned Boeing 767-200 aircraft.

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

UNAUDITED ADJUSTED EARNINGS FROM CONTINUING OPERATIONS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION

NON-GAAP RECONCILIATION

(In thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Earnings from Continuing Operations Before Income Taxes	$	17,243		$	14,691		$	31,716		$	25,022
Interest Income	(24		)	(24		)	(46		)	(43		)
Interest Expense	2,839			3,481			5,904			7,304
Depreciation and Amortization	31,400			27,142			60,393			52,121
EBITDA from Continuing Operations	$	51,458		$	45,290		$	97,967		$	84,404
Less net gain on derivative instruments	(264		)	(31		)	(251		)	(330		)
Adjusted EBITDA from Continuing Operations	$	51,194		$	45,259		$	97,716		$	84,074

EBITDA and Adjusted EBITDA from Continuing Operations are non-GAAP financial measures and should not be considered as alternatives to Earnings from Continuing Operations Before Income Taxes or any other performance measure derived in accordance with GAAP.

EBITDA from Continuing Operations is defined as Earnings from Continuing Operations Before Income Taxes plus net interest expense, depreciation, and amortization expense. Adjusted EBITDA from Continuing Operations is defined as EBITDA from Continuing Operations less derivative gains.

Management uses EBITDA from Continuing Operations as an indicator of the cash-generating performance of the operations of the Company. Management uses Adjusted EBITDA from Continuing Operations to assess the performance of its operating results among periods. EBITDA and Adjusted EBITDA from Continuing Operations should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, or as an alternative measure of liquidity.

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

IN-SERVICE CARGO AIRCRAFT FLEET

Aircraft Types
	December 31,			June 30,			December 31,
	2014			2015			2015 Projected
			Operating			Operating			Operating
	Total	Owned	Lease	Total	Owned	Lease	Total	Owned	Lease
B767-200	38	36	2	36	36	—	36	36	—
B767-300	10	9	1	10	10	—	12	12	—
B757-200	4	4	—	5	4	1	5	4	1
B757 Combi	4	4	—	4	4	—	4	4	—
Total Aircraft	56	53	3	55	54	1	57	56	1
Owned Aircraft In Serviceable Condition
	December 31,			June 30,			December 31,
	2014			2015			2015 Projected
Dry leased without CMI		11			13			15-16
Dry leased with CMI		13			16			17-18
ACMI/Charter		28			23			22-24
Staging/Unassigned		1			2			—
		53			54

Note: Cargo Aircraft Management (CAM) has acquired two Boeing 767-300 aircraft in passenger configuration (one in June, one in July) that will undergo conversion to freighter aircraft this year. Those aircraft are not reflected in the June totals above.