Delaware | 26-1631624 | |
(State of Incorporation) | (I.R.S. Employer Identification No.) | |
145 Hunter Drive, Wilmington, OH | 45177 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer x | |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o | |
Emerging growth company o |
Page | |||
PART I. FINANCIAL INFORMATION | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II. OTHER INFORMATION | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 6. | |||
Three Months Ended | |||||||
March 31 | |||||||
2017 | 2016 | ||||||
REVENUES | $ | 237,917 | $ | 177,385 | |||
OPERATING EXPENSES | |||||||
Salaries, wages and benefits | 72,663 | 52,419 | |||||
Depreciation and amortization | 36,442 | 32,534 | |||||
Maintenance, materials and repairs | 24,601 | 27,343 | |||||
Fuel | 34,841 | 16,631 | |||||
Travel | 7,366 | 4,808 | |||||
Contracted ground and aviation services | 20,687 | 10,868 | |||||
Rent | 3,286 | 2,627 | |||||
Landing and ramp | 5,299 | 3,651 | |||||
Insurance | 1,262 | 1,149 | |||||
Other operating expenses | 13,717 | 10,004 | |||||
220,164 | 162,034 | ||||||
OPERATING INCOME | 17,753 | 15,351 | |||||
OTHER INCOME (EXPENSE) | |||||||
Interest income | 32 | 24 | |||||
Net gain (loss) on financial instruments | 1,869 | (528 | ) | ||||
Interest expense | (3,548 | ) | (2,699 | ) | |||
(1,647 | ) | (3,203 | ) | ||||
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 16,106 | 12,148 | |||||
INCOME TAX EXPENSE | (6,310 | ) | (3,977 | ) | |||
EARNINGS FROM CONTINUING OPERATIONS | 9,796 | 8,171 | |||||
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAXES | 192 | 47 | |||||
NET EARNINGS | $ | 9,988 | $ | 8,218 | |||
BASIC EARNINGS PER SHARE | |||||||
Continuing operations | $ | 0.17 | $ | 0.13 | |||
Discontinued operations | — | — | |||||
TOTAL BASIC EARNINGS PER SHARE | $ | 0.17 | $ | 0.13 | |||
DILUTED EARNINGS PER SHARE | |||||||
Continuing operations | $ | 0.13 | $ | 0.13 | |||
Discontinued operations | — | — | |||||
TOTAL DILUTED EARNINGS PER SHARE | $ | 0.13 | $ | 0.13 | |||
WEIGHTED AVERAGE SHARES | |||||||
Basic | 59,133 | 63,636 | |||||
Diluted | 64,949 | 65,057 |
Three Months Ended | |||||||
March 31 | |||||||
2017 | 2016 | ||||||
NET EARNINGS | $ | 9,988 | $ | 8,218 | |||
OTHER COMPREHENSIVE INCOME: | |||||||
Defined benefit pension | 1,234 | 2,146 | |||||
Defined benefit post-retirement | 37 | 9 | |||||
Foreign currency translation | 37 | 257 | |||||
TOTAL COMPREHENSIVE INCOME, NET OF TAXES | $ | 11,296 | $ | 10,630 |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 27,631 | $ | 16,358 | |||
Accounts receivable, net of allowance of $1,273 in 2017 and $1,264 in 2016 | 83,981 | 77,247 | |||||
Inventory | 18,454 | 19,925 | |||||
Prepaid supplies and other | 24,481 | 19,123 | |||||
TOTAL CURRENT ASSETS | 154,547 | 132,653 | |||||
Property and equipment, net | 1,057,877 | 1,000,992 | |||||
Other assets | 82,799 | 80,099 | |||||
Goodwill and acquired intangibles | 45,588 | 45,586 | |||||
TOTAL ASSETS | $ | 1,340,811 | $ | 1,259,330 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 76,269 | $ | 60,704 | |||
Accrued salaries, wages and benefits | 27,032 | 37,044 | |||||
Accrued expenses | 9,553 | 10,324 | |||||
Current portion of debt obligations | 26,531 | 29,306 | |||||
Unearned revenue | 25,233 | 18,407 | |||||
TOTAL CURRENT LIABILITIES | 164,618 | 155,785 | |||||
Long term debt | 481,886 | 429,415 | |||||
Post-retirement obligations | 74,674 | 77,713 | |||||
Other liabilities | 51,294 | 52,542 | |||||
Stock warrants | 97,831 | 89,441 | |||||
Deferred income taxes | 129,425 | 122,532 | |||||
TOTAL LIABILITIES | 999,728 | 927,428 | |||||
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; 85,000,000 shares authorized; 59,563,749 and 59,461,291 shares issued and outstanding in 2017 and 2016, respectively | 596 | 595 | |||||
Additional paid-in capital | 441,300 | 443,416 | |||||
Accumulated deficit | (22,255 | ) | (32,243 | ) | |||
Accumulated other comprehensive loss | (78,558 | ) | (79,866 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY | 341,083 | 331,902 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,340,811 | $ | 1,259,330 | |||
Three Months Ended | |||||||
March 31 | |||||||
2017 | 2016 | ||||||
OPERATING ACTIVITIES: | |||||||
Net earnings from continuing operations | $ | 9,796 | $ | 8,171 | |||
Net earnings from discontinued operations | 192 | 47 | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 39,033 | 32,534 | |||||
Pension and post-retirement | 1,995 | 3,382 | |||||
Deferred income taxes | 6,149 | 3,831 | |||||
Amortization of stock-based compensation | 784 | 654 | |||||
Net (gain) loss on financial instruments | (1,869 | ) | 528 | ||||
Changes in assets and liabilities: | |||||||
Accounts receivable | (6,487 | ) | 219 | ||||
Inventory and prepaid supplies | (4,413 | ) | 1,341 | ||||
Accounts payable | 6,932 | (1,995 | ) | ||||
Unearned revenue | 4,765 | (2,719 | ) | ||||
Accrued expenses, salaries, wages, benefits and other liabilities | (9,911 | ) | (920 | ) | |||
Pension and post-retirement assets | (3,039 | ) | (2,196 | ) | |||
Other | 283 | 1,432 | |||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 44,210 | 44,309 | |||||
INVESTING ACTIVITIES: | |||||||
Capital expenditures | (83,786 | ) | (71,673 | ) | |||
Acquisitions and investments in businesses | (640 | ) | — | ||||
Redemption of long term deposits | 4,725 | — | |||||
NET CASH (USED IN) INVESTING ACTIVITIES | (79,701 | ) | (71,673 | ) | |||
FINANCING ACTIVITIES: | |||||||
Principal payments on long term obligations | (10,337 | ) | (6,189 | ) | |||
Proceeds from borrowings | 60,000 | 60,000 | |||||
Purchase of common stock | (1,463 | ) | (3,079 | ) | |||
Withholding taxes paid for conversion of employee stock awards | (1,436 | ) | (1,231 | ) | |||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 46,764 | 49,501 | |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 11,273 | 22,137 | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 16,358 | 17,697 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 27,631 | $ | 39,834 | |||
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||
Interest paid, net of amount capitalized | $ | 3,406 | $ | 2,587 | |||
Federal alternative minimum and state income taxes paid | $ | 113 | $ | — | |||
SUPPLEMENTAL NON-CASH INFORMATION: | |||||||
Accrued capital expenditures | $ | 18,251 | $ | 7,084 |
CAM | All Other | Total | ||||||||||
Carrying value as of December 31, 2016 | $ | 34,395 | $ | 2,738 | $ | 37,133 | ||||||
Purchase price adjustment | — | 140 | 140 | |||||||||
Carrying value as of March 31, 2017 | $ | 34,395 | $ | 2,878 | $ | 37,273 |
Airline | Amortizing | |||||||||||
Certificates | Intangibles | Total | ||||||||||
Carrying value as of December 31, 2016 | $ | 3,000 | $ | 5,453 | $ | 8,453 | ||||||
Amortization | — | (138 | ) | (138 | ) | |||||||
Carrying value as of March 31, 2017 | $ | 3,000 | $ | 5,315 | $ | 8,315 |
Lease | ||||
Incentive | ||||
Carrying value as of December 31, 2016 | $ | 54,730 | ||
Warrants granted | 10,050 | |||
Amortization | (2,591 | ) | ||
Carrying value as of March 31, 2017 | $ | 62,189 |
As of March 31, 2017 | Fair Value Measurement Using | Total | |||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | |||||||||||||||
Cash equivalents—money market | $ | — | $ | 6,482 | $ | — | $ | 6,482 | |||||||
Interest rate swap | — | 697 | — | 697 | |||||||||||
Total Assets | $ | — | $ | 7,179 | $ | — | $ | 7,179 | |||||||
Liabilities | |||||||||||||||
Interest rate swap | $ | — | $ | (17 | ) | $ | — | $ | (17 | ) | |||||
Stock warrant obligation | — | (97,831 | ) | — | (97,831 | ) | |||||||||
Total Liabilities | $ | — | $ | (97,848 | ) | $ | — | $ | (97,848 | ) |
As of December 31, 2016 | Fair Value Measurement Using | Total | |||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | |||||||||||||||
Cash equivalents—money market | $ | — | $ | 482 | $ | — | $ | 482 | |||||||
Interest rate swap | — | 547 | — | 547 | |||||||||||
Total Assets | $ | — | $ | 1,029 | $ | — | $ | 1,029 | |||||||
Liabilities | |||||||||||||||
Interest rate swap | $ | — | $ | (77 | ) | $ | — | $ | (77 | ) | |||||
Stock warrant obligation | — | (89,441 | ) | — | (89,441 | ) | |||||||||
Total Liabilities | $ | — | $ | (89,518 | ) | $ | — | $ | (89,518 | ) |
March 31, 2017 | December 31, 2016 | ||||||
Flight equipment | $ | 1,546,545 | $ | 1,541,872 | |||
Ground equipment | 49,348 | 49,229 | |||||
Leasehold improvements, facilities and office equipment | 28,081 | 27,364 | |||||
Aircraft modifications and projects in progress | 188,392 | 113,518 | |||||
1,812,366 | 1,731,983 | ||||||
Accumulated depreciation | (754,489 | ) | (730,991 | ) | |||
Property and equipment, net | $ | 1,057,877 | $ | 1,000,992 |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
Unsubordinated term loan | $ | 81,765 | $ | 85,636 | |||
Revolving credit facility | 415,000 | 355,000 | |||||
Aircraft loans | 11,652 | 18,085 | |||||
Total long term obligations | 508,417 | 458,721 | |||||
Less: current portion | (26,531 | ) | (29,306 | ) | |||
Total long term obligations, net | $ | 481,886 | $ | 429,415 |
Airline | Labor Agreement Unit | Percentage of the Company’s Employees |
ABX | International Brotherhood of Teamsters | 8.8% |
ATI | Air Line Pilots Association | 6.7% |
Three Months Ended March 31, | |||||||||||||||
Pension Plans | Post-Retirement Healthcare Plan | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | — | $ | — | $ | 39 | $ | 31 | |||||||
Interest cost | 8,775 | 8,968 | 36 | 42 | |||||||||||
Expected return on plan assets | (10,930 | ) | (10,264 | ) | — | — | |||||||||
Amortization of prior service cost | — | — | (13 | ) | (26 | ) | |||||||||
Amortization of net loss | 1,937 | 3,368 | 71 | 40 | |||||||||||
Net periodic benefit (income) cost | $ | (218 | ) | $ | 2,072 | $ | 133 | $ | 87 |
March 31, 2017 | December 31, 2016 | |||||||||||||
Expiration Date | Stated Interest Rate | Notional Amount | Market Value (Liability) | Notional Amount | Market Value (Liability) | |||||||||
June 30, 2017 | 1.183 | % | 41,250 | (17 | ) | 43,125 | (77 | ) | ||||||
May 5, 2021 | 1.090 | % | 41,250 | 643 | 43,125 | 547 | ||||||||
May 30, 2021 | 1.703 | % | 39,375 | 54 | — | — |
Defined Benefit Pension | Defined Benefit Post-Retirement | Foreign Currency Translation | Total | |||||||||
Balance as of December 31, 2015 | (97,302 | ) | (315 | ) | (1,395 | ) | (99,012 | ) | ||||
Other comprehensive income (loss) before reclassifications: | ||||||||||||
Foreign currency translation adjustment | — | — | 392 | 392 | ||||||||
Amounts reclassified from accumulated other comprehensive income: | ||||||||||||
Actuarial costs (reclassified to salaries, wages and benefits) | 3,368 | 40 | — | 3,408 | ||||||||
Negative prior service cost (reclassified to salaries, wages and benefits) | — | (26 | ) | — | (26 | ) | ||||||
Income tax expense | (1,222 | ) | (5 | ) | (135 | ) | (1,362 | ) | ||||
Other comprehensive income, net of tax | 2,146 | 9 | 257 | 2,412 | ||||||||
Balance as of March 31, 2016 | (95,156 | ) | (306 | ) | (1,138 | ) | (96,600 | ) |
Defined Benefit Pension | Defined Benefit Post-Retirement | Foreign Currency Translation | Total | |||||||||
Balance as of December 31, 2016 | (77,088 | ) | (1,301 | ) | (1,477 | ) | (79,866 | ) | ||||
Other comprehensive income (loss) before reclassifications: | ||||||||||||
Foreign currency translation adjustment | — | — | 58 | 58 | ||||||||
Amounts reclassified from accumulated other comprehensive income: | ||||||||||||
Actuarial costs (reclassified to salaries, wages and benefits) | 1,937 | 71 | — | 2,008 | ||||||||
Negative prior service cost (reclassified to salaries, wages and benefits) | — | (13 | ) | — | (13 | ) | ||||||
Income tax expense | (703 | ) | (21 | ) | (21 | ) | (745 | ) | ||||
Other comprehensive income, net of tax | 1,234 | 37 | 37 | 1,308 | ||||||||
Balance as of March 31, 2017 | (75,854 | ) | (1,264 | ) | (1,440 | ) | (78,558 | ) |
Three Months Ended | |||||||||||||
March 31, 2017 | March 31, 2016 | ||||||||||||
Number of Awards | Weighted average grant-date fair value | Number of Awards | Weighted average grant-date fair value | ||||||||||
Outstanding at beginning of period | 1,040,569 | $ | 9.97 | 1,157,659 | $ | 7.52 | |||||||
Granted | 243,940 | 17.52 | 294,060 | 15.43 | |||||||||
Converted | (173,210 | ) | 9.69 | (160,500 | ) | 7.20 | |||||||
Expired | — | — | — | — | |||||||||
Forfeited | (3,800 | ) | 13.66 | — | — | ||||||||
Outstanding at end of period | 1,107,499 | $ | 11.66 | 1,291,219 | $ | 9.37 | |||||||
Vested | 324,599 | $ | 6.39 | 338,919 | $ | 6.12 |
Three Months Ending March 31, | |||||||
2017 | 2016 | ||||||
Numerator: | |||||||
Earnings from continuing operations - basic | $ | 9,796 | $ | 8,171 | |||
Gain from stock warrant revaluation, net of tax | (1,539 | ) | — | ||||
Earnings from continuing operations - diluted | $ | 8,257 | $ | 8,171 | |||
Denominator: | |||||||
Weighted-average shares outstanding - basic | 59,133 | 63,636 | |||||
Common equivalent shares: | |||||||
Effect of stock-based compensation awards | 684 | 809 | |||||
Effect of stock warrants | 5,132 | 612 | |||||
Weighted-average shares outstanding assuming dilution | 64,949 | 65,057 | |||||
Basic earnings per share from continuing operations | $ | 0.17 | $ | 0.13 | |||
Diluted earnings per share from continuing operations | $ | 0.13 | $ | 0.13 |
Three Months Ending March 31, | |||||||
2017 | 2016 | ||||||
Total revenues: | |||||||
CAM | $ | 47,978 | $ | 51,726 | |||
ACMI Services | 144,949 | 114,956 | |||||
All other | 89,206 | 55,011 | |||||
Eliminate inter-segment revenues | (44,216 | ) | (44,308 | ) | |||
Total | $ | 237,917 | $ | 177,385 | |||
Customer revenues: | |||||||
CAM | $ | 30,782 | $ | 28,761 | |||
ACMI Services | 144,949 | 114,956 | |||||
All other | 62,186 | 33,668 | |||||
Total | $ | 237,917 | $ | 177,385 | |||
Depreciation and amortization expense: | |||||||
CAM | $ | 24,301 | $ | 22,730 | |||
ACMI Services | 11,072 | 9,544 | |||||
All other | 1,069 | 260 | |||||
Total | $ | 36,442 | $ | 32,534 | |||
Segment earnings (loss): | |||||||
CAM | $ | 13,330 | $ | 19,510 | |||
ACMI Services | (3,705 | ) | (10,356 | ) | |||
All other | 4,783 | 3,868 | |||||
Net unallocated interest expense | (171 | ) | (346 | ) | |||
Net gain (loss) on financial instruments | 1,869 | (528 | ) | ||||
Pre-tax earnings from continuing operations | $ | 16,106 | $ | 12,148 |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
Assets: | |||||||
CAM | $ | 1,035,730 | $ | 971,986 | |||
ACMI Services | 182,190 | 164,489 | |||||
All other | 122,891 | 122,855 | |||||
Total | $ | 1,340,811 | $ | 1,259,330 |
March 31, 2017 | December 31, 2016 | ||||||||||||
ACMI Services | CAM | Total | ACMI Services | CAM | Total | ||||||||
In-service aircraft | |||||||||||||
Aircraft owned | |||||||||||||
Boeing 767-200 | 6 | 29 | 35 | 6 | 29 | 35 | |||||||
Boeing 767-300 | 3 | 14 | 17 | 4 | 12 | 16 | |||||||
Boeing 757-200 | 4 | — | 4 | 4 | — | 4 | |||||||
Boeing 757-200 Combi | 4 | — | 4 | 4 | — | 4 | |||||||
Total | 17 | 43 | 60 | 18 | 41 | 59 | |||||||
Other aircraft | |||||||||||||
Owned Boeing 767-300 under modification | — | 9 | 9 | — | 7 | 7 | |||||||
Owned Boeing 737-400 under modification | — | 1 | 1 | — | — | — | |||||||
Owned Boeing 767 available or staging for lease | — | 1 | 1 | — | 1 | 1 |
Three Months Ending March 31, | |||||||
2017 | 2016 | ||||||
Revenues from Continuing Operations: | |||||||
CAM | |||||||
Aircraft leasing and related revenues | $ | 50,569 | $ | 51,726 | |||
Lease amortization against revenue | (2,591 | ) | — | ||||
Total CAM | 47,978 | 51,726 | |||||
ACMI Services | |||||||
Airline services | 108,066 | 101,653 | |||||
Reimbursable | 36,883 | 13,303 | |||||
Total ACMI Services | 144,949 | 114,956 | |||||
Other Activities | 89,206 | 55,011 | |||||
Total Revenues | 282,133 | 221,693 | |||||
Eliminate internal revenues | (44,216 | ) | (44,308 | ) | |||
Customer Revenues | $ | 237,917 | $ | 177,385 | |||
Pre-Tax Earnings from Continuing Operations: | |||||||
CAM, inclusive of interest expense | $ | 13,330 | $ | 19,510 | |||
ACMI Services | (3,705 | ) | (10,356 | ) | |||
Other Activities | 4,783 | 3,868 | |||||
Net unallocated interest expense | (171 | ) | (346 | ) | |||
Net financial instrument re-measurement (loss) gain | 1,869 | (528 | ) | ||||
Pre-Tax Earnings from Continuing Operations | 16,106 | 12,148 | |||||
Add other non-service components of retiree benefit costs, net | 177 | 2,203 | |||||
Add debt issuance costs from non-consolidating affiliate | — | 1,229 | |||||
Add lease incentive amortization | 2,591 | — | |||||
Add net loss (gain) on financial instruments | (1,869 | ) | 528 | ||||
Adjusted Pre-Tax Earnings from Continuing Operations | $ | 17,005 | $ | 16,108 |
Period | Total Number of Shares Purchased | Average Price paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program | ||||||||||
January 1, 2017 through January 31, 2017 | 30,000 | $ | 15.63 | 30,000 | $ | 25,616,016 | ||||||||
February 1, 2017 through February 28, 2017 | 30,000 | $ | 16.99 | 30,000 | $ | 25,106,319 | ||||||||
March 1, 2017 through March 31, 2017 | 30,000 | $ | 16.13 | 30,000 | $ | 24,622,407 | ||||||||
Total for the quarter | 90,000 | $ | 16.25 | 90,000 | $ | 24,622,407 |
Exhibit No. | Description of Exhibit |
10.1 | First Amendment to the Amended and Restated Credit Agreement, dated as of March 31, 2017, among Cargo Aircraft Management, Inc., as Borrower, Air Transport Services Group, Inc., the Lenders from time to time party hereto, 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, filed herewith. |
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. |
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 |
AIR TRANSPORT SERVICES GROUP, INC., | ||||
a Delaware Corporation | ||||
Registrant | ||||
/S/ JOSEPH C. HETE | ||||
Joseph C. Hete | ||||
Chief Executive Officer (Principal Executive Officer) | ||||
Date: | May 8, 2017 | |||
/S/ QUINT O. TURNER | ||||
Quint O. Turner | ||||
Chief Financial Officer (Principal Financial Officer | ||||
Date: | May 8, 2017 | and Principal Accounting Officer) |
REGIONS BANK, as a Lender | |
By: /s/ Cheryl L. Shelhart | |
Name: Cheryl L. Shelhart | |
Title: Vice President | |
JPMORGAN CHASE BANK, N.A., as a Lender | |
By: /s/ John B. Middelberg | |
Name: John B. Middelberg | |
Title: Executive Director | |
BANK OF AMERICA, N.A., as a Lender | |
By: /s/ Gregg A. Bush | |
Name: Gregg A. Bush | |
Title: Senior Vice President | |
PNC BANK, NATIONAL ASSOCIATION, as a Lender | |
By: /s/ David Beckett | |
Name: David Beckett | |
Title: Vice President | |
BRANCH BANKING AND TRUST COMPANY, as a Lender | |
By: /s/ David Miller | |
Name: David Miller | |
Title: Vice President | |
COMPASS BANK, as a Lender | |
By: /s/ Jeffrey Bork | |
Name: Jeffrey Bork | |
Title: Senior Vice President | |
THE NORTHERN TRUST COMPANY, as a Lender | |
By: /s/ Peter J. Hallan | |
Name: Peter J. Hallan | |
Title: Vice President | |
THE PRIVATEBANK AND TRUST COMPANY, as a Lender | |
By: /s/ Nick Fadel | |
Name: Nick Fadel | |
Title: Managing Director | |
UNION BANK & TRUST, as a Lender | |
By: /s/ deK Bowen | |
Name: deK Bowen | |
Title: Senior Vice President | |
ATLANTIC CAPITAL BANK, as a Lender | |
By: /s/ Preston McDonald | |
Name: Preston McDonald | |
Title: Vice President | |
TRISTATE CAPITAL BANK, as a Lender | |
By: /s/ Ellen Frank | |
Name: Ellen Frank | |
Title: Senior Vice President | |
Institution | Revolving Commitment | ||
SunTrust Bank | $81,208,390.00 | ||
Regions Bank | $69,814,886.00 | ||
JPMorgan Chase Bank, N.A. | $80,828,518.00 | ||
Bank of America, N.A. | $71,739,395.00 | ||
PNC Bank, National Association | $59,747,048.00 | ||
Branch Banking and Trust Company | $44,811,877.00 | ||
Compass Bank | $39,295,033.00 | ||
The Northern Trust Company | $30,197,857.00 | ||
The PrivateBank and Trust Company | $23,607,260.00 | ||
Union Bank & Trust | $24,557,918.00 | ||
Atlantic Capital Bank | $11,881,818.00 | ||
TriState Capital Bank | $7,310,000.00 | ||
TOTAL | $545,000,000.00 |
Name | Office | Signature |
______________________ | ______________________ | ______________________ |
______________________ | ______________________ | ______________________ |
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. |
/s/ JOSEPH C. HETE |
Joseph C. Hete |
Chief Executive Officer |
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. |
/s/ QUINT O. TURNER |
Quint O. Turner |
Chief Financial Officer (Principal Financial and Accounting Officer) |
(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. |
/S/ JOSEPH C. HETE |
Joseph C. Hete Chief Executive Officer |
(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. |
/s/ QUINT O. TURNER |
Quint O. Turner Chief Financial Officer |
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Document and Entity Information - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
May 08, 2017 |
Jun. 30, 2016 |
|
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-Q | ||
Document Period End Date | Mar. 31, 2017 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | Q1 | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 59,533,749 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 660,069,868 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Assets, Current [Abstract] | ||
Allowance for doubtful accounts | $ 1,273 | $ 1,264 |
Stockholders' Equity Attributable to Parent [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 85,000,000 | 85,000,000 |
Common stock, shares issued (in shares) | 59,563,749 | 59,461,291 |
Common stock, shares outstanding (in shares) | 59,563,749 | 59,461,291 |
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 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
NET EARNINGS | $ 9,988 | $ 8,218 |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | 37 | 257 |
OTHER COMPREHENSIVE INCOME: | ||
TOTAL COMPREHENSIVE INCOME, NET OF TAXES | 11,296 | 10,630 |
Pension Plans [Member] | ||
Other comprehensive income, net of tax | 1,234 | 2,146 |
OTHER COMPREHENSIVE INCOME: | ||
Income tax (expense) or benefit | (703) | (1,222) |
Post-Retirement Plans [Member] | ||
Other comprehensive income, net of tax | 37 | 9 |
OTHER COMPREHENSIVE INCOME: | ||
Income tax (expense) or benefit | $ (21) | $ (5) |
Consolidated Statements of Stockholders' Equity - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands |
Total |
Accumulated Deficit [Member] |
---|---|---|
Balance at at Dec. 31, 2016 | $ 331,902 | |
Balance at (in shares) at Dec. 31, 2016 | 59,461,291 | |
Stock-based compensation plans | ||
Total comprehensive income (loss) | $ 11,296 | $ 9,988 |
Balance at at Mar. 31, 2017 | $ 341,083 | |
Balance at (in shares) at Mar. 31, 2017 | 59,563,749 |
Summary of Financial Statement Preparation and Significant Accounting Policies |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
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 U.S. 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 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 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. 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. The Company serves a base of concentrated customers who typically have a diverse line of international cargo traffic. 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. In addition to its airline operations and aircraft leasing services, the Company sells aircraft parts, provides aircraft maintenance and modification services, equipment maintenance services, and operates mail and package sorting facilities. Basis of Presentation The accompanying unaudited condensed interim consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and such principles are applied on a basis consistent with the financial statements reflected in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations promulgated by the SEC related to interim financial statements. In the opinion of management, the accompanying financial statements contain all adjustments, including normal recurring adjustments, necessary for the fair presentation of the Company’s results of operations and financial position for the periods presented. Due to seasonal fluctuations, among other factors common to the airline industry, the results of operations for the periods presented are not necessarily indicative of the results of operations to be expected for the entire year or any interim period. The preparation of consolidated financial statements requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements. The accounting estimates reflect the best judgment of management, but actual results could differ materially from those estimates. The accompanying condensed consolidated financial statements include the accounts of Air Transport Services Group, Inc. and its wholly-owned subsidiaries. Investments in an affiliate in which the Company has significant influence but does not exercise control are accounted for using the equity method of accounting. Using the equity method, the Company’s share of the nonconsolidated affiliate's income or loss is recognized in the consolidated statement of earnings and cumulative post-acquisition changes in the investment are adjusted against the carrying amount of the investment. Inter-company balances and transactions are eliminated. New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). In April 2016, the FASB issued ASU No. 2016-10, "Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing" clarify the accounting under ASU 2014-09 for licenses of intellectual property and for identifying distinct performance obligations in a contract. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017 with earlier adoption permitted for reporting periods beginning after December 15, 2016. ASU 2014-09 may be applied using either a full retrospective approach, under which all years included in the financial statements will be presented under the revised guidance, or a modified retrospective approach, under which financial statements will be prepared under the revised guidance for the year of adoption, but not for prior years. Under the latter method, entities would recognize a cumulative catch-up adjustment to the opening balance of retained earnings at the effective date for contracts that still require performance by the entity, and disclose all line items in the year of adoption as if they were prepared under the old revenue guidance. The Company is currently evaluating the methods of adoption allowed by the new standard and the effect the standard is expected to have on the Company's consolidated financial position, results of operations or cash flows and related disclosures. The evaluation includes each of the five steps identified in the ASU 2014-09 revenue recognition model, which are as follows: 1) identify the contract with the customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) performance obligations are satisfied. The Company's lease contracts within the scope of ASC 840, Leases, are specifically excluded from ASU 2014-09. As the Company completes its evaluation of this new standard, new information may arise that could change the Company's current understanding of the impact to revenue and expense recognized. Additionally, industry activities and other guidance provided by regulators, standards setters, and the accounting profession may affect the Company’s assessment and implementation plans. In July 2015, FASB issued ASU "Inventory (Topic 330): Simplifying the Measurement of Inventory" ("ASU 2015-11"). ASU 2015-11 more closely aligns the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards ("IFRS"). The amendment in ASU 2015-11 is for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendment should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company does not expect the impact of adopting ASU 2015-11 to be material to the Company's financial statements and related disclosures. In March 2017, the FASB issued ASU "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost" (ASU 2017-07"). ASU 2017-07 requires an employer to report the service cost component of retiree benefits in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost would be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The standard is effective for annual periods beginning after December 15, 2017 and should be applied retrospectively. The Company anticipates the standard will impact the Operating Income subtotal as reported in the Company's Consolidated Statement of Operations by excluding interest expense, investment returns and other non service cost components of retiree benefit expenses. Information about interest expense, investment returns and other components of retiree benefit expenses can be found in Note H. In February 2016, the FASB issued ASU "Leases (Topic 842)" ("ASU 2016-02"), which will require the recognition of right to-use-assets and lease liabilities for leases previously classified as operating leases by lessees. The standard will take effect for annual reporting periods beginning after December 15, 2018, including interim reporting periods. Early application will be permitted for all entities. In addition, the FASB has decided to require a lessee to apply a modified retrospective transition approach for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements (the date of initial application). The modified retrospective approach would not require any transition accounting for leases that expired before the date of initial application. The FASB decided to not permit a full retrospective transition approach. The Company is currently evaluating the impact of the standard on its financial statements and disclosures. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15"). ASU 2016-15 clarifies how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The update requires retrospective application to all periods presented but may be applied prospectively if retrospective application is impracticable. The Company is currently evaluating the impact of the adoption of the standard on the its financial statements and disclosures. In November 2016, the FASB issued ASU "Statement of Cash Flows (Topic 230): Restricted Cash" ("ASU 2016-18"). ASU 2016-18 requires that the statement of cash flows explain the changes in the combined total of restricted and unrestricted cash balance. Amounts generally described as restricted cash or restricted cash equivalents will be combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. Further, the ASU requires a reconciliation of balances from the statement of cash flows to the balance sheet in situations in which the balance sheet includes more than one line item of cash, cash equivalents, and restricted cash. Companies will also be disclosing the nature of the restrictions. ASU 2016-18 is effective for financial statements issued for fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact of the standard on its financial statements and disclosures. In January 2017, the FASB issued ASU "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"). ASU 2017-04 will simplify the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. ASU 2017-04 would require applying a one-step quantitative test and recording the amount of goodwill impairment as the excess of the reporting unit's carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. The amendments in ASU 2017-04 are effective for annual or any interim goodwill impairment tests for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of the standard on its financial statements and disclosures. |
Significant Customers |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Significant Customers [Abstract] | |
Significant Customers | SIGNIFICANT CUSTOMERS DHL The Company has had long term contracts with DHL Network Operations (USA), Inc. and its affiliates ("DHL") since August 2003. Revenues from aircraft leases and related services performed for DHL were approximately 26% and 36% of the Company's consolidated revenues from continuing operations for the three month periods ending March 31, 2017 and 2016, respectively. The Company’s balance sheets include accounts receivable with DHL of $6.1 million and $7.3 million as of March 31, 2017 and December 31, 2016, respectively. The Company leases 16 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. 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. 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. Amazon The Company has been providing freighter aircraft and services for cargo handling and logistical support for Amazon Fulfillment Services, Inc. ("AFS"), a subsidiary of Amazon.com, Inc. ("Amazon") since September 2015. On March 8, 2016, the Company entered into an Air Transportation Services Agreement (the “ATSA”) with AFS pursuant to which CAM will lease 20 Boeing 767 freighter aircraft to AFS, including 12 Boeing 767-200 freighter aircraft for a term of five years and eight Boeing 767-300 freighter aircraft for a term of seven years. The ATSA, which has a term of five years, also provides for the operation of those aircraft by the Company’s airline subsidiaries, and the performance of hub and gateway services by the Company's subsidiary LGSTX Services Inc. ("LGSTX"). CAM owns all of the Boeing 767 aircraft that are or will be leased and operated under the ATSA. The ATSA became effective on April 1, 2016. As of March 31, 2017, the Company has leased 16 aircraft to AFS and is obligated to lease four more Boeing 767-300 aircraft to AFS during 2017 to meet its 20 aircraft commitment. Revenues from aircraft leases and related services performed for AFS comprised approximately 41% and 19% of the Company's consolidated revenues from continuing operations for the three month periods ending March 31, 2017 and 2016, respectively. The Company’s balance sheets include accounts receivable with AFS of $32.9 million and $24.6 million as of March 31, 2017 and December 31, 2016, respectively. In conjunction with the execution of the ATSA, the Company and Amazon entered into an Investment Agreement and a Stockholders Agreement on March 8, 2016. The Investment Agreement calls for the Company to issue warrants in three tranches which will grant Amazon the right to acquire up to 19.9% of the Company’s outstanding common shares as described below. The first tranche of warrants, issued upon execution of the Investment Agreement, grants Amazon the right to purchase approximately 12.81 million ATSG common shares, with the right to purchase 7.69 million common shares which vested upon issuance on March 8, 2016 and the right to purchase the remaining 5.12 million common shares, vesting as the Company delivers additional aircraft leased under the ATSA, or as the Company achieves specified revenue targets in connection with the ATSA. The second tranche of warrants grants Amazon a right to purchase approximately 1.59 million ATSG common shares, and will be issued on March 8, 2018. The third tranche of warrants will be issued on September 8, 2020. The third tranche of warrants will grant Amazon the right to purchase such additional number of ATSG common shares as is necessary to bring Amazon’s ownership to 19.9% of the Company’s pre-transaction outstanding common shares measured on a GAAP-diluted basis, adjusted for share issuances and repurchases by the Company following the date of the Investment Agreement and after giving effect to the warrants granted. The exercise price of the warrants will be $9.73 per share, which represents the closing price of ATSG’s common shares on February 9, 2016. Each of the three tranches of warrants will be exercisable in accordance with its terms through March 8, 2021. The Company anticipates making available the common shares required for the underlying warrants through a combination of share repurchases and the issuance of additional shares. The Company’s accounting for the warrants has been determined in accordance with the financial reporting guidance for equity-based payments to non-employees and for financial instruments. During the first quarter of 2017, 1.3 million additional warrants vested in conjunction with the execution of two aircraft leases. As of March 31, 2017, the Company's liabilities reflected 12.34 million warrants having a fair value of $7.93 per share. As of March 31, 2017, the re-measurements of the warrants to fair value resulted in a non-operating gain of $1.7 million before the effect of income taxes. As of March 31, 2017, an additional 2.6 million warrants are expected to vest as AFS leases four aircraft from the Company. The Company's earnings in future periods will be impacted by the number of warrants granted, the re-measurements of warrant fair value, amortizations of the lease incentive asset and the related income tax effects. For income tax calculations, the value and timing of related tax deductions will differ from the guidance described above for financial reporting. 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 7% and 15% of the Company's total revenues from continuing operations for the three month periods ending March 31, 2017 and 2016, respectively. The Company's balance sheets included accounts receivable with the U.S. Military of $5.7 million and $7.0 million as of March 31, 2017 and December 31, 2016, respectively. |
Goodwill and Other Intangibles |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangibles | GOODWILL, INTANGIBLES AND EQUITY INVESTMENTS On December 30, 2016, the Company purchased 100% of the outstanding stock of Pemco World Air Inc., ("Pemco") for cash consideration in a debt-free acquisition. The purchase price has been allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess purchase price over the estimated fair value of net assets acquired was recorded as goodwill and reflects the strategic value of marketing Pemco's aircraft conversion capabilities and current aircraft hangar operations with the Company's air transportation solutions. Identified intangible assets include Supplemental Type Certificates ("STCs") granting approval by FAA for Pemco to market and complete certain aircraft modifications. The Company is in process of refining its estimates of certain assets including goodwill and intangible assets, therefore the allocation of purchase price is preliminary at this time. The carrying amounts of goodwill are as follows (in thousands):
The Company's acquired intangible assets are as follows (in thousands):
The airline certificates have an indefinite life and therefore are not amortized. The Company amortizes finite-lived intangibles assets, including customer relationship and STC intangibles, over 4 to 7 years. In January 2014, the Company acquired a 25 percent equity interest in West Atlantic AB of Gothenburg, Sweden ("West"). West, through its two airlines, Atlantic Airlines Ltd. and West Air Sweden AB, operates a fleet of 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 767 and 737 aircraft. West leases three Boeing 767 aircraft from the Company. The Company accounts for West using the equity method of accounting. The Company’s carrying value of West was $9.3 million and $9.9 million at March 31, 2017 and December 31, 2016, respectively, including $5.5 million of excess purchase price over the Company's fair value of West's net assets in January of 2014. The carrying value is reflected in “Other Assets” in the Company’s consolidated balance sheets. Stock warrants issued to a lessee (see Note B) as an incentive are recorded as a lease incentive asset using their fair value at the time that the lessee has met its performance obligation and amortized against revenues over the duration of related aircraft leases. The Company's lease incentive granted to the lessee was as follows (in thousands):
The lease incentive began to amortize in April 2016, with the commencement of certain aircraft leases over the duration of the related leases. |
Fair Value Measurements |
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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, stock warrants and interest rate swaps are based on observable inputs (Level 2) from comparable market transactions. The fair value of the stock warrant obligation was determined using a Black-Scholes pricing model which considers the Company’s common stock price and various assumptions, such as the volatility of the Company’s common stock, the expected dividend yield, and the risk-free interest rate. 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 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 $4.9 million more than the carrying value, which was $508.4 million at March 31, 2017. As of December 31, 2016, the fair value of the Company’s debt obligations was approximately $0.2 million more than the carrying value, which was $458.7 million. The non-financial assets, including goodwill, intangible assets and property and equipment are measured at fair value on a non-recurring basis. |
Property and Equipment |
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Property and Equipment | PROPERTY AND EQUIPMENT The Company's property and equipment consists primarily of cargo aircraft, aircraft engines and other flight equipment. Property and equipment, to be held and used, is summarized as follows (in thousands):
CAM owned aircraft with a carrying value of $558.7 million and $524.3 million that were under leases to external customers as of March 31, 2017 and December 31, 2016, respectively. |
Debt Obligations |
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Debt Obligations | DEBT OBLIGATIONS Long term obligations consisted of the following (in thousands):
The Company executed a syndicated credit agreement ("Senior Credit Agreement") in May 2011 which includes an unsubordinated term loan and a revolving credit facility. Effective March 31, 2017, the Company executed an amendment to the Senior Credit Agreement (the "Seventh Credit Agreement"). The Seventh Credit Agreement extended the maturity of the term loan and revolving facility to May 30, 2022, increased the capacity of the Revolving credit facility by $120.0 million to $545.0 million and preserved the accordion feature such that the Company can still draw up to an additional $100.0 million subject to the lenders' consent. Each year, through May 6, 2019, the Company may request a one year extension of the final maturity date, subject to the lenders' consent. The revolving credit facility has permitted additional indebtedness of $150.0 million. Under the terms of the Senior Credit Agreement, the Company is required to maintain collateral coverage equal to 125% of the outstanding balances of the term loan and the maximum capacity of revolving credit facility or 150% of the outstanding balance of the term loan and the total funded revolving credit facility, whichever is less. The minimum collateral coverage which must be maintained is 50% of the outstanding balance of the term loan plus the revolving credit facility commitment which was $545.0 million. The balances of the unsubordinated term loan are net of debt issuance costs of $0.7 million and $0.6 million for the periods ending March 31, 2017 and December 31, 2016, respectively. 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 2.99% and 2.99%, respectively. The Senior Credit Agreement provides for the issuance of letters of credit on the Company's behalf. As of March 31, 2017, the unused revolving credit facility totaled $121.1 million, net of draws of $415.0 million and outstanding letters of credit of $8.9 million. The aircraft loans are collateralized by three aircraft, and amortize monthly with a balloon payment of approximately 20% with maturities between 2017 and early 2018. Interest rates range from 6.74% to 7.06% per annum payable monthly. The Senior Credit Agreement is collateralized by certain of the Company's Boeing 767 and 757 aircraft that are not collateralized under aircraft loans. 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 $75.0 million during any calendar year, provided the Company's total debt to EBITDA ratio is under 2.75 times, after giving effect to the dividend or repurchase. |
Commitments and Contingencies |
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Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Lease Commitments The Company leases portions of the air park in Wilmington, Ohio, under lease agreements with a regional port authority, the terms of which expire in May of 2019 and June of 2036 with options to extend the leases. The leased facilities include corporate offices, 310,000 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. The Company also leases and operates a 311,500 square foot, two hangar aircraft maintenance complex in Tampa, Florida. Additionally, the Company leases certain equipment and airport facilities, office space, maintenance facilities at locations outside of the airpark in Wilmington. Purchase Commitments The Company has agreements with Israel Aerospace Industries Ltd. ("IAI") for the conversion of Boeing 767 passenger aircraft into a standard configured freighter aircraft. The conversions primarily consist of the installation of a standard cargo door and loading system. At March 31, 2017, the Company was committed to acquire and modify additional Boeing 767-300 passenger aircraft into standard freighter aircraft. In addition to six Boeing 767-300 aircraft that were in the modification process at March 31, 2017, the Company is committed to induct eight more aircraft into the freighter modification process through 2018. As of March 31, 2017, the Company's commitments to complete the conversions of aircraft it owns or has the contracts to purchase totaled $163.7 million. Additionally, the Company could incur a cancellation fee for part kits for any aircraft that is not inducted into conversion at IAI. 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. Other In September 2015, the Company entered into a joint venture agreement to establish an express cargo airline serving multiple destinations within the People's Republic of China (including Hong Kong, Macau and Taiwan) and surrounding countries. The airline will be based in mainland China with registered capital of 400 million RMB (US$63 million). It will be established pending the receipt of required governmental approvals and plans to commence flight operations in 2017. The Company may offer the new airline aircraft leases to build its fleet. The Company expects to contribute $15 million to the joint venture over the next twelve months. In addition to the foregoing matters, the Company is 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, the Company believes that its 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 March 31, 2017, the flight crewmember employees of ABX and ATI and flight attendant employees of ATI were represented by the labor unions listed below:
In addition, the Company has approximately 40 flight attendants that are represented by a recognized labor unit and are beginning to negotiate a collective bargaining agreement. |
Pension and Other Post-Retirement Benefit Plans |
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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. Benefits for covered individuals terminate upon reaching age 65 under the post-retirement healthcare plans. 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. Effective December 31, 2016, ABX modified its unfunded, non-pilot retiree medical plan to terminate benefits to all participants. Retired participants were directed to public healthcare exchanges for more flexible and lower cost alternatives. As a result, ABX settled all retiree medical obligations. The Company's net periodic benefit costs for its defined benefit pension plans and post-retirement healthcare plans for both continuing and discontinued operations are as follows (in thousands):
During the three month periods ending March 31, 2017, the Company contributed $0.8 million to the pension plans. The Company expects to contribute an additional $3.7 million during the remainder of 2017. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The provision for income taxes for interim periods is based on management's best estimate of the effective income tax rate expected to be applicable for the current year, plus any adjustments arising from changes in the estimated amount of taxable income related to prior periods. Income tax expense recorded through March 31, 2017 utilized a 38.7% rate based upon year-to-date income and projected results for the full year. Additionally, the Company recorded discrete tax items for the conversion of employee stock awards and the issuance of stock warrants during the first quarter of 2017, resulting in an effective tax rate of 39.2%. The final effective tax rate applied to 2017 will depend on the actual amount of pre-tax book earnings by the Company for the full year, the additional conversions of employee stock awards, issuance of stock warrants and other items. The Company has operating loss carryforwards for U.S. federal income tax purposes. Management expects to utilize the loss carryforwards to offset federal income tax liabilities in the future. Due to the Company's deferred tax assets, including its loss carryforwards, management does not expect to pay federal income taxes until 2019 or later. The Company may, however, be required to pay alternative minimum taxes and certain state and local income taxes before then. |
Derivative Instruments |
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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 the term loan. Accordingly, the Company entered into interest rate swaps. The Company entered into a new interest rate swap in February 2017 having an initial value of $39.4 million and a forward start date of June 30, 2017. Under this swap, the Company pays a fixed rate of 1.703% and receives a floating rate that resets monthly based on LIBOR. The table below provides information about the Company’s interest rate swaps (in thousands):
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 the net effects on derivatives of a $0.2 million gain and a $0.1 million loss for the three month periods ending March 31, 2017 and 2016, respectively. The liability for outstanding derivatives is recorded in other liabilities and in accrued expenses. |
Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) includes the following items by components for the three month periods ending March 31, 2017 and 2016 (in thousands):
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Stock-Based Compensation |
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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 and in May 2015. 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 vesting periods of approximately six or twelve months. The Company expects to settle all of the stock unit awards by issuing new shares of stock. The table below summarizes award activity.
The average grant-date fair value of each performance condition award, non-vested restricted stock award and time-based award granted by the Company in 2017 was $16.72, 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 in 2017 was $20.18. The market condition awards were valued using a Monte Carlo simulation technique, a risk-free interest rate of 1.7% and a volatility of 34.7% based on volatility over three years using daily stock prices. For the three month periods ending March 31, 2017 and 2016, the Company recorded expense of $0.8 million and $0.7 million, respectively, for stock incentive awards. At March 31, 2017, there was $6.5 million of unrecognized expense related to the stock incentive awards that is expected to be recognized over a weighted-average period of 1.8 years. As of March 31, 2017, none of the awards were convertible, 324,599 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 1,360,474 additional outstanding shares of the Company’s common stock depending on service, performance and market results through December 31, 2019. |
Earnings Per Share |
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Earnings Per Share | COMMON STOCK AND EARNINGS PER SHARE Earnings per Share The calculation of basic and diluted earnings per common share are as follows (in thousands, except per share amounts):
The determination of diluted earnings per share requires the exclusion of the fair value re-measurement of the stock warrants recorded as a liability (see Note B), if such warrants have a anti-dilutive effect on earnings per share. The dilutive effect of the weighted-average shares outstanding was calculated using the treasury method. Under this method, the number of diluted shares is determined by dividing the assumed proceeds of the warrants by the average stock price during the period and comparing that amount with the number of warrants outstanding. The underlying warrants as of March 31, 2017, could result in 12.3 million additional shares of the Company's common stock if the warrants are settled by tendering cash. 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 and none during the three month periods ending March 31, 2017 and 2016, respectively. |
Segment Information |
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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 CMI agreements 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 mail and parcel handling services, as well as hub managements services for the USPS and AFS, the sale of aircraft parts, aircraft maintenance services, aircraft modifications, facility and ground equipment services, the sales of aviation fuel and other services, are not large enough to 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 and cash equivalents are reflected in Assets - All other below. The Company's segment information from continuing operations is presented below (in thousands):
The Company's assets are presented below by segment (in thousands):
Interest expense allocated to CAM was $3.3 million and $2.3 million for the three month periods ending March 31, 2017 and 2016, respectively. |
Summary of Financial Statement Preparation and Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed interim consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and such principles are applied on a basis consistent with the financial statements reflected in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations promulgated by the SEC related to interim financial statements. In the opinion of management, the accompanying financial statements contain all adjustments, including normal recurring adjustments, necessary for the fair presentation of the Company’s results of operations and financial position for the periods presented. Due to seasonal fluctuations, among other factors common to the airline industry, the results of operations for the periods presented are not necessarily indicative of the results of operations to be expected for the entire year or any interim period. The preparation of consolidated financial statements requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements. The accounting estimates reflect the best judgment of management, but actual results could differ materially from those estimates. The accompanying condensed consolidated financial statements include the accounts of Air Transport Services Group, Inc. and its wholly-owned subsidiaries. Investments in an affiliate in which the Company has significant influence but does not exercise control are accounted for using the equity method of accounting. Using the equity method, the Company’s share of the nonconsolidated affiliate's income or loss is recognized in the consolidated statement of earnings and cumulative post-acquisition changes in the investment are adjusted against the carrying amount of the investment. Inter-company balances and transactions are eliminated. |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). In April 2016, the FASB issued ASU No. 2016-10, "Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing" clarify the accounting under ASU 2014-09 for licenses of intellectual property and for identifying distinct performance obligations in a contract. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017 with earlier adoption permitted for reporting periods beginning after December 15, 2016. ASU 2014-09 may be applied using either a full retrospective approach, under which all years included in the financial statements will be presented under the revised guidance, or a modified retrospective approach, under which financial statements will be prepared under the revised guidance for the year of adoption, but not for prior years. Under the latter method, entities would recognize a cumulative catch-up adjustment to the opening balance of retained earnings at the effective date for contracts that still require performance by the entity, and disclose all line items in the year of adoption as if they were prepared under the old revenue guidance. The Company is currently evaluating the methods of adoption allowed by the new standard and the effect the standard is expected to have on the Company's consolidated financial position, results of operations or cash flows and related disclosures. The evaluation includes each of the five steps identified in the ASU 2014-09 revenue recognition model, which are as follows: 1) identify the contract with the customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) performance obligations are satisfied. The Company's lease contracts within the scope of ASC 840, Leases, are specifically excluded from ASU 2014-09. As the Company completes its evaluation of this new standard, new information may arise that could change the Company's current understanding of the impact to revenue and expense recognized. Additionally, industry activities and other guidance provided by regulators, standards setters, and the accounting profession may affect the Company’s assessment and implementation plans. In July 2015, FASB issued ASU "Inventory (Topic 330): Simplifying the Measurement of Inventory" ("ASU 2015-11"). ASU 2015-11 more closely aligns the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards ("IFRS"). The amendment in ASU 2015-11 is for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendment should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company does not expect the impact of adopting ASU 2015-11 to be material to the Company's financial statements and related disclosures. In March 2017, the FASB issued ASU "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost" (ASU 2017-07"). ASU 2017-07 requires an employer to report the service cost component of retiree benefits in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost would be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The standard is effective for annual periods beginning after December 15, 2017 and should be applied retrospectively. The Company anticipates the standard will impact the Operating Income subtotal as reported in the Company's Consolidated Statement of Operations by excluding interest expense, investment returns and other non service cost components of retiree benefit expenses. Information about interest expense, investment returns and other components of retiree benefit expenses can be found in Note H. In February 2016, the FASB issued ASU "Leases (Topic 842)" ("ASU 2016-02"), which will require the recognition of right to-use-assets and lease liabilities for leases previously classified as operating leases by lessees. The standard will take effect for annual reporting periods beginning after December 15, 2018, including interim reporting periods. Early application will be permitted for all entities. In addition, the FASB has decided to require a lessee to apply a modified retrospective transition approach for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements (the date of initial application). The modified retrospective approach would not require any transition accounting for leases that expired before the date of initial application. The FASB decided to not permit a full retrospective transition approach. The Company is currently evaluating the impact of the standard on its financial statements and disclosures. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15"). ASU 2016-15 clarifies how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The update requires retrospective application to all periods presented but may be applied prospectively if retrospective application is impracticable. The Company is currently evaluating the impact of the adoption of the standard on the its financial statements and disclosures. In November 2016, the FASB issued ASU "Statement of Cash Flows (Topic 230): Restricted Cash" ("ASU 2016-18"). ASU 2016-18 requires that the statement of cash flows explain the changes in the combined total of restricted and unrestricted cash balance. Amounts generally described as restricted cash or restricted cash equivalents will be combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. Further, the ASU requires a reconciliation of balances from the statement of cash flows to the balance sheet in situations in which the balance sheet includes more than one line item of cash, cash equivalents, and restricted cash. Companies will also be disclosing the nature of the restrictions. ASU 2016-18 is effective for financial statements issued for fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact of the standard on its financial statements and disclosures. In January 2017, the FASB issued ASU "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"). ASU 2017-04 will simplify the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. ASU 2017-04 would require applying a one-step quantitative test and recording the amount of goodwill impairment as the excess of the reporting unit's carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. The amendments in ASU 2017-04 are effective for annual or any interim goodwill impairment tests for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of the standard on its financial statements and disclosures. |
Summary of Financial Statement Preparation and Significant Accounting Policies (Tables) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property and equipment, to be held and used, is summarized as follows (in thousands):
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Goodwill and Other Intangibles (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Incentive Intangible [Table Text Block] | The Company's lease incentive granted to the lessee was as follows (in thousands):
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Schedule of Goodwill | The carrying amounts of goodwill are as follows (in thousands):
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Schedule Intangible Assets by Major Class | The Company's acquired intangible assets are as follows (in thousands):
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Fair Value Measurements (Tables) |
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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):
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Property and Equipment (Tables) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property and equipment, to be held and used, is summarized as follows (in thousands):
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Debt Obligations (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Long term obligations consisted of the following (in thousands):
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Commitments and Contingencies (Tables) |
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Mar. 31, 2017 | ||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor | As of March 31, 2017, the flight crewmember employees of ABX and ATI and flight attendant employees of ATI were represented by the labor unions listed below:
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Pension and Other Post-Retirement Benefit Plans (Tables) |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The Company's net periodic benefit costs for its defined benefit pension plans and post-retirement healthcare plans for both continuing and discontinued operations are as follows (in thousands):
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Derivative Instruments (Tables) |
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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):
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Accumulated Other Comprehensive Income (Loss) (Tables) |
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Other Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | Accumulated other comprehensive income (loss) includes the following items by components for the three month periods ending March 31, 2017 and 2016 (in thousands):
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Stock-Based Compensation (Tables) |
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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.
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The calculation of basic and diluted earnings per common share are as follows (in thousands, except per share amounts):
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Segment Information (Tables) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The Company's segment information from continuing operations is presented below (in thousands):
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Reconciliation of Assets from Segment to Consolidated | The Company's assets are presented below by segment (in thousands):
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Goodwill and Other Intangibles (Schedule of Goodwill) (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Goodwill [Line Items] | ||
Fresh-Start Adjustment, Increase (Decrease), Goodwill | $ 140 | |
Goodwill [Roll Forward] | ||
Carrying value, beginning balance | 37,273 | $ 37,133 |
Goodwill | 37,273 | 37,133 |
CAM [Member] | ||
Goodwill [Line Items] | ||
Fresh-Start Adjustment, Increase (Decrease), Goodwill | 0 | |
Goodwill [Roll Forward] | ||
Carrying value, beginning balance | 34,395 | 34,395 |
Goodwill | 34,395 | 34,395 |
Pemco [Member] | ||
Goodwill [Line Items] | ||
Fresh-Start Adjustment, Increase (Decrease), Goodwill | 140 | |
Goodwill [Roll Forward] | ||
Carrying value, beginning balance | 2,878 | 2,738 |
Goodwill | $ 2,878 | $ 2,738 |
Goodwill and Other Intangibles (Schedule Intangible Assets) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Finite and Indefinite-lived Intangible Assets by Major Class [Line Items] | |||
Incentive to Lessee | $ 62,189 | $ 54,730 | |
Warranted granted adding to lease incentive intangible | $ 10,050 | ||
Amortization of Lease Incentives | (2,591) | ||
Finite and Indefinite-lived Intangible Assets [Roll Forward] | |||
Carrying value at beginning of period | 5,453 | ||
Carrying value at beginning of period | 8,453 | ||
Amortization expense | (138) | ||
Carrying value at end of period | 5,453 | $ 5,315 | $ 5,453 |
Carrying value at end of period | 8,315 | ||
ACMI Services [Member] | Airline Certificates [Member] | |||
Finite and Indefinite-lived Intangible Assets [Roll Forward] | |||
Carrying value at beginning of period | 3,000 | ||
Amortization expense | 0 | ||
Carrying value at end of period | $ 3,000 |
Goodwill and Other Intangibles Investment in West Atlantic (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investments | $ 9,300 | $ 9,900 |
Goodwill | 37,273 | $ 37,133 |
Investment in West Atlantic [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Goodwill | $ 5,500 |
Property and Equipment (Schedule of Property and Equipment) (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | $ 1,812,366 | $ 1,731,983 |
Accumulated depreciation | (754,489) | (730,991) |
Property and equipment, net | 1,057,877 | 1,000,992 |
Flight Equipment [Member] | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 1,546,545 | 1,541,872 |
Ground equipment [Member] | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 49,348 | 49,229 |
facilities, leasehold improvements and office equipment [Member] | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 28,081 | 27,364 |
Construction in Progress [Member] | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | $ 188,392 | $ 113,518 |
Property and Equipment (Narrative) (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
CAM [Member] | Flight Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Leased aircraft, carrying value | $ 558.7 | $ 524.3 |
Debt Obligations (Schedule of Long Term Obligations) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Debt Instrument [Line Items] | ||
Total long term obligations | $ 508,417 | $ 458,721 |
Less: current portion | (26,531) | (29,306) |
Total long term obligations, net | $ 481,886 | 429,415 |
Unsubordinated term loan and Revolving credit facility [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Collateral, Coverage Percentage | 125.00% | |
Unsubordinated term loan [Member] | ||
Debt Instrument [Line Items] | ||
Total long term obligations | $ 81,765 | 85,636 |
Revolving credit facility [Member] | ||
Debt Instrument [Line Items] | ||
Line of Credit Facility, Accordion Feature Amount | 100,000 | |
Total long term obligations | 415,000 | 355,000 |
Aircraft loans [Member] | ||
Debt Instrument [Line Items] | ||
Total long term obligations | $ 11,652 | $ 18,085 |
Debt Obligations (Schedule of Long Term Debt Maturities) (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
Total long term obligations | $ 508,417 | $ 458,721 |
Commitments and Contingencies (Commitments) (Details) $ in Millions |
Mar. 31, 2017
USD ($)
|
---|---|
Long-term Purchase Commitment [Line Items] | |
costs to complete aircraft modification | $ 163.7 |
Commitments and Contingencies (Labor Unions) (Details) - Workforce Subject to Collective Bargaining Arrangements [Member] - Labor Unions [Member] |
3 Months Ended |
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Mar. 31, 2017 | |
ABX [Member] | |
Concentration Risk [Line Items] | |
Percentage of the Company's Employees | 8.80% |
ATI [Member] | |
Concentration Risk [Line Items] | |
Percentage of the Company's Employees | 6.70% |
Pension and Other Post-Retirement Benefit Plans (Funded Status) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Pension Plans [Member] | ||
Change in benefit obligation [Roll Forward] | ||
Service cost | $ 0 | $ 0 |
Interest cost | 8,775 | 8,968 |
Change in plan assets [Roll Forward] | ||
Employer contributions | 844 | |
Post-Retirement Healthcare Plans [Member] | ||
Change in benefit obligation [Roll Forward] | ||
Service cost | 39 | 31 |
Interest cost | $ 36 | $ 42 |
Pension and Other Post-Retirement Benefit Plans (Net Periodic Benefit Costs) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Pension Plans [Member] | ||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||
Service cost | $ 0 | $ 0 |
Interest cost | 8,775 | 8,968 |
Expected return on plan assets | (10,930) | (10,264) |
Amortization of prior service cost | 0 | 0 |
Amortization of net loss | 1,937 | 3,368 |
Net periodic benefit (income) cost | (218) | 2,072 |
Post-Retirement Healthcare Plans [Member] | ||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||
Service cost | 39 | 31 |
Interest cost | 36 | 42 |
Expected return on plan assets | 0 | 0 |
Amortization of prior service cost | (13) | (26) |
Amortization of net loss | 71 | 40 |
Net periodic benefit (income) cost | $ 133 | $ 87 |
Pension and Other Post-Retirement Benefit Plans (Cash Flows) (Details) - Pension Plans [Member] $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Defined Benefit Plan Disclosure [Line Items] | |
Employer contributions | $ 844 |
Estimated future employer contributions | $ 3,700 |
Income Taxes (Narrative) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
Rate
| |
Income Tax Disclosure [Line Items] | |
Effective Income Tax Rate Reconciliation, Percent | 38.65% |
Income Taxes (Income Tax Provision (Benefit)) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Deferred taxes: | ||
Total income tax expense from continuing operations | $ 6,310 | $ 3,977 |
Income Taxes (Tax Rate Reconciliation) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
Rate
| |
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] | |
Effective income tax rate | (39.18%) |
Derivative Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Feb. 07, 2017 |
Dec. 31, 2016 |
|
Derivative [Line Items] | ||||
Pre-tax (charge) on derivative instruments | $ 1,869 | $ (528) | ||
Net (gain) loss on financial instruments | $ (209) | $ 121 | ||
May 9, 2016 [Member] | Swap [Member] | ||||
Derivative [Line Items] | ||||
Stated Interest Rate | 1.703% | 0.00% | ||
Market Value (Liability) | $ 54 | $ 0 | ||
Derivative Liability, Notional Amount | $ 39,375 | $ 39,375 | 0 | |
June 30, 2017 [Member] [Member] | Swap [Member] | ||||
Derivative [Line Items] | ||||
Stated Interest Rate | 1.1825% | |||
Market Value (Liability) | $ (17) | (77) | ||
Derivative Liability, Notional Amount | $ 41,250 | 43,125 | ||
May 5, 2021 [Member] [Member] [Member] | Swap [Member] | ||||
Derivative [Line Items] | ||||
Stated Interest Rate | 0.00% | |||
Market Value (Liability) | $ (643) | (547) | ||
Derivative Liability, Notional Amount | $ 41,250 | $ 43,125 |
Segment Information (Narrative) (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017
USD ($)
segments
|
Mar. 31, 2016
USD ($)
|
|
Segment Reporting Information [Line Items] | ||
Number of reportable segments (in segments) | segments | 2 | |
Interest expense | $ 3,548 | $ 2,699 |
CAM [Member] | ||
Segment Reporting Information [Line Items] | ||
Interest expense | $ 3,300 | $ 2,300 |
Segment Information (Entity-Wide Disclosures) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Segment Reporting Information [Line Items] | ||
Customer revenues | $ 237,917 | $ 177,385 |
Customer Revenues [Member] | ||
Segment Reporting Information [Line Items] | ||
Customer revenues | 237,917 | 177,385 |
CAM [Member] | ||
Segment Reporting Information [Line Items] | ||
Customer revenues | 47,978 | 51,726 |
CAM [Member] | Customer Revenues [Member] | ||
Segment Reporting Information [Line Items] | ||
Customer revenues | 30,782 | 28,761 |
All other [Member] | ||
Segment Reporting Information [Line Items] | ||
Customer revenues | 89,206 | 55,011 |
All other [Member] | Customer Revenues [Member] | ||
Segment Reporting Information [Line Items] | ||
Customer revenues | $ 62,186 | $ 33,668 |
Quarterly Results (Unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Fair Value Adjustment of Warrants | $ 1,700 | $ 0 |
REVENUES | 237,917 | 177,385 |
Net earnings from continuing operations | 9,796 | 8,171 |
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAXES | $ 192 | $ 47 |
Weighted average shares: | ||
Basic (in shares) | 59,133 | 63,636 |
Diluted (in shares) | 64,949 | 65,057 |
Earnings per share from continuing operations | ||
Basic (in dollars per share) | $ 0.17 | $ 0.13 |
Diluted (in dollars per share) | $ 0.13 | $ 0.13 |
ACMI Services [Member] | ||
REVENUES | $ 144,949 | $ 114,956 |
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