XML 34 R23.htm IDEA: XBRL DOCUMENT v3.20.2
Segment Information
 9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Segment Information SEGMENT AND REVENUE INFORMATION
The Company operates in two reportable segments. The CAM segment consists of the Company's aircraft leasing operations. The ACMI Services segment consists of the Company's airline operations, including CMI agreements as well as ACMI, charter service and passenger service agreements that the Company has with its customers. The Company's aircraft maintenance services, aircraft modification services, ground services and other services, are not large enough to constitute reportable segments and are combined in all other. Intersegment revenues are valued at arms-length market rates.
The Company's segment information from continuing operations is presented below (in thousands):
 Three Months EndingNine Months Ending
September 30,September 30,
 2020201920202019
Total revenues:
CAM$76,268 $71,004 $225,301 $210,610 
ACMI Services300,189 272,188 871,958 785,082 
All other82,281 87,762 239,373 226,228 
Eliminate inter-segment revenues(54,592)(64,881)(165,415)(173,088)
Total$404,146 $366,073 $1,171,217 $1,048,832 
Customer revenues:
CAM51,409 42,007 148,104 123,569 
ACMI Services300,189 272,171 871,945 784,993 
All other52,548 51,895 151,168 140,270 
Total$404,146 $366,073 $1,171,217 $1,048,832 
ACMI Services revenues are generated from airline service agreements and are typically based on hours flown, cycles operated, the number of aircraft operated and crew resources provided during a month. ACMI Services revenues are recognized over time using the invoice practical expedient as flight hours are performed for the customer. Certain agreements include provisions for incentive payments based upon on-time reliability. These incentives are measured on a monthly basis and recorded to revenue in the corresponding month earned. Under CMI agreements, the Company's airlines have an obligation to provide integrated services including flight crews, aircraft maintenance and insurance for the customer's cargo network. Under ACMI agreements, the Company's airlines are also obligated to provide aircraft. Under CMI and ACMI agreements, customers are generally responsible for aviation fuel, landing fees, navigation fees and certain other flight expenses. When functioning as the customers' agent for arranging such services, the Company records amounts reimbursable from the customer as revenues net of the related expenses as the costs are incurred. Under charter agreements, the Company's airline is obligated to provide full services for one or more flights having specific origins and destinations. Under charter agreements in which the Company's airline is responsible for fuel, airport fees and all flight services, the related costs are recorded in operating expenses. Any sales commissions paid for charter agreements are generally expensed when incurred because the amortization period is less than one year. ACMI Services are invoiced monthly or more frequently. (There are no customer rewards programs associated with services offered by the Company nor does the Company sell passenger tickets or issue freight bills.)
The Company's revenues for customer contracts for airframe maintenance and aircraft modification services that do not have an alternative use and for which the Company has an enforceable right to payment are generally recognized over time based on the percentage of costs completed. Services for airframe maintenance and aircraft modifications typically have project durations lasting a few weeks to a few months. Other revenues for aircraft part sales, component repairs and line service are recognized at a point in time typically when the parts are delivered to the customer and the services are completed. For airframe maintenance, aircraft modifications and aircraft component repairs, contracts include assurance warranties that are not sold separately.
The Company records revenues and estimated earnings over time for its airframe maintenance and aircraft modification contracts using the costs to costs input method. For such services, the Company estimates the earnings on a contract as the difference between the expected revenue and estimated costs to complete a contract and recognizes revenues and earnings based on the proportion of costs incurred compared to the total estimated costs. Unexpected or abnormal costs that are not reflected in the price of a contract are excluded from calculations of progress toward contract obligations. The Company's estimates consider the timing and extent of the services, including the amount and rates of labor, materials and other resources required to perform the services. These production costs are specifically planned and monitored for regulatory compliance. The expenditure of these costs closely reflect the progress made toward completion of an airframe maintenance and aircraft modification project. The Company recognizes adjustments in estimated earnings on a contract under the cumulative catch-up method in which the impact of the adjustment on estimated earnings of a contract is recognized in the period the adjustment is identified.
The Company's ground services revenues include load transfer and sorting services, facility and equipment maintenance services. These revenues are recognized as the services are performed for the customer over time. Revenues from related facility and equipment maintenance services are recognized over time and at a point in time depending on the nature of the customer contracts.
The Company's external customer revenues from other activities for the three and nine month periods ended September 30, 2020 and 2019 are presented below (in thousands):
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Aircraft maintenance, modifications and part sales$26,063 $24,745 $78,749 $82,029 
Ground services19,887 20,728 50,498 50,441 
Other, including aviation fuel sales6,598 6,422 21,921 7,800 
Total customer revenues$52,548 $51,895 $151,168 $140,270 
CAM's aircraft lease revenues are recognized as operating leases on a straight-line basis over the term of the applicable lease agreements. Customer payments for leased aircraft and equipment are typically paid monthly in advance. CAM's leases do not contain residual guarantees. Approximately 13% of CAM's leases to external customers contain purchase options at projected market values. As of September 30, 2020, minimum future payments from external customers for leased aircraft and equipment were scheduled to be $54.9 million for the remainder of 2020, $213.0 million, $185.0 million, $142.7 million, and $108.2 million, respectively, for each of the next four years ending December 31, 2024 and $291.4 million thereafter. As of December 31, 2019, minimum future payments from external customers for leased aircraft and equipment were scheduled to be $186.8 million, $178.2 million, $152.0 million, $110.1 million and $75.5 million, respectively, for each of the next 5 years ending December 31, 2024 and $186.2 million thereafter.
For customers that are not a governmental agency or department, the Company generally receives partial payment in advance of services, otherwise customer balances are typically paid within 30 to 60 days of service. During the three and nine month periods ending September 30, 2020 and 2019, the Company recognized $4.7 million and $2.8 million of non lease revenue that was reported in deferred revenue at the beginning of the respective period, respectively, compared to $0.5 million and $2.8 million in the corresponding periods of 2019. Deferred revenue was $3.4 million and $3.0 million at September 30, 2020 and December 31, 2019, respectively, for contracts with customers.
Segment earnings, as used by the Company's management, includes an allocation of interest expense based on a reportable segments' assets. Segment earnings does not include asset impairment charges or the recognition of CARES Act grants. The Company's other segment information from continuing operations is presented below (in thousands):
Three Months EndingNine Months Ending
 September 30,September 30,
 2020201920202019
Segment earnings (loss):
CAM$19,781 $17,428 $55,241 $50,285 
ACMI Services18,637 4,375 56,699 17,658 
     All other(724)2,939 (2,915)8,848 
Net unallocated interest expense(797)(610)(2,133)(2,293)
Government grants21,726 — 31,547 — 
Impairment of aircraft and related assets— — (39,075)— 
Other non-service components of retiree benefit costs, net2,897 (2,351)8,693 (7,053)
Net (loss) gain on financial instruments(53,393)91,952 (56,072)60,566 
Loss from non-consolidated affiliate(2,485)(2,645)(11,762)(12,459)
Transaction fees— — — (373)
Pre-tax earnings from continuing operations$5,642 $111,088 $40,223 $115,179 
Depreciation and amortization expense:
CAM$41,421 $39,269 126,492 116,787 
ACMI Services25,336 24,171 76,032 71,131 
All other1,217 709 3,083 2,134 
Total$67,974 $64,149 $205,607 $190,052 
Interest expense
CAM9,747 9,494 29,709 28,838 
ACMI Services4,803 6,530 15,749 19,520 
The Company's assets are presented below by segment (in thousands). Cash and cash equivalents are reflected in Assets - All other.
September 30,December 31,
 20202019
Assets:
CAM$1,997,276 $1,857,687 
ACMI Services798,739 830,620 
Discontinued operations3,635 1,499 
All other163,181 130,372 
Total$2,962,831 $2,820,178 
During the first nine months of 2020, the Company had capital expenditures for property and equipment of $63.2 million and $323.4 million for the ACMI Services and CAM, respectively.