10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period March 31, 2021

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 000-50368

________________________________________________________________

Air Transport Services Group, Inc.

(Exact name of registrant as specified in its charter)

________________________________________________________________

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

145 Hunter Drive, Wilmington, OH 45177

(Address of principal executive offices)

937-382-5591

(Registrant’s telephone number, including area code)

 ________________________________________________________________

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ATSG	NASDAQ Stock Market LLC

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer	☒	Accelerated filer	☐	Smaller reporting company	☐
Non-accelerated filer	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No  ☒

As of May 10, 2021, there were 74,202,989 shares of the registrant’s common stock outstanding.

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Unaudited Condensed Consolidated Balance Sheets	4
	Unaudited Condensed Consolidated Statements of Operations	5
	Unaudited Condensed Consolidated Statements of Comprehensive Income	6
	Unaudited Condensed Consolidated Statements of Stockholders' Equity	7
	Unaudited Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 6.	Exhibits	42
SIGNATURES		43

FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION

The financial information, including the financial statements, included in the Quarterly Report on Form 10-Q should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 1, 2021.

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

FORWARD LOOKING STATEMENTS

Statements contained in this Quarterly Report on Form 10-Q that are not historical facts are considered forward-looking statements (as that term is defined in the Private Securities litigation Reform Act of 1995). Words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms and expressions are intended to identify forward-looking statements. These forward-looking statements are based on expectation, estimates and projections as of the date of this filing, and involve risks and uncertainties that are inherently difficult to predict. Actual results may differ materially from those expressed in the forward-looking statements for any number of reasons, including those described in this report and in our 2020 Annual Report filed on Form 10-K with the Securities and Exchange Commission.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	March 31,		December 31,
	2021		2020
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and restricted cash	$	51,659	$	39,719
Accounts receivable, net of allowance of $1,005 in 2021 and $997 in 2020	155,115		153,511
Inventory	43,051		40,410
Prepaid supplies and other	35,352		39,096
TOTAL CURRENT ASSETS	285,177		272,736
Property and equipment, net	1,987,082		1,939,776
Customer incentive	120,308		126,007
Goodwill and acquired intangibles	513,646		516,290
Operating lease assets	63,946		68,824
Other assets	77,554		78,112
TOTAL ASSETS	$	3,047,713	$	3,001,745
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	146,112	$	141,425
Accrued salaries, wages and benefits	46,157		56,506
Accrued expenses	17,505		19,005
Current portion of debt obligations	619		13,746
Current portion of lease obligations	16,781		17,784
Unearned revenue and grants	50,458		53,522
TOTAL CURRENT LIABILITIES	277,632		301,988
Long term debt	1,497,211		1,465,331
Stock warrant obligations	96,536		103,474
Post-retirement obligations	30,057		35,099
Long term lease obligations	47,317		51,128
Other liabilities	44,970		47,963
Deferred income taxes	154,252		141,265
TOTAL LIABILITIES	2,147,975		2,146,248
Commitments and contingencies (Note H)
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; 150,000,000 shares authorized; 60,641,436 and 59,560,036 shares issued and outstanding in 2021 and 2020, respectively	606		596
Additional paid-in capital	856,090		855,547
Retained earnings	120,300		78,010
Accumulated other comprehensive loss	(77,258)		(78,656)
TOTAL STOCKHOLDERS’ EQUITY	899,738		855,497
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,047,713	$	3,001,745

See notes to condensed consolidated financial statements.

4

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended
	March 31,
	2021		2020
REVENUES	$	376,088	$	389,277
OPERATING EXPENSES
Salaries, wages and benefits	142,016		125,531
Depreciation and amortization	71,051		69,342
Maintenance, materials and repairs	42,007		41,677
Fuel	30,442		43,799
Contracted ground and aviation services	14,803		14,349
Travel	18,404		21,657
Landing and ramp	3,109		2,745
Rent	5,868		3,486
Insurance	3,136		1,668
Other operating expenses	16,423		15,216
Government grants	(28,030)		—
	319,229		339,470
OPERATING INCOME	56,859		49,807
OTHER INCOME (EXPENSE)
Interest income	19		112
Non-service component of retiree benefit gains	4,457		2,898
Net gain on financial instruments	9,472		107,044
Loss from non-consolidated affiliate	(1,183)		(2,764)
Interest expense	(14,522)		(16,323)
	(1,757)		90,967
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	55,102		140,774
INCOME TAX EXPENSE	(12,812)		(7,041)
EARNINGS FROM CONTINUING OPERATIONS	42,290		133,733
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAXES	—		3,772
NET EARNINGS	$	42,290	$	137,505
BASIC EARNINGS PER SHARE
Continuing operations	$	0.71	$	2.27
Discontinued operations	—		0.06
TOTAL BASIC EARNINGS PER SHARE	$	0.71	$	2.33
DILUTED EARNINGS PER SHARE
Continuing operations	$	0.49	$	0.84
Discontinued operations	—		0.06
TOTAL DILUTED EARNINGS PER SHARE	$	0.49	$	0.90
WEIGHTED AVERAGE SHARES
Basic	59,447		59,040
Diluted	74,744		67,947

See notes to condensed consolidated financial statements.

5

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Three Months Ended
	March 31,
	2021		2020
NET EARNINGS	$	42,290	$	137,505
OTHER COMPREHENSIVE INCOME (LOSS):
Defined Benefit Pension	1,362		726
Defined Benefit Post-Retirement	36		24
TOTAL COMPREHENSIVE INCOME, net of tax	$	43,688	$	138,255

See notes to condensed consolidated financial statements.

6

AIR TRANSPORT SERVICES GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

	Common Stock			Additional Paid-in Capital		Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Number	Amount
BALANCE AT DECEMBER 31, 2019	59,329,431	$	593	$	475,720	$	45,895	$	(61,866)	$	460,342
Stock-based compensation plans
Grant of restricted stock	200,500	2		(2)						—
Issuance of common shares, net of withholdings	93,264	1		(1,116)						(1,115)
Amortization of stock awards and restricted stock				1,821						1,821
Total comprehensive income						137,505		750		138,255
BALANCE AT MARCH 31, 2020	59,623,195	$	596	$	476,423	$	183,400	$	(61,116)	$	599,303
BALANCE AT DECEMBER 31, 2020	59,560,036	$	596	$	855,547	$	78,010	$	(78,656)	$	855,497
Stock-based compensation plans
Grant of restricted stock	122,100	1		(1)						—
Issuance of common shares, net of withholdings	93,752	—		(1,197)						(1,197)
Conversion of warrants	865,548	9		(9)						—
Amortization of stock awards and restricted stock				1,750						1,750
Total comprehensive income						42,290		1,398		43,688
BALANCE AT MARCH 31, 2021	60,641,436	$	606	$	856,090	$	120,300	$	(77,258)	$	899,738

See notes to condensed consolidated financial statements.

7

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three Months Ended
	March 31,
	2021		2020
OPERATING ACTIVITIES:
Net earnings from continuing operations	$	42,290	$	133,733
Net earnings from discontinued operations	—		3,772
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	79,719		77,001
Pension and post-retirement	1,811		972
Deferred income taxes	12,575		7,947
Amortization of stock-based compensation	1,750		1,821
Loss from non-consolidated affiliates	1,183		2,764
Net gain on financial instruments	(9,472)		(107,044)
Changes in assets and liabilities:
Accounts receivable	(1,604)		(4,123)
Inventory and prepaid supplies	751		(4,543)
Accounts payable	18,314		6,169
Unearned revenue	(3,687)		3,604
Accrued expenses, salaries, wages, benefits and other liabilities	(11,696)		(17,742)
Pension and post-retirement balances	(7,412)		(5,483)
Other	(75)		186
NET CASH PROVIDED BY OPERATING ACTIVITIES	124,447		99,034
INVESTING ACTIVITIES:
Expenditures for property and equipment	(125,441)		(143,495)
Proceeds from property and equipment	44		32
Acquisitions and investments in businesses, net of cash acquired	(1,697)		(3,049)
NET CASH USED IN INVESTING ACTIVITIES	(127,094)		(146,512)
FINANCING ACTIVITIES:
Principal payments on long term obligations	(124,065)		(499,064)
Proceeds from borrowings	140,000		80,000
Payments for financing costs	(151)		(7,481)
Proceeds from bond issuance	—		500,000
Withholding taxes paid for conversion of employee stock awards	(1,197)		(1,115)
NET CASH PROVIDED BY FINANCING ACTIVITIES	14,587		72,340
NET INCREASE IN CASH AND CASH EQUIVALENTS	11,940		24,862
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	39,719		46,201
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	51,659	$	71,063
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of amount capitalized	$	16,582	$	8,864
Federal and state income taxes paid	$	123	$	48
SUPPLEMENTAL NON-CASH INFORMATION:
Accrued expenditures for property and equipment	$	24,253	$	27,914

See notes to condensed to consolidated financial statements.

8

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Page
Note A - Summary of Financial Statement Preparation and Significant Accounting Policies	10
Note B - Goodwill, Intangibles and Equity Investments	11
Note C - Significant Customers	12
Note D - Fair Value Measurements	15
Note E - Property and Equipment	16
Note F - Debt Obligations	17
Note G - Derivative Instruments	19
Note H - Commitments and Contingencies	19
Note I - Pension and Other Post-Retirement Benefit Plans	22
Note J - Income Taxes	23
Note K - Accumulated Other Comprehensive Income (Loss)	23
Note L - Stock-Based Compensation	24
Note M - Common Stock and Earnings Per Share	25
Note N - Segment and Revenue Information	26

9

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

Nature of Operations

Air Transport Services Group, Inc. is a holding company whose subsidiaries lease aircraft, provide contracted airline operations, ground services, aircraft modification and maintenance services and other support services mainly to the air transportation, e-commerce and package delivery industries. The Company's subsidiaries offer 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 Company's airlines, ABX Air, Inc. (“ABX”), Air Transport International, Inc. (“ATI”) and Omni Air International, LLC ("OAI" ) each have the authority, through their separate U.S. Department of Transportation ("DOT") and Federal Aviation Administration ("FAA") certificates, to transport cargo worldwide. Additionally, both ATI and OAI each have the authority to conduct passenger charter operations worldwide. The Company provides air transportation services to a concentrated base of customers. The Company provides a combination of aircraft, crews, maintenance and insurance services for a customer's transportation network through customer "CMI" and "ACMI" agreements and through charter contracts in which aircraft fuel is also included. In addition to its aircraft leasing and airline services, the Company sells aircraft parts, provides aircraft maintenance and modification services, sells and services material handling equipment and arranges load transfer and package sorting services for customers.

Basis of Presentation

The financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The accompanying unaudited condensed interim consolidated financial statements are prepared in conformity with GAAP 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, 2020 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 air cargo 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 the 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. Inter-company balances and transactions are eliminated. Investments in affiliates in which the Company has significant influence but does not exercise control are accounted for using the equity method of accounting. Under 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. Investments in affiliates in which the Company does not exercise control or have significant influence are reflected at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

COVID-19 Uncertainties

The COVID-19 pandemic has had an impact on the Company's operations and financial results. Beginning in late February 2020, revenues have been disrupted when customers cancelled scheduled passenger flights and aircraft maintenance services, airport restrictions and closures were imposed, and the Company began to incur additional costs, including expenses to protect employees.

10

The extent of the impact that the pandemic will have on future financial and operational results will depend on developments, including recurrence of the COVID-19 virus and its variants; the duration and scope of government orders and restrictions; the availability and effectiveness of vaccines on the virus and the extent of the pandemic on overall economic conditions. These are highly uncertain. Disruptions to the Company's operations, such as shortages of personnel, shortages of parts, maintenance delays, shortages of transportation and hotel accommodations for flight crews, facility closures and other issues may be caused by the pandemic. If the pandemic persists or reemerges, operating cash flows could decline significantly and the value of airframes, engines and certain intangible assets could decline significantly.

The pandemic has not had a significant adverse financial impact on the Company's leasing operations or its airline operations for customers' freight networks. However, the Company's passenger flight operations have been and continue to be, impacted by the pandemic. The Company has received government funding pursuant to payroll support programs of the federal government as described in Note H. Management believes that the Company's current cash balances and forecasted cash flows provided from its customer leases and operating agreements and government grants combined with its Senior Credit Agreement, will be sufficient to fund operations, capital spending and scheduled debt payments for at least the next 12 months.

Accounting Standards Updates

In August 2020, the FASB issued ASU No. 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" ("ASU 2020-06"). This new standard changes the accounting and measurement of convertible instruments. It eliminates the treasury stock method for convertible instruments and requires application of the “if-converted” method for certain agreements. This standard is effective for the Company beginning January 1, 2022. The Company is currently evaluating the impact of adopting ASU 2020-06 on its interest expense and earnings (loss) per share calculation under the "if-converted" method related to its convertible debt.

NOTE B—GOODWILL, INTANGIBLES AND EQUITY INVESTMENTS

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

	CAM		ACMI Services		All Other		Total
Carrying value as of December 31, 2020	153,290		234,571		$	8,113	$	395,974
Carrying value as of March 31, 2021	$	153,290	$	234,571	$	8,113	$	395,974

The Company's acquired intangible assets are as follows (in thousands):

	Airline		Amortizing
	Certificates		Intangibles		Total
Carrying value as of December 31, 2020	$	9,000	$	111,316	$	120,316
Amortization	—		(2,644)		(2,644)
Carrying value as of March 31, 2021	$	9,000	$	108,672	$	117,672

The airline certificates have an indefinite life and therefore are not amortized. The Company amortizes finite-lived intangibles assets, including customer relationship and Supplemental Type Certificates ("STC") intangibles, over 5 to 18 remaining years.

11

Stock warrants issued to a lessee (see Note C) as an incentive are recorded as a lease incentive asset using their fair value at the time that the lessee has met its performance obligations and if probable of vesting at the time of issuance, 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):

	Lease
	Incentive
Carrying value as of December 31, 2020	$	126,007
Amortization	(5,699)
Carrying value as of March 31, 2021	$	120,308

In January 2014, the Company acquired a 25 percent equity interest in West Atlantic AB of Gothenburg, Sweden ("West"). West, through its two airlines, West Atlantic UK and West Atlantic Sweden, 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. In April 2019, West issued additional shares to a new investor in conjunction with a capital investment and purchase agreement which reduced the Company's ownership to approximately 10% and reduced the Company's influence over West. In 2020, the Company sold its remaining interest to the same investor.

On August 3, 2017 the Company entered into a joint-venture agreement with Precision Aircraft Solutions, LLC, to develop a passenger-to-freighter conversion program for Airbus A321-200 aircraft. Approval of a supplemental type certificate from the FAA was granted in April 2021 and aircraft conversions are expected to begin in 2021. The Company expects to make contributions equal to its 49% ownership percentage of the joint-venture's liquidity needs. During the first three months of 2021 and 2020, the Company contributed $1.7 million and $3.0 million to the joint venture, respectively. The Company accounts for its investment in the aircraft conversion joint venture under the equity method of accounting, in which the carrying value of each investment is reduced for the Company's share of the non-consolidated affiliates operating results.

The carrying value of the joint venture is reflected in “Other Assets” in the Company’s consolidated balance sheets. The Company monitors its investments in affiliates for indicators of other-than-temporary declines in value on an ongoing basis in accordance with GAAP. If the Company determines that an other-than-temporary decline in value has occurred, it recognizes an impairment loss, which is measured as the difference between the recorded carrying value and the fair value of the investment. The fair value is generally determined using an income approach based on discounted cash flows or using negotiated transaction values.

NOTE C—SIGNIFICANT CUSTOMERS

Three customers each account for a significant portion of the Company's consolidated revenues. The percentage of the Company's revenues for the Company's three largest customers, for the three month periods ending March 31, 2021 and 2020 are as follows:

	Three Months Ended
	March 31,
	2021	2020
Customer	Percentage of Revenue
DoD	22%	30%
Amazon	35%	29%
DHL	14%	11%

12

The accounts receivable from the Company's three largest customers as of March 31, 2021 and December 31, 2020 are as follows (in thousands):

	March 31,		December 31,
	2021		2020
Customer	Accounts Receivable
DoD	$	31,204	$	32,625
Amazon	58,132		55,997
DHL	11,601		10,471

DoD

The Company is a provider of cargo and passenger airlift services to the United States Department of Defense ("DoD"). The DoD awards flights to U.S. certificated airlines through annual contracts and through temporary "expansion" routes.

Amazon

The Company has been providing freighter aircraft and services for cargo handling and logistical support for Amazon.com Services, LLC ("ASI"), successor to Amazon.com Services, Inc., 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 ASI, pursuant to which CAM leases Boeing 767 freighter aircraft to ASI. The ATSA also provides for the operation of aircraft by the Company’s airline subsidiaries, and the management of ground services by the Company's subsidiary LGSTX Services Inc. ("LGSTX"). The aircraft leases have terms which expire between March of 2023 and March of 2031.

DHL

The Company has had long term contracts with DHL Network Operations (USA), Inc. and its affiliates ("DHL") since August 2003. The Company leases Boeing 767 aircraft to DHL under both long-term and short-term lease agreements. Under a separate crew, maintenance and insurance (“CMI”) agreement, the Company operates Boeing 767 aircraft that DHL leases from the Company. 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 additional air cargo transportation services for DHL through 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.

Amazon Investment Agreement

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 provided for the Company to issue warrants in three tranches which granted Amazon the right to acquire up to 19.9% of the Company’s outstanding common shares. The first tranche of warrants, issued upon the execution of the Investment Agreement granted Amazon the right to purchase approximately 12.81 million ATSG common shares, with the first 7.69 million common shares vesting upon issuance on March 8, 2016, and the remaining 5.12 million common shares vesting as the Company delivered additional aircraft leased under the ATSA. The second tranche of warrants, which were issued and vested on March 8, 2018, granted Amazon the right to purchase approximately 1.59 million ATSG common shares. The third tranche of warrants vested on September 8, 2020, and granted Amazon the right to purchase an additional 0.5 million ATSG common shares to bring Amazon’s ownership potential, after the exercise in full of the three tranches of warrants, 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 2016 Investment Agreement and after giving effect to the warrants granted. The exercise price of the 14.9 million warrants issued under the 2016 Investment Agreement was $9.73 per share, which represents the closing price of ATSG’s common shares on February 9, 2016. Theses warrants had an expiration date of March 8, 2021 subject to extension if regulatory approvals, exemptions, authorizations, consents or clearances had not been obtained by such date.

13

On March 5, 2021, Amazon exercised warrants for 865,548 shares of the Company's common stock through a cashless exercise by forfeiting 480,047 warrants from the 2016 Investment Agreement as payment. For the cashless exchange, ATSG shares were valued at $27.27 per share, its volume-weighted average price for the previous 30 trading days immediately preceding March 5, 2021. Also on March 5, 2021, Amazon notified the Company of its intent to exercise warrants from the 2016 Investment agreement for 13,562,897 shares of the Company's common stock by paying $132.0 million of cash to the Company. This exercise was contingent upon the approval of the United States Department of Transportation, and the expiration or termination of any applicable waiting period pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976. After receiving all required regulatory approvals and clearances, Amazon remitted the funds to the Company on May 7, 2021 and the Company issued the corresponding shares of common stock, completing the warrant exercise.

On December 22, 2018 the Company announced agreements with Amazon to 1) lease and operate ten additional Boeing 767-300 aircraft for ASI, 2) extend the term of the 12 Boeing 767-200 aircraft currently leased to ASI by two years to 2023 with an option for three more years, 3) extend the term of the eight Boeing 767-300 aircraft currently leased to ASI by three years to 2026 and 2027 with an option for three more years and 4) extend the ATSA by five years through March 2026, with an option to extend for an additional three years. The Company leased all ten of the 767-300 aircraft in 2020. In conjunction with the commitment for ten additional 767 aircraft leases, extensions of twenty existing Boeing 767 aircraft leases and the ATSA described above, Amazon and the Company entered into another Investment Agreement on December 20, 2018. Pursuant to the 2018 Investment Agreement, Amazon was issued additional warrants for 14.8 million common shares. This group of warrants will expire if not exercised within seven years from their issuance date, in December of 2025, (subject to extension if regulatory approvals, exemptions, authorizations, consents or clearances have not been obtained by such date). They have an exercise price of $21.53 per share.

On May 29, 2020, Amazon agreed to lease twelve more Boeing 767-300 aircraft from the Company. The first of these leases began in the second quarter of 2020, four more leases began in the first quarter of 2021 with the remaining seven to be delivered in 2021. All twelve of these aircraft leases will be for ten year terms. Pursuant to the 2018 Investment Agreement, as a result of leasing 12 aircraft, Amazon was issued warrants for 7.0 million common shares of which 2.9 million common shares have vested. These warrants will expire if not exercised by December 20, 2025 (subject to extension if regulatory approvals, exemptions, authorizations, consents or clearances have not been obtained by such date). The exercise price of these warrants is $20.40 per share.

Issued and outstanding warrants are summarized below as of May 10, 2021:

			Common Shares in millions
	Lease Commitment	Exercise price	Vested	Non-Vested	Expiration
2018 Investment Agreement	10 aircraft	$21.53	14.8	0.0	December 20, 2025
2018 Investment Agreement	12 aircraft	$20.40	2.9	4.1	December 20, 2025

Additionally, Amazon can earn incremental warrant rights for up to 2.9 million common shares under the 2018 Investment Agreement by leasing up to five more cargo aircraft from the Company before January 2026. Incremental warrants granted for Amazon’s commitment to any such future aircraft leases will have an exercise price based on the volume-weighted average price of the Company's shares during the 30 trading days immediately preceding the contractual commitment for each lease.

For all outstanding warrants vested, Amazon may select a cashless conversion option. Assuming ATSG’s stock price at the time of conversion is above the warrant exercise price, Amazon would receive fewer shares in exchange for any warrants exercised under the cashless option by surrendering the number of shares with a market value equal to the exercise value.

The Company’s accounting for the warrants has been determined in accordance with the financial reporting guidance for financial instruments. Warrants classified as liabilities are marked to fair value at the end of each reporting period. The value of warrants is recorded as a customer incentive asset if it is probable of vesting at the time of grant and further changes in the fair value of warrant obligations are recorded to earnings. Upon a warrant

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vesting event, the customer incentive asset is amortized as a reduction of revenue over the duration of the related revenue contract.

In accordance with the 2016 Investment Agreement, on September 8, 2020, the final number of shares issuable under the third tranche of warrants was determined to be 0.5 million common shares. As a result, under US GAAP, the value of the entire warrant grant under the 2016 Investment Agreement was remeasured on September 8, 2020, and their fair value of $221 million was reclassified from balance sheet liabilities to paid-in-capital. In October 2020 upon the execution of the 10th and final aircraft lease of the December 2018 commitment, warrants for 14.8 million shares from the 2018 Investment Agreement were vested. As a result, under US GAAP, the value of this entire grant was remeasured on October 1, 2020, and their fair value of $154 million was reclassified from balance sheet liabilities to paid-in-capital.

As of March 31, 2021, the Company's liabilities reflected warrants primarily from the 2018 Investment agreement for the May 2020 lease commitment, having a fair value of $96.5 million. During the three months ending March 31, 2021 and 2020 the re-measurements of warrants to fair value resulted in a net non-operating gains of $6.9 million and $118.0 million before the effect of income taxes, respectively.

The Company's earnings in future periods will be impacted by 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.

NOTE D—FAIR VALUE MEASUREMENTS

The Company’s money market funds and interest rate swaps are reported on the Company’s consolidated balance sheets at fair values based on market values from comparable transactions. The fair value of the Company’s money market funds, convertible note, convertible note hedges and interest rate swaps are based on observable inputs (Level 2) from comparable market transactions.

The fair value of the stock warrant obligations resulting from aircraft leased to Amazon were determined using a Black-Scholes pricing model which considers various assumptions, including the Company’s common stock price, the volatility of the Company’s common stock, the expected dividend yield, exercise price and the risk-free interest rate (Level 2 inputs). The fair value of the stock warrant obligations for unvested stock warrants, conditionally granted to Amazon for the execution of incremental, future aircraft leases, include additional assumptions including the expected exercise prices and the probabilities that future leases will occur (Level 3 inputs).

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

As of March 31, 2021	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Assets
Cash equivalents—money market	$	—	$	40	$	—	$	40
Total Assets	$	—	$	40	$	—	$	40
Liabilities
Interest rate swap	$	—	$	(10,880)	$	—	$	(10,880)
Stock warrant obligations	—		—		(96,536)		(96,536)
Total Liabilities	$	—	$	(10,880)	$	(96,536)	$	(107,416)

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As of December 31, 2020	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Assets
Cash equivalents—money market	$	—	$	20,389	$	—	$	20,389
Total Assets	$	—	$	20,389	$	—	$	20,389
Liabilities
Interest rate swap	$	—	$	(13,414)	$	—	$	(13,414)
Stock warrant obligation	—		(9,058)		(94,416)		(103,474)
Total Liabilities	$	—	$	(22,472)	$	(94,416)	$	(116,888)

As a result of lower market interest rates compared to the stated interest rates of the Company’s fixed rate debt obligations, the fair value of the Company’s debt obligations, based on Level 2 observable inputs, was approximately $48.2 million more than the carrying value, which was $1,497.8 million at March 31, 2021. As of December 31, 2020, the fair value of the Company’s debt obligations was approximately $70.8 million less than the carrying value, which was $1,479.1 million. The non-financial assets, including goodwill, intangible assets and property and equipment are measured at fair value on a non-recurring basis.

NOTE E—PROPERTY AND EQUIPMENT

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

	March 31,		December 31,
	2021		2020
Flight equipment	$	2,985,850	$	2,856,142
Ground equipment	67,332		65,857
Leasehold improvements, facilities and office equipment	37,283		36,193
Aircraft modifications and projects in progress	206,977		231,451
	3,297,442		3,189,643
Accumulated depreciation	(1,310,360)		(1,249,867)
Property and equipment, net	$	1,987,082	$	1,939,776

CAM owned aircraft with a carrying value of $1,208.9 million and $1,097.6 million that were under lease to external customers as of March 31, 2021 and December 31, 2020, respectively.

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

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NOTE F—DEBT OBLIGATIONS

Debt obligations consisted of the following (in thousands):

	March 31,		December 31,
	2021		2020
Unsubordinated term loans	$	608,568	$	612,169
Revolving credit facility	160,000		140,000
Senior Notes	493,543		493,376
Convertible debt	224,674		222,391
Other financing arrangements	11,045		11,141
Total debt obligations	1,497,830		1,479,077
Less: current portion	(619)		(13,746)
Total long term obligations, net	$	1,497,211	$	1,465,331

The Company utilizes a syndicated credit agreement ("Senior Credit Agreement") which, as of March 31, 2021, included unsubordinated term loans and a revolving credit facility. Prior to its amendment on April 6, 2021, the Senior Credit Agreement had a maturity date of November 2024 provided certain liquidity measures are maintained during 2024, an incremental accordion capacity based on debt ratios, and a maximum revolver capacity of $600.0 million. The interest rate is a pricing premium added to LIBOR based upon the the Company's debt to its earnings before interest, taxes, depreciation and amortization expenses ("EBITDA") as defined under the Senior Credit Agreement. As of March 31, 2021, the unused revolving credit facility available to the Company at the trailing twelve month EBITDA level was $426.0 million, and additional permitted indebtedness under the Senior Credit Agreement subject to compliance with other covenants, was limited to $250.0 million.

On January 28, 2020, the Company, through a subsidiary, completed a debt offering of $500.0 million in senior unsecured notes (the “Senior Notes”). The Senior Notes were sold only to qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and certain investors pursuant to Regulation S under the Securities Act. The Senior Notes are senior unsecured obligations that bear interest at a rate of 4.75% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2020. The Senior Notes will mature on February 1, 2028. The Senior Notes contain customary events of default and certain covenants which are generally no more restrictive than those set forth in the Senior Credit Agreement. The net proceeds of $495.0 million from the Senior Notes were used to pay down the revolving credit facility. The Senior Notes do not require principal payments until maturity but prepayments are allowed without penalty beginning February 1, 2025.

The balance of the unsubordinated term loan is net of debt issuance costs of $6.6 million and $7.0 million as of March 31, 2021 and December 31, 2020, respectively. The balance of the Senior Notes is net of debt issuance costs of $6.5 million and $6.6 million as of March 31, 2021 and December 31, 2020, respectively. Under the terms of the Senior Credit Agreement, interest rates are adjusted at least quarterly based on the Company's 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 variable interest rates of 1.36% and 1.36%, respectively. The Senior Notes bear a fixed rate of 4.75%.

The Senior Credit Agreement is collateralized by certain of the Company's Boeing 777, 767 and 757 aircraft. Under the terms of the Senior Credit Agreement, the Company is required to maintain certain collateral coverage ratios set forth in 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 $100.0 million during any calendar year, provided the Company's total debt to EBITDA ratio is under 3.50 times and the secured debt to EBITDA ratio is under 3.0 times, after giving effect to the dividend or repurchase. The Senior Credit Agreement contains covenants, including a maximum permitted total EBITDA to debt ratio, a fixed charge covenant ratio requirement, limitations on certain additional indebtedness, and on guarantees of indebtedness. 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.

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On April 6, 2021, the Company amended the Senior Credit Agreement ("Amended Credit Agreement"). The Amended Credit Agreement: (i) increased the aggregate amount of the revolving credit facility from $600 million to $1 billion temporarily, and subsequently to $800 million on April 13, 2021, (ii) permits increases of the revolving credit facility commitments and/or new tranches of terms loans in an aggregate principal amount equal to the sum of $400 million plus the principal amount of indebtedness that could be incurred at the time of the increase that would not cause the Secured Leverage Ratio (as defined in the Amended Credit Agreement) to exceed 3.25 to 1.00 on a pro forma basis, (iii) modified the maturity date of the agreement from November 30, 2024, to April 6, 2026, with such extension of the maturity date being subject to (1) at the election of the Lenders, five one year extensions and (2) an earlier springing maturity date of July 12, 2024, if, on such date, (a) more than $75,000,000 in aggregate principal amount of the Company’s 1.125% senior convertible notes due 2024 remain outstanding and (b) the Company has less than $375,000,000 of liquidity at such time, (iv) removed the Collateral to Total Exposure Ratio (as defined in the agreements) as a financial covenant and (v) prepaid the entire outstanding balance of all term loans at the time of the amendment.

On April 13, 2021, the Company, through a subsidiary, completed its offering of $200.0 million of additional notes ("Additional Notes") under the existing Senior Notes. The Additional Notes are fully fungible with the Senior Notes, treated as a single class for all purposes under the indenture governing the existing notes with the same terms as those of the existing notes (other than issue date and issue price). The net proceeds of $205.5 million were used, in conjunction with draws from the revolving credit facility to pay off the unsubordinated term loans.

In September 2017, the Company issued $258.8 million aggregate principal amount of 1.125% Convertible Senior Notes due 2024 ("Convertible Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The Convertible Notes bear interest at a rate of 1.125% per year payable semi-annually in arrears on April 15 and October 15 each year, beginning April 15, 2018. The Convertible Notes mature on October 15, 2024, unless repurchased or converted in accordance with their terms prior to such date. The Convertible Notes are unsecured indebtedness, subordinated to the Company's existing and future secured indebtedness and other liabilities, including trade payables. Conversion of the Convertible Notes can only occur upon satisfaction of certain conditions and during certain periods, beginning any calendar quarter commencing after December 31, 2017 and thereafter, until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon the occurrence of certain fundamental changes, holders of the Convertible Notes can require the Company to repurchase their notes at the cash repurchase price equal to the principal amount of the notes, plus any accrued and unpaid interest.

The Convertible Notes may be settled in cash, the Company’s common shares or a combination of cash and the Company’s common shares, at the Company’s election. The initial conversion rate is 31.3475 common shares per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $31.90 per common share). If a “make-whole fundamental change” (as defined in the offering circular with the Convertible Notes) occurs, the Company will, in certain circumstances, increase the conversion rate for a specified period of time.

In conjunction with the Convertible Notes, the Company purchased convertible note hedges under privately negotiated transactions for $56.1 million, having the same number of the Company's common shares, 8.1 million shares and same strike price of $31.90, that underlie the Convertible Notes. The convertible note hedges are expected to reduce the potential equity dilution with respect to the Company's common stock, and/or offset any cash payments in excess of the principal amount due, as the case may be, upon conversion of the Convertible Notes. The Company's current intent and policy is to settle all Note conversions through a combination settlement which satisfies the principal amount of the Convertible Notes outstanding with cash. The Convertible Notes could have a dilutive effect on the computation of earnings per share in accordance with accounting principles to the extent that the average traded market price of the Company’s common shares for a reporting period exceeds the conversion price.

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The net proceeds from the issuance of the Convertible Notes was approximately $252.3 million, after deducting initial issuance costs. These unamortized issuance costs and discount are being amortized to interest expense through October 2024, using an effective interest rate of approximately 5.15%. The carrying value of the Company's convertible debt is shown below.

	March 31,	December 31,
	2021	2020
Principal value, Convertible Senior Notes, due 2024	258,750	258,750
Unamortized issuance costs	(3,646)	(3,894)
Unamortized discount	(30,430)	(32,465)
Convertible debt	224,674	222,391

In conjunction with the offering of the Convertible Notes, the Company also sold warrants to the convertible note hedge counterparties in separate, privately negotiated warrant transactions at a higher strike price and for the same number of the Company’s common shares, subject to customary anti-dilution adjustments. The amount received for these warrants and recorded in Stockholders' Equity in the Company’s consolidated balance sheets was $38.5 million. These warrants could result in 8.1 million additional shares of the Company's common stock, if the Company's traded market price exceeds the strike price which is $41.35 per share and is subject to certain adjustments under the terms of the warrant transactions. The warrants could have a dilutive effect on the computation of earnings per share to the extent that the average traded market price of the Company's common shares for a reporting period exceeds the strike price.

NOTE G—DERIVATIVE INSTRUMENTS

The Company's Senior Credit Agreement requires the Company to maintain derivative instruments for protection from fluctuating interest rates, for at least twenty-five percent of the outstanding balance of the term loan issued in November 2018. The table below provides information about the Company’s interest rate swaps (in thousands):

			March 31, 2021		December 31, 2020
Expiration Date	Stated Interest Rate		Notional Amount	Market Value (Liability)	Notional Amount	Market Value (Liability)
May 5, 2021	1.090	%	11,250	(10)	13,125	(41)
May 30, 2021	1.703	%	11,250	(29)	13,125	(80)
December 31, 2021	2.706	%	136,875	(2,659)	138,750	(3,551)
March 31, 2022	1.900	%	50,000	(892)	50,000	(1,116)
March 31, 2022	1.950	%	75,000	(1,375)	75,000	(1,722)
March 31, 2023	2.425	%	138,750	(5,915)	140,625	(6,904)

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 a net gain on derivatives of $2.5 million and a net loss of $10.9 million for the three month periods ending March 31, 2021 and 2020, respectively. The liability for outstanding derivatives is recorded in other liabilities and in accrued expenses.

NOTE H—COMMITMENTS AND CONTINGENCIES

CARES Act and Payroll Support Programs

During 2020, two of the Company's airline subsidiaries, OAI and ATI, received government funds totaling $75.8 million pursuant to payroll support program agreements under the Coronavirus Aid, Relief, and Economic Security

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Act (“CARES Act”). In February of 2021, OAI was approved for $37.4 million of additional non-repayable government funds pursuant to a payroll support program agreement under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (the “PSP Extension Law”). This grant was subsequently increased by $5.6 million. Further, in April 2021, OAI was approved for $40.0 million of additional non-repayable government grants pursuant to a payroll support program agreement under section 7301 of the American Rescue Plan Act of 2021 (the “American Act”).

The three programs are structured in a substantially similar manner. These grants are not required to be repaid if the Company complies with provisions of the CARES Act, the PSP Extension Law, the American Act and the payroll support program agreements. The grants are recognized over the periods in which the Company recognizes the related expenses for which the grants are intended to compensate. The Company recognizes the grants as contra-expense during the periods in which passenger flight operations and combi flight operations are expected to be negatively impacted by the pandemic. During the three month period ended March 31, 2021, the Company recognized $28.0 million of the grants. The Company expects to recognize all of grant funds into earnings by December 31, 2021. As of March 31, 2021, grants approved and received but not recognized totaled $37.9 million.

In conjunction with the payroll support program agreements, the airlines agreed to refrain from conducting involuntary furloughs or reducing employee rates of pay or benefits through September 30, 2020. OAI further agreed to refrain from conducting involuntary furloughs or reducing employee rates of pay or benefits through September 30, 2021. The airlines agreed to limit, on behalf of themselves and certain of their affiliates, executive compensation through March 24, 2022; maintain certain air transportation service through March 1, 2022 as may be required by the U.S. Department of Transportation pursuant to its authority under the CARES Act; and maintain certain internal controls and records relating to the funds and comply with certain reporting requirements. OAI further agreed to limit executive compensation through April 1, 2023. In addition, the Company may not pay dividends or repurchase its shares through September 30, 2022.

Lease Commitments

The Company leases property, six aircraft, aircraft engines and other types of equipment under operating leases. Property leases include hangars, warehouses, offices and other space at certain airports with fixed rent payments and lease terms ranging from one month to six years. The Company is obligated to pay the lessor for maintenance, real estate taxes, insurance and other operating expenses on certain property leases. These expenses are variable and are not included in the measurement of the lease asset or lease liability. These expenses are recognized as variable lease expense when incurred and are not material. Equipment leases include ground support and industrial equipment as well as computer hardware with fixed rent payments and terms of one month to five years.

The Company records the initial right-to-use asset and lease liability at the present value of lease payments scheduled during the lease term. For the first three months of 2021 and 2020, non-cash transactions to recognize right-to-use assets and corresponding liabilities for new leases were $0.9 million and $12.9 million, respectively. Unless the rate implicit in the lease is readily determinable, the Company discounts the lease payments using an estimated incremental borrowing rate at the time of lease commencement. The Company estimates the incremental borrowing rate based on the information available at the lease commencement date, including the rate the Company could borrow for a similar amount, over a similar lease term with similar collateral. The Company's weighted-average discount rate for operating leases at March 31, 2021 was 2.75% compared to 2.9% at December 31, 2020. Leases often include rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate. Although not material, the amount of such options is reflected below in the maturity of operating lease liabilities table. Lease expense is recognized on a straight-line basis over the lease term. Our weighted-average remaining lease term is 4.3 years and 4.5 years as of March 31, 2021 and December 31, 2020, respectively.

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For the three month periods ended March 31, 2021 and 2020, cash payments against operating lease liabilities were $5.3 million and $3.9 million, respectively. As of March 31, 2021, the maturities of operating lease liabilities are as follows (in thousands):

	Operating Leases
Remaining 2021	$	14,309
2022	15,104
2023	13,801
2024	12,489
2025	8,726
2026 and beyond	3,349
Total undiscounted cash payments	67,778
Less: amount representing interest	(3,680)
Present value of future minimum lease payments	64,098
Less: current obligations under leases	16,781
Long-term lease obligation	$	47,317

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. As of March 31, 2021, the Company had nine aircraft that were in or awaiting the modification process. As of March 31, 2021, the Company has agreements to purchase four more Boeing 767-300 passenger aircraft through 2021 with non-refundable deposits of $7.6 million. As of March 31, 2021, the Company's commitments to acquire and convert aircraft totaled $172.8 million through 2022.

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 addition to the foregoing matters, the Company is also a party to legal proceedings in various federal and state jurisdictions from time to time 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 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.

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Employees Under Collective Bargaining Agreements

As of March 31,2021, the flight crewmember employees of ABX, ATI and Omni and flight attendant employees of ATI and Omni were represented by the labor unions listed below:

Airline	Labor Agreement Unit	Percentage of the Company’s Employees
ABX	International Brotherhood of Teamsters	4.6%
ATI	Air Line Pilots Association	9.2%
OAI	International Brotherhood of Teamsters	6.6%
ATI	Association of Flight Attendants	0.7%
OAI	Association of Flight Attendants	6.5%

NOTE I—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 crewmembers, 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 obligations. The assumptions considered most sensitive in actuarially valuing ABX’s pension obligations and determining related expense amounts are discount rates and expected long term investment returns on plan assets. Additionally, other assumptions concerning retirement ages, mortality and employee turnover also affect the valuations. Actual results and future changes in these assumptions could result in future costs significantly higher than those recorded in our results of operations.

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

ABX’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):

	Three Months Ended March 31,
	Pension Plans				Post-Retirement Healthcare Plan
	2021		2020		2021		2020
Service cost	$	—	$	—	$	24	$	35
Interest cost	5,597		6,970		10		23
Expected return on plan assets	(11,875)		(11,168)		—		—
Amortization of net (gain) loss	1,764		941		47		31
Net periodic benefit cost (income)	$	(4,514)	$	(3,257)	$	81	$	89

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During the three month period ending March 31, 2021, the Company contributed $1.1 million to the pension plans. The Company expects to contribute an additional $0.6 million during the remainder of 2021.

NOTE J—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 taxes recorded through March 31, 2021 have been estimated utilizing a 24% rate based upon year-to-date income and projected results for the full year. The recognition of discrete tax items, such as the conversion of employee stock awards, the issuance of stock warrants and other items, have an impact on the effective rate during a period.

As a result of these differences in which expenses and benefits for tax purposes are different than required by generally accepted accounting principles, the Company's effective tax rate for the first three months of 2021 was 23.3%. The final effective tax rate for the year 2021 will depend on the actual amount of pre-tax book results by the Company for the full year, the additional conversions of employee stock awards, stock warrant valuations, executive compensation 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 2023 or later. The Company may, however, be required to pay some federal tax due to loss carryforward usage limitations and certain state and local income taxes before then.

NOTE K—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) includes the following items by components for the three month periods ending March 31, 2021 and 2020 (in thousands):

	Defined Benefit Pension	Defined Benefit Post-Retirement	Foreign Currency Translation	Total
Balance as of January 1, 2020	(61,152)	(702)	(12)	(61,866)
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	941	31	—	972
Income Tax (Expense) or Benefit	(215)	(7)	—	(222)
Other comprehensive income, net of tax	726	24	—	750
Balance as of March 31, 2020	(60,426)	(678)	(12)	(61,116)
Balance as of January 1, 2021	(78,093)	(549)	(14)	(78,656)
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	1,764	47	—	1,811
Income Tax (Expense) or Benefit	(402)	(11)	—	(413)
Other comprehensive income, net of tax	1,362	36	—	1,398
Balance as of March 31, 2021	(76,731)	(513)	(14)	(77,258)

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NOTE L—STOCK-BASED COMPENSATION

The Company's Board of Directors has granted stock incentive awards to certain employees and board members pursuant to a long term incentive plan which was approved by the Company's stockholders in May 2005 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 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.

	Three Months Ended
	March 31, 2021			March 31, 2020
	Number of Awards	Weighted average grant-date fair value		Number of Awards	Weighted average grant-date fair value
Outstanding at beginning of period	1,085,023	$	17.14	963,832	$	17.67
Granted	274,606	26.65		435,254	18.86
Converted	(115,930)	25.55		(128,463)	19.06
Expired	—	—		(1,000)	19.40
Forfeited	—	—		—	—
Outstanding at end of period	1,243,699	$	18.46	1,269,623	$	17.94
Vested	357,499	$	9.26	353,023	$	8.25

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 2021 was $26.69, 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 2021 was $26.50. The market condition awards were valued using a Monte Carlo simulation technique based on volatility over three years for the awards granted in 2021 using daily stock prices and using the following variables:

	2021
Risk-free interest rate	0.3%
Volatility	39.7%

For the three month periods ended March 31, 2021 and 2020, the Company recorded expense of $1.8 million, $1.8 million, respectively, for stock incentive awards. At March 31, 2021, there was $13.1 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, 2021, none of the awards were convertible, 357,499 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 1,542,949 additional outstanding shares of the Company’s common stock depending on service, performance and market results through December 31, 2023.

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NOTE M—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):

	Three Months Ending March 31,
	2021		2020
Numerator:
Earnings from continuing operations - basic	$	42,290	$	133,733
Gain from stock warrants revaluation, net of tax	(5,355)		(76,361)
Earnings from continuing operations - diluted	$	36,935	$	57,372
Denominator:
Weighted-average shares outstanding for basic earnings per share	59,447		59,040
Common equivalent shares:
Effect of stock-based compensation awards and warrants	15,297		8,907
Weighted-average shares outstanding assuming dilution	74,744		67,947
Basic earnings per share from continuing operations	$	0.71	$	2.27
Diluted earnings per share from continuing operations	$	0.49	$	0.84

Basic weighted average shares outstanding for purposes of basic earnings per share are less than the shares outstanding due to 487,200 shares and 365,100 shares of restricted stock for 2021 and 2020, respectively, which are accounted for as part of diluted weighted average shares outstanding in diluted earnings per share.

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 D), if such warrants have an anti-dilutive effect on earnings per share. The dilutive effect of the weighted-average diluted shares outstanding is calculated using the treasury method for periods in which equivalent shares have a dilutive effect on earnings per share. Under this method, the number of diluted shares is determined by dividing the assumed proceeds of the warrants recorded as a liability by the average stock price during the period and comparing that amount with the number of corresponding warrants outstanding.

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NOTE N—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 Ending
	March 31,
	2021		2020
Total revenues:
CAM	$	83,277	$	74,163
ACMI Services	247,131		284,165
All other	93,698		80,036
Eliminate inter-segment revenues	(48,018)		(49,087)
Total	$	376,088	$	389,277
Customer revenues:
CAM	$	60,800	$	46,736
ACMI Services	247,126		284,161
All other	68,162		58,380
Total	$	376,088	$	389,277

ACMI Services revenues are generated from airline service agreements and are typically based on hours flown, the amount 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

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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 month periods ended March 31, 2021 and 2020 are presented below (in thousands):

	Three Months Ended
	March 31,
	2021		2020
Aircraft maintenance, modifications and part sales	$	34,048	$	33,835
Ground services	23,460		14,609
Other, including aviation fuel sales	10,654		9,936
Total customer revenues	$	68,162	$	58,380

CAM's aircraft lease revenues are recognized as operating lease revenues 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 15% of CAM's leases to external customers contain purchase options at projected market values. As of March 31, 2021, minimum future payments from external customers for leased aircraft and equipment were scheduled to be $192.3 million for the remainder of 2021, $212.8 million, $168.3 million, $117.6 million, $105.4 million, respectively, for each of the next 4 years ending December 31, 2025 and $275.3 million thereafter. As of December 31, 2020, minimum future payments from external customers for leased aircraft and equipment were scheduled to be $222.4 million, $195.5 million, $150.5 million, $99.8 million and $90.7 million, respectively, for each of the next 5 years ending December 31, 2025 and $202.2 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 month periods ending March 31, 2021 and 2020, the Company recognized $2.7 million and $2.7 million of non lease revenue that was reported in deferred revenue at the beginning of the respective year. Deferred revenue was $1.3 million and $3.0 million at March 31, 2021 and December 31, 2020, respectively, for contracts with customers.

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Segment earnings, as used by the Company's management, includes an allocation of interest expense based on a reportable segments' assets. The Company's other segment information from continuing operations is presented below (in thousands):

	Three Months Ending
	March 31,
	2021		2020
Depreciation and amortization expense:
CAM	$	46,995	$	43,047
ACMI Services	22,981		25,312
All other	1,075		983
Total	$	71,051	$	69,342
Interest expense
CAM	9,226		10,255
ACMI Services	4,523		5,301
Government grants recognized
ACMI Service	28,030		—
Segment earnings (loss):
CAM	$	21,462	$	15,820
ACMI Services	21,259		18,378
All other	389		53
Net unallocated interest expense	(754)		(655)
Net gain on financial instruments	9,472		107,044
Other non-service components of retiree benefit costs, net	4,457		2,898
Loss from non-consolidated affiliate	(1,183)		(2,764)
Pre-tax earnings from continuing operations	$	55,102	$	140,774

The Company's assets are presented below by segment (in thousands). Cash and cash equivalents are reflected in Assets - All other.

	March 31,		December 31
	2021		2020
Assets:
CAM	$	2,093,190	$	2,037,628
ACMI Services	807,822		811,516
All other	146,701		152,601
Total	$	3,047,713	$	3,001,745

During the first three months of 2021, the Company had capital expenditures for property and equipment of $22.4 million and $102.5 million for the ACMI Services and CAM, respectively.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis has been prepared with reference to the historical financial condition and results of operations of Air Transport Services Group, Inc., and its subsidiaries. Air Transport Services Group, Inc. and its subsidiaries may hereinafter individually and collectively be referred to as "the Company", "we", "our", or "us" from time to time. The following discussion and analysis describes the principal factors affecting the results of operations, financial condition, cash flows, liquidity and capital resources. It should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes prepared in accordance with accounting principles generally accepted in the United States of America contained in this report and our Annual Report on Form 10-K for the year ended December 31, 2020.

INTRODUCTION

We lease aircraft and provide airline operations, aircraft modification and maintenance services, ground services, and other support services to the air transportation and logistics industries. Through the Company's subsidiaries, we offer a range of complementary services to delivery companies, freight forwarders, e-commerce operators, airlines and government customers. Our principal subsidiaries include three independently certificated airlines (ABX, ATI and OAI) and an aircraft leasing company (CAM).

The health and safety of our employees is paramount. Our airline operations rely on flight crews, aircraft maintenance technicians, flight support personnel and aircraft loading personnel. We rely on a skilled workforce to perform aircraft maintenance. Similarly, we staff personnel near airports to sort customer packages, load aircraft and maintain related equipment. Maintaining the health of our employees during the COVID-19 pandemic is essential for us to operate safely and maintain our customers' networks. We have taken precautions to prevent, detect and limit the spread of the COVID-19 virus in the workplace. These practices include daily temperature checks, requiring face masks, periodically sanitizing facilities, frequent cleaning of high touch surfaces, supporting remote working, travel restrictions, promoting social distancing and frequent hand washing, contact tracing, quarantining, and other practices prescribed by the Centers for Disease Control and Prevention. We have added extra precautions and redundancies related to crews reserves, employee travel protocols, sanitation and other measures.

The Company's passenger flight operations have been and continue to be impacted by the pandemic primarily as a result of certain international airport closures, flight cancellations and increased expenses. The Company's airlines have received government funding pursuant to payroll support programs of the federal government as described in Note H of the accompanying financial statements. The pandemic has not had a significant adverse financial impact on our leasing operations or our airline operations for customers' freight networks. We have not experienced a wide-spread outbreak at any location. However, a COVID-19 outbreak among our flight crews, at one of our maintenance facilities, at customer sorting centers or at an airport could result in workforce shortages, facility closures and additional flight cancellations. In such event, flight delays and additional costs would result. A COVID-19 outbreak at one of our maintenance facilities, or at customer sorting centers could result in workforce shortages and facility closures.

We have two reportable segments: CAM, which leases Boeing 777, 767, and 757 aircraft and aircraft engines, and ACMI Services, which includes the cargo and passenger transportation operations of the three airlines. Our other business operations, which primarily provide support services to the transportation industry, include providing aircraft maintenance and modification services to customers, load transfer and sorting services as well as related equipment maintenance services. These operations do not constitute reportable segments and are reported together as Other Activities.

At March 31, 2021, we owned 98 Boeing aircraft that were in revenue service. At March 31, 2021, CAM also owned nine Boeing 767-300 aircraft either already undergoing or awaiting induction into the freighter conversion process. In addition to these aircraft, we leased two freighter aircraft provided by a customer and four passenger aircraft. Our largest customers are the U.S. Department of Defense ("DoD"), Amazon.com Services, LLC ("ASI"), successor to Amazon.com Services, Inc., a subsidiary of Amazon.com, Inc. ("Amazon") and DHL Network Operations (USA), Inc. and its affiliates ("DHL").

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DoD

The DoD comprised 22% and 30% of the Company's consolidated revenues during the three month periods ended March 31, 2021 and 2020, respectively. The Company's airlines have been providing passenger and cargo airlift services to the U.S. DoD since the mid 1990's. Contracts with the US Transportation Command ("USTC") are typically for a one-year period, however, the current passenger international charter contract has a two-year term with option periods, at the election of the DoD, through September 2024 and the contract with ATI to provide combi aircraft operations, runs through December 2021. The decline in the percentage of revenues from DoD primarily reflects the negative impact of the pandemic on our passenger flight operations and increased revenues from aircraft leases to other customers, including Amazon.

Amazon

Revenues from our commercial arrangements with ASI comprised approximately 35% and 29% of our consolidated revenues during the three month periods ending March 31, 2021 and 2020, respectively. On March 8, 2016, we entered into an Air Transportation Services Agreement (as amended, the “ATSA”) with ASI pursuant to which we lease Boeing 767 freighter aircraft to ASI, operate the aircraft via our airline subsidiaries and provide ground handling services by our subsidiary, LGSTX. Under the ATSA, we operate aircraft based on pre-defined fees scaled for the number of aircraft hours flown, aircraft scheduled and flight crews provided to ASI for its network. The operating term of the ATSA runs through March of 2026 and is thereafter subject to renewal provisions.

The table below summarizes aircraft lease placements and commitments with Amazon as of March 31, 2021.

		Amazon	Year of
		# of Leases	Commencement	Expiration
Leased
	Boeing 767-200	12	2016	2023
	Boeing 767-300	2	2016	2026
	Boeing 767-300	6	2017	2027
	Boeing 767-300	6	2019	2029
	Boeing 767-300	5	2020	2030
	Boeing 767-300	4	2021	2031
Lease Commitments
	Boeing 767-300	7	2021	2031

In conjunction with the execution of the ATSA and its amendments, the Company and Amazon entered into an Investment Agreement and a Stockholders Agreement on March 8, 2016 (the 2016 Investment Agreement) and a second Investment Agreement on December 20, 2018 (the 2018 Investment Agreement). Pursuant to these Investment Agreements, the Company issued warrants to Amazon in conjunction with aircraft leases. Our accounting for the warrants issued to Amazon has been determined in accordance with the financial reporting guidance for financial instruments. The fair value of the warrants issued or issuable to Amazon are recorded as a lease incentive asset and are amortized against revenues over the duration of the aircraft leases. The Company's earnings are impacted by the fair value re-measurement of the Amazon warrants classified in liabilities at the end of each reporting period, customer incentive amortization and the related income tax effects. For income tax calculations, the value and timing of related tax deductions will differ from the guidance described below for financial reporting.

For additional information about the Amazon warrants, see Note C to the accompanying financial statements in this report.

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DHL

DHL accounted for 14% and 11% of the Company's consolidated revenues, excluding directly reimbursed revenues, during the three month periods ending March 31, 2021 and 2020, respectively. Under a CMI agreement with DHL, ABX operates and maintains aircraft based on pre-defined fees scaled for the number of aircraft hours flown, aircraft scheduled and flight crews provided to DHL for its network. Under the pricing structure of the CMI agreement, ABX is responsible for complying with FAA airworthiness directives, the cost of Boeing 767 airframe maintenance and certain engine maintenance events for the aircraft leased to DHL that it operates. As of March 31, 2021, the Company, through CAM, leased 13 Boeing 767 aircraft to DHL comprised of six Boeing 767-200 aircraft and seven Boeing 767-300 aircraft, expiring between 2021 and 2024. Eight of the 13 Boeing 767 aircraft were being operated by the Company's airlines for DHL. We also operated four CAM-owned Boeing 757 aircraft under other operating arrangements with DHL during the first half of 2020. DHL terminated operating agreements for three of the Boeing 757 aircraft in mid 2020 and the last one during the first quarter of 2021.

RESULTS OF OPERATIONS

Summary

External customer revenues from continuing operations decreased by $13.2 million, or 3%, to $376.1 million during the first three months of 2021 compared to 2020. Customer revenues decreased in 2021 for contracted passenger airline services and charter flights, and were partially offset by increases in aircraft leasing and flying for our customers' package delivery networks compared to the previous year period. Beginning in late February 2020, our passenger related revenues were disrupted due to the COVID-19 pandemic. As a result of the pandemic, the DoD and other customers have cancelled or reduced the level of scheduled passenger flights. The cancelled or reduced level of scheduled passenger flights was partially offset in 2020 by special airlift capacity and missions for governmental agencies related to the pandemic. These additional flights have not continued at the same level in 2021.

The consolidated net earnings from continuing operations were $42.3 million for the three month period ending March 31, 2021 compared to $133.7 million for the corresponding period of 2020. The pre-tax earnings from continuing operations were $55.1 million for the first quarter of 2021 compared to $140.8 million for 2020. Earnings were affected by the following specific events or certain adjustments that do not directly reflect our underlying operations among the periods presented.

•Pre-tax basis earnings included net gains of $9.5 million and $107.0 million for the three month periods ended March 31, 2021 and 2020, respectively, for the re-measurement of financial instruments, including warrant obligations granted to Amazon.

•Pre-tax earnings were also reduced by $5.7 million and $4.9 million for the three month periods ended March 31, 2021 and 2020, respectively, for the amortization of customer incentives given to ASI in the form of warrants.

•Pre-tax earnings from continuing operations included gains of $4.5 million and $2.9 million for the three month periods ended March 31, 2021 and 2020, respectively, for non-service components of retiree benefit plans.

•Pre-tax earnings included losses of $1.2 million and $2.8 million for the three month periods ended March 31, 2021 and 2020, respectively, for the Company's share of development costs for a joint venture and the partial sale of an airline investment.

•During the first quarter of 2021, the Company recognized $28.0 million of government grants from payroll support program agreements during the pandemic.

After removing the effects of these items, adjusted pre-tax earnings from continuing operations, a non-GAAP measure (a definition and reconciliation of adjusted pre-tax earnings from continuing operations follows), were $20.0 million and $38.5 million for the three month periods ended March 31, 2021 and 2020, respectively. Adjusted pre-tax earnings from continuing operations for the first quarter of 2021, which excludes the recognition of COVID-19 related government grants, decreased by $18.4 million compared to 2020, driven primarily by reduced ACMI Services revenues for passenger flying compared to the corresponding period of 2020.

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Pre-tax segment earnings for CAM increased $5.6 million compared to the first quarter of 2020, driven by 13 more aircraft under lease to external customers during the first quarter of 2021. Pre-tax segment earnings for ACMI Services increased $2.9M during the first quarter of 2021 compared to the previous year, as reduced passenger flying due to COVD-19 was offset by the recognition of pandemic-related government grants.

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

	Three Months Ended
	March 31,
	2021		2020
Revenues from Continuing Operations:
CAM
Aircraft leasing and related services	$	88,229	$	78,609
Lease incentive amortization	(4,952)		(4,446)
Total CAM	83,277		74,163
ACMI Services	247,131		284,165
Other Activities	93,698		80,036
Total Revenues	424,106		438,364
Eliminate internal revenues	(48,018)		(49,087)
Customer Revenues	$	376,088	$	389,277
Pre-Tax Earnings (Loss) from Continuing Operations:
CAM, inclusive of interest expense	$	21,462	$	15,820
ACMI Services, inclusive of government grants and interest expense	21,259		18,378
Other Activities	389		53
Net unallocated interest expense	(754)		(655)
Net financial instrument re-measurement (loss) gain	9,472		107,044
Other non-service components of retiree benefits costs, net	4,457		2,898
Loss from non-consolidated affiliate	(1,183)		(2,764)
Pre-Tax Earnings (Loss) from Continuing Operations	55,102		140,774
Add other non-service components of retiree benefit costs, net	(4,457)		(2,898)
Less government grants	(28,030)		—
Add charges for non-consolidated affiliates	1,183		2,764
Add customer incentive amortization	5,699		4,857
Add net loss (gain) on financial instruments	(9,472)		(107,044)
Adjusted Pre-Tax Earnings from Continuing Operations	$	20,025	$	38,453

Adjusted pre-tax earnings from continuing operations, a non-GAAP measure, is pre-tax earnings excluding the following: (i) settlement charges and other non-service components of retiree benefit costs; (ii) gains and losses for the fair value re-measurement of financial instruments; (iii) customer incentive amortization; (iv) the start-up costs of a non-consolidated joint venture and (v) the sale of an airline investment. We exclude these items from adjusted pre-tax earnings because they are distinctly different in their predictability or not closely related to our on-going operating activities. We also excluded the recognition of government grants from adjusted pre-tax earnings to highlight the varying impact of the grants on our operations. Management uses adjusted pre-tax earnings to compare the performance of core operating results between periods. Presenting this measure provides investors with a comparative metric of fundamental operations while highlighting changes to certain items among periods. Adjusted pre-tax earnings should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP.

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Aircraft Fleet Summary

Our fleet of cargo and passenger aircraft is summarized in the following table as of March 31, 2021 and December 31, 2020. Our freighters, converted from passenger aircraft, utilize standard shipping containers and can be deployed into regional cargo markets more economically than larger capacity aircraft, newly built freighters or other competing alternatives. At March 31, 2021, the Company owned nine Boeing 767-300 aircraft that were either already undergoing or awaiting induction into the freighter conversion process.

Aircraft fleet activity during the first three months of 2021 is summarized below:

•CAM completed the modification of four Boeing 767-300 freighter aircraft purchased in the previous year and began to lease three of these aircraft to external customers under multi-year leases. ATI operates two of these aircraft for a customer. CAM leased the fourth aircraft to ATI.

•ATI returned three Boeing 767-300 freighter aircraft to CAM. CAM leased two of these aircraft to an external customer under a multi-year lease. ATI operates these aircraft for the customer. The third aircraft is being prepped for lease to an external customer in the second quarter.

•External customers returned three Boeing 767-200 freighter aircraft to CAM. These aircraft are being prepped for leases to other external customers later in 2021.

•CAM purchased four Boeing 767-300 passenger aircraft for the purpose of converting the passenger aircraft into a standard freighter configuration. These aircraft are expected to be leased to external customers during 2021.

•OAI returned one Boeing 767-300 passenger aircraft to CAM. CAM has begun converting this passenger aircraft into a standard freighter configuration. This aircraft is expected to be leased to an external customer later in 2021.

•ATI returned the last Boeing 757-200 freighter aircraft to CAM and the aircraft was retired.

	March 31, 2021			December 31, 2020
	ACMI Services	CAM	Total	ACMI Services	CAM	Total
In-service aircraft
Aircraft owned
Boeing 767-200 Freighter	5	25	30	5	28	33
Boeing 767-200 Passenger	2	—	2	2	—	2
Boeing 767-300 Freighter	3	50	53	5	45	50
Boeing 767-300 Passenger	6	—	6	7	—	7
Boeing 777-200 Passenger	3	—	3	3	—	3
Boeing 757-200 Freighter	—	—	—	1	—	1
Boeing 757-200 Combi	4	—	4	4	—	4
Total	23	75	98	27	73	100
Operating lease
Boeing 767-200 Passenger	1	—	1	1	—	1
Boeing 767-300 Passenger	3	—	3	3	—	3
Boeing 767-300 Freighter	2	—	2	2	—	2
Total	6	—	6	6	—	6
Other aircraft
Owned Boeing 767-300 under modification	—	9	9	—	8	8
Owned Boeing 767 available or staging for lease	—	4	4	—	—	—

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As of March 31, 2021, ABX, ATI and OAI were leasing 23 in-service aircraft internally from CAM for use in ACMI Services. Of CAM's 25 externally leased Boeing 767-200 freighter aircraft, 12 were leased to ASI and operated by ABX or ATI, one was leased to DHL and operated by ABX, five were leased to DHL and were being operated by a DHL-affiliated airline and seven were leased to other external customers. Of the 50 externally leased Boeing 767-300 freighter aircraft, 23 were leased to ASI and operated by ABX or ATI, seven were leased to DHL and operated by ABX, and 20 were leased to other external customers, one of which was operated by ATI. The carrying values of the total in-service fleet as of March 31, 2021 and December 31, 2020 were $1,557.8 million and $1,535.3 million, respectively.

The table above does not reflect one Boeing 767-200 passenger aircraft and four Boeing 757 aircraft that are being marketed for sale.

CAM Segment

CAM offers aircraft leasing and related services to external customers and also leases aircraft internally to the Company's airlines. CAM acquires passenger aircraft and manages the modification of the aircraft into freighters. The follow-on aircraft leases normally cover a term of five to ten years.

As of March 31, 2021 and 2020, CAM had 75 and 62 aircraft under lease to external customers, respectively. CAM's revenues grew by $9.1 million during the first quarter of 2021 compared to 2020, primarily as a result of additional aircraft leases. Revenues from external customers totaled $60.8 million and $46.7 million for the first quarters of 2021 and 2020, respectively. CAM's revenues from the Company's airlines totaled $22.5 million during the first quarter of 2021, compared to $27.4 million for 2020. CAM's aircraft leasing and related services revenues, which exclude customer lease incentive amortization, increased $9.6 million in the first quarter of 2021 compared to 2020, as a result of new aircraft leases in 2021 and 2020. Since April 1, 2020, CAM added 14 Boeing 767-300 aircraft to its portfolio and placed 15 Boeing 767-300 aircraft to external customers under long-term leases.

CAM's pre-tax segment earnings, inclusive of internally allocated interest expense, were $21.5 million and $15.8 million during the first quarters of 2021 and 2020, respectively. Increased pre-tax earnings reflect the 14 aircraft placed into service since April 1, 2020 and a $1.0 million decrease in internally allocated interest expense, partially offset by a $3.9 million increase in depreciation expense driven by the addition of 14 Boeing aircraft into service since the end of the first quarter of 2020.

In addition to the nine Boeing 767-300 aircraft which were in the modification process at March 31, 2021, CAM has agreements to purchase four more Boeing 767-300 aircraft and expects to complete their modifications through 2021. CAM's operating results will depend on its continuing ability to convert passenger aircraft into freighters within planned costs and within the time frames required by customers. We expect to lease at least 12 newly modified Boeing 767-300 freighters and re-deploy four Boeing 767-300 freighters during 2021, comprising eleven to Amazon and five to other external customers. CAM's future operating results will also depend on the timing and lease rates under which aircraft are redeployed when leases expire. During the first quarter of 2021, three leases for a Boeing 767-200 were returned and two others are expected to be returned later in 2021. CAM's future operating results will also be impacted by the additional amortization of warrant incentives as incremental long-term aircraft leases to ASI commence.

ACMI Services

The ACMI Services segment provides airline operations to its customers, typically under contracts providing for a combination of aircraft, crews, maintenance, insurance and aviation fuel. Our customers are typically responsible for supplying the necessary aviation fuel and cargo handling services and reimbursing our airline for other operating expenses such as landing fees, ramp expenses, certain aircraft maintenance expenses and fuel procured directly by the airline. Aircraft charter agreements, including those for the DoD, usually require the airline to provide full service, including fuel and other operating expenses for a fixed, all-inclusive price.

Total revenues from ACMI Services decreased $37.0 million during the first quarter of 2021 compared with 2020 to $247.1 million. Decreased revenues reflect a 5% net decrease in billable block hours during the first quarter of 2021 compared to 2020. Revenues for the first quarter of 2021 were impacted by the COVID-19 pandemic more so than the first quarter of 2020. In late February 2020, the DoD began canceling combi aircraft flights and in March 2020, commercial customers began canceling scheduled passenger flights as a result of the pandemic. Combined block hours flown for all passenger flights including contracted commercial passenger and combi flights

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declined 42% for the first quarter of 2021, compared to 2020 due to the pandemic. The decline in revenues from these cancellations was partially mitigated by increased flying for customer e-commerce networks.

ACMI Services had pre-tax segment earnings of $21.3 million during the first quarter of 2021, compared to $18.4 million for 2020 inclusive of internally allocated interest expense and the recognition of pandemic-related government grants of $28.0 million in 2021. No amount of government grants were recognized in 2020. Internally allocated interest expense decreased to $4.5 million for the first quarter of 2021 compared to $5.3 million for 2020.

During the first quarter of 2021, we began to operate four more CAM-owned Boeing 767-300 aircraft under the Amazon ATSA. Flight crew training costs and other start-up expenses, were approximately $2 million more in the first quarter of 2021 compared to 2020. As of March 31, 2021, ACMI Services included 73 in-service aircraft compared to 69 as of March 31, 2020.

Maintaining profitability in ACMI Services will depend on a number of factors, including the impact of the COVID-19 pandemic, customer flight schedules, crewmember productivity and pay, employee benefits, aircraft maintenance schedules and the number of aircraft we operate. We expect our operating results from commercial passenger and combi flights to continue to be detrimentally impacted by the pandemic during 2021. The DoD has reduced normal personnel movements while most of our other passenger service customers have suspended their operations and demand for commercial passenger charters has significantly declined. During 2020, the DoD and other government agencies contracted for special airlift capacity and missions which are not expected to occur at the same level in the months ahead. Similarly, customers may find alternatives for the incremental e-commerce routes we operate. While it is difficult to predict, we expect revenues from passenger operations to continue to be lower during 2021 than we recognized in 2020. In December 2020, ABX and its pilots union amended the collective bargaining agreement. While the changes in the amendment are expected to positively impact productivity, we expect compensation costs to increase between $7 million to $8 million for ABX pilots in 2021.

We expect Amazon to lease at least seven more Boeing 767-300 freighter aircraft from CAM during the last nine months of 2021 and contract the operation of those aircraft through our existing ATSA. We also expect Amazon to contract with us to operate at least two more Amazon-provided aircraft under the ATSA in 2021.

Other Activities

We provide other support services to our ACMI Services customers and other airlines by leveraging our knowledge and capabilities developed for our own operations over the years. Through our FAA certificated maintenance and repair subsidiaries, we sell aircraft parts and provide aircraft maintenance and modification services. We also arrange and perform logistical services and package sorting services for certain ASI gateway locations in the U.S. We provide maintenance for ground equipment, facilities and material handling equipment and we resell aviation fuel in Wilmington, Ohio. Additionally, we provide flight training services. Other activities include the cost of unallocated corporate expenses.

External customer revenues from all other activities increased $9.8 million in the first quarter of 2021 compared to 2020 primarily due to ground services from the addition of the two new USPS mail facilities in mid 2020. Revenues from aircraft maintenance and part sales were flat during the first quarter of 2021, while revenues from two USPS mail facility contracts increased sharply. The pre-tax earnings from other activities increased by $0.3 million to $0.4 million in the first quarter of 2021. Pre-tax earnings for 2021 were impacted by reductions in revenues from higher margin ground services and aircraft maintenance services. Ground service customers have chosen to in-source some of the higher margin services we provided in 2020, while at the same time we have experienced additional revenues from the two new USPS mail facility contracts which generated losses and low margins during the quarter.

Expenses from Continuing Operations

Salaries, wages and benefits expense increased $16.5 million, or 13% during the quarter ended March 31, 2021 compared to the corresponding period of 2020 driven by higher employee headcount for flight operations, maintenance operations and package sorting services. The total headcount increased 16% as of March 31, 2021 compared to March 31, 2020, including additional personnel for the two USPS mail contracts added since last year. Additionally, increases since April 1, 2020 include more flight crewmembers, aircraft maintenance technicians and other personnel to support additional flight operations for our customers' express cargo networks, primarily ASI.

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Depreciation and amortization expense increased $1.7 million during the quarter ended March 31, 2021 compared to the corresponding period of 2020. The increase reflects incremental depreciation for fourteen Boeing 767-300 aircraft and additional aircraft engines added to the operating fleet since the April 1, 2020, as well as capitalized heavy maintenance and navigation technology upgrades. This increase in depreciation was offset by the retirement of the Boeing 757 freighter fleet and lower depreciation expense on passenger aircraft engines due to reduced activity compared to the previous year. We expect depreciation expense to increase during future periods in conjunction with our fleet expansion and capital spending plans.

Maintenance, materials and repairs expense increased by $0.3 million during the quarter ended March 31, 2021 compared to the corresponding period of 2020. Increased maintenance expense for the first quarter of 2021 was driven by increased flight operations for our customers' express cargo networks, offset by lower costs for unscheduled engine repairs at our airlines. The aircraft maintenance and material expenses can vary among periods due to the number of maintenance events and the scope of airframe checks that are performed.

Fuel expense decreased by $13.4 million during the quarter ended March 31, 2021 compared to the corresponding period of 2020. Fuel expense includes the cost of fuel to operate DoD charters, fuel used to position aircraft for service and for maintenance purposes, as well as the cost of fuel sales. Fuel expense decreased during the first quarter of 2021 compared to 2020 due to lower block hours for passenger flight services and lower prices for aviation fuel during the pandemic.

Contracted ground and aviation services expense includes navigational services, aircraft and cargo handling services, baggage handling services and other airport services. Contracted ground and aviation services increased $0.5 million during the quarter ended March 31, 2021 compared to the corresponding period of 2020.

Travel expense decreased by $3.3 million during the quarter ended March 31, 2021 compared to the corresponding period of 2020. The decrease in travel expense was due to less employee travel and the lower costs of air travel during the pandemic.

Landing and ramp expense, which includes the cost of deicing chemicals, increased by $0.4 million during the quarter ended March 31, 2021 compared to the corresponding period of 2020, driven by increased block hours for our customers' express cargo networks.

Rent expense increased by $2.4 million during the quarter ended March 31, 2021 compared to the corresponding period of 2020 due to the lease of an additional passenger aircraft and facility rents for the two USPS facilities started in mid 2020.

Insurance expense increased by $1.5 million during the quarter ended March 31, 2021 compared to the corresponding period of 2020. Aircraft fleet insurance has increased due to additional aircraft operations and higher insurance rates during the first quarter of 2021 compared to 2020.

Other operating expenses increased by $1.2 million during the quarter ended March 31, 2021 compared to the corresponding period of 2020. Other operating expenses include professional fees, employee training, utilities, commission expense to our CRAF team for DoD revenues and other expenses.

Operating results included a pre-tax expense credit of $28.0 million during the quarter ended March 31, 2021 to recognize grants received from the U.S. government for payroll support programs. For additional information about the government grants, see Note H of the accompanying financial statements.

Non Operating Income, Adjustments and Expenses

Interest expense decreased by $1.8 million during the quarter ended March 31, 2021 compared to the corresponding period of 2020. Interest expense during the first quarter of 2021 decreased compared to 2020 due to lower interest rates on our borrowings under the Senior Credit Agreement and lower average debt balances outstanding during the year. During the second quarter of 2021, we will record a pre-tax charge of approximately $6.6 million to write-off the unamortized debt issuance costs of the Company's term loans which were prepaid in full during April 2021.

The Company recorded unrealized pre-tax gains on financial instruments re-measurements of $9.5 million during the first quarter of 2021, compared to $107.0 million for 2020. The gains and losses include the results of re-valuing, as of March 31, 2021 and 2020, the fair value of the stock warrants granted to Amazon. Generally, the

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warrant value increases or decreases with corresponding increases or decreases in the ATSG share price during the measurement period. Warrant gains for the first quarter of 2021 reflect a 7% decrease in the traded price of ATSG shares. Additionally, the value of certain warrants depends partially on the probability that warrants will vest upon the execution of aircraft leases. Increases in the traded value of ATSG shares and increases in the probability of vested warrants each result in an increase to the warrant value and resulted in warrant losses recorded to financial instruments for 2021.

Non-service components of retiree benefits were a net gain of $4.5 million for the first quarter of 2021 compared to $2.9 million for 2020. The non-service component gain and losses of retiree benefits are actuarially determined and include the amortization of unrecognized gains and losses stemming from changes in assumptions regarding discount rates, expected investment returns and other retirement plan assumptions. Non-service components of retiree benefits can vary significantly from one year to the next based on investment results and changes in discount rates used to account for defined benefit retirement plans.

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 taxes recorded through March 31, 2021 have been estimated utilizing a 24% rate based upon year-to-date income and projected results for the full year. The recognition of discrete tax items, such as the conversion of employee stock awards, officer's compensation, the issuance of stock warrants and other items have an impact on the effective rate during a period.

The effective tax rate from continuing operations for the three month period ended March 31, 2021 was 23%. The effective tax rate is affected by the re-measurement of warrants, changes in valuation allowances and other discrete tax items in which expenses and benefits for tax purposes are different than required by generally accepted accounting principles. The effective tax rate before including the effects of the warrant re-measurements, incentive amortizations and the other adjustments for adjusted pre-tax earnings from continuing operations (see items in table above) was 24% for the three month period ended March 31, 2021. The effective tax rate before including the effects of the warrants was 24% for the three month period ended March 31, 2020.

Discontinued Operations

The financial results of discontinued operations primarily reflect pension, workers' compensation cost adjustments and other benefits for former employees previously associated with ABX's former hub operations pursuant to which ABX performed package sorting services for DHL. Pre-tax gains related to the former sorting operations were $4.9 million for the first quarter of 2020. Pre-tax earnings during 2020 were a result of reductions in self-insurance reserves for former employee claims and pension credits.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Net cash generated from operating activities totaled $124.4 million and $99.0 million for the first three months in 2021 and 2020, respectively. Improved cash flows from operating activities during 2021 were derived from additional aircraft leases to customers and the receipt of $37.4 million of grant funds from the U.S. government for payroll support programs offset by lowering passenger operating levels within the ACMI Services segment. Cash outlays for pension contributions were $1.1 million and $1.3 million for the first three months of 2021 and 2020, respectively.

Capital spending levels were primarily the result of aircraft modification costs and the acquisition of aircraft for freighter modification. Cash payments for capital expenditures were $125.4 million and $143.5 million for the first three months of 2021 and 2020, respectively. Capital expenditures in the first quarter of 2021 included $84.7 million for the acquisition of four Boeing 767-300 aircraft and freighter modification costs; $37.3 million for required heavy maintenance; and $3.4 million for other equipment. Capital expenditures in the first quarter of 2020 included $105.4 million for the acquisition of five Boeing 767-300 aircraft and freighter modification costs; $27.4 million for required heavy maintenance; and $10.7 million for other equipment, including the purchases of aircraft engines and rotables.

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During the first quarters of 2021 and 2020, we contributed $1.7 million and $3.0 million, respectively, to a joint-venture with Precision Aircraft Solutions, LLC, to develop a passenger-to-freighter conversion program for Airbus A321-200 aircraft.

Net cash provided by financing activities was $14.6 million during the first three months of 2021 compared to $72.3 million in 2020. During the first three months in 2021, we drew $140.0 million from the revolving credit facility and we made scheduled debt principal payments of $4.1 million and payments on the revolving credit facility of 120.0 million. During the first three months in 2020, we drew $80.0 million from the revolving credit facility. Our financing activities during the first three months in 2020 included a debt offering of $500 million in senior unsecured notes (the "Senior Notes"). The net proceeds from the Senior Notes were used to pay down the revolving credit facility in 2020. Our borrowing activities were necessary to purchase and modify aircraft for deployment into air cargo markets.

Commitments

As of March 31, 2021, the Company had nine aircraft that were in or awaiting the modification process. Additionally, we placed non-refundable deposits and have agreements to purchase four more Boeing 767-300 passenger aircraft through 2021. We expect to purchase additional aircraft for modification in 2021. We estimate that capital expenditures for 2021 will total at least $500 million, of which the majority will be related to aircraft purchases and freighter modifications. Actual capital spending for any future period will be impacted by aircraft acquisitions, maintenance and modification processes. We expect to finance the capital expenditures from current cash balances, future operating cash flows and the Senior Credit Agreement. The Company outsources a significant portion of the aircraft freighter modification process to a non-affiliated third party. The modification primarily consists of the installation of a standard cargo door and loading system. For additional information about the Company's aircraft modification obligations, see Note I of the accompanying financial statements in this report.

Since August 3, 2017, the Company has been part of a joint-venture with Precision Aircraft Solutions, LLC, to develop a passenger-to-freighter conversion program for Airbus A321-200 aircraft. Approval of a supplemental type certificate from the FAA was granted in April 2021 and conversions are expected to begin in 2021. We expect to make contributions to the join-venture, equal to the Company's 49% ownership percentage, as may be needed for inventory and other working capital needs during 2021.

Liquidity

At March 31, 2021, the Company had $51.7 million of cash balances. We believe that the Company's current cash balances and forecasted cash flows provided from its customer leases and operating agreements, combined with its Senior Credit Agreement, will be sufficient to fund operations, capital spending, scheduled debt payments and required pension funding for at least the next 12 months.

The Company has a Senior Credit Agreement with a consortium of banks. Borrowings under the Senior Credit Agreement are collateralized by certain Company-owned aircraft. The Company has also issued unsecured Senior Notes in unregistered offerings pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Senior Credit Agreement and Senior Notes are described in Note F of the accompanying financial statements. In April and May 2021, we made changes to the Company's debt structure which resulted in the extension of repayment maturities, a reduction in collateralized borrowings outstanding, an increase to fixed rate debt, and increased borrowing capacity subject to certain conditions.

The Senior Credit Agreement was amended on April 6, 2021 ("Amended Credit Agreement") to increase the maximum amount of the Company's revolving credit facility from $600 million to $1 billion temporarily, and subsequently on April 13, 2021 to $800 million. In addition, the amendment modified the maturity date of the agreement from November 30, 2024, to April 6, 2026, and effected other changes as described in Note F of the accompanying financial statements. In conjunction with the amendment, we prepaid the entire outstanding balance of all term loans at the time of the amendment.

On January 8, 2020, the Company, through a subsidiary, issued $500 million of Senior Notes. On April 13, 2021, the Company, through a subsidiary, completed an offering of $200 million of additional Senior Notes ("Additional Notes"). The Additional Notes are fully fungible with the previously-issued Senior Notes, treated as a single class for all purposes under the indenture governing the Senior Notes with the same terms as those of the

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previously-issued Senior Notes (other than issue date and issue price) and mature on February 1, 2028. The net proceeds of $205.5 million were used to reduce borrowings under the revolving credit facility.

On May 7, 2021, Amazon remitted cash of $132 million to the Company to exercise warrants for the Company's common stock as described in Note C of the accompanying financial statements in this report. These funds are being used to further pay down the balance of the revolving credit facility.

The Senior Credit Agreement is collateralized by our fleet of Boeing 777, 767 and 757 freighter aircraft. Under the terms of the Senior Credit Agreement, we are required to maintain collateral coverage equal to 125% of the outstanding balances of the term loans and the total funded revolving credit facility. The minimum collateral coverage which must be maintained is 50% of the outstanding balance of the term loan plus the revolving credit facility commitment. As mentioned above, in conjunction with the amendment to the Senior Credit Agreement done on April 6, 2021, the Company paid off the entire outstanding balance of all term loans.

Under the Senior Credit Agreement, the Company is subject to covenants and warranties that are usual and customary including, among other things, limitations on certain additional indebtedness, guarantees of indebtedness, as well as a total debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization expenses) ratio and a fixed charge coverage ratio. The Senior Credit Agreement stipulates events of default including unspecified events that may have a material adverse effect on the Company. If an event of default occurs, the Company may be forced to repay, renegotiate or replace the Senior Credit Agreement. The Senior Notes contain customary events of default and covenants which are generally no more restrictive than those set forth in the Senior Credit Agreement.

As of March 31, 2021, the unused revolving credit facility totaled $426.0 million and additional permitted indebtedness under the Senior Credit Agreement subject to compliance with other covenants, was limited to $250.0 million. Additional debt or lower EBITDA may result in higher interest rates. Under the Senior Credit Agreement, interest rates are adjusted quarterly based on the prevailing LIBOR or prime rates and a ratio of the Company's outstanding debt level to EBITDA. At the Company's current debt-to-EBITDA ratio, the Senior Notes and the revolving credit facility bear variable interest rates of 4.75% and 1.36%, respectively.

Off-Balance Sheet Arrangements

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (“SPEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of March 31, 2021 and 2020, we were not involved in any material unconsolidated SPE transactions.

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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For information regarding recently issued accounting pronouncements and the expected impact on our annual statements, see Note A "SUMMARY OF FINANCIAL STATEMENT PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES" in the accompanying notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

No changes have occurred to the market risks the Company faces since information about those risks was disclosed in item 7A of the Company's 2020 Annual Report on form 10-K filed with the Securities and Exchange Commission on March 1, 2021.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

As of March 31, 2021, the Company carried out an evaluation, under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based upon the evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported within time periods specified in the Securities and Exchange Commission rules and forms and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls

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

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

The Company faces risks that could adversely affect its condition or results of operations. Many of these risks are disclosed in Item 1A of the Company's 2020 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 1, 2021. Other risks that are currently unknown to management or are currently considered immaterial or unlikely, could also adversely affect the Company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On August 5, 2014, the Board of Directors authorized the Company to repurchase up to $50.0 million of outstanding common stock. In May 2016, the Board amended the Company's common stock repurchase program increasing the amount that management may repurchase from $50.0 million to $100.0 million of outstanding common stock. In February 2018, the Board increased the authorization from $100.0 million to $150.0 million (less amounts previously repurchased). The Board's authorization does not require the Company to repurchase a specific number of shares or establish a time frame for any repurchase and the Board may terminate the repurchase program at any time. Repurchases may be made from time to time in the open market or in privately negotiated transactions. There is no expiration date for the repurchase program. There were no repurchases made during the first quarter of 2021. As of March 31, 2021, the Company had repurchased 6,592,349 shares and the maximum dollar value of shares that could then be purchased under the program was $61.3 million.

The share repurchase program has been suspended until the CARES Act, PSP Extension Law, and American Act restrictions on the repurchase of shares have lapsed. For more information, see Note H of the accompanying consolidated financial statements in this report.

On March 5, 2021, Amazon exercised warrants for 865,548 shares of the Company's common stock through a cashless exercise by forfeiting 480,047 warrants from the 2016 Investment Agreement as payment. For the cashless exchange, ATSG shares were valued at $27.27 per share, its volume-weighted average price for the previous 30 trading days immediately preceding March 5, 2021. Also on March 5, 2021, Amazon notified the Company of its intent to exercise warrants from the 2016 Investment agreement for 13,562,897 shares of the Company's common stock by paying $132.0 million of cash to the Company. This exercise was contingent upon the approval of the United States Department of Transportation, and the expiration or termination of any applicable waiting period pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976. After receiving all required regulatory approvals and clearances, Amazon remitted the funds to the Company on May 7, 2021 and the Company issued the corresponding shares of common stock, completing the warrant exercise. These funds are being used to pay down the balance of the Company's revolving credit facility. The shares were issued to Amazon without registration under the Securities Act of 1933, as amended (the “1933 Act”), pursuant to exemptions from registration under Section 4(2) of the 1933 Act and Regulation D promulgated by the Securities and Exchange Commission under the 1933 Act.

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ITEM 6. EXHIBITS

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

Exhibit No.	Description of Exhibit
	Articles of Incorporation
	Instruments defining the rights of security holders
4.1	Supplemental Indenture, dated as of April 13, 2021, among Cargo Aircraft Management, Inc., the guarantors party thereto, and Regions Bank, an Alabama state banking corporation, as trustee. (2)
	Material Contracts
10.1	Payroll Support Program Extension Agreement, dated February 2, 2021, by and between Omni Air international, LLC and the U.S. Department of Treasury under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021, filed herewith.
10.2	Amendment to Investment Agreement, dated as of March 5, 2021, by and between Air Transport Services Group, Inc., and Amazon.com, Inc., filed herewith.
10.3	Third Amended and Restated Credit Agreement, dated as of April 6, 2021, by and among Cargo Aircraft Management, Inc., as borrower, Air Transport Services Group, Inc., the lenders and other financial institutions from time to time a party thereto, Trust Bank, as administrative agent and a lender, Bank of America, N.A., JPMorgan Chase Bank, N.A., and PNC Bank, National Association, as co-syndication agents and Regions Bank, as documentation agent. (1)
	Certifications
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

____________________

(1)Incorporated by reference to the Company's Form 8-K filed with the Securities and Exchange Commission on April 6, 2021.

(2)Incorporated by reference to the Company's Form 8-K filed with the Securities and Exchange Commission on April 13, 2021.

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SIGNATURES

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

		AIR TRANSPORT SERVICES GROUP, INC.,
		a Delaware Corporation
		Registrant
		/S/  RICHARD F. CORRADO
		Richard F. Corrado
		Chief Executive Officer (Principal Executive Officer)
Date:	May 10, 2021
		/S/  QUINT O. TURNER
		Quint O. Turner
		Chief Financial Officer (Principal Financial Officer
Date:	May 10, 2021	and Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

PAYROLL SUPPORT PROGRAM EXTENSION AGREEMENT

Recipient: Omni Air International, LLC 3303 NORTH SHERIDAN ROAD, HANGAR 19 TULSA, OK 74115 PSP Participant Number: PSAP-2101110288 Employer Identification Number: 20-0605928 DUNS Number: 174112102

Additional Recipients: N/A

Amount of Initial Payroll Support Payment: $18,704,536.00

The Department of the Treasury (Treasury) hereby provides Payroll Support (as defined herein) under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021. The Signatory Entity named above, on behalf of itself and its Affiliates (as defined herein), agrees to comply with this Agreement and applicable Federal law as a condition of receiving Payroll Support. The Signatory Entity and its undersigned authorized representatives acknowledge that a materially false, fictitious, or fraudulent statement (or concealment or omission of a material fact) in connection with this Agreement may result in administrative remedies as well as civil and/or criminal penalties.

The undersigned hereby agree to the attached Payroll Support Program Extension Agreement.

/s/ David A. Lebryk Department of the Treasury Authorized Representative: David A. Lebryk Title: Fiscal Assistant Secretary Date: 02/02/2021	/s/ Shonda Fisher Omni Air International, LLC First Authorized Representative: Shonda Fisher Title: VP. Finance Date: 01.22.2021
	/s/ Jeffrey C. Crippen
	Omni Air International, LLC Second Authorized Representative: Jeffrey Crippen Title: President Date: 01.22.2021

OMB Approved No. 1505-0263

1

PAYROLL SUPPORT PROGRAM EXTENSION AGREEMENT

INTRODUCTION

Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP Extension Law) directs the Department of the Treasury (Treasury) to provide Payroll Support (as defined herein) to passenger air carriers and certain contractors that must be exclusively used for the continuation of payment of Employee Salaries, Wages, and Benefits (as defined herein). The PSP Extension Law permits Treasury to provide Payroll Support in such form, and on such terms and conditions, as the Secretary of the Treasury determines appropriate, and requires certain assurances from the Recipient (as defined herein).

This Payroll Support Program Extension Agreement, including the application and all supporting documents submitted by the Recipient and the Payroll Support Program Extension Certification attached hereto (collectively, Agreement), memorializes the binding terms and conditions applicable to the Recipient.

DEFINITIONS

As used in this Agreement, the following terms ‘shall have the following respective meanings, unless the context clearly requires otherwise. In addition, this Agreement shall be construed in a manner consistent with any public guidance Treasury may from time to time issue regarding the implementation of the PSP Extension Law.

Additional Payroll Support Payment means any disbursement of Payroll Support occurring after the first disbursement of Payroll Support under this Agreement.

Affiliate means any Person that directly or indirectly controls, is controlled by, or is under common control with, the Recipient. For purposes of this definition, “control”- of a Person shall mean having the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by ownership of voting equity, by contract, or otherwise.

Benefits means, without duplication of any amounts counted as Salary or Wages. pension expenses in respect of Employees, all expenses for accident, sickness, hospital, and death benefits to Employees, and the cost of insurance to provide such benefits; any Severance Pay or Other Benefits payable to Employees pursuant to a bona fide voluntary early retirement program or voluntary furlough; and any other similar expenses paid by the Recipient for the benefit of Employees, including any other fringe benefit expense described in lines 10 and 11 of Financial Reporting Schedule P-6, Form 41, as published by the Department of Transportation, but excluding any Federal, state, or local payroll taxes paid by the Recipient.

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Corporate Officer means, with respect to the Recipient, its president; any vice president in charge of a principal business unit, division, or function (such as sales, administration or finance); any other officer who performs a policy-making function; or any other person who performs similar policy making functions for the Recipient. Executive officers of subsidiaries or parents of the Recipient may be deemed Corporate Officers of the Recipient if they perform such policy-making functions for the Recipient.

Employee means an individual who is employed by the Recipient and whose principal place of employment is in the United States (including its territories, and possessions), including salaried, hourly, full-time, part-time, temporary, and leased employees, but excluding any individual who is a Corporate Officer or independent contractor.

Involuntary Termination or Furlough means the Recipient terminating the employment of one or more Employees or requiring one or more Employees to take a temporary suspension or unpaid leave for any reason, including a shut-down or slow-down of business; provided, however, that an Involuntary Termination or Furlough does not include a Permitted Termination or Furlough.

Maximum Awardable Amount means the amount determined by the Secretary with respect to the Recipient pursuant to section 403(a) of the PSP Extension Law,

Payroll Support means funds disbursed by the Secretary to the Recipient under this Agreement, including the first disbursement of Payroll Support and any Additional Payroll Support Payment.

PSP Extension Law means Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021.

Permitted Termination or Furlough means, with respect to an Employee, (1) a voluntary furlough, voluntary leave of absence, voluntary resignation, or voluntary retirement, (2) termination of employment resulting from such Employee’s death or disability, or (3) the Recipient terminating the employment of such Employee for cause or placing such Employee on a temporary suspension or unpaid leave of absence for disciplinary reasons, in either case, as reasonably determined by the Recipient acting in good faith.

Person means any natural person, corporation, limited liability company, partnership, joint venture, trust, business association, governmental entity, or other entity.

PSPI means the Payroll Support Program established under Division A, Title IV, Subtitle B of the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136).

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Recall means the dispatch of a notice by the Recipient, via mail, courier, or electronic mail, to an Employee who was subject to an Involuntary Termination or Furlough notifying the Employee that (1) the Employee must, within a specified period of time that is not lessthan 14 days or such other period for recall as is specified in an existing collective bargaining agreement entered into before December 27, 2020, elect either (a) to return to employment or bypass return to employment, in accordance with an applicable collective bargaining agreement or, in the absence of a collective bargaining agreement, the Recipient’s policy; or (b) to permanently separate from employment with the Recipient; and (2) failure to respond within such time period specified shall be considered an election under clause (1)(b) of this definition.

Recipient means, collectively, the Signatory Entity; its Affiliates that are listed on the signature page hereto as Additional Recipients; and their respective heirs, executors, administrators, successors, and assigns.

Returning Employee means an Employee of the Recipient who was subject to an Involuntary Termination or Furlough and who has elected to return to employment pursuant to a Recall.

Salary means, without duplication of any amounts counted as Benefits, a predetermined regular payment, typically paid on a weekly or less frequent basis but which may be expressed as an hourly, weekly, annual or other rate, as well as cost-of-living differentials, vacation time, paid time off, sick leave, and overtime pay, paid by the Recipient Ito its Employees; but excluding any Federal, state, or local payroll, taxes paid by the Recipient.

Secretary means the Secretary of the Treasury.

Severance Pay or Other Benefits means any severance payment or other similar benefits, including cash payments, health care benefits, perquisites, the enhancement or acceleration of the payment or vesting of any payment or benefit or any other in-kind benefit payable (whether ill lump sum or over time, including after October 1, 2022) by the Recipient to a Corporate Officer or Employee in connection with any termination of such Corporate Officer’s or Employee’s employment (including, without limitation, resignation, severance, retirement, or constructive termination), which shall be determined and calculated in respect of any Employee or Corporate Officer of the Recipient in the manner prescribed in 17 CFR 229.402(j) (without regard to its limitation to the five most highly compensated executives and using the actual date of termination of employment rather than the last business day of the Recipient’s last completed fiscal year as the trigger event).

Signatory Entity means the passenger air carrier or contractor that has entered into this Agreement.

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Taxpayer Protection Instruments means warrants, options, preferred stock, debt securities, notes, or other financial, instruments issued by the Recipient or an Affiliate to Treasury as compensation for the Payroll Support under this Agreement, if applicable.

Total Compensation means compensation including salary, wages, bonuses, awards of stock, and any other financial benefits provided by the Recipient or an Affiliate, as applicable, which shall be determined and calculated for the 2019 calendar year or any applicable 12-month period in respect of any Employee or Corporate Officer of the Recipient in the manner prescribed under paragraph e.6 of the award term in 2 CFR part 170, App. A, but excluding any Severance Pay or Other Benefits in connection with a termination of employment.

Wage means, without duplication of any amounts counted as Benefits, a payment, typically paid on an hourly, daily, or piecework basis, including cost-of-living differentials, vacation, paid time off, sick leave, and overtime pay, paid by the Recipient to its Employees, but excluding any Federal, state, or local payroll taxes paid by the Recipient.

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PAYROLL SUPPORT PAYMENTS

1. Upon the execution of this Agreement by Treasury and the Recipient, the Secretary shall approve the Recipient’s application for Payroll Support.

2. The Recipient may receive Payroll Support in multiple payments up to the Maximum Awardable Amount, and the amounts (individually and in the aggregate) and timing of such payments will be determined by the Secretary in his sole discretion. The Secretary may, in his sole discretion, increase or reduce the Maximum Awardable Amount (a) consistent with section 403(a) of the PSP Extension Law and (b) on a pro rata basis in order to address any shortfall in available funds, pursuant to section 403(e) of the PSP Extension Law.

The Secretary may determine in his sole discretion that any Payroll Support shall be conditioned on, and subject to, compliance by the Recipient with all applicable requirements under PSP1 if the Recipient received financial assistance in PSP1, and such additional terms and conditions (including the receipt of, and any terms regarding, Taxpayer Protection Instruments) to which the parties may agree in writing.

TERMS AND CONDITIONS

Retaining and Paying Employees

3. The Recipient shall use the Payroll Support exclusively for the continuation of payment of Wages, Salaries, and Benefits to the Employees of the Recipient, including the payment of lost Wages, Salaries, and Benefits to Returning Employees.

a. Furloughs and Layoffs. The Recipient shall not conduct an Involuntary Termination or Furlough of any Employee between the date of this Agreement and March 31, 2021.

b. Employee Salary, Wages, and Benefits

i. Salary and Wages. Except in the ease of a Permitted Termination or Furlough, the Recipient shall not, between the date of this Agreement and March 31, 2021, reduce, without the Employee’s consent, (A) the pay rate of any Employee earning a Salary, or (B) the pay rate of any Employee earning Wages.

ii. Benefits. Except in the case of a Permitted Termination or Furlough, the Recipient shall not, between the date of this Agreement and March 31, 2021, reduce, without the Employee’s consent, the Benefits of any Employee; provided, however, that for purposes of this paragraph, personnel expenses associated with the performance of work duties, including those described in line 10 of Financial Reporting Schedule P-6, Form 41, as published by the Department of Transportation, may be reduced to the extent the associated work duties are not performed.

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3.1 If the Recipient received financial assistance in PSP1, the Recipient shall:

a. Recall, not later than 72 hours after this Agreement has been executed by each party hereto, any Employees who were subject to an Involuntary Termination or Furlough between October 1, 2020, and the effective date of this Agreement, and enable each Returning Employee to return to employment within 30 days after making the election to do so;

b. compensate, not later than 30 days after a Returning Employee returns to employment, such Returning Employee for lost Salary, Wages, and Benefits (offset by any amounts received by the Returning Employee from the Recipient or an Affiliate as a result of such Returning Employee’s Involuntary Termination or Furlough, including any Severance Pay or Other Benefits or furlough pay) between December 1, 2020, and the effective date of this Agreement; and

c. restore the rights and protections for any Returning Employees as if such Returning. Employees had not been subject to an Involuntary Termination or Furlough.

3.2 If the Recipient did not receive financial assistance in PSP1, the Recipient shall:

a. Recall, not later than 72 hours after this Agreement has been executed by each party hereto, any Employees who were subject to an Involuntary Termination or Furlough between March 27, 2020, and the effective date of this Agreement, and enable each Returning Employee to return to employment within 30 days of making the election to do so;

b. compensate, not later than 30 days after a Returning Employee returns to employment, such Returning Employee for lost Salary, Wages, and Benefits (offset by any amounts received by the Returning Employee from the Recipient or an Affiliate as a result of such Returning Employee’s Involuntary Termination or Furlough, including any Severance Pay or Other Benefits or furlough pay) between December 1, 2020, and the effective date of this Agreement; and

c. restore the rights and protections for any Returning Employees as if such Returning Employees had not been subject to an Involuntary Termination or Furlough.

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Dividends and Buybacks

4. Through March 31, 2022 neither the Recipient nor any Affiliate shall, in any transaction, purchase an equity security of the Recipient or of any direct or indirect parent company of the Recipient that, in either case, is listed on a national securities exchange.

Through March 31, 2022, the Recipient shall not pay dividends, or make any other capital distributions, with respect to the common stock (or equivalent equity interest) of the Recipient.

Limitations on Certain Compensation

5. Beginning October 1, 2020, and ending October 1, 2022, the Recipient and its Affiliates shall not pay any of the Recipient’s Corporate Officers or Employees whose Total Compensation exceeded $425,000 in calendar year 2019 (other than an Employee whose compensation is determined through an existing collective bargaining agreement entered into before December 27, 2020):

a. Total Compensation which exceeds, during any 12 consecutive months of such two-year period, the Total Compensation the Corporate Officer or Employee received in calendar year 2019; or

b. Severance Pay or Other Benefits in connection with a termination of employment with the Recipient which exceed twice the maximum Total Compensation received by such Corporate Officer or Employee in calendar year 2019.

6. Beginning October 1, 2020, and ending October 1, 2022, the Recipient and its Affiliates shall not pay, during any 12 consecutive months of such two-year period, any of the Recipient’s Corporate Officers or Employees whose Total Compensation exceeded $3,000,000 in calendar year 2019 Total Compensation in excess of the sum of:

a. $3,000,000; and

b. 50 percent of the excess over $3,000,000 of the Total Compensation received by such Corporate Officer or Employee in calendar year 2019.

For purposes of determining applicable amounts under paragraphs 7 and 8 with respect to any Corporate Officer or Employee who was employed by the Recipient or an Affiliate for less than all of calendar year 2019, the amount of Total Compensation in calendar year 2019 shall mean such Corporate Officer’s or Employee’s Total Compensation on an annualized basis.

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Continuation of Service

7. If the Recipient is an air carrier, until March 1, 2022, the Recipient shall comply with any applicable requirement issued by the Secretary of Transportation under section 407) of the PSP Extension Law to maintain scheduled air transportation service to any point served by the Recipient before March 1, 2020.

Effective Date

8. This Agreement shall be effective as of the date of its execution by both parties.

Reporting and Auditing

9. Until the calendar quarter that begins after the later of October 1, 2022, and the date on which no Taxpayer Protection Instrument is outstanding, not later than 45 days after the end of each of the first three calendar quarters of each calendar year and 90 days after the end of each calendar year, the Signatory Entity, on behalf of itself and each other Recipient, shall certify to Treasury that it is in compliance with the terms and conditions of this Agreement and provide a report containing the following:

a. the amount of Payroll Support funds expended during such quarter;

b. the Recipient’s financial statements (audited by an independent certified public accountant, in the case of annual financial statements); and

c. a copy of the Recipient’s IRS Form 941 filed with respect to such quarter; and

d. a detailed summary describing, with respect to the Recipient, (a) any changes in Employee headcount during such quarter and the reasons therefor, including any Involuntary Termination or Furlough, (b) any changes in the amounts spent by the Recipient on Employee Wages, Salary, and Benefits during such quarter, and (c) any changes in Total Compensation for, and any Severance Pay or Other Benefits in connection with the termination of, Corporate Officers and Employees subject to limitation under this Agreement during such quarter; and the reasons for any such changes.

10. If the Recipient or any Affiliate, or any Corporate Officer of the Recipient or any Affiliate, becomes aware of facts, events, or circumstances that may materially affect the Recipient’s compliance with the terms and conditions of this Agreement, the Recipient or Affiliate shall promptly provide Treasury with a written description of the events or circumstances and any action taken, or contemplated, to address the issue.

11. In the event the Recipient contemplates any action to commence a bankruptcy or solvency proceeding in any jurisdiction, the Recipient shall promptly notify Treasury.

12. The Recipient shall:

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a. Promptly provide to Treasury and the Treasury Inspector General a copy of any Department of Transportation Inspector General report, audit report, or report of any other oversight body, that is received by the Recipient relating to this Agreement.

b. Immediately notify Treasury and the Treasury Inspector General of any indication of fraud, waste, abuse, or potentially criminal activity pertaining to the Payroll Support.

c. Promptly provide Treasury with any information Treasury may request relating to compliance by the Recipient and its Affiliates with this Agreement.

13. The Recipient and Affiliates will provide Treasury, the Treasury Inspector General, and such other entities as authorized by Treasury timely and unrestricted access to all documents, papers, or other records, including electronic records, of the Recipient related to the Payroll Support, to enable Treasury and the Treasury Inspector General to make audits, examinations, and otherwise evaluate the Recipient’s compliance with the terms of this Agreement. This right, also includes timely and reasonable access to the Recipient’s and its Affiliates’ personnel for the purpose of interview and discussion related to such documents. This right of access shall continue as long as records are required to be retained. In addition, the Recipient will provide timely reports as reasonably required by Treasury, the Treasury Inspector General, and such other entities as authorized by Treasury to comply with applicable law and to assess program effectiveness.

Recordkeeping and Internal Controls

14. If the Recipient is a debtor as defined under 11 U.S.C. § 101(13), the Payroll Support funds, any claim or account receivable arising under this Agreement, and any segregated account holding funds received under this Agreement shall not constitute or become property of the estate under 11 U.S.C. § 541.

15. The Recipient shall expend and account for Payroll Support funds in a manner sufficient to:

a. Permit the preparation of accurate, current, and complete quarterly reports as required under this Agreement.

b. Permit the tracing of funds to a level of expenditures adequate to establish that such funds have been used as required under this Agreement.

16. The Recipient shall establish and maintain effective internal controls over the Payroll Support; comply with all requirements related to the Payroll Support established under applicable Federal statutes and regulations; monitor compliance with Federal statutes, regulations, and the terms and conditions of this Agreement; and take prompt corrective actions in accordance with audit recommendations. The Recipient shall promptly remedy any identified instances of noncompliance with this Agreement.

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17. The Recipient and Affiliates shall retain all records pertinent to the receipt of Payroll Support and compliance with the terms and conditions of this Agreement (including by suspending any automatic deletion functions for electronic records, including e-mails) for a period of three years following the period of performance. Such records shall include all information necessary to substantiate factual representations made in the Recipient’s application for Payroll Support, including ledgers and sub-ledgers, and the Recipient’s and Affiliates’ compliance with this Agreement. While electronic storage of records (backed up as appropriate) is preferable, the Recipient and Affiliates may store records in hardcopy (paper) format. The term “records” includes all relevant financial and accounting records and all supporting documentation for the information reported on the Recipient’s quarterly reports.

18. If any litigation, claim, investigation, or audit relating to the Payroll Support is started before the expiration of the three-year period, the Recipient and Affiliates shall retain all records described in paragraph 20 until all such litigation, claims, investigations, or audit findings have been completely resolved and final judgment entered or final action taken.

Remedies

19. If Treasury believes that an instance of noncompliance by the Recipient or an Affiliate with (a) this Agreement, (b) sections 404 or 406 of the PSP Extension Law, or (c) the Internal Revenue Code of 1986 as it applies to the receipt of Payroll Support has occurred, Treasury may notify the Recipient in writing of its proposed determination of noncompliance, provide an explanation of the nature of the noncompliance, and specify a proposed remedy. Upon receipt of such notice, the Recipient shall, within seven days, accept Treasury’s proposed remedy, propose an alternative remedy, or provide information and documentation contesting Treasury’s proposed determination. Treasury shall consider any such submission by the Recipient and make a final written determination, which will state Treasury’s findings regarding noncompliance and the remedy to he imposed.

20. If Treasury makes a final determination under paragraph 22 that an instance of noncompliance has occurred, Treasury may, in its sole discretion, withhold any Additional Papua Support Payments; require the repayment of the amount of any previously disbursed Payroll Support, with appropriate interest; require additional reporting or monitoring; initiate suspension or debarment proceedings as authorized under 2 CFR Part 180; terminate this Agreement; or take any such other action as Treasury, in its sole discretion, deems appropriate.

21. Treasury may make a final determination regarding noncompliance without regard to paragraph 22 if Treasury determines, in its sole discretion, that such determination is necessary to protect a material interest of the Federal Government. In such event. Treasury shall notify the Recipient of the remedy that Treasury, in its sole discretion, shall impose, after which the Recipient may contest Treasury’s final determination or propose an alternative remedy in writing to Treasury. Following the receipt of such a submission by the Recipient, Treasury may, in its sole discretion, maintain or alter its final determination.

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22. Any final determination of noncompliance and any final determination to take any remedial action described herein shall not be subject to further review. To the extent permitted by law, the Recipient waives any right to judicial review of any such determinations and further agrees not to assert in any court any claim arising from or relating to any such determination or remedial action.

23. Instead of, or in addition to, the remedies listed Above, Treasury may refer any noncompliance or any allegations of fraud, waste, or abuse to the Treasury Inspector General.

24. Treasury, in its sole discretion, may grant any request by the Recipient for termination of this Agreement, which such request shall be in writing and shall include the reasons for such termination, the proposed effective date of the termination, and the amount of any unused Payroll Support funds the Recipient requests to return to Treasury. Treasury may, in its sole discretion, determine the extent to which the requirements under this Agreement may cease to apply following any such termination.

25. If Treasury determines that any remaining portion of the Payroll Support will not accomplish the purpose of this Agreement, Treasury may terminate this Agreement in its entirety to the extent permitted by law.

Debts

26. Any Payroll Support in excess of the amount which Treasury determines, at any time, the Recipient is authorized to receive or retain under the terms of this Agreement constitutes a debt to the Federal Government.

27. Any debts determined to be owed by the Recipient to the Federal Government shall be paid promptly by the Recipient. A debt is delinquent if it has not been paid by the date specified in Treasury’s initial written demand for payment, unless other satisfactory arrangements have been made. Interest, penalties, and administrative charges shall be charged on delinquent debts in accordance with 31 U.S.C. § 3717. 31 CFR 901.9, and paragraphs 31 and 32. Treasury will refer any debt that is more than 180 days delinquent to Treasury’s Bureau of the Fiscal Service for debt collection services.

28. Penalties on any debts shall accrue at a rate of not more than 6 percent per year or such other higher rate as authorized by law.

29. Administrative charges relating to the costs of processing and handling a delinquent debt shall be determined by Treasury.

30. The Recipient shall not use funds from other federally sponsored programs to pay a debt to the government arising under this Agreement.

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Protections for whistleblowers

31. In addition to other applicable whistleblower protections, in accordance with 41 U.S.C. § 4712, the Recipient shall not discharge, demote, or otherwise discriminate against an Employee as a reprisal for disclosing information to a Person listed below that the Employee reasonably believes is evidence of gross mismanagement of a Federal contract or grant, a gross waste of Federal funds, an abuse of authority relating to a Federal contract or grant, a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a Federal contract (including the competition for or negotiation of a contract) or grant:

a. A Member of Congress or a representative of a committee of Congress;

b. An Inspector General;

c. The Government Accountability Office;

d. A Treasury employee responsible for contract or grant oversight or management;

e. An authorized official o (-the Department of Justice or other law enforcement agency;

f. A court or grand jury; or

g. A management official or other Employee of the Recipient who has the responsibility to investigate, discover, or address misconduct.

Lobbying

32. The Recipient shall comply with the provisions of 31 U.S.C. § 1352, as amended, and with the regulations at 31 CFR Part 21.

Non-Discrimination

33. The Recipient shall comply with, and hereby assures that it will Comply with, all applicable Federal statutes and regulations relating to nondiscrimination including:

a. Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d et seq.), including Treasury’s implementing regulations at 31 CFR Part 22;

b. Section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. § 794);

c. The Age Discrimination Act of 1975, as amended (42 U.S.C. §§ 6101–6107), including Treasury’s implementing regulations at 31 CFR Part 23 and the general age discrimination regulations at 45 CFR Part 90; and

d. The Air Carrier Access Act of 1986 (49 U.S.C. § 41705).

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Additional Reporting

34. Within seven days after the date of this Agreement, the Recipient shall register in SAM.gov, and thereafter maintain the currency of the information in SAM.gov until at least October 1, 2022. The Recipient shall review and update such information at least annually after the initial registration, and more frequently if required by changes in the Recipient’s information. The Recipient agrees that this Agreement and information related thereto, including the Maximum Awardable Amount and any executive total compensation reported pursuant to paragraph 38, may be made available to the public through a U.S. Government website, including SAM.gov.

35. For purposes of paragraph 37, the Recipient shall report total compensation as defined in paragraph e.6 or the award term in 2 CFR part 170, App. A for each of the Recipient’s rive most highly compensated executives for the preceding completed fiscal year, if:

a. the total Payroll Support is $25,000 or more;

b. in the preceding Fiscal year, the Recipient received:

i. 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance, as defined at 2 CFR 170.320 (and subawards); and

ii. $25,000,000 or more in annual gross revenues From Federal procurement contracts (and subcontracts) and Federal financial assistance, as defined at 2 CFR 170.320 (and subawards); and

c. the public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. To determine if the public has access to the compensation information, the Recipient shall refer to U.S. Securities and Exchange Commission total compensation filings at http://www.see.gov/answers/execomp.htm.

36. The Recipient shall report executive total compensation described in paragraph 38:

a. as part of its registration profile at https://www.sam.gov; and

b. within five business days after the end of each month following the month in which this Agreement becomes effective, and annually thereafter.

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37. The Recipient agrees that, from time to time, it will, at its own expense, promptly upon reasonable request by Treasury, execute and deliver, or cause to be executed and delivered, or use its commercially reasonable efforts to procure, all instruments, documents and information, all in form and substance reasonably satisfactory to Treasury, to enable Treasury to ensure compliance with, or effect the purposes of, this Agreement, which may include, among other documents or information, (a) certain audited financial statements of the Recipient, (b) documentation regarding the Recipient’s revenues derived from its business as a passenger air carrier or regarding the passenger air carriers for which the Recipient provides services as a contractor (as the ease may be), and (c) the Recipient’s most recent quarterly Federal tax returns. The Recipient agrees to provide Treasury with such documents or information promptly.

38. If the total value of the Recipient’s currently active grants, cooperative agreements, and procurement contracts from all Federal awarding agencies exceeds $10,000,000 for any period before termination of this Agreement, then the Recipient shall make such reports as required by 2 CFR part 200, Appendix XII.

Other

39. The Recipient acknowledges that neither Treasury, nor any other actor, department, or agency of the Federal Government, shall condition the provision of Payroll Support on the Recipient’s implementation of measures to enter into negotiations with the certified bargaining representative of a craft or class of employees of the Recipient under the Railway Labor Act (45 U.S.C. 151 et seq.) or the National Labor Relations Act (29 U.S.C. 151 et seq.), regarding pay or other terms and conditions of employment.

40. Notwithstanding any other provision of this Agreement, the Recipient has no right to, and shall not, transfer, pledge, mortgage, encumber, or otherwise assign this Agreement or any Payroll Support provided under this Agreement, or any interest therein, or ally claim, account receivable, or funds arising thereunder or accounts holding Payroll Support, to any party, bank, trust company, or other Person without the express written approval of Treasury.

41. The Signatory Entity will cause its Affiliates to comply with all of their obligations under or relating to this Agreement.

42. Unless otherwise provided in guidance issued by Treasury or the Internal Revenue Service, the form of any Taxpayer Protection Instrument held by Treasury and any subsequent holder will be treated as such form for purposes of the Internal Revenue Code of 1986 (for example, a Taxpayer Protection Instrument in the form of a note will be treated as indebtedness for purposes of the Internal Revenue Code of 1986).

43. This Agreement may not be amended or modified except pursuant to an agreement in writing entered into by the Recipient and Treasury, except that Treasury may unilaterally amend this Agreement if required in order to comply with applicable Federal law or regulation.

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44. Subject to applicable law, Treasury may, in its sole discretion, waive any term or condition under this Agreement imposing a requirement on the Recipient or any Affiliate.

45. This Agreement shall bind and inure to the benefit of the parties and their respective heirs, executors, administrators, successors, and assigns.

46. The Recipient represents and warrants to Treasury that this Agreement, and the issuance and delivery to Treasury of the Taxpayer Protection Instruments, if applicable, have been duly authorized by all requisite corporate and, if required, stockholder action, and will not result in the violation by the Recipient of any provision of law, statute, or regulation, or of the articles of incorporation or other constitutive documents or bylaws of the Recipient, or breach or constitute an event of default under any material contract to which the Recipient is a party.

47. The Recipient represents and warrants to Treasury that this Agreement has been duly executed and delivered by the Recipient and constitutes a legal, valid, and binding obligation of the Recipient enforceable against the Recipient in accordance with its terms.

48. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which together shall constitute a single contract.

49. The words “execution,” “signed,” -signature,” and words of like import in any assignment shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. Notwithstanding anything herein to the contrary, delivery of an executed counterpart of a signature page of this Agreement by electronic means, or confirmation of the execution of this Agreement on behalf of a party by an email from an authorized signatory of such party, shall be effective as delivery of a manually executed counterpart of this Agreement.

50. The captions and paragraph headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

51. This Agreement is governed by and shall be construed in accordance with Federal law. Insofar as there may be no applicable Federal law, this Agreement shall be construed in accordance with the laws of the State of New York, without regard to any rule of conflicts of law (other than section 5-1401 of the New York General Obligations Law) that would result in the application of the substantive law of any jurisdiction other than the State of New York.

52. Nothing in this Agreement shall require any unlawful action or inaction by either party.

53. The requirement pertaining to trafficking in persons at 2 CFR 175.15(b) is incorporated herein and made applicable to the Recipient.

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54. This Agreement, together with the attachments hereto, including the Payroll Support Program Extension Certification and any attached terms regarding Taxpayer Protection Instruments, constitute the entire agreement of the parties relating to the subject matter hereof and supersede any previous agreements and understandings, oral or written, relating to the subject matter hereof. There may exist other agreements between the parties as to other matters, which are not affected by this Agreement and are not included within This integration clause.

55. No failure by either party to insist upon the strict performance of any provision or this Agreement or to exercise any right or remedy hereunder, and no acceptance of full or partial Payroll Support (if applicable) or other performance by either party during the continuance of any such breach, shall constitute a waiver of any such breach of such provision.

ATTACHMENT

Payroll Support Program Extension Certification of Corporate Officer of Recipient

17

PAYROLL SUPPORT PROGRAM EXTENSION

CERTIFICATION OF CORPORATE OFFICER OF RECIPIENT

In connection with the Payroll Support Program Extension Agreement (Agreement) between Omni Air International, LLC and the Department of the Treasury (Treasury) relating to Payroll Support being provided by Treasury to the Recipient under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021, I hereby certify under penalty of perjury to the Treasury that all of the following are true and correct. Capitalized terms used but not defined herein have the meanings set forth in the Agreement.

(1) I have the authority to make the following representations on behalf of myself and the Recipient. I understand that these representations will be relied upon as material in the decision by Treasury to provide Payroll Support to the Recipient.

(2) The information and certifications provided by the Recipient in an application for Payroll Support, and in any attachments or other information provided by the Recipient to Treasury related to the application, are true and correct and do not contain any materially false, fictitious, or fraudulent statement, nor any concealment or omission of any material fact.

(3) The Recipient has the legal authority to apply for the Payroll Support, and it has the institutional, managerial, and financial capability to comply with all obligations, terms, and conditions set forth in the Agreement and any attachment thereto.

(4) The Recipient and any Affiliate will give Treasury, Treasury’s designee or the Treasury Office of Inspector General (as applicable) access to, and opportunity to examine, all documents, papers, or other records of the Recipient or Affiliate pertinent to the provision of Payroll Support made by Treasury based on the application, in order to make audits, examinations, excerpts, and transcripts.

(5) No Federal appropriated funds, including Payroll Support, have been paid or will be paid, by or on behalf of the Recipient, to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.

(6) If the Payroll Support exceeds $100,000, the Recipient shall comply with the disclosure requirements in 31 CFR Part 21 regarding any amounts paid for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the Payroll Support.

18

I acknowledge that a materially false, fictitious, or fraudulent statement (or concealment or omission of a material fact) in this certification, or in the application that it supports, may be the subject of criminal prosecution and also may subject me and the Recipient to civil penalties and/or administrative remedies for false claims or otherwise.

/s/ Shonda Fisher	/s/ Jeffrey C. Crippen
Corporate Officer of Signatory Fund	Second Authorized Representative
Name: Shonda Fisher	Name: Jeffrey Crippen
Title: VP. Finance	Title: President
Date: 01.22.2021	Date: 01.22.2021

19

EX-10.2

Exhibit 10.2

Amendment to Investment Agreement

March 5, 2021

This Amendment, dated as of March 5, 2021 (this “Amendment”), is by and between Air Transport Services Group, Inc., a Delaware corporation (the “Company”), and Amazon.com, Inc., a Delaware corporation (“Amazon”).

Whereas, on March 8, 2016, the Company and Amazon entered into an investment agreement (as amended, the “Investment Agreement”), pursuant to the terms and conditions of which the Company issued to Amazon, and Amazon acquired from the Company (i) as of March 8, 2016, a warrant to purchase 12,810,629 shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) (subject to adjustment in accordance with its terms) (“Warrant-A”), (ii) as of March 8, 2018, a warrant to purchase 1,591,333 shares of Common Stock (subject to adjustment in accordance with its terms) (“Warrant-B-1,”) and (iii) as of September 8, 2020, a warrant to purchase 1,591,333 shares of Common Stock, as adjusted to 506,530 shares of Common Stock (subject to adjustment in accordance with its terms) (“Warrant-B-2,” and together with Warrant-A and Warrant B-1, the “Warrants”);

Whereas, on or about the date hereof, Amazon has delivered notice of its intent to exercise the Warrants in full;

Whereas, any amendment to the Investment Agreement must be made in writing and signed by a duly authorized officer of each of the Company and Amazon; and

Whereas, each of the parties wishes to amend the Investment Agreement as specifically set forth herein.

Now, Therefore, in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein, and intending to be legally bound, the parties agree as follows:

1.The Investment Agreement is hereby supplemented by adding the following as a new Section 5.13:

5.13. Sell Down Notice.

(a)    Upon approval by the Company or its Board of Directors of (i) any plan or program to repurchase shares that is publicly disclosed, or upon the recommencement of any prior approved plan or program that the Company publicly disclosed was stopped, paused or otherwise restricted (a “Program”) or (ii) a Qualifying Private Share Repurchase (as defined below), then, with respect to clause (i), no later than three (3) Business Days following the Company’s public disclosure thereof, or, with respect to clause (ii), promptly (and, in any event, within three (3) Business Days) following such approval, the Company shall deliver written notice to Amazon (a “Sell Down Notice”) which shall include (A), with respect to a Program, the maximum authorized amount (in dollars) that the Company may use to repurchase shares of Common Stock pursuant to such Program or, with respect to a Qualifying Private Share Repurchase, the number of shares to be purchased by the Company and (B) the number of shares of Common Stock outstanding. Following receipt of a Sell Down Notice, Amazon may in its discretion, by delivering written notice (a “Participation Notice”) to the Company no later than five (5) Business Days following receipt of a Sell Down Notice, elect to sell to the Company, and the Company shall purchase from Amazon or its designated Attribution Parties, the number of shares of Common Stock specified by Amazon in such notice; provided that the number of shares specified shall not exceed the applicable Maximum Participation Amount (as defined below). The Participation Notice shall include (i) the

aggregate purchase price for the number of shares of Common Stock specified therein, (ii) the price per share thereof, which price shall be equal to the Market Price as of the closing of the trading day immediately preceding the delivery of the Sell Down Notice (or, with respect to a Program, the Market Price as of the latter of the closing of the trading day on which the Program is publicly disclosed by the Company or of the closing of the trading day immediately preceding the delivery of the Sell Down Notice) and (iii) Amazon’s account instruction’s for wire transfers. Subject to its receipt of such shares, the Company shall complete the purchase of shares of Common Stock from Amazon, by wire transfer of immediate available funds to the account specified by Amazon, within five (5) Business Days of receipt of a Participation Notice. The Company shall not purchase any shares of Common Stock in connection with a Program or a Qualifying Private Share Repurchase prior to the sixth (6th) Business Day following delivery of a Sell Down Notice in respect thereof to Amazon, provided that, if Amazon timely delivers to the Company a Participation Notice in accordance with this Section 5.13(a), then the Company shall not purchase any shares pursuant to such Program or Qualifying Private Share Repurchase prior to purchasing from Amazon the shares specified in the Participation Notice.

(b)    For purposes of this Section 5.13, the following terms shall have the meanings indicated.

i.    “Maximum Participation Amount” means, with respect to the applicable Sell Down Notice and Participation Notice, a number of shares of Common Stock equal to the number of shares of Common Stock owned by Amazon as of the date of such Sell Down Notice less the number of shares equal to the product of (i) 19.5% and (ii) the difference between the number of shares of Common Stock outstanding as of the date of the Sell Down Notice and the Estimated Maximum Repurchase Amount.

ii.    “Estimated Maximum Repurchase Amount” means (A) with respect to a Sell Down Notice delivered in connection with a Program, a number of shares of Common Stock equal to (1) the maximum authorized amount (in dollars) that the Company may repurchase pursuant to a repurchase plan or program, as specified in the applicable Sell Down Notice divided by (2) the lowest market price of the Company’s Common Stock during the 26-week period immediately prior to the date of the Sell Down Notice and (B) with respect to a Sell Down Notice delivered in connection with a Qualifying Private Share Repurchase, the number of shares specified in the Sell Down Notice.

iii.    “Qualifying Private Share Repurchase” means a purchase by the Company of Common Stock, other than pursuant to a Program or of shares of Common Stock from its current or former directors or employees surrendered to cover tax liabilities under stockholder approved benefit plans, in a private sale or series of private sale transactions such that upon completion of such purchase of shares, Amazon, together with its Attribution Parties, would beneficially own a number of shares of Common Stock in excess of the Beneficial Ownership Limitation (as waived, modified or amended); provided that such Beneficial Ownership Limitation is to be calculated by substituting the number of shares of Common Stock that would be outstanding immediately following such purchase by the Company, subject to any waiver, modification or amendment of such Beneficial Ownership Limitation. The Company shall be permitted to make such determination on the basis of its stock ownership records which shall include the shares issued in connection with the exercise of the Warrants unless the Company is notified or otherwise has knowledge of a transfer of such shares.

(c)    The provisions of this Section 5.13 shall be in addition to, and not in lieu of, any other rights of Amazon.

(d)    Capitalized terms used in this Section 5.13 and not otherwise defined, shall have the meaning ascribed to such term in the Warrants, as amended.

(e)    This Section 5.13 shall terminate upon the earlier of (i) Amazon filing a Schedule 13D with respect to the Common Stock; and (ii) any purchase by Amazon of Common Stock other than (A) through the exercise of the Warrants or (B) with the consent of the Company with respect to this Section 5.13(e), except that nothing herein shall relieve any party from liability for any breach of this Section 5.13 prior to such termination.

2.    Upon the execution and delivery hereof, the Investment Agreement shall be deemed to be amended as set forth above as fully and with the same effect as if the amendments made hereby were originally set forth in the Investment Agreement, and this Amendment and the Investment Agreement shall henceforth respectively be read, taken and construed as one and the same instrument, but such amendments and/or restatements shall not operate so as to render invalid or improper any action heretofore taken under the Warrants or the Investment Agreement.

3.    This Amendment may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. Executed signature pages to this Amendment may be delivered by facsimile or transmitted electronically by “pdf” file and such facsimiles or pdf files shall be deemed as sufficient as if actual signature pages had been delivered.

4.    Except as specifically provided for in this Amendment, this Amendment shall not by implication or otherwise alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Warrants or the Investment Agreement, all of which shall continue to be in full force and effect.

5.    This Amendment shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

[Remainder of the Page Left Intentionally Blank]

 

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by the

duly authorized officers of the parties as of the date first herein above written.

Air Transport Services Group, Inc.

By:    /s/ W. Joseph Payne

Name:    W. Joseph Payne

Title:    Chief Legal Officer & Sec.

Amazon.com, Inc.

By:     /s/ Alex Ceballos Encarnacion

Name:    Alex Ceballos Encarnacion

Title:    Authorized Signatory

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard F. Corrado, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 10, 2021

/s/ RICHARD F. CORRADO

Richard F. Corrado

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Quint O. Turner, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 10, 2021

/s/ QUINT O. TURNER

Quint O. Turner

Chief Financial Officer
(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Air Transport Services Group, Inc. (the “Company”) on Form 10-Q for the quarter ending March 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard F. Corrado, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as enacted by § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

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

/S/ RICHARD F. CORRADO

Richard F. Corrado
Chief Executive Officer

Date: May 10, 2021

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Air Transport Services Group, Inc. (the “Company”) on Form 10-Q for the quarter ending March 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Quint O. Turner, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as enacted by § 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

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

/s/ QUINT O. TURNER

Quint O. Turner
Chief Financial Officer

Date: May 10, 2021

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2021	May 10, 2021
Cover [Abstract]
Document Type	10-Q
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	000-50368
Entity Registrant Name	Air Transport Services Group, Inc.
Entity Central Index Key	0000894081
Current Fiscal Year End Date	--03-31
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	FY
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-1631624
Entity Address, Address Line One	145 Hunter Drive
Entity Address, City or Town	Wilmington
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	45177
City Area Code	937
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Local Phone Number	382-5591
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	ATSG
Entity Common Stock, Shares Outstanding		74,202,989
Document Quarterly Report	true
Document Information [Line Items]
Document Period End Date	Mar. 31, 2021

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
CURRENT ASSETS:
Cash, cash equivalents and restricted cash	$ 51,659	$ 39,719
Accounts receivable, net of allowance of $1,005 in 2021 and $997 in 2020	155,115	153,511
Inventory	43,051	40,410
Prepaid supplies and other	35,352	39,096
TOTAL CURRENT ASSETS	285,177	272,736
Property and equipment, net	1,987,082	1,939,776
Lease incentive	120,308	126,007
Other assets	77,554
Goodwill and acquired intangibles	513,646	516,290
Operating lease assets	63,946	68,824
Intangibles		120,316
Goodwill		395,974
TOTAL ASSETS	3,047,713	3,001,745
CURRENT LIABILITIES:
Accounts payable	146,112	141,425
Accrued salaries, wages and benefits	46,157	56,506
Accrued expenses	17,505	19,005
Current portion of debt obligations	619	13,746
Current portion of lease obligations	16,781	17,784
Unearned revenue and grants	50,458	53,522
TOTAL CURRENT LIABILITIES	277,632	301,988
Long term debt	1,497,211	1,465,331
Post-retirement obligations	30,057	35,099
Long term lease obligations	47,317	51,128
Other liabilities	44,970	47,963
Stock Warrants	96,536	103,474
Deferred income taxes	154,252	141,265
TOTAL LIABILITIES	2,147,975	2,146,248
Commitments and contingencies (Note H)
STOCKHOLDERS’ EQUITY:
Preferred stock, 20,000,000 shares authorized, including 75,000 Series A Junior Participating Preferred Stock	0	0
Common stock, par value $0.01 per share; 150,000,000 shares authorized; 60,641,436 and 59,560,036 shares issued and outstanding in 2021 and 2020, respectively	606	596
Additional paid-in capital	856,090	855,547
Retained earnings	120,300	78,010
Accumulated other comprehensive loss	(77,258)	(78,656)
TOTAL STOCKHOLDERS’ EQUITY	899,738	855,497
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 3,047,713	$ 3,001,745

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Assets, Current [Abstract]
Allowance for doubtful accounts	$ 1,005	$ 997
Stockholders' Equity Attributable to Parent [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	150,000,000	150,000,000
Common stock, shares issued (in shares)	60,641,436	59,560,036
Common stock, shares outstanding (in shares)	60,641,436	59,560,036
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

XML

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
REVENUES	$ 376,088	$ 389,277
OPERATING EXPENSES
Salaries, wages and benefits	142,016	125,531
Fuel	30,442	43,799
Maintenance, materials and repairs	42,007	41,677
Depreciation and amortization	71,051	69,342
Travel	18,404	21,657
Contracted ground and aviation services	14,803	14,349
Rent	5,868	3,486
Landing and ramp	3,109	2,745
Insurance	3,136	1,668
Other operating expenses	16,423	15,216
government grants continuing operations	(28,030)	0
Operating Expenses	319,229	339,470
OPERATING INCOME	56,859	49,807
OTHER INCOME (EXPENSE)
Interest income	19	112
Non-service component of retiree benefit costs	4,457	2,898
Non-service component of retiree benefit gains	(14,522)	(16,323)
Net gain on financial instruments	9,472	107,044
Other Nonoperating Income (Expense)	(1,757)	90,967
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	55,102	140,774
INCOME TAX EXPENSE		(7,041)
EARNINGS FROM CONTINUING OPERATIONS	42,290	133,733
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES	0	3,772
NET EARNINGS	$ 42,290	$ 137,505
BASIC EARNINGS PER SHARE
Basic earnings per share from continuing operations (in dollars per share)	$ 0.71	$ 2.27
Discontinued operations (in dollars per share)	0	0.06
TOTAL BASIC EARNINGS PER SHARE (in dollars per share)	0.71	2.33
DILUTED EARNINGS PER SHARE
Diluted earnings per share from continuing operations (in dollars per share)	0.49	0.84
Discontinued operations (in dollars per share)	$ 0	$ 0.06
WEIGHTED AVERAGE SHARES
Basic (in shares)	59,447	59,040
Diluted (in shares)	74,744	67,947

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
NET EARNINGS	$ 42,290	$ 137,505
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	0	0
OTHER COMPREHENSIVE INCOME (LOSS):
TOTAL COMPREHENSIVE INCOME, net of tax	43,688	138,255
Pension Plans [Member]
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	1,362	726
OTHER COMPREHENSIVE INCOME (LOSS):
Income tax (expense) or benefit	(402)	(215)
Post-Retirement Plans [Member]
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	36	24
OTHER COMPREHENSIVE INCOME (LOSS):
Income tax (expense) or benefit	$ (11)	$ (7)

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Write off of Deferred Debt Issuance Cost	$ 1,183	$ 2,764
Withholding taxes paid for conversion of employee stock awards	1,197	1,115
OPERATING ACTIVITIES:
Net earnings from continuing operations	42,290	133,733
Net earnings from discontinued operations	0	3,772
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	79,719	77,001
Pension and post-retirement	1,811	972
Deferred income taxes	12,575	7,947
Amortization of stock-based compensation	1,750	1,821
Net gain on financial instruments	(2,500)	10,900
Changes in assets and liabilities:
Accounts receivable	(1,604)	(4,123)
Inventory and prepaid supplies	751	(4,543)
Accounts payable	18,314	6,169
Unearned revenue	(3,687)	3,604
Accrued expenses, salaries, wages, benefits and other liabilities	(11,696)	(17,742)
Pension and post-retirement balances	(7,412)	(5,483)
Other	(75)	186
NET CASH PROVIDED BY OPERATING ACTIVITIES	124,447	99,034
INVESTING ACTIVITIES:
Expenditures for property and equipment	(125,441)	(143,495)
Proceeds from property and equipment	44	32
Investment in nonconsolidated affiliate	(1,697)	(3,049)
NET CASH USED IN INVESTING ACTIVITIES	(127,094)	(146,512)
FINANCING ACTIVITIES:
Principal payments on long term obligations	(124,065)	(499,064)
Proceeds from borrowings	140,000	80,000
Payments for financing costs	(151)	(7,481)
Proceeds from Issuance of Unsecured Debt	0	500,000
NET CASH PROVIDED BY FINANCING ACTIVITIES	14,587	72,340
NET INCREASE IN CASH AND CASH EQUIVALENTS	11,940	24,862
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	39,719	46,201
CASH AND CASH EQUIVALENTS AT END OF PERIOD	51,659	71,063
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of amount capitalized	16,582	8,864
Federal and state income taxes paid	123	48
SUPPLEMENTAL NON-CASH INFORMATION:
Accrued expenditures for property and equipment	24,253	27,914
Net (gain) loss on financial instruments	$ 9,472	$ 107,044

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Consolidated Statements of Stockholders' Equity - 3 months ended Mar. 31, 2020 - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance at at Dec. 31, 2019	$ 460,342	$ 593	$ 475,720	$ 45,895	$ (61,866)
Balance at (in shares) at Dec. 31, 2019		59,329,431
Stock-based compensation plans
Stock Issued During Period, Value, Restricted Stock Award, Gross	0	$ 2	(2)
Grant of restricted stock (in shares)		200,500
Issuance of common shares, net of withholdings	(1,115)	$ 1	(1,116)
Issuance of common shares, net of withholdings (in shares)		93,264
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	1,821		1,821
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	138,255			137,505
Balance at at Mar. 31, 2020	$ 599,303	$ 596	$ 476,423	$ 183,400	$ (61,116)
Balance at (in shares) at Mar. 31, 2020		59,623,195

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Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2021

Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) includes the following items by components for the three month periods ending March 31, 2021 and 2020 (in thousands):

	Defined Benefit Pension	Defined Benefit Post-Retirement	Foreign Currency Translation	Total
Balance as of January 1, 2020	(61,152)	(702)	(12)	(61,866)
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	941	31	—	972
Income Tax (Expense) or Benefit	(215)	(7)	—	(222)
Other comprehensive income, net of tax	726	24	—	750
Balance as of March 31, 2020	(60,426)	(678)	(12)	(61,116)
Balance as of January 1, 2021	(78,093)	(549)	(14)	(78,656)
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	1,764	47	—	1,811
Income Tax (Expense) or Benefit	(402)	(11)	—	(413)
Other comprehensive income, net of tax	1,362	36	—	1,398
Balance as of March 31, 2021	(76,731)	(513)	(14)	(77,258)

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Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2021

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, 2021 and 2020 (in thousands):

	Defined Benefit Pension	Defined Benefit Post-Retirement	Foreign Currency Translation	Total
Balance as of January 1, 2020	(61,152)	(702)	(12)	(61,866)
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	941	31	—	972
Income Tax (Expense) or Benefit	(215)	(7)	—	(222)
Other comprehensive income, net of tax	726	24	—	750
Balance as of March 31, 2020	(60,426)	(678)	(12)	(61,116)
Balance as of January 1, 2021	(78,093)	(549)	(14)	(78,656)
Amounts reclassified from accumulated other comprehensive income:
Actuarial costs (reclassified to salaries, wages and benefits)	1,764	47	—	1,811
Income Tax (Expense) or Benefit	(402)	(11)	—	(413)
Other comprehensive income, net of tax	1,362	36	—	1,398
Balance as of March 31, 2021	(76,731)	(513)	(14)	(77,258)

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Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020	Dec. 31, 2019
Schedule of Accumulated Other Comprehensive Income [Line Items]
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	$ (14)	$ (12)	$ (14)	$ (12)
Accumulated other comprehensive income (loss), beginning balance	(78,656)	(61,866)
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax	1,811	972
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax	0	0
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent		750
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	0	0
Accumulated other comprehensive income (loss), ending balance	(77,258)	(61,116)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	43,688	138,255
Other Comprehensive Income (Loss), Tax	(413)	(222)
Common stock, shares outstanding (in shares)			59,560,036
Stockholders' Equity Attributable to Parent		599,303	$ 855,497	460,342
Stock Issued During Period, Value, Restricted Stock Award, Gross	0	0
Issuance of common shares, net of withholdings		(1,115)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	1,750	1,821
NET EARNINGS	42,290	137,505
Stock Issued During Period, Value, Share-based Compensation, Withholdings of Common Shares, Net of Issuances	(1,197)
reclassification of liability to equity	0
Amazon Warrant AB and C
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
reclassification of liability to equity	(9)
Accumulated Other Comprehensive Income (Loss) [Member]
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	$ 1,398
Stockholders' Equity Attributable to Parent		$ (61,116)		$ (61,866)
Common Stock [Member]
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Common stock, shares outstanding (in shares)		59,623,195		59,329,431
Stockholders' Equity Attributable to Parent		$ 596		$ 593
Grant of restricted stock (in shares)	122,100	200,500
Stock Issued During Period, Value, Restricted Stock Award, Gross	$ 1	$ 2
Issuance of common shares, net of withholdings (in shares)		93,264
Issuance of common shares, net of withholdings		$ 1
Withholdings of common shares, net of issuances (in shares)	93,752
Stock Issued During Period, Value, Share-based Compensation, Withholdings of Common Shares, Net of Issuances	$ 0
Additional Paid-in Capital [Member]
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Stockholders' Equity Attributable to Parent		476,423		475,720
Stock Issued During Period, Value, Restricted Stock Award, Gross	(1)	(2)
Issuance of common shares, net of withholdings		(1,116)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	1,750	1,821
Stock Issued During Period, Value, Share-based Compensation, Withholdings of Common Shares, Net of Issuances	(1,197)
Accumulated Deficit [Member]
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	42,290	137,505
Stockholders' Equity Attributable to Parent		183,400		$ 45,895
Pension Plans [Member]
Schedule of Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income (loss), beginning balance	(78,093)	(61,152)
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax	1,764	941
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, Tax	(402)	(215)
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	1,362	726
Accumulated other comprehensive income (loss), ending balance	(76,731)	(60,426)
Post-Retirement Plans [Member]
Schedule of Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income (loss), beginning balance	(549)	(702)
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax	47	31
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, Tax	(11)	(7)
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	36	24
Accumulated other comprehensive income (loss), ending balance	$ (513)	$ (678)

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Summary of Financial Statement Preparation and Significant Accounting Policies

3 Months Ended

Mar. 31, 2021

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 subsidiaries lease aircraft, provide contracted airline operations, ground services, aircraft modification and maintenance services and other support services mainly to the air transportation, e-commerce and package delivery industries. The Company's subsidiaries offer 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 Company's airlines, ABX Air, Inc. (“ABX”), Air Transport International, Inc. (“ATI”) and Omni Air International, LLC ("OAI" ) each have the authority, through their separate U.S. Department of Transportation ("DOT") and Federal Aviation Administration ("FAA") certificates, to transport cargo worldwide. Additionally, both ATI and OAI each have the authority to conduct passenger charter operations worldwide. The Company provides air transportation services to a concentrated base of customers. The Company provides a combination of aircraft, crews, maintenance and insurance services for a customer's transportation network through customer "CMI" and "ACMI" agreements and through charter contracts in which aircraft fuel is also included. In addition to its aircraft leasing and airline services, the Company sells aircraft parts, provides aircraft maintenance and modification services, sells and services material handling equipment and arranges load transfer and package sorting services for customers.

Basis of Presentation

The financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The accompanying unaudited condensed interim consolidated financial statements are prepared in conformity with GAAP 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, 2020 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 air cargo 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 the 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. Inter-company balances and transactions are eliminated. Investments in affiliates in which the Company has significant influence but does not exercise control are accounted for using the equity method of accounting. Under 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. Investments in affiliates in which the Company does not exercise control or have significant influence are reflected at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

COVID-19 Uncertainties

The COVID-19 pandemic has had an impact on the Company's operations and financial results. Beginning in late February 2020, revenues have been disrupted when customers cancelled scheduled passenger flights and aircraft maintenance services, airport restrictions and closures were imposed, and the Company began to incur additional costs, including expenses to protect employees.

The extent of the impact that the pandemic will have on future financial and operational results will depend on developments, including recurrence of the COVID-19 virus and its variants; the duration and scope of government orders and restrictions; the availability and effectiveness of vaccines on the virus and the extent of the pandemic on overall economic conditions. These are highly uncertain. Disruptions to the Company's operations, such as shortages of personnel, shortages of parts, maintenance delays, shortages of transportation and hotel accommodations for flight crews, facility closures and other issues may be caused by the pandemic. If the pandemic persists or reemerges, operating cash flows could decline significantly and the value of airframes, engines and certain intangible assets could decline significantly.

The pandemic has not had a significant adverse financial impact on the Company's leasing operations or its airline operations for customers' freight networks. However, the Company's passenger flight operations have been and continue to be, impacted by the pandemic. The Company has received government funding pursuant to payroll support programs of the federal government as described in Note H. Management believes that the Company's current cash balances and forecasted cash flows provided from its customer leases and operating agreements and government grants combined with its Senior Credit Agreement, will be sufficient to fund operations, capital spending and scheduled debt payments for at least the next 12 months.

Accounting Standards Updates

In August 2020, the FASB issued ASU No. 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" ("ASU 2020-06"). This new standard changes the accounting and measurement of convertible instruments. It eliminates the treasury stock method for convertible instruments and requires application of the “if-converted” method for certain agreements. This standard is effective for the Company beginning January 1, 2022. The Company is currently evaluating the impact of adopting ASU 2020-06 on its interest expense and earnings (loss) per share calculation under the "if-converted" method related to its convertible debt.

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Significant Customers

3 Months Ended

Mar. 31, 2021

Significant Customers [Abstract]

Significant Customers

SIGNIFICANT CUSTOMERS

Three customers each account for a significant portion of the Company's consolidated revenues. The percentage of the Company's revenues for the Company's three largest customers, for the three month periods ending March 31, 2021 and 2020 are as follows:

	Three Months Ended
	March 31,
	2021	2020
Customer	Percentage of Revenue
DoD	22%	30%
Amazon	35%	29%
DHL	14%	11%

The accounts receivable from the Company's three largest customers as of March 31, 2021 and December 31, 2020 are as follows (in thousands):

	March 31,		December 31,
	2021		2020
Customer	Accounts Receivable
DoD	$	31,204	$	32,625
Amazon	58,132		55,997
DHL	11,601		10,471

DoD

The Company is a provider of cargo and passenger airlift services to the United States Department of Defense ("DoD"). The DoD awards flights to U.S. certificated airlines through annual contracts and through temporary "expansion" routes.

Amazon

The Company has been providing freighter aircraft and services for cargo handling and logistical support for Amazon.com Services, LLC ("ASI"), successor to Amazon.com Services, Inc., 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 ASI, pursuant to which CAM leases Boeing 767 freighter aircraft to ASI. The ATSA also provides for the operation of aircraft by the Company’s airline subsidiaries, and the management of ground services by the Company's subsidiary LGSTX Services Inc. ("LGSTX"). The aircraft leases have terms which expire between March of 2023 and March of 2031.

DHL

The Company has had long term contracts with DHL Network Operations (USA), Inc. and its affiliates ("DHL") since August 2003. The Company leases Boeing 767 aircraft to DHL under both long-term and short-term lease agreements. Under a separate crew, maintenance and insurance (“CMI”) agreement, the Company operates Boeing 767 aircraft that DHL leases from the Company. 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 additional air cargo transportation services for DHL through 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.

Amazon Investment Agreement

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 provided for the Company to issue warrants in three tranches which granted Amazon the right to acquire up to 19.9% of the Company’s outstanding common shares. The first tranche of warrants, issued upon the execution of the Investment Agreement granted Amazon the right to purchase approximately 12.81 million ATSG common shares, with the first 7.69 million common shares vesting upon issuance on March 8, 2016, and the remaining 5.12 million common shares vesting as the Company delivered additional aircraft leased under the ATSA. The second tranche of warrants, which were issued and vested on March 8, 2018, granted Amazon the right to purchase approximately 1.59 million ATSG common shares. The third tranche of warrants vested on September 8, 2020, and granted Amazon the right to purchase an additional 0.5 million ATSG common shares to bring Amazon’s ownership potential, after the exercise in full of the three tranches of warrants, 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 2016 Investment Agreement and after giving effect to the warrants granted. The exercise price of the 14.9 million warrants issued under the 2016 Investment Agreement was $9.73 per share, which represents the closing price of ATSG’s common shares on February 9, 2016. Theses warrants had an expiration date of March 8, 2021 subject to extension if regulatory approvals, exemptions, authorizations, consents or clearances had not been obtained by such date.

On March 5, 2021, Amazon exercised warrants for 865,548 shares of the Company's common stock through a cashless exercise by forfeiting 480,047 warrants from the 2016 Investment Agreement as payment. For the cashless exchange, ATSG shares were valued at $27.27 per share, its volume-weighted average price for the previous 30 trading days immediately preceding March 5, 2021. Also on March 5, 2021, Amazon notified the Company of its intent to exercise warrants from the 2016 Investment agreement for 13,562,897 shares of the Company's common stock by paying $132.0 million of cash to the Company. This exercise was contingent upon the approval of the United States Department of Transportation, and the expiration or termination of any applicable waiting period pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976. After receiving all required regulatory approvals and clearances, Amazon remitted the funds to the Company on May 7, 2021 and the Company issued the corresponding shares of common stock, completing the warrant exercise.

On December 22, 2018 the Company announced agreements with Amazon to 1) lease and operate ten additional Boeing 767-300 aircraft for ASI, 2) extend the term of the 12 Boeing 767-200 aircraft currently leased to ASI by two years to 2023 with an option for three more years, 3) extend the term of the eight Boeing 767-300 aircraft currently leased to ASI by three years to 2026 and 2027 with an option for three more years and 4) extend the ATSA by five years through March 2026, with an option to extend for an additional three years. The Company leased all ten of the 767-300 aircraft in 2020. In conjunction with the commitment for ten additional 767 aircraft leases, extensions of twenty existing Boeing 767 aircraft leases and the ATSA described above, Amazon and the Company entered into another Investment Agreement on December 20, 2018. Pursuant to the 2018 Investment Agreement, Amazon was issued additional warrants for 14.8 million common shares. This group of warrants will expire if not exercised within seven years from their issuance date, in December of 2025, (subject to extension if regulatory approvals, exemptions, authorizations, consents or clearances have not been obtained by such date). They have an exercise price of $21.53 per share.

On May 29, 2020, Amazon agreed to lease twelve more Boeing 767-300 aircraft from the Company. The first of these leases began in the second quarter of 2020, four more leases began in the first quarter of 2021 with the remaining seven to be delivered in 2021. All twelve of these aircraft leases will be for ten year terms. Pursuant to the 2018 Investment Agreement, as a result of leasing 12 aircraft, Amazon was issued warrants for 7.0 million common shares of which 2.9 million common shares have vested. These warrants will expire if not exercised by December 20, 2025 (subject to extension if regulatory approvals, exemptions, authorizations, consents or clearances have not been obtained by such date). The exercise price of these warrants is $20.40 per share.

Issued and outstanding warrants are summarized below as of May 10, 2021:

			Common Shares in millions
	Lease Commitment	Exercise price	Vested	Non-Vested	Expiration
2018 Investment Agreement	10 aircraft	$21.53	14.8	0.0	December 20, 2025
2018 Investment Agreement	12 aircraft	$20.40	2.9	4.1	December 20, 2025

Additionally, Amazon can earn incremental warrant rights for up to 2.9 million common shares under the 2018 Investment Agreement by leasing up to five more cargo aircraft from the Company before January 2026. Incremental warrants granted for Amazon’s commitment to any such future aircraft leases will have an exercise price based on the volume-weighted average price of the Company's shares during the 30 trading days immediately preceding the contractual commitment for each lease.

For all outstanding warrants vested, Amazon may select a cashless conversion option. Assuming ATSG’s stock price at the time of conversion is above the warrant exercise price, Amazon would receive fewer shares in exchange for any warrants exercised under the cashless option by surrendering the number of shares with a market value equal to the exercise value.

The Company’s accounting for the warrants has been determined in accordance with the financial reporting guidance for financial instruments. Warrants classified as liabilities are marked to fair value at the end of each reporting period. The value of warrants is recorded as a customer incentive asset if it is probable of vesting at the time of grant and further changes in the fair value of warrant obligations are recorded to earnings. Upon a warrant

vesting event, the customer incentive asset is amortized as a reduction of revenue over the duration of the related revenue contract.

In accordance with the 2016 Investment Agreement, on September 8, 2020, the final number of shares issuable under the third tranche of warrants was determined to be 0.5 million common shares. As a result, under US GAAP, the value of the entire warrant grant under the 2016 Investment Agreement was remeasured on September 8, 2020, and their fair value of $221 million was reclassified from balance sheet liabilities to paid-in-capital. In October 2020 upon the execution of the 10th and final aircraft lease of the December 2018 commitment, warrants for 14.8 million shares from the 2018 Investment Agreement were vested. As a result, under US GAAP, the value of this entire grant was remeasured on October 1, 2020, and their fair value of $154 million was reclassified from balance sheet liabilities to paid-in-capital.

As of March 31, 2021, the Company's liabilities reflected warrants primarily from the 2018 Investment agreement for the May 2020 lease commitment, having a fair value of $96.5 million. During the three months ending March 31, 2021 and 2020 the re-measurements of warrants to fair value resulted in a net non-operating gains of $6.9 million and $118.0 million before the effect of income taxes, respectively.

The Company's earnings in future periods will be impacted by 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.

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Goodwill and Other Intangibles

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangibles

GOODWILL, INTANGIBLES AND EQUITY INVESTMENTS

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

	CAM		ACMI Services		All Other		Total
Carrying value as of December 31, 2020	153,290		234,571		$	8,113	$	395,974
Carrying value as of March 31, 2021	$	153,290	$	234,571	$	8,113	$	395,974

The Company's acquired intangible assets are as follows (in thousands):

	Airline		Amortizing
	Certificates		Intangibles		Total
Carrying value as of December 31, 2020	$	9,000	$	111,316	$	120,316
Amortization	—		(2,644)		(2,644)
Carrying value as of March 31, 2021	$	9,000	$	108,672	$	117,672

The airline certificates have an indefinite life and therefore are not amortized. The Company amortizes finite-lived intangibles assets, including customer relationship and Supplemental Type Certificates ("STC") intangibles, over 5 to 18 remaining years.

Stock warrants issued to a lessee (see Note C) as an incentive are recorded as a lease incentive asset using their fair value at the time that the lessee has met its performance obligations and if probable of vesting at the time of issuance, 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):

	Lease
	Incentive
Carrying value as of December 31, 2020	$	126,007
Amortization	(5,699)
Carrying value as of March 31, 2021	$	120,308

In January 2014, the Company acquired a 25 percent equity interest in West Atlantic AB of Gothenburg, Sweden ("West"). West, through its two airlines, West Atlantic UK and West Atlantic Sweden, 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. In April 2019, West issued additional shares to a new investor in conjunction with a capital investment and purchase agreement which reduced the Company's ownership to approximately 10% and reduced the Company's influence over West. In 2020, the Company sold its remaining interest to the same investor.

On August 3, 2017 the Company entered into a joint-venture agreement with Precision Aircraft Solutions, LLC, to develop a passenger-to-freighter conversion program for Airbus A321-200 aircraft. Approval of a supplemental type certificate from the FAA was granted in April 2021 and aircraft conversions are expected to begin in 2021. The Company expects to make contributions equal to its 49% ownership percentage of the joint-venture's liquidity needs. During the first three months of 2021 and 2020, the Company contributed $1.7 million and $3.0 million to the joint venture, respectively. The Company accounts for its investment in the aircraft conversion joint venture under the equity method of accounting, in which the carrying value of each investment is reduced for the Company's share of the non-consolidated affiliates operating results.

The carrying value of the joint venture is reflected in “Other Assets” in the Company’s consolidated balance sheets. The Company monitors its investments in affiliates for indicators of other-than-temporary declines in value on an ongoing basis in accordance with GAAP. If the Company determines that an other-than-temporary decline in value has occurred, it recognizes an impairment loss, which is measured as the difference between the recorded carrying value and the fair value of the investment. The fair value is generally determined using an income approach based on discounted cash flows or using negotiated transaction values.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2021

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 comparable transactions. The fair value of the Company’s money market funds, convertible note, convertible note hedges and interest rate swaps are based on observable inputs (Level 2) from comparable market transactions.

The fair value of the stock warrant obligations resulting from aircraft leased to Amazon were determined using a Black-Scholes pricing model which considers various assumptions, including the Company’s common stock price, the volatility of the Company’s common stock, the expected dividend yield, exercise price and the risk-free interest rate (Level 2 inputs). The fair value of the stock warrant obligations for unvested stock warrants, conditionally granted to Amazon for the execution of incremental, future aircraft leases, include additional assumptions including the expected exercise prices and the probabilities that future leases will occur (Level 3 inputs).

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

As of March 31, 2021	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Assets
Cash equivalents—money market	$	—	$	40	$	—	$	40
Total Assets	$	—	$	40	$	—	$	40
Liabilities
Interest rate swap	$	—	$	(10,880)	$	—	$	(10,880)
Stock warrant obligations	—		—		(96,536)		(96,536)
Total Liabilities	$	—	$	(10,880)	$	(96,536)	$	(107,416)

As of December 31, 2020	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Assets
Cash equivalents—money market	$	—	$	20,389	$	—	$	20,389
Total Assets	$	—	$	20,389	$	—	$	20,389
Liabilities
Interest rate swap	$	—	$	(13,414)	$	—	$	(13,414)
Stock warrant obligation	—		(9,058)		(94,416)		(103,474)
Total Liabilities	$	—	$	(22,472)	$	(94,416)	$	(116,888)

As a result of lower market interest rates compared to the stated interest rates of the Company’s fixed rate debt obligations, the fair value of the Company’s debt obligations, based on Level 2 observable inputs, was approximately $48.2 million more than the carrying value, which was $1,497.8 million at March 31, 2021. As of December 31, 2020, the fair value of the Company’s debt obligations was approximately $70.8 million less than the carrying value, which was $1,479.1 million. The non-financial assets, including goodwill, intangible assets and property and equipment are measured at fair value on a non-recurring basis.

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Property and Equipment

3 Months Ended

Mar. 31, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

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

	March 31,		December 31,
	2021		2020
Flight equipment	$	2,985,850	$	2,856,142
Ground equipment	67,332		65,857
Leasehold improvements, facilities and office equipment	37,283		36,193
Aircraft modifications and projects in progress	206,977		231,451
	3,297,442		3,189,643
Accumulated depreciation	(1,310,360)		(1,249,867)
Property and equipment, net	$	1,987,082	$	1,939,776

CAM owned aircraft with a carrying value of $1,208.9 million and $1,097.6 million that were under lease to external customers as of March 31, 2021 and December 31, 2020, respectively.

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

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Debt Obligations

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Debt Obligations

DEBT OBLIGATIONS

Debt obligations consisted of the following (in thousands):

	March 31,		December 31,
	2021		2020
Unsubordinated term loans	$	608,568	$	612,169
Revolving credit facility	160,000		140,000
Senior Notes	493,543		493,376
Convertible debt	224,674		222,391
Other financing arrangements	11,045		11,141
Total debt obligations	1,497,830		1,479,077
Less: current portion	(619)		(13,746)
Total long term obligations, net	$	1,497,211	$	1,465,331

The Company utilizes a syndicated credit agreement ("Senior Credit Agreement") which, as of March 31, 2021, included unsubordinated term loans and a revolving credit facility. Prior to its amendment on April 6, 2021, the Senior Credit Agreement had a maturity date of November 2024 provided certain liquidity measures are maintained during 2024, an incremental accordion capacity based on debt ratios, and a maximum revolver capacity of $600.0 million. The interest rate is a pricing premium added to LIBOR based upon the the Company's debt to its earnings before interest, taxes, depreciation and amortization expenses ("EBITDA") as defined under the Senior Credit Agreement. As of March 31, 2021, the unused revolving credit facility available to the Company at the trailing twelve month EBITDA level was $426.0 million, and additional permitted indebtedness under the Senior Credit Agreement subject to compliance with other covenants, was limited to $250.0 million.

On January 28, 2020, the Company, through a subsidiary, completed a debt offering of $500.0 million in senior unsecured notes (the “Senior Notes”). The Senior Notes were sold only to qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and certain investors pursuant to Regulation S under the Securities Act. The Senior Notes are senior unsecured obligations that bear interest at a rate of 4.75% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2020. The Senior Notes will mature on February 1, 2028. The Senior Notes contain customary events of default and certain covenants which are generally no more restrictive than those set forth in the Senior Credit Agreement. The net proceeds of $495.0 million from the Senior Notes were used to pay down the revolving credit facility. The Senior Notes do not require principal payments until maturity but prepayments are allowed without penalty beginning February 1, 2025.

The balance of the unsubordinated term loan is net of debt issuance costs of $6.6 million and $7.0 million as of March 31, 2021 and December 31, 2020, respectively. The balance of the Senior Notes is net of debt issuance costs of $6.5 million and $6.6 million as of March 31, 2021 and December 31, 2020, respectively. Under the terms of the Senior Credit Agreement, interest rates are adjusted at least quarterly based on the Company's 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 variable interest rates of 1.36% and 1.36%, respectively. The Senior Notes bear a fixed rate of 4.75%.

The Senior Credit Agreement is collateralized by certain of the Company's Boeing 777, 767 and 757 aircraft. Under the terms of the Senior Credit Agreement, the Company is required to maintain certain collateral coverage ratios set forth in 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 $100.0 million during any calendar year, provided the Company's total debt to EBITDA ratio is under 3.50 times and the secured debt to EBITDA ratio is under 3.0 times, after giving effect to the dividend or repurchase. The Senior Credit Agreement contains covenants, including a maximum permitted total EBITDA to debt ratio, a fixed charge covenant ratio requirement, limitations on certain additional indebtedness, and on guarantees of indebtedness. 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.

On April 6, 2021, the Company amended the Senior Credit Agreement ("Amended Credit Agreement"). The Amended Credit Agreement: (i) increased the aggregate amount of the revolving credit facility from $600 million to $1 billion temporarily, and subsequently to $800 million on April 13, 2021, (ii) permits increases of the revolving credit facility commitments and/or new tranches of terms loans in an aggregate principal amount equal to the sum of $400 million plus the principal amount of indebtedness that could be incurred at the time of the increase that would not cause the Secured Leverage Ratio (as defined in the Amended Credit Agreement) to exceed 3.25 to 1.00 on a pro forma basis, (iii) modified the maturity date of the agreement from November 30, 2024, to April 6, 2026, with such extension of the maturity date being subject to (1) at the election of the Lenders, five one year extensions and (2) an earlier springing maturity date of July 12, 2024, if, on such date, (a) more than $75,000,000 in aggregate principal amount of the Company’s 1.125% senior convertible notes due 2024 remain outstanding and (b) the Company has less than $375,000,000 of liquidity at such time, (iv) removed the Collateral to Total Exposure Ratio (as defined in the agreements) as a financial covenant and (v) prepaid the entire outstanding balance of all term loans at the time of the amendment.

On April 13, 2021, the Company, through a subsidiary, completed its offering of $200.0 million of additional notes ("Additional Notes") under the existing Senior Notes. The Additional Notes are fully fungible with the Senior Notes, treated as a single class for all purposes under the indenture governing the existing notes with the same terms as those of the existing notes (other than issue date and issue price). The net proceeds of $205.5 million were used, in conjunction with draws from the revolving credit facility to pay off the unsubordinated term loans.

In September 2017, the Company issued $258.8 million aggregate principal amount of 1.125% Convertible Senior Notes due 2024 ("Convertible Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The Convertible Notes bear interest at a rate of 1.125% per year payable semi-annually in arrears on April 15 and October 15 each year, beginning April 15, 2018. The Convertible Notes mature on October 15, 2024, unless repurchased or converted in accordance with their terms prior to such date. The Convertible Notes are unsecured indebtedness, subordinated to the Company's existing and future secured indebtedness and other liabilities, including trade payables. Conversion of the Convertible Notes can only occur upon satisfaction of certain conditions and during certain periods, beginning any calendar quarter commencing after December 31, 2017 and thereafter, until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon the occurrence of certain fundamental changes, holders of the Convertible Notes can require the Company to repurchase their notes at the cash repurchase price equal to the principal amount of the notes, plus any accrued and unpaid interest.

The Convertible Notes may be settled in cash, the Company’s common shares or a combination of cash and the Company’s common shares, at the Company’s election. The initial conversion rate is 31.3475 common shares per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $31.90 per common share). If a “make-whole fundamental change” (as defined in the offering circular with the Convertible Notes) occurs, the Company will, in certain circumstances, increase the conversion rate for a specified period of time.

In conjunction with the Convertible Notes, the Company purchased convertible note hedges under privately negotiated transactions for $56.1 million, having the same number of the Company's common shares, 8.1 million shares and same strike price of $31.90, that underlie the Convertible Notes. The convertible note hedges are expected to reduce the potential equity dilution with respect to the Company's common stock, and/or offset any cash payments in excess of the principal amount due, as the case may be, upon conversion of the Convertible Notes. The Company's current intent and policy is to settle all Note conversions through a combination settlement which satisfies the principal amount of the Convertible Notes outstanding with cash. The Convertible Notes could have a dilutive effect on the computation of earnings per share in accordance with accounting principles to the extent that the average traded market price of the Company’s common shares for a reporting period exceeds the conversion price.

The net proceeds from the issuance of the Convertible Notes was approximately $252.3 million, after deducting initial issuance costs. These unamortized issuance costs and discount are being amortized to interest expense through October 2024, using an effective interest rate of approximately 5.15%. The carrying value of the Company's convertible debt is shown below.

	March 31,	December 31,
	2021	2020
Principal value, Convertible Senior Notes, due 2024	258,750	258,750
Unamortized issuance costs	(3,646)	(3,894)
Unamortized discount	(30,430)	(32,465)
Convertible debt	224,674	222,391

In conjunction with the offering of the Convertible Notes, the Company also sold warrants to the convertible note hedge counterparties in separate, privately negotiated warrant transactions at a higher strike price and for the same number of the Company’s common shares, subject to customary anti-dilution adjustments. The amount received for these warrants and recorded in Stockholders' Equity in the Company’s consolidated balance sheets was $38.5 million. These warrants could result in 8.1 million additional shares of the Company's common stock, if the Company's traded market price exceeds the strike price which is $41.35 per share and is subject to certain adjustments under the terms of the warrant transactions. The warrants could have a dilutive effect on the computation of earnings per share to the extent that the average traded market price of the Company's common shares for a reporting period exceeds the strike price.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

CARES Act and Payroll Support Programs

During 2020, two of the Company's airline subsidiaries, OAI and ATI, received government funds totaling $75.8 million pursuant to payroll support program agreements under the Coronavirus Aid, Relief, and Economic Security

Act (“CARES Act”). In February of 2021, OAI was approved for $37.4 million of additional non-repayable government funds pursuant to a payroll support program agreement under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (the “PSP Extension Law”). This grant was subsequently increased by $5.6 million. Further, in April 2021, OAI was approved for $40.0 million of additional non-repayable government grants pursuant to a payroll support program agreement under section 7301 of the American Rescue Plan Act of 2021 (the “American Act”).

The three programs are structured in a substantially similar manner. These grants are not required to be repaid if the Company complies with provisions of the CARES Act, the PSP Extension Law, the American Act and the payroll support program agreements. The grants are recognized over the periods in which the Company recognizes the related expenses for which the grants are intended to compensate. The Company recognizes the grants as contra-expense during the periods in which passenger flight operations and combi flight operations are expected to be negatively impacted by the pandemic. During the three month period ended March 31, 2021, the Company recognized $28.0 million of the grants. The Company expects to recognize all of grant funds into earnings by December 31, 2021. As of March 31, 2021, grants approved and received but not recognized totaled $37.9 million.

In conjunction with the payroll support program agreements, the airlines agreed to refrain from conducting involuntary furloughs or reducing employee rates of pay or benefits through September 30, 2020. OAI further agreed to refrain from conducting involuntary furloughs or reducing employee rates of pay or benefits through September 30, 2021. The airlines agreed to limit, on behalf of themselves and certain of their affiliates, executive compensation through March 24, 2022; maintain certain air transportation service through March 1, 2022 as may be required by the U.S. Department of Transportation pursuant to its authority under the CARES Act; and maintain certain internal controls and records relating to the funds and comply with certain reporting requirements. OAI further agreed to limit executive compensation through April 1, 2023. In addition, the Company may not pay dividends or repurchase its shares through September 30, 2022.

Lease Commitments

The Company leases property, six aircraft, aircraft engines and other types of equipment under operating leases. Property leases include hangars, warehouses, offices and other space at certain airports with fixed rent payments and lease terms ranging from one month to six years. The Company is obligated to pay the lessor for maintenance, real estate taxes, insurance and other operating expenses on certain property leases. These expenses are variable and are not included in the measurement of the lease asset or lease liability. These expenses are recognized as variable lease expense when incurred and are not material. Equipment leases include ground support and industrial equipment as well as computer hardware with fixed rent payments and terms of one month to five years.

The Company records the initial right-to-use asset and lease liability at the present value of lease payments scheduled during the lease term. For the first three months of 2021 and 2020, non-cash transactions to recognize right-to-use assets and corresponding liabilities for new leases were $0.9 million and $12.9 million, respectively. Unless the rate implicit in the lease is readily determinable, the Company discounts the lease payments using an estimated incremental borrowing rate at the time of lease commencement. The Company estimates the incremental borrowing rate based on the information available at the lease commencement date, including the rate the Company could borrow for a similar amount, over a similar lease term with similar collateral. The Company's weighted-average discount rate for operating leases at March 31, 2021 was 2.75% compared to 2.9% at December 31, 2020. Leases often include rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate. Although not material, the amount of such options is reflected below in the maturity of operating lease liabilities table. Lease expense is recognized on a straight-line basis over the lease term. Our weighted-average remaining lease term is 4.3 years and 4.5 years as of March 31, 2021 and December 31, 2020, respectively.

For the three month periods ended March 31, 2021 and 2020, cash payments against operating lease liabilities were $5.3 million and $3.9 million, respectively. As of March 31, 2021, the maturities of operating lease liabilities are as follows (in thousands):

	Operating Leases
Remaining 2021	$	14,309
2022	15,104
2023	13,801
2024	12,489
2025	8,726
2026 and beyond	3,349
Total undiscounted cash payments	67,778
Less: amount representing interest	(3,680)
Present value of future minimum lease payments	64,098
Less: current obligations under leases	16,781
Long-term lease obligation	$	47,317

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. As of March 31, 2021, the Company had nine aircraft that were in or awaiting the modification process. As of March 31, 2021, the Company has agreements to purchase four more Boeing 767-300 passenger aircraft through 2021 with non-refundable deposits of $7.6 million. As of March 31, 2021, the Company's commitments to acquire and convert aircraft totaled $172.8 million through 2022.

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 addition to the foregoing matters, the Company is also a party to legal proceedings in various federal and state jurisdictions from time to time 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 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 31,2021, the flight crewmember employees of ABX, ATI and Omni and flight attendant employees of ATI and Omni were represented by the labor unions listed below:

Airline	Labor Agreement Unit	Percentage of the Company’s Employees
ABX	International Brotherhood of Teamsters	4.6%
ATI	Air Line Pilots Association	9.2%
OAI	International Brotherhood of Teamsters	6.6%
ATI	Association of Flight Attendants	0.7%
OAI	Association of Flight Attendants	6.5%

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Pension and Other Post-Retirement Benefit Plans

3 Months Ended

Mar. 31, 2021

Retirement Benefits [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 crewmembers, 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 obligations. The assumptions considered most sensitive in actuarially valuing ABX’s pension obligations and determining related expense amounts are discount rates and expected long term investment returns on plan assets. Additionally, other assumptions concerning retirement ages, mortality and employee turnover also affect the valuations. Actual results and future changes in these assumptions could result in future costs significantly higher than those recorded in our results of operations.

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

ABX’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):

	Three Months Ended March 31,
	Pension Plans				Post-Retirement Healthcare Plan
	2021		2020		2021		2020
Service cost	$	—	$	—	$	24	$	35
Interest cost	5,597		6,970		10		23
Expected return on plan assets	(11,875)		(11,168)		—		—
Amortization of net (gain) loss	1,764		941		47		31
Net periodic benefit cost (income)	$	(4,514)	$	(3,257)	$	81	$	89

During the three month period ending March 31, 2021, the Company contributed $1.1 million to the pension plans. The Company expects to contribute an additional $0.6 million during the remainder of 2021.

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Income Taxes

3 Months Ended

Mar. 31, 2021

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 taxes recorded through March 31, 2021 have been estimated utilizing a 24% rate based upon year-to-date income and projected results for the full year. The recognition of discrete tax items, such as the conversion of employee stock awards, the issuance of stock warrants and other items, have an impact on the effective rate during a period.

As a result of these differences in which expenses and benefits for tax purposes are different than required by generally accepted accounting principles, the Company's effective tax rate for the first three months of 2021 was 23.3%. The final effective tax rate for the year 2021 will depend on the actual amount of pre-tax book results by the Company for the full year, the additional conversions of employee stock awards, stock warrant valuations, executive compensation 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 2023 or later. The Company may, however, be required to pay some federal tax due to loss carryforward usage limitations and certain state and local income taxes before then.

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Derivative Instruments

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

The Company's Senior Credit Agreement requires the Company to maintain derivative instruments for protection from fluctuating interest rates, for at least twenty-five percent of the outstanding balance of the term loan issued in November 2018. The table below provides information about the Company’s interest rate swaps (in thousands):

			March 31, 2021		December 31, 2020
Expiration Date	Stated Interest Rate		Notional Amount	Market Value (Liability)	Notional Amount	Market Value (Liability)
May 5, 2021	1.090	%	11,250	(10)	13,125	(41)
May 30, 2021	1.703	%	11,250	(29)	13,125	(80)
December 31, 2021	2.706	%	136,875	(2,659)	138,750	(3,551)
March 31, 2022	1.900	%	50,000	(892)	50,000	(1,116)
March 31, 2022	1.950	%	75,000	(1,375)	75,000	(1,722)
March 31, 2023	2.425	%	138,750	(5,915)	140,625	(6,904)

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 a net gain on derivatives of $2.5 million and a net loss of $10.9 million for the three month periods ending March 31, 2021 and 2020, respectively. The liability for outstanding derivatives is recorded in other liabilities and in accrued expenses.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [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 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.

	Three Months Ended
	March 31, 2021			March 31, 2020
	Number of Awards	Weighted average grant-date fair value		Number of Awards	Weighted average grant-date fair value
Outstanding at beginning of period	1,085,023	$	17.14	963,832	$	17.67
Granted	274,606	26.65		435,254	18.86
Converted	(115,930)	25.55		(128,463)	19.06
Expired	—	—		(1,000)	19.40
Forfeited	—	—		—	—
Outstanding at end of period	1,243,699	$	18.46	1,269,623	$	17.94
Vested	357,499	$	9.26	353,023	$	8.25

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 2021 was $26.69, 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 2021 was $26.50. The market condition awards were valued using a Monte Carlo simulation technique based on volatility over three years for the awards granted in 2021 using daily stock prices and using the following variables:

	2021
Risk-free interest rate	0.3%
Volatility	39.7%

For the three month periods ended March 31, 2021 and 2020, the Company recorded expense of $1.8 million, $1.8 million, respectively, for stock incentive awards. At March 31, 2021, there was $13.1 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, 2021, none of the awards were convertible, 357,499 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 1,542,949 additional outstanding shares of the Company’s common stock depending on service, performance and market results through December 31, 2023.

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Earnings Per Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

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):

	Three Months Ending March 31,
	2021		2020
Numerator:
Earnings from continuing operations - basic	$	42,290	$	133,733
Gain from stock warrants revaluation, net of tax	(5,355)		(76,361)
Earnings from continuing operations - diluted	$	36,935	$	57,372
Denominator:
Weighted-average shares outstanding for basic earnings per share	59,447		59,040
Common equivalent shares:
Effect of stock-based compensation awards and warrants	15,297		8,907
Weighted-average shares outstanding assuming dilution	74,744		67,947
Basic earnings per share from continuing operations	$	0.71	$	2.27
Diluted earnings per share from continuing operations	$	0.49	$	0.84

Basic weighted average shares outstanding for purposes of basic earnings per share are less than the shares outstanding due to 487,200 shares and 365,100 shares of restricted stock for 2021 and 2020, respectively, which are accounted for as part of diluted weighted average shares outstanding in diluted earnings per share.

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 D), if such warrants have an anti-dilutive effect on earnings per share. The dilutive effect of the weighted-average diluted shares outstanding is calculated using the treasury method for periods in which equivalent shares have a dilutive effect on earnings per share. Under this method, the number of diluted shares is determined by dividing the assumed proceeds of the warrants recorded as a liability by the average stock price during the period and comparing that amount with the number of corresponding warrants outstanding.

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Segment Information

3 Months Ended

Mar. 31, 2021

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 Ending
	March 31,
	2021		2020
Total revenues:
CAM	$	83,277	$	74,163
ACMI Services	247,131		284,165
All other	93,698		80,036
Eliminate inter-segment revenues	(48,018)		(49,087)
Total	$	376,088	$	389,277
Customer revenues:
CAM	$	60,800	$	46,736
ACMI Services	247,126		284,161
All other	68,162		58,380
Total	$	376,088	$	389,277

ACMI Services revenues are generated from airline service agreements and are typically based on hours flown, the amount 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 month periods ended March 31, 2021 and 2020 are presented below (in thousands):

	Three Months Ended
	March 31,
	2021		2020
Aircraft maintenance, modifications and part sales	$	34,048	$	33,835
Ground services	23,460		14,609
Other, including aviation fuel sales	10,654		9,936
Total customer revenues	$	68,162	$	58,380

CAM's aircraft lease revenues are recognized as operating lease revenues 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 15% of CAM's leases to external customers contain purchase options at projected market values. As of March 31, 2021, minimum future payments from external customers for leased aircraft and equipment were scheduled to be $192.3 million for the remainder of 2021, $212.8 million, $168.3 million, $117.6 million, $105.4 million, respectively, for each of the next 4 years ending December 31, 2025 and $275.3 million thereafter. As of December 31, 2020, minimum future payments from external customers for leased aircraft and equipment were scheduled to be $222.4 million, $195.5 million, $150.5 million, $99.8 million and $90.7 million, respectively, for each of the next 5 years ending December 31, 2025 and $202.2 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 month periods ending March 31, 2021 and 2020, the Company recognized $2.7 million and $2.7 million of non lease revenue that was reported in deferred revenue at the beginning of the respective year. Deferred revenue was $1.3 million and $3.0 million at March 31, 2021 and December 31, 2020, 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. The Company's other segment information from continuing operations is presented below (in thousands):

	Three Months Ending
	March 31,
	2021		2020
Depreciation and amortization expense:
CAM	$	46,995	$	43,047
ACMI Services	22,981		25,312
All other	1,075		983
Total	$	71,051	$	69,342
Interest expense
CAM	9,226		10,255
ACMI Services	4,523		5,301
Government grants recognized
ACMI Service	28,030		—
Segment earnings (loss):
CAM	$	21,462	$	15,820
ACMI Services	21,259		18,378
All other	389		53
Net unallocated interest expense	(754)		(655)
Net gain on financial instruments	9,472		107,044
Other non-service components of retiree benefit costs, net	4,457		2,898
Loss from non-consolidated affiliate	(1,183)		(2,764)
Pre-tax earnings from continuing operations	$	55,102	$	140,774

The Company's assets are presented below by segment (in thousands). Cash and cash equivalents are reflected in Assets - All other.

	March 31,		December 31
	2021		2020
Assets:
CAM	$	2,093,190	$	2,037,628
ACMI Services	807,822		811,516
All other	146,701		152,601
Total	$	3,047,713	$	3,001,745

During the first three months of 2021, the Company had capital expenditures for property and equipment of $22.4 million and $102.5 million for the ACMI Services and CAM, respectively.

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

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The accompanying unaudited condensed interim consolidated financial statements are prepared in conformity with GAAP 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, 2020 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 air cargo 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 the 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. Inter-company balances and transactions are eliminated. Investments in affiliates in which the Company has significant influence but does not exercise control are accounted for using the equity method of accounting. Under 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. Investments in affiliates in which the Company does not exercise control or have significant influence are reflected at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Use of Estimates

COVID-19 Uncertainties

The COVID-19 pandemic has had an impact on the Company's operations and financial results. Beginning in late February 2020, revenues have been disrupted when customers cancelled scheduled passenger flights and aircraft maintenance services, airport restrictions and closures were imposed, and the Company began to incur additional costs, including expenses to protect employees.

The extent of the impact that the pandemic will have on future financial and operational results will depend on developments, including recurrence of the COVID-19 virus and its variants; the duration and scope of government orders and restrictions; the availability and effectiveness of vaccines on the virus and the extent of the pandemic on overall economic conditions. These are highly uncertain. Disruptions to the Company's operations, such as shortages of personnel, shortages of parts, maintenance delays, shortages of transportation and hotel accommodations for flight crews, facility closures and other issues may be caused by the pandemic. If the pandemic persists or reemerges, operating cash flows could decline significantly and the value of airframes, engines and certain intangible assets could decline significantly.

The pandemic has not had a significant adverse financial impact on the Company's leasing operations or its airline operations for customers' freight networks. However, the Company's passenger flight operations have been and continue to be, impacted by the pandemic. The Company has received government funding pursuant to payroll support programs of the federal government as described in Note H. Management believes that the Company's current cash balances and forecasted cash flows provided from its customer leases and operating agreements and government grants combined with its Senior Credit Agreement, will be sufficient to fund operations, capital spending and scheduled debt payments for at least the next 12 months.

New Accounting Pronouncements

Accounting Standards Updates

In August 2020, the FASB issued ASU No. 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" ("ASU 2020-06"). This new standard changes the accounting and measurement of convertible instruments. It eliminates the treasury stock method for convertible instruments and requires application of the “if-converted” method for certain agreements. This standard is effective for the Company beginning January 1, 2022. The Company is currently evaluating the impact of adopting ASU 2020-06 on its interest expense and earnings (loss) per share calculation under the "if-converted" method related to its convertible debt.

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

3 Months Ended

Mar. 31, 2021

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):

	March 31,		December 31,
	2021		2020
Flight equipment	$	2,985,850	$	2,856,142
Ground equipment	67,332		65,857
Leasehold improvements, facilities and office equipment	37,283		36,193
Aircraft modifications and projects in progress	206,977		231,451
	3,297,442		3,189,643
Accumulated depreciation	(1,310,360)		(1,249,867)
Property and equipment, net	$	1,987,082	$	1,939,776

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Significant Customers (Tables)

3 Months Ended

Mar. 31, 2021

Concentration Risk [Line Items]

Schedule of Stockholders' Equity Note, Warrants or Rights

Issued and outstanding warrants are summarized below as of May 10, 2021:

			Common Shares in millions
	Lease Commitment	Exercise price	Vested	Non-Vested	Expiration
2018 Investment Agreement	10 aircraft	$21.53	14.8	0.0	December 20, 2025
2018 Investment Agreement	12 aircraft	$20.40	2.9	4.1	December 20, 2025

Accounts Receivable [Member]

Concentration Risk [Line Items]

Schedule of Revenue by Major Customers by Reporting Segments

The accounts receivable from the Company's three largest customers as of March 31, 2021 and December 31, 2020 are as follows (in thousands):

	March 31,		December 31,
	2021		2020
Customer	Accounts Receivable
DoD	$	31,204	$	32,625
Amazon	58,132		55,997
DHL	11,601		10,471

Revenue, Product and Service Benchmark [Member]

Concentration Risk [Line Items]

Schedule of Revenue by Major Customers by Reporting Segments

The percentage of the Company's revenues for the Company's three largest customers, for the three month periods ending March 31, 2021 and 2020 are as follows:

	Three Months Ended
	March 31,
	2021	2020
Customer	Percentage of Revenue
DoD	22%	30%
Amazon	35%	29%
DHL	14%	11%

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Goodwill and Other Intangibles (Tables)

3 Months Ended

Mar. 31, 2021

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):

	Lease
	Incentive
Carrying value as of December 31, 2020	$	126,007
Amortization	(5,699)
Carrying value as of March 31, 2021	$	120,308

Schedule of Goodwill

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

	CAM		ACMI Services		All Other		Total
Carrying value as of December 31, 2020	153,290		234,571		$	8,113	$	395,974
Carrying value as of March 31, 2021	$	153,290	$	234,571	$	8,113	$	395,974

Schedule Intangible Assets by Major Class

The Company's acquired intangible assets are as follows (in thousands):

	Airline		Amortizing
	Certificates		Intangibles		Total
Carrying value as of December 31, 2020	$	9,000	$	111,316	$	120,316
Amortization	—		(2,644)		(2,644)
Carrying value as of March 31, 2021	$	9,000	$	108,672	$	117,672

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

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

As of March 31, 2021	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Assets
Cash equivalents—money market	$	—	$	40	$	—	$	40
Total Assets	$	—	$	40	$	—	$	40
Liabilities
Interest rate swap	$	—	$	(10,880)	$	—	$	(10,880)
Stock warrant obligations	—		—		(96,536)		(96,536)
Total Liabilities	$	—	$	(10,880)	$	(96,536)	$	(107,416)

As of December 31, 2020	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Assets
Cash equivalents—money market	$	—	$	20,389	$	—	$	20,389
Total Assets	$	—	$	20,389	$	—	$	20,389
Liabilities
Interest rate swap	$	—	$	(13,414)	$	—	$	(13,414)
Stock warrant obligation	—		(9,058)		(94,416)		(103,474)
Total Liabilities	$	—	$	(22,472)	$	(94,416)	$	(116,888)

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Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2021

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

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

	March 31,		December 31,
	2021		2020
Flight equipment	$	2,985,850	$	2,856,142
Ground equipment	67,332		65,857
Leasehold improvements, facilities and office equipment	37,283		36,193
Aircraft modifications and projects in progress	206,977		231,451
	3,297,442		3,189,643
Accumulated depreciation	(1,310,360)		(1,249,867)
Property and equipment, net	$	1,987,082	$	1,939,776

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Debt Obligations (Tables)

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Convertible Debt [Table Text Block]

The carrying value of the Company's convertible debt is shown below.

	March 31,	December 31,
	2021	2020
Principal value, Convertible Senior Notes, due 2024	258,750	258,750
Unamortized issuance costs	(3,646)	(3,894)
Unamortized discount	(30,430)	(32,465)
Convertible debt	224,674	222,391

Schedule of Long-term Debt Instruments

Debt obligations consisted of the following (in thousands):

	March 31,		December 31,
	2021		2020
Unsubordinated term loans	$	608,568	$	612,169
Revolving credit facility	160,000		140,000
Senior Notes	493,543		493,376
Convertible debt	224,674		222,391
Other financing arrangements	11,045		11,141
Total debt obligations	1,497,830		1,479,077
Less: current portion	(619)		(13,746)
Total long term obligations, net	$	1,497,211	$	1,465,331

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

As of March 31, 2021, the maturities of operating lease liabilities are as follows (in thousands):

	Operating Leases
Remaining 2021	$	14,309
2022	15,104
2023	13,801
2024	12,489
2025	8,726
2026 and beyond	3,349
Total undiscounted cash payments	67,778
Less: amount representing interest	(3,680)
Present value of future minimum lease payments	64,098
Less: current obligations under leases	16,781
Long-term lease obligation	$	47,317

Schedules of Concentration of Risk, by Risk Factor

As of March 31,2021, the flight crewmember employees of ABX, ATI and Omni and flight attendant employees of ATI and Omni were represented by the labor unions listed below:

Airline	Labor Agreement Unit	Percentage of the Company’s Employees
ABX	International Brotherhood of Teamsters	4.6%
ATI	Air Line Pilots Association	9.2%
OAI	International Brotherhood of Teamsters	6.6%
ATI	Association of Flight Attendants	0.7%
OAI	Association of Flight Attendants	6.5%

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Pension and Other Post-Retirement Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2021

Retirement Benefits [Abstract]

Schedule of Net Benefit Costs

ABX’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):

	Three Months Ended March 31,
	Pension Plans				Post-Retirement Healthcare Plan
	2021		2020		2021		2020
Service cost	$	—	$	—	$	24	$	35
Interest cost	5,597		6,970		10		23
Expected return on plan assets	(11,875)		(11,168)		—		—
Amortization of net (gain) loss	1,764		941		47		31
Net periodic benefit cost (income)	$	(4,514)	$	(3,257)	$	81	$	89

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Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2021

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):

			March 31, 2021		December 31, 2020
Expiration Date	Stated Interest Rate		Notional Amount	Market Value (Liability)	Notional Amount	Market Value (Liability)
May 5, 2021	1.090	%	11,250	(10)	13,125	(41)
May 30, 2021	1.703	%	11,250	(29)	13,125	(80)
December 31, 2021	2.706	%	136,875	(2,659)	138,750	(3,551)
March 31, 2022	1.900	%	50,000	(892)	50,000	(1,116)
March 31, 2022	1.950	%	75,000	(1,375)	75,000	(1,722)
March 31, 2023	2.425	%	138,750	(5,915)	140,625	(6,904)

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

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

The table below summarizes award activity.

	Three Months Ended
	March 31, 2021			March 31, 2020
	Number of Awards	Weighted average grant-date fair value		Number of Awards	Weighted average grant-date fair value
Outstanding at beginning of period	1,085,023	$	17.14	963,832	$	17.67
Granted	274,606	26.65		435,254	18.86
Converted	(115,930)	25.55		(128,463)	19.06
Expired	—	—		(1,000)	19.40
Forfeited	—	—		—	—
Outstanding at end of period	1,243,699	$	18.46	1,269,623	$	17.94
Vested	357,499	$	9.26	353,023	$	8.25

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

The market condition awards were valued using a Monte Carlo simulation technique based on volatility over three years for the awards granted in 2021 using daily stock prices and using the following variables:

	2021
Risk-free interest rate	0.3%
Volatility	39.7%

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2021

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):

	Three Months Ending March 31,
	2021		2020
Numerator:
Earnings from continuing operations - basic	$	42,290	$	133,733
Gain from stock warrants revaluation, net of tax	(5,355)		(76,361)
Earnings from continuing operations - diluted	$	36,935	$	57,372
Denominator:
Weighted-average shares outstanding for basic earnings per share	59,447		59,040
Common equivalent shares:
Effect of stock-based compensation awards and warrants	15,297		8,907
Weighted-average shares outstanding assuming dilution	74,744		67,947
Basic earnings per share from continuing operations	$	0.71	$	2.27
Diluted earnings per share from continuing operations	$	0.49	$	0.84

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2021

Segment Reporting Information [Line Items]

Segment Reporting, Additional Information about Entity's Reportable Segments

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

	Three Months Ending
	March 31,
	2021		2020
Depreciation and amortization expense:
CAM	$	46,995	$	43,047
ACMI Services	22,981		25,312
All other	1,075		983
Total	$	71,051	$	69,342
Interest expense
CAM	9,226		10,255
ACMI Services	4,523		5,301
Government grants recognized
ACMI Service	28,030		—
Segment earnings (loss):
CAM	$	21,462	$	15,820
ACMI Services	21,259		18,378
All other	389		53
Net unallocated interest expense	(754)		(655)
Net gain on financial instruments	9,472		107,044
Other non-service components of retiree benefit costs, net	4,457		2,898
Loss from non-consolidated affiliate	(1,183)		(2,764)
Pre-tax earnings from continuing operations	$	55,102	$	140,774

Schedule of Segment Reporting Information, by Segment

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

	Three Months Ending
	March 31,
	2021		2020
Total revenues:
CAM	$	83,277	$	74,163
ACMI Services	247,131		284,165
All other	93,698		80,036
Eliminate inter-segment revenues	(48,018)		(49,087)
Total	$	376,088	$	389,277
Customer revenues:
CAM	$	60,800	$	46,736
ACMI Services	247,126		284,161
All other	68,162		58,380
Total	$	376,088	$	389,277

Reconciliation of Assets from Segment to Consolidated

The Company's assets are presented below by segment (in thousands). Cash and cash equivalents are reflected in Assets - All other.

	March 31,		December 31
	2021		2020
Assets:
CAM	$	2,093,190	$	2,037,628
ACMI Services	807,822		811,516
All other	146,701		152,601
Total	$	3,047,713	$	3,001,745

Revenue from External Customers by Products and Services

The Company's external customer revenues from other activities for the three month periods ended March 31, 2021 and 2020 are presented below (in thousands):

	Three Months Ended
	March 31,
	2021		2020
Aircraft maintenance, modifications and part sales	$	34,048	$	33,835
Ground services	23,460		14,609
Other, including aviation fuel sales	10,654		9,936
Total customer revenues	$	68,162	$	58,380

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Significant Customers (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Concentration Risk [Line Items]
Accounts receivable			$ 155,115	$ 153,511
Fair Value Adjustment of Warrants	$ 6,900	$ 118,000
Warrant liability			$ 96,536	103,474
DHL [Member] | Revenues from Leases and Contracted Services [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Percentage of consolidated revenues	14.00%	11.00%
DHL [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Accounts receivable	$ 11,601			10,471
Amazon [Member] | Revenues from Leases and Contracted Services [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Percentage of consolidated revenues	35.00%	29.00%
Amazon [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Accounts receivable	$ 58,132			55,997
US Military [Member] | Revenues from Leases and Contracted Services [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Percentage of consolidated revenues	22.00%	30.00%
US Military [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Accounts receivable	$ 31,204			$ 32,625
Amazon Warrant C [Member] [Member]
Concentration Risk [Line Items]
Class of Warrant or Right, Outstanding	0
Warrant liability	$ (96,500)
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 21.53
Class of Warrant or Right, Unissued	14,800
Amazon Warrant Subsequent [Member]
Concentration Risk [Line Items]
Class of Warrant or Right, Outstanding	4,100
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 20.40
Class of Warrant or Right, Unissued	2,900

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Goodwill and Other Intangibles (Schedule of Goodwill) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Goodwill [Roll Forward]
Carrying value, beginning balance	$ 395,974	$ 395,974
Carrying value, ending balance	395,974
ACMI Services [Member]
Goodwill [Roll Forward]
Carrying value, beginning balance	234,571	234,571
Carrying value, ending balance	234,571
CAM [Member]
Goodwill [Roll Forward]
Carrying value, beginning balance	153,290	153,290
Carrying value, ending balance	153,290
MRO Services [Member] [Member]
Goodwill [Roll Forward]
Carrying value, beginning balance	8,113	$ 8,113
Carrying value, ending balance	$ 8,113

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Goodwill and Other Intangibles (Schedule Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Finite and Indefinite-lived Intangible Assets by Major Class [Line Items]
Incentive to Lessee		$ 120,308	$ 126,007
Amortization of Lease Incentives	$ (5,699)
Finite and Indefinite-lived Intangible Assets [Roll Forward]
Carrying value at beginning of period	111,316
Carrying value at beginning of period	120,316
Amortization expense	(2,644)
Carrying value at end of period	111,316	$ 108,672	$ 111,316
Carrying value at end of period	117,672
ACMI Services [Member] | Airline Certificates [Member]
Finite and Indefinite-lived Intangible Assets [Roll Forward]
Carrying value at beginning of period	9,000
Amortization expense	0
Carrying value at end of period	$ 9,000

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Goodwill and Other Intangibles Investment in West Atlantic (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Schedule of Equity Method Investments [Line Items]
Payments to Acquire Interest in Joint Venture	$ 1,700	$ 3,000
Goodwill	$ 395,974		$ 395,974

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Goodwill and Other Intangibles Investment A321 (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Investments, Debt and Equity Securities [Abstract]
Payments to Acquire Interest in Joint Venture	$ 1.7	$ 3.0

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020	Sep. 25, 2017
Liabilities, Fair Value Disclosure [Abstract]
Warrant liability	$ 96,536		$ 103,474
Fair Value, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents - money market		$ 40	20,389
Total Assets		40	20,389
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap			(13,414)
Warrant liability		(96,536)	(103,474)
Total Liabilities		(107,416)	(116,888)
Carrying value, debt		1,497,800	1,479,100
Fair Value, Recurring [Member] | Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents - money market		0	0
Total Assets		0	0
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap		0	0
Warrant liability		0	0
Total Liabilities		0	0
Fair Value, Recurring [Member] | Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents - money market		40	20,389
Convertible note hedge fair value				$ 56,100
Total Assets		40	20,389
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap		(10,880)	(13,414)
Warrant liability		0	(9,058)
Total Liabilities		(10,880)	(22,472)
Difference between fair value and carrying value, debt		48,200	70,800
Fair Value, Recurring [Member] | Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents - money market		0	0
Total Assets		0	0
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap		0	0
Warrant liability		(96,536)	(94,416)
Total Liabilities		(96,536)	$ (94,416)
Fair Value, Recurring [Member] | Total [Member]
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap		(10,880)
Amazon Warrant C [Member] [Member]
Liabilities, Fair Value Disclosure [Abstract]
Warrant liability		$ (96,500)

XML

Property and Equipment (Schedule of Property and Equipment) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross		$ 3,297,442	$ 3,189,643
Accumulated depreciation		(1,310,360)	(1,249,867)
Property and equipment, net	$ 1,987,082	1,987,082	1,939,776
Flight Equipment [Member]
Property, Plant and Equipment [Line Items]
Operating Leases, Future Minimum Payments Receivable, Current	222,400	192,300
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross		2,985,850	2,856,142
Operating Leases, Future Minimum Payments Receivable, in Two Years	195,500	212,800
Operating Leases, Future Minimum Payments Receivable, in Three Years	150,500	168,300
Operating Leases, Future Minimum Payments Receivable, in Four Years	99,800	117,600
Operating Leases, Future Minimum Payments Receivable, in Five Years	$ 90,700	105,400
Ground equipment [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross		67,332	65,857
facilities, leasehold improvements and office equipment [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross		37,283	36,193
Construction in Progress [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross		$ 206,977	$ 231,451

XML

Property and Equipment (Narrative) (Details) - Flight Equipment [Member] - USD ($) $ in Millions	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Operating Leases, Future Minimum Payments Receivable [Abstract]
Minimum future lease payments, Due within next 12 months	$ 222.4	$ 192.3
Minimum future lease payments, Due within next 2 years	195.5	212.8
Minimum future lease payments, Due within next 3 years	150.5	168.3
Minimum future lease payments, Due within next 4 years	99.8	117.6
Minimum future lease payments, Due within next 5 years	$ 90.7	105.4
CAM [Member]
Property, Plant and Equipment [Line Items]
Leased aircraft, carrying value		$ 1,208.9	$ 1,097.6

XML

Debt Obligations (Schedule of Long Term Obligations) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Total long term obligations	$ 1,497,830	$ 1,479,077
Unsecured Debt	493,543	493,376
Convertible Debt	224,674	222,391
Other Long-term Debt	11,045	11,141
Less: current portion	(619)	(13,746)
Total long term obligations, net	1,497,211	1,465,331
Unsubordinated term loan [Member]
Debt Instrument [Line Items]
Total long term obligations	608,568	612,169
Revolving credit facility [Member]
Debt Instrument [Line Items]
Total long term obligations	160,000	$ 140,000
Line of Credit Facility, Maximum Borrowing Capacity	$ 250,000

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Debt Obligations (Schedule of Long Term Debt Maturities) (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Long-term Debt, Fiscal Year Maturity [Abstract]
Total long term obligations	$ 1,497,830	$ 1,479,077

XML

Debt Obligations (Narrative) (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2019	Apr. 13, 2021	Dec. 31, 2020	Jan. 28, 2020	Sep. 25, 2017
Debt Instrument [Line Items]
Long term obligations	$ 1,497,830				$ 1,479,077
Unsecured Debt	493,543				493,376
Proceeds from Issuance of Unsecured Debt	0	$ 500,000
Convertible Debt	224,674				222,391
Aircraft loans [Member]
Debt Instrument [Line Items]
Debt Issuance Costs, Line of Credit Arrangements, Net	6,600				7,000
Unsecured Debt [Member]
Debt Instrument [Line Items]
Debt Issuance Costs, Line of Credit Arrangements, Net	6,500				6,600
Unsubordinated term loan and Revolving credit facility [Member]
Debt Instrument [Line Items]
Maximum amount of common stock authorized for repurchase	100,000
Unsubordinated term loan [Member]
Debt Instrument [Line Items]
Long term obligations	$ 608,568				612,169
Variable interest rate	1.36%
Revolving credit facility [Member]
Debt Instrument [Line Items]
Long term obligations	$ 160,000				140,000
Line of Credit Facility, Maximum Borrowing Capacity	$ 250,000
Variable interest rate	1.36%
Credit facility, revolving credit loan, remaining borrowing capacity	$ 426,000
Bonds [Member]
Debt Instrument [Line Items]
Unsecured Debt				$ 200,000		$ 500,000
Debt Instrument, Interest Rate, Stated Percentage						4.75%
Proceeds from Issuance of Unsecured Debt	$ 205,500	$ 495,000
Unsecured Debt [Member]
Debt Instrument [Line Items]
Variable interest rate	4.75%
Convertible Debt [Member]
Debt Instrument [Line Items]
Convertible Debt	$ 258,750				258,750		$ 258,800
Debt Conversion, Converted Instrument, Rate	1.125%
Debt Instrument, Interest Rate, Effective Percentage	5.15%
Proceeds from Convertible Debt			$ 252,300
Convertible note hedge shares							8,100
Warrants and Rights Outstanding	$ 38,500
Unamortized Debt Issuance Expense	(3,646)				(3,894)
Debt Instrument, Unamortized Discount	$ (30,430)				$ (32,465)
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Debt Instrument [Line Items]
Convertible note hedge fair value							$ 56,100

XML

Commitments and Contingencies (Operating Lease Payments) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Operating Leased Assets [Line Items]
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	$ 900	$ 12,900
Operating Lease, Weighted Average Discount Rate, Percent	2.75%			2.90%
Operating Lease, Weighted Average Remaining Lease Term	4 years 3 months 18 days			4 years 6 months
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2017	$ 14,309
Total minimum lease payments	64,098
lessee, operating lease, interest due	(3,680)
Operating Lease, Liability, Current	16,781		$ 16,781	$ 17,784
Operating Lease, Liability, Noncurrent	47,317		$ 47,317	$ 51,128
Operating Lease, Payments	5,300	$ 3,900
Property Subject to Operating Lease [Member]
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2018	15,104
2019	13,801
2020	12,489
2021	8,726
2022 and beyond	3,349
Lessee, Operating Lease, Liability, Payments, Due	$ 67,778

XML

Commitments and Contingencies (Commitments) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Long-term Purchase Commitment [Line Items]
aircraft purchase deposit	$ 7,600
Long-term Purchase Commitment, Amount	172,800
total government grant awarded		$ 37,400	$ 75,800
Income Tax (Expense) Benefit, Continuing Operations, Government Grants	28,030	$ 0
unrecognized government grants received	$ 37,900

XML

Commitments and Contingencies (Labor Unions) (Details) - Workforce Subject to Collective Bargaining Arrangements [Member] - Labor Unions [Member]	3 Months Ended
	Mar. 31, 2021
ABX [Member]
Concentration Risk [Line Items]
Percentage of the Company's Employees	4.60%
ATI [Member]
Concentration Risk [Line Items]
Percentage of the Company's Employees	9.20%
Omni Air International [Member]
Concentration Risk [Line Items]
Percentage of the Company's Employees	6.60%
Air Transport International, Flight Attendants [Member]
Concentration Risk [Line Items]
Percentage of the Company's Employees	0.70%
Omni Air International, Flight Attendants [Member] [Member]
Concentration Risk [Line Items]
Percentage of the Company's Employees	6.50%

XML

Pension and Other Post-Retirement Benefit Plans (Funded Status) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Pension Plans [Member]
Change in benefit obligation [Roll Forward]
Service cost	$ 0	$ 0
Interest cost	5,597	6,970
Change in plan assets [Roll Forward]
Employer contributions	1,100
Post-Retirement Healthcare Plans [Member]
Change in benefit obligation [Roll Forward]
Service cost	24	35
Interest cost	$ 10	$ 23

XML

Pension and Other Post-Retirement Benefit Plans (Net Periodic Benefit Costs) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Pension Plans [Member]
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract]
Service cost	$ 0	$ 0
Interest cost	5,597	6,970
Expected return on plan assets	(11,875)	(11,168)
Amortization of net (gain) loss	1,764	941
Net periodic benefit cost (income)	(4,514)	(3,257)
Post-Retirement Healthcare Plans [Member]
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract]
Service cost	24	35
Interest cost	10	23
Expected return on plan assets	0	0
Amortization of net (gain) loss	47	31
Net periodic benefit cost (income)	$ 81	$ 89

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Pension and Other Post-Retirement Benefit Plans (Cash Flows) (Details) - Pension Plans [Member] $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Employer contributions	$ 1.1
Estimated future employer contributions	$ 0.6

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Income Taxes (Narrative) (Details)	3 Months Ended
	Mar. 31, 2021
Income Tax Disclosure [Line Items]
Statutory federal tax rate	(23.30%)
Effective Income Tax Rate Reconciliation, Percent	24.00%

XML

Income Taxes (Income Tax Provision (Benefit)) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Deferred taxes:
Total income tax expense from continuing operations	$ 7,041

XML

Income Taxes (Tax Rate Reconciliation) (Details)	3 Months Ended
	Mar. 31, 2021
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
Statutory federal tax rate	(23.30%)
Effective income tax rate	24.00%

XML

Derivative Instruments (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020	Sep. 25, 2017
Derivative [Line Items]
Pre-tax (charge) on derivative instruments	$ 9,472	$ 107,044
Net gain on financial instruments	$ (2,500)	$ 10,900
June 30, 2017 [Member] [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	2.706%
Market Value (Liability)	$ (2,659)		$ (3,551)
Derivative Liability, Notional Amount	$ 136,875		138,750
May 5, 2021 [Member] [Member] [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	1.09%
Market Value (Liability)	$ 10		41
Derivative Liability, Notional Amount	$ 11,250		13,125
May 30, 2021 [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	1.703%
Market Value (Liability)	$ 29		80
Derivative Liability, Notional Amount	$ 11,250		13,125
March 31, 2022 One [Member] [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	1.90%
Market Value (Liability)	$ 892		1,116
Derivative Liability, Notional Amount	$ 50,000		50,000
March 31, 2022 Two [Member] [Member] [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	1.95%
Market Value (Liability)	$ 1,375		1,722
Derivative Liability, Notional Amount	$ 75,000		75,000
March 31, 2023 [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	2.425%
Market Value (Liability)	$ 5,915		6,904
Derivative Liability, Notional Amount	$ 138,750		$ 140,625
Convertible Debt [Member]
Derivative [Line Items]
Convertible note hedge shares				8,100

XML

Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at beginning of period (in shares)	1,085,023	963,832
Granted (in shares)	274,606	435,254
Converted (in shares)	(115,930)	(128,463)
Expired (in shares)	0	(1,000)
Forfeited (in shares)	0	0
Outstanding at end of period (in shares)	1,243,699	1,269,623
Vested (in shares)	357,499	353,023
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Outstanding at beginning of period, Weighted average grant-date fair value (in dollars per share)	$ 17.14	$ 17.67
Granted, Weighted average grant-date fair value (in dollars per share)	26.65	18.86
Converted, Weighted average grant-date fair value (in dollars per share)	25.55	19.06
Expired, Weighted average grant-date fair value (in dollars per share)	0	19.40
Forfeited, Weighted average grant-date fair value (in dollars per share)	0	0
Outstanding at end of period, Weighted average grant-date fair value (in dollars per share)	18.46	17.94
Vested (in dollars per share)	$ 9.26	$ 8.25
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Share-based compensation expense	$ 1.8	$ 1.8
Unrecognized share-based compensation expense	$ 13.1
Unrecognized share-based compensation, weighted average recognition period	1 year 9 months 18 days
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period	3 years
Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Historical volatility period	3 years
Risk-free interest rate	0.30%
Expected volatility rate	39.70%
Market Condition Award [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Granted, Weighted average grant-date fair value (in dollars per share)	$ 26.50
Performance Condition Award [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Granted, Weighted average grant-date fair value (in dollars per share)	$ 26.69
Time-Based Awards [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Number of additional outstanding shares issued (in shares)	1,542,949
Director [Member] | Time-Based Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Vested (in shares)	357,499
Director [Member] | Time-Based Awards [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period	12 months

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share Reconciliation [Abstract]
Earnings from continuing operations	$ 42,290	$ 133,733
fair value adjustment to warrants, net of tax	(5,355)	(76,361)
Undistributed Earnings (Loss) from Continuing Operations Available to Common Shareholders, Diluted	$ 36,935	$ 57,372
Weighted-average shares outstanding for basic earnings per share (in shares)	59,447,000	59,040,000
Restricted stock (in shares)	487,200	365,100
Common equivalent shares:
Effect of stock-based compensation awards (in shares)	15,297,000	8,907,000
Weighted-average shares outstanding assuming dilution (in shares)	74,744,000	67,947,000
Basic earnings per share from continuing operations (in dollars per share)	$ 0.71	$ 2.27
Diluted earnings per share from continuing operations (in dollars per share)	$ 0.49	$ 0.84

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Segment Information (Segment Reconciliation) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Segment Reporting Information [Line Items]
Operating Expenses	$ 319,229	$ 339,470
REVENUES	376,088	389,277
Customer revenues	376,088	389,277
Depreciation and amortization expense	71,051	69,342
Net unallocated interest expense	(14,522)	(16,323)
Net gain on financial instruments	9,472	107,044
Pre-tax earnings from continuing operations	55,102	140,774
Assets	3,047,713		$ 3,047,713	$ 3,001,745
Income Tax Expense (Benefit)		7,041
Net Periodic Defined Benefits Expense (Reversal of Expense), Excluding Service Cost Component	4,457	2,898
Net earnings from continuing operations	42,290	133,733
Income Tax (Expense) Benefit, Continuing Operations, Government Grants	28,030	0
Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	376,088	389,277
Customer revenues	376,088	389,277
ACMI Services [Member]
Segment Reporting Information [Line Items]
REVENUES	247,131	284,165
Customer revenues	247,131	284,165
Depreciation and amortization expense	22,981	25,312
Segment earnings (loss)	21,259	18,378
Net unallocated interest expense	(4,523)	(5,301)
Assets	807,822			811,516
ACMI Services [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	247,126	284,161
Customer revenues	247,126	284,161
All other [Member]
Segment Reporting Information [Line Items]
REVENUES	93,698	80,036
Customer revenues	93,698	80,036
Depreciation and amortization expense	1,075	983
Segment earnings (loss)	389	53
Assets	146,701			152,601
All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	68,162	58,380
Customer revenues	68,162	58,380
CAM [Member]
Segment Reporting Information [Line Items]
REVENUES	83,277	74,163
Customer revenues	83,277	74,163
Depreciation and amortization expense	46,995	43,047
Segment earnings (loss)	21,462	15,820
Net unallocated interest expense	(9,226)	(10,255)
Assets	2,093,190			$ 2,037,628
CAM [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	60,800	46,736
Customer revenues	60,800	46,736
Significant Reconciling Items [Member]
Segment Reporting Information [Line Items]
Net unallocated interest expense	(754)	(655)
Non-operating charges from a non-consolidating affiliate	(1,183)	(2,764)
Eliminate inter-segment revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	(48,018)	(49,087)
Customer revenues	(48,018)	(49,087)
Accounting Standards Update 2014-09 [Member]
Segment Reporting Information [Line Items]
Income Tax Expense (Benefit)	(12,812)
Accounting Standards Update 2014-09 [Member] | Ground Services [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	34,048	33,835
Customer revenues	34,048	33,835
Accounting Standards Update 2014-09 [Member] | All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	68,162	58,380
Customer revenues	68,162	58,380
Accounting Standards Update 2014-09 [Member] | Ground Services [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	23,460	14,609
Customer revenues	23,460	14,609
Accounting Standards Update 2014-09 [Member] | All Other non MRO or Ground Services [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	10,654	9,936
Customer revenues	$ 10,654	$ 9,936

XML

Segment Information (Narrative) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($) segments	Mar. 31, 2020 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Segment Reporting Information [Line Items]
REVENUES	$ 376,088	$ 389,277
Deferred Revenue, Revenue Recognized	2,700	2,700
Deferred Revenue	$ 1,300			$ 3,000
Number of reportable segments (in segments) | segments	2
Interest expense	$ 14,522	16,323
Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	376,088	389,277
ACMI Services [Member]
Segment Reporting Information [Line Items]
REVENUES	247,131	284,165
Interest expense	4,523	5,301
Property, Plant and Equipment, Additions	22,400
ACMI Services [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	247,126	284,161
CAM [Member]
Segment Reporting Information [Line Items]
REVENUES	83,277	74,163
Interest expense	9,226	10,255
Property, Plant and Equipment, Additions	102,500
CAM [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	60,800	$ 46,736
Flight Equipment [Member]
Segment Reporting Information [Line Items]
Operating Leases, Future Minimum Payments Receivable, Current	192,300		$ 222,400
Operating Leases, Future Minimum Payments Receivable, in Two Years	212,800		195,500
Operating Leases, Future Minimum Payments Receivable, in Three Years	168,300		150,500
Operating Leases, Future Minimum Payments Receivable, in Four Years	117,600		99,800
Operating Leases, Future Minimum Payments Receivable, in Five Years	105,400		90,700
Operating Leases, Future Minimum Payments Receivable, Thereafter	$ 275,300		$ 202,200

XML

Segment Information (Entity-Wide Disclosures) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Segment Reporting Information [Line Items]
Customer revenues	$ 376,088	$ 389,277
Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues	376,088	389,277
CAM [Member]
Segment Reporting Information [Line Items]
Customer revenues	83,277	74,163
CAM [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues	60,800	46,736
All other [Member]
Segment Reporting Information [Line Items]
Customer revenues	93,698	80,036
All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues	$ 68,162	$ 58,380

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Quarterly Results (Unaudited) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Fair Value Adjustment of Warrants	$ 6,900	$ 118,000
Income Tax (Expense) Benefit, Continuing Operations, Government Grants	28,030	0
REVENUES	376,088	389,277
Net earnings from continuing operations	42,290	133,733
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES	0	3,772
ACMI Services [Member]
REVENUES	$ 247,131	$ 284,165

XML

Acquisition of Business (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Business Acquisition [Line Items]
REVENUES	$ 376,088	$ 389,277
Goodwill	395,974		$ 395,974
Long-term Debt	1,497,830		1,479,077
Revolving Credit Facility [Member]
Business Acquisition [Line Items]
Long-term Debt	$ 160,000		$ 140,000

XML

Investments in Non-Consolidated Affiliates (Unaudited) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Noncontrolling Interest [Line Items]
Assets, Current			$ 285,177	$ 272,736
NET EARNINGS	$ 42,290	$ 137,505
Liabilities, Current			277,632	301,988
Liabilities			$ 2,147,975	$ 2,146,248
REVENUES	$ 376,088	$ 389,277