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 June 30, 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 August 9, 2021, there were 74,202,815 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	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	44
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 6.	Exhibits	46
SIGNATURES		47

FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION

The financial information, including the financial statements, included in this 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 expectations, estimates and projections as of the date of this filing, and involve risks and uncertainties that are inherently difficult to predict. Actual results may differ materially from those expressed in the forward-looking statements for any number of reasons, including those described in 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)

	June 30,		December 31,
	2021		2020
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and restricted cash	$	84,909	$	39,719
Accounts receivable, net of allowance of $890 in 2021 and $997 in 2020	176,146		153,511
Inventory	44,501		40,410
Prepaid supplies and other	27,931		39,096
TOTAL CURRENT ASSETS	333,487		272,736
Property and equipment, net	2,097,256		1,939,776
Customer incentive	114,510		126,007
Goodwill and acquired intangibles	511,001		516,290
Operating lease assets	63,925		68,824
Other assets	90,675		78,112
TOTAL ASSETS	$	3,210,854	$	3,001,745
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	172,286	$	141,425
Accrued salaries, wages and benefits	58,888		56,506
Accrued expenses	18,213		19,005
Current portion of debt obligations	622		13,746
Current portion of lease obligations	16,889		17,784
Unearned revenue and grants	68,970		53,522
TOTAL CURRENT LIABILITIES	335,868		301,988
Long term debt	1,398,470		1,465,331
Stock warrant obligations	63,085		103,474
Post-retirement obligations	25,626		35,099
Long term lease obligations	47,192		51,128
Other liabilities	47,183		47,963
Deferred income taxes	178,703		141,265
TOTAL LIABILITIES	2,096,127		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; 74,202,815 and 59,560,036 shares issued and outstanding in 2021 and 2020, respectively	742		596
Additional paid-in capital	989,611		855,547
Retained earnings	200,234		78,010
Accumulated other comprehensive loss	(75,860)		(78,656)
TOTAL STOCKHOLDERS’ EQUITY	1,114,727		855,497
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,210,854	$	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				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
REVENUES	$	409,872	$	377,794	$	785,960	$	767,071
OPERATING EXPENSES
Salaries, wages and benefits	141,524		119,503		283,540		245,034
Depreciation and amortization	75,633		68,291		146,684		137,633
Maintenance, materials and repairs	45,913		43,704		87,920		85,381
Fuel	36,592		36,787		67,034		80,586
Contracted ground and aviation services	18,794		13,546		33,597		27,895
Travel	18,501		17,315		36,905		38,972
Landing and ramp	3,026		2,772		6,135		5,517
Rent	5,726		5,198		11,594		8,684
Insurance	3,068		2,508		6,204		4,176
Other operating expenses	14,750		15,738		31,173		30,954
Government grants	(38,274)		(9,821)		(66,304)		(9,821)
Impairment of aircraft and related assets	—		39,075		—		39,075
	325,253		354,616		644,482		694,086
OPERATING INCOME	84,619		23,178		141,478		72,985
OTHER INCOME (EXPENSE)
Interest income	9		12		28		124
Non-service component of retiree benefit gains	4,456		2,898		8,913		5,796
Debt issuance costs	(6,505)		—		(6,505)		—
Net gain (loss) on financial instruments	35,703		(109,723)		45,175		(2,679)
Gain (loss) from non-consolidated affiliate	965		(6,513)		(218)		(9,277)
Interest expense	(15,021)		(16,045)		(29,543)		(32,368)
	19,607		(129,371)		17,850		(38,404)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	104,226		(106,193)		159,328		34,581
INCOME TAX BENEFIT (EXPENSE)	(24,357)		1,031		(37,169)		(6,010)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS	79,869		(105,162)		122,159		28,571
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAXES	65		236		65		4,008
NET EARNINGS (LOSS)	$	79,934	$	(104,926)	$	122,224	$	32,579
BASIC EARNINGS PER SHARE
Continuing operations	$	1.17	$	(1.78)	$	1.91	$	0.48
Discontinued operations	—		0.01		—		0.07
TOTAL BASIC EARNINGS (LOSS) PER SHARE	$	1.17	$	(1.77)	$	1.91	$	0.55
DILUTED EARNINGS PER SHARE
Continuing operations	$	0.74	$	(1.78)	1.23		0.14
Discontinued operations	—		0.01		—		0.05
TOTAL DILUTED EARNINGS (LOSS) PER SHARE	$	0.74	$	(1.77)	1.23		0.19
WEIGHTED AVERAGE SHARES
Basic	68,206		59,130		63,851		59,085
Diluted	72,964		59,130		73,849		68,104

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				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
NET EARNINGS (LOSS)	$	79,934	$	(104,926)	$	122,224	$	32,579
OTHER COMPREHENSIVE INCOME (LOSS):
Defined Benefit Pension	1,362		726		2,724		1,452
Defined Benefit Post-Retirement	36		24		72		48
TOTAL COMPREHENSIVE INCOME (LOSS), net of tax	$	81,332	$	(104,176)	$	125,020	$	34,079

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 (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total
	Number	Amount
BALANCE AT MARCH 31, 2020	59,623,195	$	596	$	476,423	$	183,400	$	(61,116)	$	599,303
Stock-based compensation plans
Grant of restricted stock	900	—		—						—
Withholdings of common shares, net of issuances	(33,825)	—		(724)						(724)
Forfeited restricted stock	(500)	—		—						—
Amortization of stock awards and restricted stock				2,130						2,130
Total comprehensive income (loss)						(104,926)		750		(104,176)
BALANCE AT JUNE 30, 2020	59,589,770	$	596	$	477,829	$	78,474	$	(60,366)	$	496,533
BALANCE AT JANUARY 1, 2020	59,329,431	$	593	$	475,720	$	45,895	$	(61,866)	$	460,342
Stock-based compensation plans
Grant of restricted stock	201,400	2		(2)						—
Issuance of common shares, net of withholdings	59,439	1		(1,840)						(1,839)
Forfeited restricted stock	(500)	—		—						—
Amortization of stock awards and restricted stock				3,951						3,951
Total comprehensive income (loss)						32,579		1,500		34,079
BALANCE AT JUNE 30, 2020	59,589,770	$	596	$	477,829	$	78,474	$	(60,366)	$	496,533

See notes to condensed consolidated financial statements.

7

AIR TRANSPORT SERVICES GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY, cont.

(In thousands, except share data)

	Common Stock			Additional Paid-in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total
	Number	Amount
BALANCE AT MARCH 31, 2021	60,641,436	$	606	$	856,090	$	120,300	$	(77,258)	$	899,738
Stock-based compensation plans
Grant of restricted stock	—	—		—						—
Withholdings of common shares, net of issuances	(1,518)	—		(39)						(39)
Conversion of warrants	13,562,897	136		131,831						131,967
Amortization of stock awards and restricted stock				1,729						1,729
Total comprehensive income (loss)						79,934		1,398		81,332
BALANCE AT JUNE 30, 2021	74,202,815	$	742	$	989,611	$	200,234	$	(75,860)	$	1,114,727
BALANCE AT JANUARY 1, 2021	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	92,234	1		(1,237)						(1,236)
Conversion of warrants	14,428,445	144		131,823						131,967
Amortization of stock awards and restricted stock				3,479						3,479
Total comprehensive income (loss)						122,224		2,796		125,020
BALANCE AT JUNE 30, 2021	74,202,815	$	742	$	989,611	$	200,234	$	(75,860)	$	1,114,727

See notes to condensed consolidated financial statements.

8

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Six Months Ended
	June 30,
	2021		2020
OPERATING ACTIVITIES:
Net earnings from continuing operations	$	122,159	$	28,571
Net earnings from discontinued operations	65		4,008
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	163,590		153,088
Pension and post-retirement	3,622		1,944
Deferred income taxes	36,613		6,597
Amortization of stock-based compensation	3,479		3,951
Loss from non-consolidated affiliates	218		9,277
Net (gain) loss on financial instruments	(45,175)		2,679
Debt issuance costs	6,505		—
Impairment of aircraft and related assets	—		39,075
Changes in assets and liabilities:
Accounts receivable	(22,688)		(3,677)
Inventory and prepaid supplies	5,107		(6,992)
Accounts payable	26,698		9,628
Unearned revenue	14,656		26,631
Accrued expenses, salaries, wages, benefits and other liabilities	6,306		(12,104)
Pension and post-retirement balances	(14,057)		(10,049)
Other	93		(3,631)
NET CASH PROVIDED BY OPERATING ACTIVITIES	307,191		248,996
INVESTING ACTIVITIES:
Expenditures for property and equipment	(300,249)		(265,882)
Proceeds from property and equipment	724		9,080
Investments in businesses	(2,482)		(5,556)
NET CASH USED IN INVESTING ACTIVITIES	(302,007)		(262,358)
FINANCING ACTIVITIES:
Principal payments on long term obligations	(1,725,919)		(543,240)
Proceeds from revolving credit facilities	1,430,600		80,000
Payments for financing costs	(2,806)		(7,507)
Proceeds from bond issuance	207,400		500,000
Proceeds from exercise of warrants	131,967		—
Withholding taxes paid for conversion of employee stock awards	(1,236)		(1,839)
NET CASH PROVIDED BY FINANCING ACTIVITIES	40,006		27,414
NET INCREASE IN CASH AND CASH EQUIVALENTS	45,190		14,052
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	39,719		46,201
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	84,909	$	60,253
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of amount capitalized	$	20,112	$	16,779
Federal and state income taxes paid	$	1,227	$	650
SUPPLEMENTAL NON-CASH INFORMATION:
Accrued expenditures for property and equipment	$	40,143	$	44,171

See notes to condensed to consolidated financial statements.

9

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	11
Note B - Goodwill, Intangibles and Equity Investments	12
Note C - Significant Customers	13
Note D - Fair Value Measurements	16
Note E - Property and Equipment	17
Note F - Debt Obligations	18
Note G - Derivative Instruments	20
Note H - Commitments and Contingencies	20
Note I - Pension and Other Post-Retirement Benefit Plans	23
Note J - Income Taxes	24
Note K - Accumulated Other Comprehensive Income (Loss)	24
Note L - Stock-Based Compensation	26
Note M - Common Stock and Earnings Per Share	27
Note N - Segment and Revenue Information	28

10

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.

11

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 June 30, 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	—		(5,289)		(5,289)
Carrying value as of June 30, 2021	$	9,000	$	106,027	$	115,027

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

12

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	(11,497)
Carrying value as of June 30, 2021	$	114,510

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 six months of 2021 and 2020, the Company contributed $2.5 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 affiliate's 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 and six month periods ending June 30, 2021 and 2020 are as follows:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2021	2020	2021	2020
Customer	Percentage of Revenue		Percentage of Revenue
DoD	25%	33%	24%	32%
Amazon	37%	29%	36%	29%
DHL	13%	12%	13%	11%

13

The accounts receivable from the Company's three largest customers as of June 30, 2021 and December 31, 2020 are as follows (in thousands):

	June 30,		December 31,
	2021		2020
Customer	Accounts Receivable
DoD	$	40,060	$	32,625
Amazon	68,548		55,997
DHL	11,456		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, maintenance services 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.

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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, seven more leases began in the first half of 2021 with the remaining four 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 4.7 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 June 30, 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	4.7	2.3	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 June 30, 2021, the Company's liabilities reflected warrants primarily from the 2018 Investment agreement for the May 2020 lease commitment, having a fair value of $63.1 million. During the three and six month periods ended June 30, 2021, the re-measurements of warrants to fair value resulted in net non-operating gains of $33.5 million and $40.4 million before the effect of income taxes, respectively, compared to losses of $110.4 million and gains of $7.5 million for the corresponding periods of 2020.

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 June 30, 2021	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Assets
Cash equivalents—money market	$	—	$	10,040	$	—	$	10,040
Total Assets	$	—	$	10,040	$	—	$	10,040
Liabilities
Interest rate swap	$	—	$	(8,628)	$	—	$	(8,628)
Stock warrant obligations	—		—		(63,085)		(63,085)
Total Liabilities	$	—	$	(8,628)	$	(63,085)	$	(71,713)

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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 $24.5 million more than the carrying value, which was $1,399.1 million at June 30, 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):

	June 30,		December 31,
	2021		2020
Flight equipment	$	3,116,838	$	2,856,142
Ground equipment	64,245		65,857
Leasehold improvements, facilities and office equipment	38,309		36,193
Aircraft modifications and projects in progress	246,856		231,451
	3,466,248		3,189,643
Accumulated depreciation	(1,368,992)		(1,249,867)
Property and equipment, net	$	2,097,256	$	1,939,776

CAM owned aircraft with a carrying value of $1,274.3 million and $1,097.6 million that were under lease to external customers as of June 30, 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):

	June 30,		December 31,
	2021		2020
Senior Notes	$	697,168	$	493,376
Revolving credit facility	464,000		140,000
Unsubordinated term loans	—		612,169
Convertible debt	226,977		222,391
Other financing arrangements	10,947		11,141
Total debt obligations	1,399,092		1,479,077
Less: current portion	(622)		(13,746)
Total long term obligations, net	$	1,398,470	$	1,465,331

The Company utilizes a syndicated credit agreement ("Senior Credit Agreement") which, as of June 30, 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 through 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.

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 $800.0 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 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.

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 proceeds of $205.5 million, net of scheduled interest payable, were used, in conjunction with draws from the revolving credit facility to repay the unsubordinated term loans. Upon retirement the unsubordinated term loans, the company expensed debt issuance costs of $6.5 million related to the unsubordinated term loans.

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As of June 30, 2021, the unused revolving credit facility available to the Company at the trailing twelve month EBITDA level was $321.7 million, and additional permitted indebtedness under the Senior Credit Agreement subject to compliance with other covenants, was limited to $250.0 million.

The balance of the Senior Notes is net of debt issuance costs of $8.2 million and $6.6 million as of June 30, 2021 and December 31, 2020, respectively. The balance of the unsubordinated term loan was net of debt issuance costs of $7.0 million as of December 31, 2020. 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 revolving credit facility bears a variable interest rate of 1.33%. The Senior Notes bears 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.

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. 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 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.

	June 30,	December 31,
	2021	2020
Principal value, Convertible Senior Notes, due 2024	258,750	258,750
Unamortized issuance costs	(3,396)	(3,894)
Unamortized discount	(28,377)	(32,465)
Convertible debt	226,977	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 required 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):

			June 30, 2021		December 31, 2020
Expiration Date	Stated Interest Rate		Notional Amount	Market Value (Liability)	Notional Amount	Market Value (Liability)
May 5, 2021	1.090	%	—	—	13,125	(41)
May 30, 2021	1.703	%	—	—	13,125	(80)
December 31, 2021	2.706	%	135,000	(1,779)	138,750	(3,551)
March 31, 2022	1.900	%	50,000	(677)	50,000	(1,116)
March 31, 2022	1.950	%	75,000	(1,045)	75,000	(1,722)
March 31, 2023	2.425	%	136,875	(5,127)	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 net gains on derivatives of $2.3 million and $4.8 million for the three and six month periods ending June 30, 2021, respectively, compared to a net gain of $0.7 million and a net loss of $10.2 million for the corresponding periods of 2020. The liability for outstanding derivatives is recorded in other liabilities and in accrued expenses.

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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 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 and six month periods ended June 30, 2021, the Company recognized $38.3 million and $66.3 million of the grants, respectively. The Company expects to recognize all of grant funds into earnings by December 31, 2021. As of June 30, 2021, grants approved and received but not recognized totaled $45.4 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, seven 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 six month period ending June 30, 2021, non-cash transactions to recognize right-to-use assets and corresponding liabilities for new leases were $5.9 million compared to $23.9 million for the corresponding period of 2020. 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 June 30, 2021 was 2.55% 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 4.1 years and 4.5 years as of June 30, 2021 and December 31, 2020, respectively.

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For the six month periods ended June 30, 2021 and 2020, cash payments against operating lease liabilities were $10.7 million and $8.3 million, respectively. As of June 30, 2021, the maturities of operating lease liabilities are as follows (in thousands):

	Operating Leases
Remaining 2021	$	9,391
2022	17,397
2023	16,022
2024	12,529
2025	8,733
2026 and beyond	3,352
Total undiscounted cash payments	67,424
Less: amount representing interest	(3,343)
Present value of future minimum lease payments	64,081
Less: current obligations under leases	16,889
Long-term lease obligation	$	47,192

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 June 30, 2021, the Company had fifteen aircraft that were in or awaiting the modification process. As of June 30, 2021, the Company has agreements to purchase six more Boeing 767-300 passenger aircraft and two Airbus 321 passenger aircraft through 2022 with non-refundable deposits of $5.1 million. As of June 30, 2021, the Company's commitments to acquire and convert aircraft totaled $277.4 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 June 30, 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	9.0%
OAI	International Brotherhood of Teamsters	6.2%
ATI	Association of Flight Attendants	0.6%
OAI	Association of Flight Attendants	5.9%

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 June 30,								Six Months Ended June 30,
	Pension Plans				Post-Retirement Healthcare Plan				Pension Plans				Post-Retirement Healthcare Plan
	2021		2020		2021		2020		2021		2020		2021		2020
Service cost	$	—	$	—	$	24	$	35	—		—		48		69
Interest cost	5,597		6,970		10		23		11,194		13,940		20		45
Expected return on plan assets	(11,875)		(11,168)		—		—		(23,750)		(22,336)		—		—
Amortization of net loss	1,764		941		47		31		3,528		1,882		94		62
Net periodic benefit cost (income) loss	$	(4,514)	$	(3,257)	$	81	$	89	$	(9,028)	$	(6,514)	$	162	$	176

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During the six month period ending June 30, 2021, the Company contributed $1.4 million to the pension plans. The Company expects to contribute an additional $0.3 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 June 30, 2021 have been estimated utilizing a 23% 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 six 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 2024 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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NOTE K—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) includes the following items by components for the three and six month periods ending June 30, 2021 and 2020 (in thousands):

	Defined Benefit Pension	Defined Benefit Post-Retirement	Foreign Currency Translation	Total
Balance as of March 31, 2020	(60,426)	(678)	(12)	(61,116)
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 June 30, 2020	(59,700)	(654)	(12)	(60,366)
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)	1,882	62	—	1,944
Income Tax (Expense) or Benefit	(430)	(14)	—	(444)
Other comprehensive income, net of tax	1,452	48	—	1,500
Balance as of June 30, 2020	(59,700)	(654)	(12)	(60,366)

	Defined Benefit Pension	Defined Benefit Post-Retirement	Foreign Currency Translation	Total
Balance as of March 31, 2021	(76,731)	(513)	(14)	(77,258)
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 June 30, 2021	(75,369)	(477)	(14)	(75,860)
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)	3,528	94	—	3,622
Income Tax (Expense) or Benefit	(804)	(22)	—	(826)
Other comprehensive income, net of tax	2,724	72	—	2,796
Balance as of June 30, 2021	(75,369)	(477)	(14)	(75,860)

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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.

	Six Months Ended
	June 30, 2021			June 30, 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		437,054	18.85
Converted	(120,830)	25.40		(200,563)	19.87
Expired	(1,200)	26.60		(34,100)	19.40
Forfeited	—	—		(1,000)	18.90
Outstanding at end of period	1,237,599	$	18.44	1,165,223	$	17.69
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 six month periods ended June 30, 2021 and 2020, the Company recorded expense of $3.5 million and $4.0 million, respectively, for stock incentive awards. At June 30, 2021, there was $10.6 million of unrecognized expense related to the stock incentive awards that is expected to be recognized over a weighted-average period of 1.5 years. As of June 30, 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 1,535,949 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				Six Months Ending
	June 30,				June 30,
	2021		2020		2021		2020
Numerator:
Earnings from continuing operations - basic	$	79,869	$	(105,162)	$	122,159	$	28,571
Gain from stock warrants revaluation, net of tax	(25,816)		—		(31,171)		(19,312)
Earnings from continuing operations - diluted	$	54,053	$	(105,162)	$	90,988	$	9,259
Denominator:
Weighted-average shares outstanding for basic earnings per share	68,206		59,130		63,851		59,085
Common equivalent shares:
Effect of stock-based compensation awards and warrants	4,758		—		9,998		9,019
Weighted-average shares outstanding assuming dilution	72,964		59,130		73,849		68,104
Basic earnings per share from continuing operations	$	1.17	$	(1.78)	$	1.91	$	0.48
Diluted earnings per share from continuing operations	$	0.74	$	(1.78)	$	1.23	$	0.14

Basic weighted average shares outstanding for purposes of basic earnings per share are less than the shares outstanding due to 482,300 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				Six Months Ending
	June 30,				June 30,
	2021		2020		2021		2020
Total revenues:
CAM	$	88,594	$	74,870	$	171,871	$	149,033
ACMI Services	273,301		287,604		520,432		571,769
All other	97,236		77,056		190,934		157,092
Eliminate inter-segment revenues	(49,259)		(61,736)		(97,277)		(110,823)
Total	$	409,872	$	377,794	$	785,960	$	767,071
Customer revenues:
CAM	$	66,676	$	49,959	$	127,476	$	96,695
ACMI Services	273,295		287,595		520,422		571,756
All other	69,901		40,240		138,062		98,620
Total	$	409,872	$	377,794	$	785,960	$	767,071

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.

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The Company records revenues and estimated earnings over time for its airframe maintenance and aircraft modification contracts using the costs to costs input method. For such services, the Company estimates the earnings on a contract as the difference between the expected revenue and estimated costs to complete a contract and recognizes revenues and earnings based on the proportion of costs incurred compared to the total estimated costs. Unexpected or abnormal costs that are not reflected in the price of a contract are excluded from calculations of progress toward contract obligations. The Company's estimates consider the timing and extent of the services, including the amount and rates of labor, materials and other resources required to perform the services. These production costs are specifically planned and monitored for regulatory compliance. The expenditure of these costs closely reflect the progress made toward completion of an airframe maintenance and aircraft modification project. The Company recognizes adjustments in estimated earnings on a contract under the cumulative catch-up method in which the impact of the adjustment on estimated earnings of a contract is recognized in the period the adjustment is identified.

The Company's ground services revenues include load transfer and sorting services, facility and equipment maintenance services. These revenues are recognized as the services are performed for the customer over time. Revenues from related facility and equipment maintenance services are recognized over time and at a point in time depending on the nature of the customer contracts.

The Company's external customer revenues from other activities for the three and six month periods ended June 30, 2021 and 2020 are presented below (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Aircraft maintenance, modifications and part sales	$	28,791	$	18,851	$	62,839	$	52,686
Ground services	29,022		16,003		52,482		30,611
Other, including aviation fuel sales	12,088		5,386		22,741		15,323
Total customer revenues	$	69,901	$	40,240	$	138,062	$	98,620

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 June 30, 2021, minimum future payments from external customers for leased aircraft and equipment were scheduled to be $125.9 million for the remainder of 2021, $227.0 million, $182.5 million, $131.9 million, $118.8 million, respectively, for each of the next 4 years ending December 31, 2025 and $333.4 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 and six month periods ending June 30, 2021 and 2020, the Company recognized $1.0 million and $2.7 million of non lease revenue that was reported in deferred revenue at the beginning of the respective period, respectively, compared to $1.6 million and $2.8 million in the corresponding periods of 2020. Deferred revenue was $1.2 million and $3.0 million at June 30, 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				Six Months Ending
	June 30,				June 30,
	2021		2020		2021		2020
Depreciation and amortization expense:
CAM	$	50,012	$	42,024	$	97,007	$	85,071
ACMI Services	24,768		25,384		47,749		50,696
All other	853		883		1,928		1,866
Total	$	75,633	$	68,291	$	146,684	$	137,633
Interest expense
CAM	9,669		9,707		18,895		19,962
ACMI Services	4,473		5,645		8,996		10,946
Government grants recognized
ACMI Service	38,274		9,821		66,304		9,821
Segment earnings (loss):
CAM	$	22,554	$	19,640	$	44,016	$	35,460
ACMI Services	44,762		29,505		66,021		47,883
All other	3,161		(2,244)		3,550		(2,191)
Net unallocated interest expense	(870)		(681)		(1,624)		(1,336)
Impairment of aircraft and related assets	—		(39,075)		—		(39,075)
Net gain (loss) on financial instruments	35,703		(109,723)		45,175		(2,679)
Debt issuance costs	(6,505)		—		(6,505)		—
Other non-service components of retiree benefit costs, net	4,456		2,898		8,913		5,796
Loss from non-consolidated affiliate	965		(6,513)		(218)		(9,277)
Pre-tax earnings from continuing operations	$	104,226	$	(106,193)	$	159,328	$	34,581

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

	June 30,		December 31
	2021		2020
Assets:
CAM	$	2,199,262	$	2,037,628
ACMI Services	829,365		811,516
All other	182,227		152,601
Total	$	3,210,854	$	3,001,745

During the first six months of 2021, the Company had capital expenditures for property and equipment of $48.8 million and $251.8 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 ("GAAP") contained in this report and the audited consolidated financial statements and related notes prepared in accordance with GAAP contained in 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, face masks as required by applicable governing authorities, periodically sanitizing facilities, supporting remote working, travel restrictions, promoting social distancing and frequent hand washing, contact tracing and quarantining as 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 of our employee locations. However, a COVID-19 outbreak at one of our maintenance facilities, an aircraft modification facility, or at customer sorting centers could result in workforce shortages and facility closures. A COVID-19 outbreak among our flight crews, at one of our maintenance facilities, at a critical vendor, at a customer sorting center or at an airport could result in workforce shortages, facility closures, delayed aircraft deployments and additional flight cancellations. In such events, flight delays, revenue disruptions and additional costs would result.

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 June 30, 2021, we owned 103 Boeing aircraft that were in revenue service. At June 30, 2021, CAM also owned fifteen Boeing 767-300 aircraft either already undergoing or awaiting induction into the freighter conversion process. In addition to these aircraft, we leased three 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 24% and 32% of our consolidated revenues during the six month periods ended June 30, 2021 and 2020, respectively. Our 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 COVID-19 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 36% and 29% of our consolidated revenues during the six month periods ending June 30, 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, perform maintenance services 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 June 30, 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	7	2021	2031
Lease Commitments
	Boeing 767-300	4	2021	2031

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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.

DHL

DHL accounted for 13% and 11% of the Company's consolidated revenues, excluding directly reimbursed revenues, during the six month periods ending June 30, 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 June 30, 2021, 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 our 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.

In May 2021, CAM reached an agreement with DHL to lease four more Boeing 767-300 converted freighter to DHL each for a term of seven years. Three of the four aircraft leases are expected to begin in the second half of 2021 with the fourth beginning in 2022.

RESULTS OF OPERATIONS

Summary

External customer revenues from continuing operations increased by $32.1 million, or 8%, to $409.9 million and $18.9 million, or 2%, to $786.0 million for the three and six month periods ended June 30, 2021 compared to the corresponding periods of 2020. Customer revenues increased in 2021 for aircraft leasing and flying for our customers' package delivery networks, and were partially offset by decreases in contracted passenger airline services and charter flights 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.

Consolidated net earnings from continuing operations were $79.9 million and $122.2 million for the three and six month periods ending June 30, 2021, respectively, compared to net losses of $105.2 million and net earnings of $28.6 million for the corresponding periods of 2020. The pre-tax earnings from continuing operations were $104.2 million and $159.3 million for the three and six month periods ending June 30, 2021, respectively, compared to pre-tax losses of $106.2 million and pre-tax earnings of $34.6 million for the corresponding periods of 2020. Earnings were affected by the following specific events or adjustments that do not directly reflect our underlying operations among the periods presented.

•Pre-tax basis earnings included net gains of $35.7 million and $45.2 million for the three and six month periods ended June 30, 2021, respectively, for the re-measurement of financial instruments, including

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warrant obligations granted to Amazon. This compares to pre-tax losses for re-measurement of financial instruments of $109.7 million and $2.7 million for the corresponding periods of 2020.

•Pre-tax earnings were also reduced by $5.8 million and $11.5 million for the three and six month periods ended June 30, 2021, respectively, for the amortization of customer incentives given to ASI in the form of warrants, compared to $4.9 million and $9.8 million for the corresponding periods of 2020.

•Pre-tax earnings from continuing operations included gains of $4.5 million and $8.9 million for the three and six month periods ended June 30, 2021, respectively, for the non-service components of retiree benefit plans compared to gains of $2.9 million and $5.8 million for the corresponding periods of 2020.

•Pre-tax earnings for the three and six month periods ended June 30, 2021 included gains of $1.0 million and losses of $0.2 million, respectively, for the Company's share of development costs for a joint venture and the partial sale of an airline investment, compared to losses of $6.5 million and $9.3 million for the corresponding periods of 2020.

•Pre-tax earnings for the three and six month periods ended June 30, 2020 included an impairment of $39.1 million for our four Boeing 757 freighter aircraft and related asset.

•Pre-tax earnings for the three and six month periods ended June 30, 2021 included a charge of $6.5 million to write-off debt issuance costs in conjunction with the restructuring of the Company debt obligations.

•During the three and six month periods ended June 30, 2021, the Company recognized $38.3 million and $66.3 million, respectively, of government grants from payroll support program agreements during the pandemic compared to $9.8 million and $9.8 million for the corresponding periods of 2020 .

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 $37.1 million and $57.2 million for the three and six month periods ended June 30, 2021, respectively, compared to $41.3 million and $79.7 million for the corresponding periods of 2020. Adjusted pre-tax earnings from continuing operations, which excludes the recognition of COVID-19 related government grants, decreased by $4.2 million and $22.6 million for the three and six month periods ended June 30, 2021 compared to the corresponding periods of 2020, driven primarily by reduced ACMI Services revenues for passenger flying compared to the corresponding periods of 2020.

Pre-tax segment earnings for CAM increased $2.9 million and $8.6 million for the three and six month periods ended June 30, 2021, respectively, compared to the corresponding periods of 2020, driven by 17 more aircraft under lease to external customers during the first half of 2021. Pre-tax segment earnings for ACMI Services, which includes government grants, increased $15.3 million and $18.1 million during the three and six month periods ended June 30, 2021, respectively, compared to the corresponding periods of 2020, as reduced passenger flying due to COVD-19 was offset by the recognition of additional pandemic-related government grants.

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

	Three Months Ending				Six Months Ending
	June 30,				June 30,
	2021		2020		2021		2020
Revenues from Continuing Operations:
CAM
Aircraft leasing and related services	$	93,624	$	79,345	$	181,853	$	157,954
Lease incentive amortization	(5,030)		(4,475)		(9,982)		(8,921)
Total CAM	88,594		74,870		171,871		149,033
ACMI Services	273,301		287,604		520,432		571,769
Other Activities	97,236		77,056		190,934		157,092
Total Revenues	459,131		439,530		883,237		877,894
Eliminate internal revenues	(49,259)		(61,736)		(97,277)		(110,823)
Customer Revenues	$	409,872	$	377,794	$	785,960	$	767,071
Pre-Tax Earnings (Loss) from Continuing Operations:
CAM, inclusive of interest expense	$	22,554	$	19,640	$	44,016	$	35,460
ACMI Services, inclusive of government grants and interest expense	44,762		29,505		66,021		47,883
Other Activities	3,161		(2,244)		3,550		(2,191)
Net unallocated interest expense	(870)		(681)		(1,624)		(1,336)
Impairment of aircraft and related assets	—		(39,075)		—		(39,075)
Net financial instrument re-measurement (loss) gain	35,703		(109,723)		45,175		(2,679)
Debt issuance costs	(6,505)		—		(6,505)		—
Other non-service components of retiree benefits gains, net	4,456		2,898		8,913		5,796
Gain (loss) from non-consolidated affiliate	965		(6,513)		(218)		(9,277)
Pre-Tax Earnings (Loss) from Continuing Operations	104,226		(106,193)		159,328		34,581
Add other non-service components of retiree benefit (gains) costs, net	(4,456)		(2,898)		(8,913)		(5,796)
Remove government grants	(38,274)		(9,821)		(66,304)		(9,821)
Add impairment of aircraft and related assets	—		39,075		—		39,075
Remove (gain) add loss for non-consolidated affiliates	(965)		6,513		218		9,277
Add debt issuance costs	6,505		—		6,505		—
Add customer incentive amortization	5,798		4,896		11,497		9,753
Remove (gain) add net loss on financial instruments	(35,703)		109,723		(45,175)		2,679
Adjusted Pre-Tax Earnings from Continuing Operations	$	37,131	$	41,295	$	57,156	$	79,748

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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; (v) the charge off of debt issuance costs; and (vi) 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 operating results. Management uses adjusted pre-tax earnings to compare the performance of core operating results between periods. Presenting this measure provides 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.

Aircraft Fleet Summary

Our fleet of cargo and passenger aircraft is summarized in the following table as of June 30, 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 June 30, 2021, the Company owned fifteen Boeing 767-300 aircraft that were either already undergoing or awaiting induction into the freighter conversion process.

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

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

•ATI returned three Boeing 767-300 freighter aircraft to CAM. CAM leased all three of these aircraft to an external customer under a multi-year lease. ATI operates these aircraft for the customer.

•External customers returned three Boeing 767-200 freighter aircraft to CAM. Two of these aircraft were leased to other external customers under multi-year leases. The third aircraft is being prepped for lease to another external customer later in 2021.

•CAM purchased twelve 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 and 2022.

•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.

•ATI began to operate a customer owned Boeing 767-300 freighter aircraft.

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	June 30, 2021			December 31, 2020
	ACMI Services	CAM	Total	ACMI Services	CAM	Total
In-service aircraft
Aircraft owned
Boeing 767-200 Freighter	5	27	32	5	28	33
Boeing 767-200 Passenger	2	—	2	2	—	2
Boeing 767-300 Freighter	3	53	56	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	80	103	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	3	—	3	2	—	2
Total	7	—	7	6	—	6
Other aircraft
Owned Boeing 767-300 under modification	—	15	15	—	8	8
Owned Boeing 767 available or staging for lease	—	1	1	—	—	—

As of June 30, 2021, ABX, ATI and OAI were leasing 23 in-service aircraft internally from CAM for use in ACMI Services. Of CAM's 27 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 nine were leased to other external customers. Of the 53 externally leased Boeing 767-300 freighter aircraft, 26 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. The carrying values of the total in-service fleet as of June 30, 2021 and December 31, 2020 were $1,618.1 million and $1,535.3 million, respectively.

The table above does not reflect 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 June 30, 2021 and 2020, CAM had 80 and 63 aircraft under lease to external customers, respectively. CAM's revenues grew by $13.7 million and $22.8 million for the three and six month periods ended June 30, 2021, respectively, compared to the corresponding periods of 2020, primarily as a result of additional aircraft leases. Revenues from external customers totaled $66.7 million and $127.5 million for the three and six month periods ended June 30, 2021, respectively, compared to $50.0 million and $96.7 million for the corresponding periods of 2020. CAM's revenues from the Company's airlines totaled $21.9 million and $44.4 million for the three and six month periods ended June 30, 2021, respectively, compared to $24.9 million and $52.3 million for the corresponding periods of 2020. CAM's aircraft leasing and related services revenues, which exclude customer lease incentive amortization, increased $14.3 million and $23.9 million for the three and six month periods ended June 30, 2021 compared to the corresponding periods of 2020, primarily as a result of new aircraft leases in 2021. Since July 1, 2020, CAM has added 16 Boeing 767-300 aircraft to its portfolio and placed 17 Boeing 767-300 aircraft to external customers under long-term leases.

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CAM's pre-tax segment earnings, inclusive of internally allocated interest expense, were $22.6 million and $44.0 million for the three and six month periods ended June 30, 2021, respectively, compared to $19.6 million and $35.5 million for the corresponding periods of 2020. Increased pre-tax earnings reflect the 16 aircraft placed into service since July 1, 2020. The pre-tax earnings are inclusive of increased depreciation expense of $8.0 million and $11.9 million for the three and six month periods ended June 30, 2021, respectively, compared to the corresponding periods of 2020 driven by the addition of 16 Boeing aircraft in 2021 compared to the first half of 2020.

In addition to the fifteen Boeing 767-300 aircraft which were in the modification process at June 30, 2021, CAM has agreements to purchase six more Boeing 767-300 aircraft and expects to complete their modifications through 2022. 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 place at least nine more B767-300 freighter under long-term leases in the second half of 2021, bringing the planned total for 2021 to 16, 12 newly modified Boeing 767-300 freighters and four re-deployed Boeing 767-300 freighters, 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 half of 2021, three leases for 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 $14.3 million and $51.3 million during the three and six month periods ended June 30, 2021, respectively, to $273.3 million and $520.4 million compared to the corresponding periods of 2020. Revenues for the first half of 2021 were impacted by the COVID-19 pandemic more so than the revenues for the first half 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. Additionally, during 2020, the DoD and other government agencies contracted for special airlift capacity and missions which have not occurred at the same levels in 2021. Combined block hours flown for all passenger flights, including contracted commercial passenger and combi flights, for the three and six month periods ending June 30, 2021, declined 8% and 28%, respectively, compared to the corresponding periods of 2020 due to the pandemic.

The decline in revenues was partially mitigated by increased flying for customer e-commerce networks. Overall billable block hours increased 18% and 6% for the three and six month periods ending June 30, 2021, respectively, compared to the corresponding periods of 2020 and reflect nine more aircraft added since June 30, 2020. During the first half of 2021, we began to operate seven more CAM-owned Boeing 767-300 aircraft under the Amazon ATSA and one more customer provided Boeing 767-300 aircraft. As of June 30, 2021, ACMI Services included 76 in-service aircraft compared to 67 as of June 30, 2020.

ACMI Services had pre-tax segment earnings of $44.8 million and $66.0 million during the three and six month periods ended June 30, 2021, respectively, compared to $29.5 million and $47.9 million for the corresponding periods of 2020 inclusive of internally allocated interest expense and the recognition of pandemic-related government grants of $38.3 million and $66.3 million in the three and six months periods ended June 30, 2021 and $9.8 million and $9.8 million in the corresponding periods of 2020. Internally allocated interest expense decreased by $1.2 million and $2.0 million for the three and six month periods ended June 30, 2021, to $4.5 million and $9.0 million, respectively, compared to the corresponding periods in 2020.

Maintaining profitability in ACMI Services will depend on a number of factors, including the impact of the COVID-19 pandemic on airports and ground operations, customer flight schedules, crewmember productivity and pay, employee benefits, aircraft maintenance schedules and the number of aircraft 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 due to the pandemic. The DoD has reduced normal personnel movements and demand for commercial passenger charters remains low for 2021. We expect Amazon to lease at least four more Boeing 767-300 freighter

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aircraft from CAM during the last six 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 one 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 $29.7 million and $39.4 million for the three and six month periods ended June 30, 2021, respectively, compared to the corresponding periods of 2020. Broad revenue increases during the second quarter of 2021 were lead by ground services revenues which increased over 80% compared to the previous year period. The pre-tax earnings from other activities increased by $5.4 million and $5.7 million during the three and six month periods ended June 30, 2021 to $3.2 million and $3.6 million, compared to the corresponding periods of 2020 as a result of higher revenues.

Expenses from Continuing Operations

Salaries, wages and benefits expense increased $22.0 million, or 18%, and $38.5 million, or 16%, during the three and six month periods ended June 30, 2021, respectively, 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 10% as of June 30, 2021 compared to June 30, 2020, including additional personnel for the two USPS mail contracts added since last year. Additionally, increases since July 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. 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 the annual impact on compensation costs for the year 2021 to be $7 million to $8 million for ABX pilots.

Depreciation and amortization expense increased $7.3 million and $9.1 million during the three and six month periods ended June 30, 2021, respectively, compared to the corresponding period of 2020. The increase reflects incremental depreciation for sixteen Boeing 767-300 aircraft and additional aircraft engines added to the operating fleet since the July 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 $2.2 million and $2.5 million during the three and six month periods ended June 30, 2021, respectively, compared to the corresponding period of 2020. Increased maintenance expense for the first half of 2021 was driven by increased flight operations for our customers' express cargo networks and increased heavy maintenance, 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 $0.2 million and $13.6 million during the three and six month periods ended June 30, 2021, respectively, 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 half of 2021 compared to 2020 primarily due to lower block hours for passenger flight services, particularly during the first quarter of 2021 compared to 2020. Decreases in fuel expense were partially offset by additional customer fuel sales compared to 2020.

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

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$5.2 million and $5.7 million during the three and six month periods ended June 30, 2021, respectively, compared to the corresponding period of 2020. The increases were driven by additional ground equipment installation projects for customers and higher fees for airports services compared to the previous year periods.

Travel expense increased by $1.2 million and decreased by $2.1 million during the three and six month periods ended June 30, 2021, respectively, compared to the corresponding period of 2020. The decrease in travel expense for the first six months of the year was due to less employee travel and the lower costs of air travel during the first quarter of 2021 compared to the first quarter of 2020, before all pandemic travel restrictions were in effect. The increase in travel expense during the second quarter of 2021 reflects in increase in employee travel to support improved block hours flown for customers, which increased 18% compared to the second quarter of 2020.

Landing and ramp expense, which includes the cost of deicing chemicals, increased by $0.3 million and $0.6 million during the three and six month periods ended June 30, 2021, respectively, compared to the corresponding period of 2020, driven by increased block hours for our customers' express cargo networks.

Rent expense increased by $0.5 million and $2.9 million during the three and six month periods ended June 30, 2021, respectively, 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 $0.6 million and $2.0 million during the three and six month periods ended June 30, 2021, respectively, compared to the corresponding period of 2020. Aircraft fleet insurance has increased due to additional aircraft operations and higher insurance rates during the first half of 2021 compared to 2020.

Other operating expenses decreased by $1.0 million and increased by $0.2 million during the three and six month periods ended June 30, 2021, respectively, 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 $38.3 million and $66.3 million during the three and six month periods ended June 30, 2021, respectively, compared to $9.8 million and $9.8 million during the corresponding periods of 2020, 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 $1.0 million and $2.8 million during the three and six month periods ended June 30, 2021, respectively, compared to the corresponding period of 2020. Interest expense during the first half 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, the Company recorded a pre-tax charge of $6.5 million to write-off the unamortized debt issuance costs of the Company's term loans which were repaid in full during April 2021.

The Company recorded unrealized pre-tax gains on financial instruments re-measurements of $35.7 million and $45.2 million during the three and six month periods ended June 30, 2021, respectively, compared to pre-tax losses of $109.7 million and $2.7 million for the corresponding periods of 2020. The gains and losses include the results of re-valuing, as of June 30, 2021 and 2020, the fair value of the stock warrants granted to Amazon. Generally, the warrant value increases or decreases with corresponding increases or decreases in the ATSG share price during the measurement period. Warrant gains for the first six months of 2021 reflect a 26% decrease in the traded price of ATSG shares.

Non-service components of retiree benefits were a net gain of $4.5 million and $8.9 million for the three and six month periods ended June 30, 2021, respectively, compared to $2.9 million and $5.8 million for the corresponding periods of 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

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estimated amount of taxable income related to prior periods. Income taxes recorded through June 30, 2021 have been estimated utilizing a 23% 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 both the three and six month periods ended June 30, 2021 was 23%. The effective tax rate is affected by 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 both the three and six month periods ended June 30, 2021. The effective tax rate before including the effects of the warrants was 1% and 17% for the three and six month periods ended June 30, 2020, respectively.

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 $0.1 million for the first six months of 2021 compared to $5.2 million for 2020. Pre-tax earnings during 2021 and 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 $307.2 million and $249.0 million for the first six 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 $83.0 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 $1.4 million and $1.6 million for the first six 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 $300.2 million and $265.9 million for the first six months of 2021 and 2020, respectively. Capital expenditures in the first half of 2021 included $200.1 million for the acquisition of twelve Boeing 767-300 aircraft and freighter modification costs; $94.5 million for required heavy maintenance; and $5.6 million for other equipment. Capital expenditures in the first half of 2020 included $188.2 million for the acquisition of seven Boeing 767-300 aircraft and freighter modification costs; $47.2 million for required heavy maintenance; and $30.5 million for other equipment, including the purchases of aircraft engines and rotables.

During the first six months of 2021 and 2020, we contributed $2.5 million and $5.6 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 $40.0 million during the first six months of 2021 compared to $27.4 million in 2020. Financing activities include $132 million remitted by Amazon on May 7, 2021 to exercise warrants for the Company's common stock, as described in Note C of the accompanying financial statements. During the first six months in 2021, we made debt principal payments of $1,725.9 million which included payments of $619.1 million to repay the entire balance of all term loans and payments of $1,106.6 million to the revolving credit facility. Our financing activities during the first six months in 2020 included a debt offering of a $200 million add-on to our senior unsecured notes. During the first six months in 2021, we drew $1,430.6 million from the revolving credit facility. The proceeds from the senior notes add-on, the funds received from Amazon and draws on the revolving credit facility resulted in the retirement of the term loans and a larger outstanding balance under the revolving credit agreement. During the first six months in 2020, we drew $80.0 million from the revolving credit facility. Our financing activities during the first six months in 2020 included a debt offering of $500 million in senior unsecured notes which was 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.

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Commitments

As of June 30, 2021, the Company had fifteen aircraft that were in or awaiting the modification process. We estimate that capital expenditures for 2021 will total at least $550 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 have placed non-refundable deposits and have agreements to purchase six more Boeing 767-300 passenger aircraft and two Airbus 321 passenger aircraft through 2022. 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 June 30, 2021, the Company had $84.9 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. The Senior Notes are senior unsecured obligations that bear interest at a rate of 4.75% per year, and mature on February 1, 2028. 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 previously-issued Senior Notes (other than issue date and issue price) and mature on February 1, 2028.

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

42

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 June 30, 2021, the unused revolving credit facility totaled $321.7 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 1.33%, 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 June 30, 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.

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.

43

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

As of June 30, 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.

44

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 second quarter of 2021. As of June 30, 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 were 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.

45

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. (3)
10.2	Amendment to Investment Agreement, dated as of March 5, 2021, by and between Air Transport Services Group, Inc., and Amazon.com, Inc. (3)
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.

(3)Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2021.

46

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:	August 9, 2021
		/S/  QUINT O. TURNER
		Quint O. Turner
		Chief Financial Officer (Principal Financial Officer
Date:	August 9, 2021	and Principal Accounting Officer)

47

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: August 9, 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: August 9, 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 June 30, 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: August 9, 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 June 30, 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: August 9, 2021

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Aug. 09, 2021
Cover [Abstract]
Document Type	10-Q
Document Period End Date	Jun. 30, 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	--06-30
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		74,202,815
Document Quarterly Report	true
Document Information [Line Items]
Document Period End Date	Jun. 30, 2021

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
CURRENT ASSETS:
Cash, cash equivalents and restricted cash	$ 84,909	$ 39,719
Accounts receivable, net of allowance of $890 in 2021 and $997 in 2020	176,146	153,511
Inventory	44,501	40,410
Prepaid supplies and other	27,931	39,096
TOTAL CURRENT ASSETS	333,487	272,736
Property and equipment, net	2,097,256	1,939,776
Lease incentive	114,510	126,007
Other assets	90,675
Goodwill and acquired intangibles	511,001	516,290
Operating lease assets	63,925	68,824
Intangibles	115,027	120,316
Goodwill	395,974	395,974
TOTAL ASSETS	3,210,854	3,001,745
CURRENT LIABILITIES:
Accounts payable	172,286	141,425
Accrued salaries, wages and benefits	58,888	56,506
Accrued expenses	18,213	19,005
Current portion of debt obligations	622	13,746
Current portion of lease obligations	16,889	17,784
Unearned revenue and grants	68,970	53,522
TOTAL CURRENT LIABILITIES	335,868	301,988
Long term debt	1,398,470	1,465,331
Post-retirement obligations	25,626	35,099
Long term lease obligations	47,192	51,128
Other liabilities	47,183	47,963
Stock Warrants	63,085	103,474
Deferred income taxes	178,703	141,265
TOTAL LIABILITIES	2,096,127	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; 74,202,815 and 59,560,036 shares issued and outstanding in 2021 and 2020, respectively	742	596
Additional paid-in capital	989,611	855,547
Retained earnings	200,234	78,010
Accumulated other comprehensive loss	(75,860)	(78,656)
TOTAL STOCKHOLDERS’ EQUITY	1,114,727	855,497
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 3,210,854	$ 3,001,745

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Assets, Current [Abstract]
Allowance for doubtful accounts	$ 890	$ 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)	74,202,815	59,560,036
Common stock, shares outstanding (in shares)	74,202,815	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		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
REVENUES	$ 409,872	$ 377,794	$ 785,960	$ 767,071
OPERATING EXPENSES
Salaries, wages and benefits	141,524	119,503	283,540	245,034
Fuel	36,592	36,787	67,034	80,586
Maintenance, materials and repairs	45,913	43,704	87,920	85,381
Depreciation and amortization	75,633	68,291	146,684	137,633
Travel	18,501	17,315	36,905	38,972
Contracted ground and aviation services	18,794	13,546	33,597	27,895
Rent	5,726	5,198	11,594	8,684
Landing and ramp	3,026	2,772	6,135	5,517
Insurance	3,068	2,508	6,204	4,176
Other operating expenses	14,750	15,738	31,173	30,954
government grants continuing operations	(38,274)	(9,821)	(66,304)	(9,821)
Operating Expenses	325,253	354,616	644,482	694,086
OPERATING INCOME	84,619	23,178	141,478	72,985
OTHER INCOME (EXPENSE)
Interest income	9	12	28	124
Non-service component of retiree benefit costs	4,456	2,898	8,913	5,796
Write off of Deferred Debt Issuance Cost	(6,505)	0	(6,505)	0
Non-service component of retiree benefit gains	(15,021)	(16,045)	(29,543)	(32,368)
Net gain (loss) on financial instruments	35,703	(109,723)	45,175	(2,679)
Other Nonoperating Income (Expense)	19,607	(129,371)	17,850	(38,404)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	104,226	(106,193)	159,328	34,581
INCOME TAX BENEFIT (EXPENSE)		1,031	(37,169)	(6,010)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS	79,869	(105,162)	122,159	28,571
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES	65	236	65	4,008
NET EARNINGS (LOSS)	$ 79,934	$ (104,926)	$ 122,224	$ 32,579
BASIC EARNINGS PER SHARE
Basic earnings per share from continuing operations (in dollars per share)	$ 1.17	$ (1.78)	$ 1.91	$ 0.48
Discontinued operations (in dollars per share)	0	0.01	0	0.07
TOTAL BASIC EARNINGS PER SHARE (in dollars per share)	1.17	(1.77)	1.91	0.55
DILUTED EARNINGS PER SHARE
Diluted earnings per share from continuing operations (in dollars per share)	0.74	(1.78)	1.23	0.14
Discontinued operations (in dollars per share)	0	0.01	0	0.05
TOTAL DILUTED NET EARNINGS PER SHARE (in dollars per share)	$ 0.74	$ (1.77)	$ 1.23	$ 0.19
WEIGHTED AVERAGE SHARES
Basic (in shares)	68,206	59,130	63,851	59,085
Diluted (in shares)	72,964	59,130	73,849	68,104
Asset Impairment Charges	$ 0	$ 39,075	$ 0	$ 39,075
Significant Reconciling Items [Member]
OTHER INCOME (EXPENSE)
Non-service component of retiree benefit gains	(870)	(681)	(1,624)	(1,336)
Loss from non-consolidated affiliates	$ 965	$ (6,513)	$ (218)	$ (9,277)

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
NET EARNINGS (LOSS)	$ 79,934	$ (104,926)	$ 122,224	$ 32,579
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	0	0	0	0
OTHER COMPREHENSIVE INCOME (LOSS):
TOTAL COMPREHENSIVE INCOME (LOSS), net of tax	81,332	(104,176)	125,020	34,079
Pension Plans [Member]
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	1,362	726	2,724	1,452
OTHER COMPREHENSIVE INCOME (LOSS):
Income tax (expense) or benefit	(402)	(215)	(804)	(430)
Post-Retirement Plans [Member]
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	36	24	72	48
OTHER COMPREHENSIVE INCOME (LOSS):
Income tax (expense) or benefit	$ (11)	$ (7)	$ (22)	$ (14)

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Write off of Deferred Debt Issuance Cost	$ 6,505	$ 0
Withholding taxes paid for conversion of employee stock awards	1,236	1,839
OPERATING ACTIVITIES:
Net earnings from continuing operations	122,159	28,571
Net earnings from discontinued operations	65	4,008
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	163,590	153,088
Pension and post-retirement	3,622	1,944
Deferred income taxes	36,613	6,597
Amortization of stock-based compensation	3,479	3,951
Proceeds from Contributions from Affiliates	218	9,277
Net (gain) loss on financial instruments	(4,800)	10,200
Changes in assets and liabilities:
Accounts receivable	(22,688)	(3,677)
Inventory and prepaid supplies	5,107	(6,992)
Accounts payable	26,698	9,628
Unearned revenue	14,656	26,631
Accrued expenses, salaries, wages, benefits and other liabilities	6,306	(12,104)
Pension and post-retirement balances	(14,057)	(10,049)
Other	93	(3,631)
NET CASH PROVIDED BY OPERATING ACTIVITIES	307,191	248,996
INVESTING ACTIVITIES:
Expenditures for property and equipment	(300,249)	(265,882)
Proceeds from property and equipment	724	9,080
Investment in nonconsolidated affiliate	(2,482)	(5,556)
NET CASH USED IN INVESTING ACTIVITIES	(302,007)	(262,358)
FINANCING ACTIVITIES:
Principal payments on long term obligations	(1,725,919)	(543,240)
Proceeds from revolving credit facilities	1,430,600	80,000
Payments for financing costs	(2,806)	(7,507)
Proceeds from Issuance of Unsecured Debt	207,400	500,000
NET CASH PROVIDED BY FINANCING ACTIVITIES	40,006	27,414
Proceeds from issuance of warrants	131,967	0
NET INCREASE IN CASH AND CASH EQUIVALENTS	45,190	14,052
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	39,719	46,201
CASH AND CASH EQUIVALENTS AT END OF PERIOD	84,909	60,253
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of amount capitalized	20,112	16,779
Federal and state income taxes paid	1,227	650
SUPPLEMENTAL NON-CASH INFORMATION:
Accrued expenditures for property and equipment	40,143	44,171
Net (gain) loss on financial instruments	45,175	(2,679)
Asset Impairment Charges	$ 0	$ 39,075

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Consolidated Statements of Stockholders' Equity - 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)		201,400
Stock Issued During Period, Value, Share-based Compensation, Withholdings of Common Shares, Net of Issuances	(1,839)	$ 1	(1,840)
Withholdings of common shares, net of issuances (in shares)		59,439
Stock Issued During Period, Value, Restricted Stock Award, Forfeitures	0	$ 0	0
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	3,951		3,951
Forfeited restricted stock (in shares)		(500)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	34,079			32,579
Balance at at Jun. 30, 2020	496,533	$ 596	477,829	78,474	(60,366)
Balance at (in shares) at Jun. 30, 2020		59,589,770
Stock-based compensation plans
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	1,500
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
Stock-based compensation plans
Stock Issued During Period, Value, Restricted Stock Award, Gross	0	$ 0	0
Grant of restricted stock (in shares)		900
Withholdings of common shares, net of issuances	(724)	$ 0	(724)
Issuance of common shares, net of withholdings (in shares)		(33,825)
Stock Issued During Period, Value, Restricted Stock Award, Forfeitures	0	$ 0	0
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	2,130		2,130
Forfeited restricted stock (in shares)		(500)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	(104,176)			(104,926)
Balance at at Jun. 30, 2020	496,533	$ 596	477,829	78,474	(60,366)
Balance at (in shares) at Jun. 30, 2020		59,589,770
Stock-based compensation plans
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	750
Balance at at Dec. 31, 2020	$ 855,497	$ 596	855,547	78,010	(78,656)
Balance at (in shares) at Dec. 31, 2020	59,560,036	59,560,036
Stock-based compensation plans
Stock Issued During Period, Value, Restricted Stock Award, Gross	$ 0	$ 1	(1)
Grant of restricted stock (in shares)		122,100
Withholdings of common shares, net of issuances	(1,236)	$ 1	(1,237)
Issuance of common shares, net of withholdings (in shares)		92,234
Conversion of Stock, Amount Converted	131,967	$ 144	131,823
Conversion of Stock, Shares Converted		14,428,445
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	3,479		3,479
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	125,020				122,224
Balance at at Jun. 30, 2021	$ 1,114,727	$ 742	989,611	200,234	(75,860)
Balance at (in shares) at Jun. 30, 2021	74,202,815	74,202,815
Stock-based compensation plans
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent					2,796
Balance at at Mar. 31, 2021	$ 899,738	$ 606	856,090	120,300	(77,258)
Balance at (in shares) at Mar. 31, 2021		60,641,436
Stock-based compensation plans
Stock Issued During Period, Value, Restricted Stock Award, Gross	0	$ 0	0
Grant of restricted stock (in shares)		0
Withholdings of common shares, net of issuances	(39)	$ 0	(39)
Issuance of common shares, net of withholdings (in shares)		(1,518)
Conversion of Stock, Amount Converted	131,967	$ 136	131,831
Conversion of Stock, Shares Converted		13,562,897
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	1,729		1,729
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	81,332			79,934
Balance at at Jun. 30, 2021	$ 1,114,727	$ 742	$ 989,611	$ 200,234	$ (75,860)
Balance at (in shares) at Jun. 30, 2021	74,202,815	74,202,815
Stock-based compensation plans
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	$ 1,398

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Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 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 and six month periods ending June 30, 2021 and 2020 (in thousands):

	Defined Benefit Pension	Defined Benefit Post-Retirement	Foreign Currency Translation	Total
Balance as of March 31, 2020	(60,426)	(678)	(12)	(61,116)
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 June 30, 2020	(59,700)	(654)	(12)	(60,366)
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)	1,882	62	—	1,944
Income Tax (Expense) or Benefit	(430)	(14)	—	(444)
Other comprehensive income, net of tax	1,452	48	—	1,500
Balance as of June 30, 2020	(59,700)	(654)	(12)	(60,366)

	Defined Benefit Pension	Defined Benefit Post-Retirement	Foreign Currency Translation	Total
Balance as of March 31, 2021	(76,731)	(513)	(14)	(77,258)
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 June 30, 2021	(75,369)	(477)	(14)	(75,860)
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)	3,528	94	—	3,622
Income Tax (Expense) or Benefit	(804)	(22)	—	(826)
Other comprehensive income, net of tax	2,724	72	—	2,796
Balance as of June 30, 2021	(75,369)	(477)	(14)	(75,860)

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Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 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 and six month periods ending June 30, 2021 and 2020 (in thousands):

	Defined Benefit Pension	Defined Benefit Post-Retirement	Foreign Currency Translation	Total
Balance as of March 31, 2020	(60,426)	(678)	(12)	(61,116)
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 June 30, 2020	(59,700)	(654)	(12)	(60,366)
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)	1,882	62	—	1,944
Income Tax (Expense) or Benefit	(430)	(14)	—	(444)
Other comprehensive income, net of tax	1,452	48	—	1,500
Balance as of June 30, 2020	(59,700)	(654)	(12)	(60,366)

	Defined Benefit Pension	Defined Benefit Post-Retirement	Foreign Currency Translation	Total
Balance as of March 31, 2021	(76,731)	(513)	(14)	(77,258)
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 June 30, 2021	(75,369)	(477)	(14)	(75,860)
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)	3,528	94	—	3,622
Income Tax (Expense) or Benefit	(804)	(22)	—	(826)
Other comprehensive income, net of tax	2,724	72	—	2,796
Balance as of June 30, 2021	(75,369)	(477)	(14)	(75,860)

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Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Mar. 31, 2021	Dec. 31, 2020	Mar. 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)	$ (14)	$ (14)	$ (12)	$ (12)
Accumulated other comprehensive income (loss), beginning balance	(77,258)	(61,116)	(78,656)	(61,866)
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax	1,811	972	3,622	1,944
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax	0	0	0	0
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	1,398	750		1,500
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	0	0	0	0
Accumulated other comprehensive income (loss), ending balance	(75,860)	(60,366)	(75,860)	(60,366)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	81,332	(104,176)	125,020	34,079
Other Comprehensive Income (Loss), Tax	$ (413)	(222)	$ (826)	(444)
Common stock, shares outstanding (in shares)	74,202,815		74,202,815			59,560,036
Stockholders' Equity Attributable to Parent	$ 1,114,727	496,533	$ 1,114,727	496,533	899,738	$ 855,497	599,303	460,342
Stock Issued During Period, Value, Restricted Stock Award, Gross	0	0	0	0
Withholdings of common shares, net of issuances	(39)	(724)	(1,236)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	1,729	2,130	3,479	3,951
NET EARNINGS (LOSS)	79,934	(104,926)	122,224	32,579
Stock Issued During Period, Value, Share-based Compensation, Withholdings of Common Shares, Net of Issuances				(1,839)
Accumulated Other Comprehensive Income (Loss) [Member]
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent			2,796
Comprehensive Income (Loss), Net of Tax, Attributable to Parent			122,224
Stockholders' Equity Attributable to Parent	$ (75,860)	$ (60,366)	$ (75,860)	$ (60,366)	$ (77,258)	$ (78,656)	$ (61,116)	$ (61,866)
Common Stock [Member]
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Common stock, shares outstanding (in shares)	74,202,815	59,589,770	74,202,815	59,589,770	60,641,436	59,560,036	59,623,195	59,329,431
Stockholders' Equity Attributable to Parent	$ 742	$ 596	$ 742	$ 596	$ 606	$ 596	$ 596	$ 593
Grant of restricted stock (in shares)	0	900	122,100	201,400
Stock Issued During Period, Value, Restricted Stock Award, Gross	$ 0	$ 0	$ 1	$ 2
Issuance of common shares, net of withholdings (in shares)	(1,518)	(33,825)	92,234
Withholdings of common shares, net of issuances	$ 0	$ 0	$ 1
Withholdings of common shares, net of issuances (in shares)				59,439
Stock Issued During Period, Value, Share-based Compensation, Withholdings of Common Shares, Net of Issuances				$ 1
Additional Paid-in Capital [Member]
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Stockholders' Equity Attributable to Parent	989,611	477,829	989,611	477,829	856,090	855,547	476,423	475,720
Stock Issued During Period, Value, Restricted Stock Award, Gross	0	0	(1)	(2)
Withholdings of common shares, net of issuances	(39)	(724)	(1,237)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	1,729	2,130	3,479	3,951
Stock Issued During Period, Value, Share-based Compensation, Withholdings of Common Shares, Net of Issuances				(1,840)
Accumulated Deficit [Member]
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	79,934	(104,926)		32,579
Stockholders' Equity Attributable to Parent	200,234	78,474	200,234	78,474	$ 120,300	$ 78,010	$ 183,400	$ 45,895
Pension Plans [Member]
Schedule of Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income (loss), beginning balance	(76,731)	(60,426)	(78,093)	(61,152)
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax	1,764	941	3,528	1,882
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, Tax	(402)	(215)	(804)	(430)
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	1,362	726	2,724	1,452
Accumulated other comprehensive income (loss), ending balance	(75,369)	(59,700)	(75,369)	(59,700)
Post-Retirement Plans [Member]
Schedule of Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income (loss), beginning balance	(513)	(678)	(549)	(702)
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax	47	31	94	62
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, before Tax [Abstract]
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, Tax	(11)	(7)	(22)	(14)
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	36	24	72	48
Accumulated other comprehensive income (loss), ending balance	$ (477)	$ (654)	$ (477)	$ (654)

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Summary of Financial Statement Preparation and Significant Accounting Policies

6 Months Ended

Jun. 30, 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

6 Months Ended

Jun. 30, 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 and six month periods ending June 30, 2021 and 2020 are as follows:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2021	2020	2021	2020
Customer	Percentage of Revenue		Percentage of Revenue
DoD	25%	33%	24%	32%
Amazon	37%	29%	36%	29%
DHL	13%	12%	13%	11%

The accounts receivable from the Company's three largest customers as of June 30, 2021 and December 31, 2020 are as follows (in thousands):

	June 30,		December 31,
	2021		2020
Customer	Accounts Receivable
DoD	$	40,060	$	32,625
Amazon	68,548		55,997
DHL	11,456		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, maintenance services 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, seven more leases began in the first half of 2021 with the remaining four 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 4.7 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 June 30, 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	4.7	2.3	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 June 30, 2021, the Company's liabilities reflected warrants primarily from the 2018 Investment agreement for the May 2020 lease commitment, having a fair value of $63.1 million. During the three and six month periods ended June 30, 2021, the re-measurements of warrants to fair value resulted in net non-operating gains of $33.5 million and $40.4 million before the effect of income taxes, respectively, compared to losses of $110.4 million and gains of $7.5 million for the corresponding periods of 2020.

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

6 Months Ended

Jun. 30, 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 June 30, 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	—		(5,289)		(5,289)
Carrying value as of June 30, 2021	$	9,000	$	106,027	$	115,027

The airline certificates have an indefinite life and therefore are not amortized. The Company amortizes finite-lived intangibles assets, including customer relationship, 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	(11,497)
Carrying value as of June 30, 2021	$	114,510

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 six months of 2021 and 2020, the Company contributed $2.5 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 affiliate's 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

6 Months Ended

Jun. 30, 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 June 30, 2021	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Assets
Cash equivalents—money market	$	—	$	10,040	$	—	$	10,040
Total Assets	$	—	$	10,040	$	—	$	10,040
Liabilities
Interest rate swap	$	—	$	(8,628)	$	—	$	(8,628)
Stock warrant obligations	—		—		(63,085)		(63,085)
Total Liabilities	$	—	$	(8,628)	$	(63,085)	$	(71,713)

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 $24.5 million more than the carrying value, which was $1,399.1 million at June 30, 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

6 Months Ended

Jun. 30, 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):

	June 30,		December 31,
	2021		2020
Flight equipment	$	3,116,838	$	2,856,142
Ground equipment	64,245		65,857
Leasehold improvements, facilities and office equipment	38,309		36,193
Aircraft modifications and projects in progress	246,856		231,451
	3,466,248		3,189,643
Accumulated depreciation	(1,368,992)		(1,249,867)
Property and equipment, net	$	2,097,256	$	1,939,776

CAM owned aircraft with a carrying value of $1,274.3 million and $1,097.6 million that were under lease to external customers as of June 30, 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

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Debt Obligations

DEBT OBLIGATIONS

Debt obligations consisted of the following (in thousands):

	June 30,		December 31,
	2021		2020
Senior Notes	$	697,168	$	493,376
Revolving credit facility	464,000		140,000
Unsubordinated term loans	—		612,169
Convertible debt	226,977		222,391
Other financing arrangements	10,947		11,141
Total debt obligations	1,399,092		1,479,077
Less: current portion	(622)		(13,746)
Total long term obligations, net	$	1,398,470	$	1,465,331

The Company utilizes a syndicated credit agreement ("Senior Credit Agreement") which, as of June 30, 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 through 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.

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 $800.0 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 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.

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 proceeds of $205.5 million, net of scheduled interest payable, were used, in conjunction with draws from the revolving credit facility to repay the unsubordinated term loans. Upon retirement the unsubordinated term loans, the company expensed debt issuance costs of $6.5 million related to the unsubordinated term loans.

As of June 30, 2021, the unused revolving credit facility available to the Company at the trailing twelve month EBITDA level was $321.7 million, and additional permitted indebtedness under the Senior Credit Agreement subject to compliance with other covenants, was limited to $250.0 million.

The balance of the Senior Notes is net of debt issuance costs of $8.2 million and $6.6 million as of June 30, 2021 and December 31, 2020, respectively. The balance of the unsubordinated term loan was net of debt issuance costs of $7.0 million as of December 31, 2020. 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 revolving credit facility bears a variable interest rate of 1.33%. The Senior Notes bears 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.

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. 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 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.

	June 30,	December 31,
	2021	2020
Principal value, Convertible Senior Notes, due 2024	258,750	258,750
Unamortized issuance costs	(3,396)	(3,894)
Unamortized discount	(28,377)	(32,465)
Convertible debt	226,977	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

6 Months Ended

Jun. 30, 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 and six month periods ended June 30, 2021, the Company recognized $38.3 million and $66.3 million of the grants, respectively. The Company expects to recognize all of grant funds into earnings by December 31, 2021. As of June 30, 2021, grants approved and received but not recognized totaled $45.4 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, seven 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 six month period ending June 30, 2021, non-cash transactions to recognize right-to-use assets and corresponding liabilities for new leases were $5.9 million compared to $23.9 million for the corresponding period of 2020. 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 June 30, 2021 was 2.55% 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 4.1 years and 4.5 years as of June 30, 2021 and December 31, 2020, respectively.

For the six month periods ended June 30, 2021 and 2020, cash payments against operating lease liabilities were $10.7 million and $8.3 million, respectively. As of June 30, 2021, the maturities of operating lease liabilities are as follows (in thousands):

	Operating Leases
Remaining 2021	$	9,391
2022	17,397
2023	16,022
2024	12,529
2025	8,733
2026 and beyond	3,352
Total undiscounted cash payments	67,424
Less: amount representing interest	(3,343)
Present value of future minimum lease payments	64,081
Less: current obligations under leases	16,889
Long-term lease obligation	$	47,192

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 June 30, 2021, the Company had fifteen aircraft that were in or awaiting the modification process. As of June 30, 2021, the Company has agreements to purchase six more Boeing 767-300 passenger aircraft and two Airbus 321 passenger aircraft through 2022 with non-refundable deposits of $5.1 million. As of June 30, 2021, the Company's commitments to acquire and convert aircraft totaled $277.4 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 June 30, 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	9.0%
OAI	International Brotherhood of Teamsters	6.2%
ATI	Association of Flight Attendants	0.6%
OAI	Association of Flight Attendants	5.9%

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Pension and Other Post-Retirement Benefit Plans

6 Months Ended

Jun. 30, 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 June 30,								Six Months Ended June 30,
	Pension Plans				Post-Retirement Healthcare Plan				Pension Plans				Post-Retirement Healthcare Plan
	2021		2020		2021		2020		2021		2020		2021		2020
Service cost	$	—	$	—	$	24	$	35	—		—		48		69
Interest cost	5,597		6,970		10		23		11,194		13,940		20		45
Expected return on plan assets	(11,875)		(11,168)		—		—		(23,750)		(22,336)		—		—
Amortization of net loss	1,764		941		47		31		3,528		1,882		94		62
Net periodic benefit cost (income) loss	$	(4,514)	$	(3,257)	$	81	$	89	$	(9,028)	$	(6,514)	$	162	$	176

During the six month period ending June 30, 2021, the Company contributed $1.4 million to the pension plans. The Company expects to contribute an additional $0.3 million during the remainder of 2021.

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Income Taxes

6 Months Ended

Jun. 30, 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 June 30, 2021 have been estimated utilizing a 23% 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 six 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 2024 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

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

The Company's Senior Credit Agreement required 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):

			June 30, 2021		December 31, 2020
Expiration Date	Stated Interest Rate		Notional Amount	Market Value (Liability)	Notional Amount	Market Value (Liability)
May 5, 2021	1.090	%	—	—	13,125	(41)
May 30, 2021	1.703	%	—	—	13,125	(80)
December 31, 2021	2.706	%	135,000	(1,779)	138,750	(3,551)
March 31, 2022	1.900	%	50,000	(677)	50,000	(1,116)
March 31, 2022	1.950	%	75,000	(1,045)	75,000	(1,722)
March 31, 2023	2.425	%	136,875	(5,127)	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 net gains on derivatives of $2.3 million and $4.8 million for the three and six month periods ending June 30, 2021, respectively, compared to a net gain of $0.7 million and a net loss of $10.2 million for the corresponding periods of 2020. The liability for outstanding derivatives is recorded in other liabilities and in accrued expenses.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 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.

	Six Months Ended
	June 30, 2021			June 30, 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		437,054	18.85
Converted	(120,830)	25.40		(200,563)	19.87
Expired	(1,200)	26.60		(34,100)	19.40
Forfeited	—	—		(1,000)	18.90
Outstanding at end of period	1,237,599	$	18.44	1,165,223	$	17.69
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 six month periods ended June 30, 2021 and 2020, the Company recorded expense of $3.5 million and $4.0 million, respectively, for stock incentive awards. At June 30, 2021, there was $10.6 million of unrecognized expense related to the stock incentive awards that is expected to be recognized over a weighted-average period of 1.5 years. As of June 30, 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 1,535,949 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

6 Months Ended

Jun. 30, 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				Six Months Ending
	June 30,				June 30,
	2021		2020		2021		2020
Numerator:
Earnings from continuing operations - basic	$	79,869	$	(105,162)	$	122,159	$	28,571
Gain from stock warrants revaluation, net of tax	(25,816)		—		(31,171)		(19,312)
Earnings from continuing operations - diluted	$	54,053	$	(105,162)	$	90,988	$	9,259
Denominator:
Weighted-average shares outstanding for basic earnings per share	68,206		59,130		63,851		59,085
Common equivalent shares:
Effect of stock-based compensation awards and warrants	4,758		—		9,998		9,019
Weighted-average shares outstanding assuming dilution	72,964		59,130		73,849		68,104
Basic earnings per share from continuing operations	$	1.17	$	(1.78)	$	1.91	$	0.48
Diluted earnings per share from continuing operations	$	0.74	$	(1.78)	$	1.23	$	0.14

Basic weighted average shares outstanding for purposes of basic earnings per share are less than the shares outstanding due to 482,300 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

6 Months Ended

Jun. 30, 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				Six Months Ending
	June 30,				June 30,
	2021		2020		2021		2020
Total revenues:
CAM	$	88,594	$	74,870	$	171,871	$	149,033
ACMI Services	273,301		287,604		520,432		571,769
All other	97,236		77,056		190,934		157,092
Eliminate inter-segment revenues	(49,259)		(61,736)		(97,277)		(110,823)
Total	$	409,872	$	377,794	$	785,960	$	767,071
Customer revenues:
CAM	$	66,676	$	49,959	$	127,476	$	96,695
ACMI Services	273,295		287,595		520,422		571,756
All other	69,901		40,240		138,062		98,620
Total	$	409,872	$	377,794	$	785,960	$	767,071

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 and six month periods ended June 30, 2021 and 2020 are presented below (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Aircraft maintenance, modifications and part sales	$	28,791	$	18,851	$	62,839	$	52,686
Ground services	29,022		16,003		52,482		30,611
Other, including aviation fuel sales	12,088		5,386		22,741		15,323
Total customer revenues	$	69,901	$	40,240	$	138,062	$	98,620

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 June 30, 2021, minimum future payments from external customers for leased aircraft and equipment were scheduled to be $125.9 million for the remainder of 2021, $227.0 million, $182.5 million, $131.9 million, $118.8 million, respectively, for each of the next 4 years ending December 31, 2025 and $333.4 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 and six month periods ending June 30, 2021 and 2020, the Company recognized $1.0 million and $2.7 million of non lease revenue that was reported in deferred revenue at the beginning of the respective period, respectively, compared to $1.6 million and $2.8 million in the corresponding periods of 2020. Deferred revenue was $1.2 million and $3.0 million at June 30, 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				Six Months Ending
	June 30,				June 30,
	2021		2020		2021		2020
Depreciation and amortization expense:
CAM	$	50,012	$	42,024	$	97,007	$	85,071
ACMI Services	24,768		25,384		47,749		50,696
All other	853		883		1,928		1,866
Total	$	75,633	$	68,291	$	146,684	$	137,633
Interest expense
CAM	9,669		9,707		18,895		19,962
ACMI Services	4,473		5,645		8,996		10,946
Government grants recognized
ACMI Service	38,274		9,821		66,304		9,821
Segment earnings (loss):
CAM	$	22,554	$	19,640	$	44,016	$	35,460
ACMI Services	44,762		29,505		66,021		47,883
All other	3,161		(2,244)		3,550		(2,191)
Net unallocated interest expense	(870)		(681)		(1,624)		(1,336)
Impairment of aircraft and related assets	—		(39,075)		—		(39,075)
Net gain (loss) on financial instruments	35,703		(109,723)		45,175		(2,679)
Debt issuance costs	(6,505)		—		(6,505)		—
Other non-service components of retiree benefit costs, net	4,456		2,898		8,913		5,796
Loss from non-consolidated affiliate	965		(6,513)		(218)		(9,277)
Pre-tax earnings from continuing operations	$	104,226	$	(106,193)	$	159,328	$	34,581

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

	June 30,		December 31
	2021		2020
Assets:
CAM	$	2,199,262	$	2,037,628
ACMI Services	829,365		811,516
All other	182,227		152,601
Total	$	3,210,854	$	3,001,745

During the first six months of 2021, the Company had capital expenditures for property and equipment of $48.8 million and $251.8 million for the ACMI Services and CAM, respectively.

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

6 Months Ended

Jun. 30, 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)

6 Months Ended

Jun. 30, 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):

	June 30,		December 31,
	2021		2020
Flight equipment	$	3,116,838	$	2,856,142
Ground equipment	64,245		65,857
Leasehold improvements, facilities and office equipment	38,309		36,193
Aircraft modifications and projects in progress	246,856		231,451
	3,466,248		3,189,643
Accumulated depreciation	(1,368,992)		(1,249,867)
Property and equipment, net	$	2,097,256	$	1,939,776

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Significant Customers (Tables)

6 Months Ended

Jun. 30, 2021

Concentration Risk [Line Items]

Schedule of Stockholders' Equity Note, Warrants or Rights

Issued and outstanding warrants are summarized below as of June 30, 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	4.7	2.3	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 June 30, 2021 and December 31, 2020 are as follows (in thousands):

	June 30,		December 31,
	2021		2020
Customer	Accounts Receivable
DoD	$	40,060	$	32,625
Amazon	68,548		55,997
DHL	11,456		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 and six month periods ending June 30, 2021 and 2020 are as follows:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2021	2020	2021	2020
Customer	Percentage of Revenue		Percentage of Revenue
DoD	25%	33%	24%	32%
Amazon	37%	29%	36%	29%
DHL	13%	12%	13%	11%

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Goodwill and Other Intangibles (Tables)

6 Months Ended

Jun. 30, 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	(11,497)
Carrying value as of June 30, 2021	$	114,510

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 June 30, 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	—		(5,289)		(5,289)
Carrying value as of June 30, 2021	$	9,000	$	106,027	$	115,027

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 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 June 30, 2021	Fair Value Measurement Using						Total
	Level 1		Level 2		Level 3
Assets
Cash equivalents—money market	$	—	$	10,040	$	—	$	10,040
Total Assets	$	—	$	10,040	$	—	$	10,040
Liabilities
Interest rate swap	$	—	$	(8,628)	$	—	$	(8,628)
Stock warrant obligations	—		—		(63,085)		(63,085)
Total Liabilities	$	—	$	(8,628)	$	(63,085)	$	(71,713)

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)

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

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

	June 30,		December 31,
	2021		2020
Flight equipment	$	3,116,838	$	2,856,142
Ground equipment	64,245		65,857
Leasehold improvements, facilities and office equipment	38,309		36,193
Aircraft modifications and projects in progress	246,856		231,451
	3,466,248		3,189,643
Accumulated depreciation	(1,368,992)		(1,249,867)
Property and equipment, net	$	2,097,256	$	1,939,776

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Debt Obligations (Tables)

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Convertible Debt [Table Text Block]

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

	June 30,	December 31,
	2021	2020
Principal value, Convertible Senior Notes, due 2024	258,750	258,750
Unamortized issuance costs	(3,396)	(3,894)
Unamortized discount	(28,377)	(32,465)
Convertible debt	226,977	222,391

Schedule of Long-term Debt Instruments

Debt obligations consisted of the following (in thousands):

	June 30,		December 31,
	2021		2020
Senior Notes	$	697,168	$	493,376
Revolving credit facility	464,000		140,000
Unsubordinated term loans	—		612,169
Convertible debt	226,977		222,391
Other financing arrangements	10,947		11,141
Total debt obligations	1,399,092		1,479,077
Less: current portion	(622)		(13,746)
Total long term obligations, net	$	1,398,470	$	1,465,331

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

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

As of June 30, 2021, the maturities of operating lease liabilities are as follows (in thousands):

	Operating Leases
Remaining 2021	$	9,391
2022	17,397
2023	16,022
2024	12,529
2025	8,733
2026 and beyond	3,352
Total undiscounted cash payments	67,424
Less: amount representing interest	(3,343)
Present value of future minimum lease payments	64,081
Less: current obligations under leases	16,889
Long-term lease obligation	$	47,192

Schedules of Concentration of Risk, by Risk Factor

As of June 30, 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	9.0%
OAI	International Brotherhood of Teamsters	6.2%
ATI	Association of Flight Attendants	0.6%
OAI	Association of Flight Attendants	5.9%

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Pension and Other Post-Retirement Benefit Plans (Tables)

6 Months Ended

Jun. 30, 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 June 30,								Six Months Ended June 30,
	Pension Plans				Post-Retirement Healthcare Plan				Pension Plans				Post-Retirement Healthcare Plan
	2021		2020		2021		2020		2021		2020		2021		2020
Service cost	$	—	$	—	$	24	$	35	—		—		48		69
Interest cost	5,597		6,970		10		23		11,194		13,940		20		45
Expected return on plan assets	(11,875)		(11,168)		—		—		(23,750)		(22,336)		—		—
Amortization of net loss	1,764		941		47		31		3,528		1,882		94		62
Net periodic benefit cost (income) loss	$	(4,514)	$	(3,257)	$	81	$	89	$	(9,028)	$	(6,514)	$	162	$	176

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 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):

			June 30, 2021		December 31, 2020
Expiration Date	Stated Interest Rate		Notional Amount	Market Value (Liability)	Notional Amount	Market Value (Liability)
May 5, 2021	1.090	%	—	—	13,125	(41)
May 30, 2021	1.703	%	—	—	13,125	(80)
December 31, 2021	2.706	%	135,000	(1,779)	138,750	(3,551)
March 31, 2022	1.900	%	50,000	(677)	50,000	(1,116)
March 31, 2022	1.950	%	75,000	(1,045)	75,000	(1,722)
March 31, 2023	2.425	%	136,875	(5,127)	140,625	(6,904)

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

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

The table below summarizes award activity.

	Six Months Ended
	June 30, 2021			June 30, 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		437,054	18.85
Converted	(120,830)	25.40		(200,563)	19.87
Expired	(1,200)	26.60		(34,100)	19.40
Forfeited	—	—		(1,000)	18.90
Outstanding at end of period	1,237,599	$	18.44	1,165,223	$	17.69
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)

6 Months Ended

Jun. 30, 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				Six Months Ending
	June 30,				June 30,
	2021		2020		2021		2020
Numerator:
Earnings from continuing operations - basic	$	79,869	$	(105,162)	$	122,159	$	28,571
Gain from stock warrants revaluation, net of tax	(25,816)		—		(31,171)		(19,312)
Earnings from continuing operations - diluted	$	54,053	$	(105,162)	$	90,988	$	9,259
Denominator:
Weighted-average shares outstanding for basic earnings per share	68,206		59,130		63,851		59,085
Common equivalent shares:
Effect of stock-based compensation awards and warrants	4,758		—		9,998		9,019
Weighted-average shares outstanding assuming dilution	72,964		59,130		73,849		68,104
Basic earnings per share from continuing operations	$	1.17	$	(1.78)	$	1.91	$	0.48
Diluted earnings per share from continuing operations	$	0.74	$	(1.78)	$	1.23	$	0.14

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Segment Information (Tables)

6 Months Ended

Jun. 30, 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				Six Months Ending
	June 30,				June 30,
	2021		2020		2021		2020
Depreciation and amortization expense:
CAM	$	50,012	$	42,024	$	97,007	$	85,071
ACMI Services	24,768		25,384		47,749		50,696
All other	853		883		1,928		1,866
Total	$	75,633	$	68,291	$	146,684	$	137,633
Interest expense
CAM	9,669		9,707		18,895		19,962
ACMI Services	4,473		5,645		8,996		10,946
Government grants recognized
ACMI Service	38,274		9,821		66,304		9,821
Segment earnings (loss):
CAM	$	22,554	$	19,640	$	44,016	$	35,460
ACMI Services	44,762		29,505		66,021		47,883
All other	3,161		(2,244)		3,550		(2,191)
Net unallocated interest expense	(870)		(681)		(1,624)		(1,336)
Impairment of aircraft and related assets	—		(39,075)		—		(39,075)
Net gain (loss) on financial instruments	35,703		(109,723)		45,175		(2,679)
Debt issuance costs	(6,505)		—		(6,505)		—
Other non-service components of retiree benefit costs, net	4,456		2,898		8,913		5,796
Loss from non-consolidated affiliate	965		(6,513)		(218)		(9,277)
Pre-tax earnings from continuing operations	$	104,226	$	(106,193)	$	159,328	$	34,581

Schedule of Segment Reporting Information, by Segment

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

	Three Months Ending				Six Months Ending
	June 30,				June 30,
	2021		2020		2021		2020
Total revenues:
CAM	$	88,594	$	74,870	$	171,871	$	149,033
ACMI Services	273,301		287,604		520,432		571,769
All other	97,236		77,056		190,934		157,092
Eliminate inter-segment revenues	(49,259)		(61,736)		(97,277)		(110,823)
Total	$	409,872	$	377,794	$	785,960	$	767,071
Customer revenues:
CAM	$	66,676	$	49,959	$	127,476	$	96,695
ACMI Services	273,295		287,595		520,422		571,756
All other	69,901		40,240		138,062		98,620
Total	$	409,872	$	377,794	$	785,960	$	767,071

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.

	June 30,		December 31
	2021		2020
Assets:
CAM	$	2,199,262	$	2,037,628
ACMI Services	829,365		811,516
All other	182,227		152,601
Total	$	3,210,854	$	3,001,745

Revenue from External Customers by Products and Services

The Company's external customer revenues from other activities for the three and six month periods ended June 30, 2021 and 2020 are presented below (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Aircraft maintenance, modifications and part sales	$	28,791	$	18,851	$	62,839	$	52,686
Ground services	29,022		16,003		52,482		30,611
Other, including aviation fuel sales	12,088		5,386		22,741		15,323
Total customer revenues	$	69,901	$	40,240	$	138,062	$	98,620

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Significant Customers (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Concentration Risk [Line Items]
Accounts receivable	$ 176,146		$ 176,146		$ 153,511
Fair Value Adjustment of Warrants	33,500	$ (110,400)	40,400	$ 7,500
Warrant liability	$ 63,085		$ 63,085		103,474
DHL [Member] | Revenues from Leases and Contracted Services [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Percentage of consolidated revenues	13.00%	12.00%	13.00%	11.00%
DHL [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Accounts receivable	$ 11,456		$ 11,456		10,471
Amazon [Member] | Revenues from Leases and Contracted Services [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Percentage of consolidated revenues	37.00%	29.00%	36.00%	29.00%
Amazon [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Accounts receivable	$ 68,548		$ 68,548		55,997
US Military [Member] | Revenues from Leases and Contracted Services [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Percentage of consolidated revenues	25.00%	33.00%	24.00%	32.00%
US Military [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Accounts receivable	$ 40,060		$ 40,060		$ 32,625
Amazon Warrant C [Member] [Member]
Concentration Risk [Line Items]
Class of Warrant or Right, Outstanding	0		0
Warrant liability	$ (63,100)		$ (63,100)
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 21.53		$ 21.53
Class of Warrant or Right, Unissued	14,800		14,800
Amazon Warrant Subsequent [Member]
Concentration Risk [Line Items]
Class of Warrant or Right, Outstanding	2,300		2,300
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 20.40		$ 20.40
Class of Warrant or Right, Unissued	4,700		4,700

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Goodwill and Other Intangibles (Schedule of Goodwill) (Details) - USD ($) $ in Thousands	Jun. 30, 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	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Finite and Indefinite-lived Intangible Assets by Major Class [Line Items]
Incentive to Lessee	$ 114,510	$ 126,007
Amortization of Lease Incentives	(11,497)
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	(5,289)
Carrying value at end of period	106,027	$ 111,316
Carrying value at end of period	115,027
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	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Schedule of Equity Method Investments [Line Items]
Payments to Acquire Interest in Joint Venture	$ 2,500	$ 3,000
Goodwill	$ 395,974		$ 395,974

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Goodwill and Other Intangibles Investment A321 (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Investments, Debt and Equity Securities [Abstract]
Payments to Acquire Interest in Joint Venture	$ 2.5	$ 3.0

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020	Sep. 25, 2017
Liabilities, Fair Value Disclosure [Abstract]
Warrant liability	$ 63,085	$ 103,474
Fair Value, Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Cash equivalents - money market	10,040	20,389
Total Assets	10,040	20,389
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap		(13,414)
Warrant liability	(63,085)	(103,474)
Total Liabilities	(71,713)	(116,888)
Carrying value, debt	1,399,100	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	10,040	20,389
Convertible note hedge fair value			$ 56,100
Total Assets	10,040	20,389
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap	(8,628)	(13,414)
Warrant liability	0	(9,058)
Total Liabilities	(8,628)	(22,472)
Difference between fair value and carrying value, debt	24,500	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	(63,085)	(94,416)
Total Liabilities	(63,085)	$ (94,416)
Fair Value, Recurring [Member] | Total [Member]
Liabilities, Fair Value Disclosure [Abstract]
Interest rate swap	(8,628)
Amazon Warrant C [Member] [Member]
Liabilities, Fair Value Disclosure [Abstract]
Warrant liability	$ (63,100)

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Property and Equipment (Schedule of Property and Equipment) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	$ 3,466,248	$ 3,189,643
Accumulated depreciation	(1,368,992)	(1,249,867)
Property and equipment, net	2,097,256	1,939,776
Flight Equipment [Member]
Property, Plant and Equipment [Line Items]
Operating Leases, Future Minimum Payments Receivable, Current	125,900	222,400
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	3,116,838	2,856,142
Operating Leases, Future Minimum Payments Receivable, in Two Years	227,000	195,500
Operating Leases, Future Minimum Payments Receivable, in Three Years	182,500	150,500
Operating Leases, Future Minimum Payments Receivable, in Four Years	131,900	99,800
Operating Leases, Future Minimum Payments Receivable, in Five Years	118,800	90,700
Ground equipment [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	64,245	65,857
facilities, leasehold improvements and office equipment [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	38,309	36,193
Construction in Progress [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	$ 246,856	$ 231,451

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Property and Equipment (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Operating Leases, Future Minimum Payments Receivable [Abstract]
Asset Impairment Charges	$ 0	$ 39,075	$ 0	$ 39,075
Flight Equipment [Member]
Operating Leases, Future Minimum Payments Receivable [Abstract]
Minimum future lease payments, Due within next 12 months	125,900		125,900		$ 222,400
Minimum future lease payments, Due within next 2 years	227,000		227,000		195,500
Minimum future lease payments, Due within next 3 years	182,500		182,500		150,500
Minimum future lease payments, Due within next 4 years	131,900		131,900		99,800
Minimum future lease payments, Due within next 5 years	118,800		118,800		90,700
CAM [Member] | Flight Equipment [Member]
Property, Plant and Equipment [Line Items]
Leased aircraft, carrying value	$ 1,274,300		$ 1,274,300		$ 1,097,600

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Debt Obligations (Schedule of Long Term Obligations) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Total long term obligations	$ 1,399,092	$ 1,479,077
Unsecured Debt	697,168	493,376
Line of Credit Facility, Maximum Borrowing Capacity	800,000
Convertible Debt	226,977	222,391
Other Long-term Debt	10,947	11,141
Less: current portion	(622)	(13,746)
Total long term obligations, net	1,398,470	1,465,331
Unsubordinated term loan [Member]
Debt Instrument [Line Items]
Total long term obligations	0	612,169
Revolving credit facility [Member]
Debt Instrument [Line Items]
Total long term obligations	$ 464,000	$ 140,000

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Debt Obligations (Schedule of Long Term Debt Maturities) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Long-term Debt, Fiscal Year Maturity [Abstract]
Total long term obligations	$ 1,399,092	$ 1,479,077

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Debt Obligations (Narrative) (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2019	Apr. 13, 2021	Dec. 31, 2020	Jan. 28, 2020	Sep. 25, 2017
Debt Instrument [Line Items]
Long term obligations	$ 1,399,092		$ 1,399,092				$ 1,479,077
Line of Credit Facility, Maximum Borrowing Capacity	800,000		800,000
Unsecured Debt	697,168		697,168				493,376
Proceeds from Issuance of Unsecured Debt			207,400	$ 500,000
Convertible Debt	226,977		226,977				222,391
Write off of Deferred Debt Issuance Cost	6,505	$ 0	6,505	0
Aircraft loans [Member]
Debt Instrument [Line Items]
Debt Issuance Costs, Line of Credit Arrangements, Net							7,000
Unsecured Debt [Member]
Debt Instrument [Line Items]
Debt Issuance Costs, Line of Credit Arrangements, Net	8,200		8,200				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	0		0				612,169
Revolving credit facility [Member]
Debt Instrument [Line Items]
Long term obligations	464,000		$ 464,000				140,000
Variable interest rate			1.33%
Credit facility, revolving credit loan, remaining borrowing capacity	321,700		$ 321,700
Line of Credit Facility, Maximum Amount Outstanding During Period			250,000
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				258,750		$ 258,800
Debt Conversion, Converted Instrument, Rate			1.125%
Proceeds from Convertible Debt					$ 252,300
Convertible note hedge shares									8,100
Warrants and Rights Outstanding	38,500		$ 38,500
Unamortized Debt Issuance Expense	(3,396)		(3,396)				(3,894)
Debt Instrument, Unamortized Discount	$ (28,377)		$ (28,377)				$ (32,465)
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Debt Instrument [Line Items]
Convertible note hedge fair value									$ 56,100

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Commitments and Contingencies (Operating Lease Payments) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Operating Leased Assets [Line Items]
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	$ 5,900	$ 23,900
Operating Lease, Weighted Average Discount Rate, Percent	2.55%		2.90%
Operating Lease, Weighted Average Remaining Lease Term	4 years 1 month 6 days		4 years 6 months
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2017	$ 9,391
Total minimum lease payments	64,081
lessee, operating lease, interest due	(3,343)
Operating Lease, Liability, Current	16,889		$ 17,784
Operating Lease, Liability, Noncurrent	47,192		$ 51,128
Operating Lease, Payments	10,700	$ 8,300
Property Subject to Operating Lease [Member]
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2018	17,397
2019	16,022
2020	12,529
2021	8,733
2022 and beyond	3,352
Lessee, Operating Lease, Liability, Payments, Due	$ 67,424

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Commitments and Contingencies (Commitments) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Mar. 31, 2021	Dec. 31, 2020
Long-term Purchase Commitment [Line Items]
aircraft purchase deposit	$ 5,100		$ 5,100
Long-term Purchase Commitment, Amount			277,400
total government grant awarded	40,000		40,000		$ 37,400	$ 75,800
Income Tax (Expense) Benefit, Continuing Operations, Government Grants	38,274	$ 9,821	66,304	$ 9,821
unrecognized government grants received	$ 45,400		$ 45,400

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Commitments and Contingencies (Labor Unions) (Details) - Workforce Subject to Collective Bargaining Arrangements [Member] - Labor Unions [Member]	6 Months Ended
	Jun. 30, 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	9.00%
Omni Air International [Member]
Concentration Risk [Line Items]
Percentage of the Company's Employees	6.20%
Air Transport International, Flight Attendants [Member]
Concentration Risk [Line Items]
Percentage of the Company's Employees	0.60%
Omni Air International, Flight Attendants [Member] [Member]
Concentration Risk [Line Items]
Percentage of the Company's Employees	5.90%

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Pension and Other Post-Retirement Benefit Plans (Funded Status) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Pension Plans [Member]
Change in benefit obligation [Roll Forward]
Service cost	$ 0	$ 0	$ 0	$ 0
Interest cost	5,597	6,970	11,194	13,940
Change in plan assets [Roll Forward]
Employer contributions			1,400
Post-Retirement Healthcare Plans [Member]
Change in benefit obligation [Roll Forward]
Service cost	24	35	48	69
Interest cost	$ 10	$ 23	$ 20	$ 45

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Pension and Other Post-Retirement Benefit Plans (Net Periodic Benefit Costs) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Pension Plans [Member]
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract]
Service cost	$ 0	$ 0	$ 0	$ 0
Interest cost	5,597	6,970	11,194	13,940
Expected return on plan assets	(11,875)	(11,168)	(23,750)	(22,336)
Amortization of net loss	1,764	941	3,528	1,882
Net periodic benefit cost (income) loss	(4,514)	(3,257)	(9,028)	(6,514)
Post-Retirement Healthcare Plans [Member]
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract]
Service cost	24	35	48	69
Interest cost	10	23	20	45
Expected return on plan assets	0	0	0	0
Amortization of net loss	47	31	94	62
Net periodic benefit cost (income) loss	$ 81	$ 89	$ 162	$ 176

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Pension and Other Post-Retirement Benefit Plans (Cash Flows) (Details) - Pension Plans [Member] $ in Millions	6 Months Ended
	Jun. 30, 2021 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Employer contributions	$ 1.4
Estimated future employer contributions	$ 0.3

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Income Taxes (Narrative) (Details)	6 Months Ended
	Jun. 30, 2021
Income Tax Disclosure [Line Items]
Statutory federal tax rate	(23.30%)
Effective Income Tax Rate Reconciliation, Percent	23.00%

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Income Taxes (Income Tax Provision (Benefit)) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Deferred taxes:
Total income tax expense from continuing operations	$ (1,031)	$ 37,169	$ 6,010

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Income Taxes (Tax Rate Reconciliation) (Details)	6 Months Ended
	Jun. 30, 2021
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
Statutory federal tax rate	(23.30%)
Effective income tax rate	23.00%

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Derivative Instruments (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Sep. 25, 2017
Derivative [Line Items]
Pre-tax (charge) on derivative instruments	$ 35,703	$ (109,723)	$ 45,175	$ (2,679)
Net (gain) loss on financial instruments	$ (2,300)	$ (700)	$ (4,800)	$ 10,200
June 30, 2017 [Member] [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	2.706%		2.706%
Market Value (Liability)	$ (1,779)		$ (1,779)		$ (3,551)
Derivative Liability, Notional Amount	$ 135,000		$ 135,000		138,750
May 5, 2021 [Member] [Member] [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	1.09%		1.09%
Market Value (Liability)	$ 0		$ 0		41
Derivative Liability, Notional Amount	$ 0		$ 0		13,125
May 30, 2021 [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	1.703%		1.703%
Market Value (Liability)	$ 0		$ 0		80
Derivative Liability, Notional Amount	$ 0		$ 0		13,125
March 31, 2022 One [Member] [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	1.90%		1.90%
Market Value (Liability)	$ 677		$ 677		1,116
Derivative Liability, Notional Amount	$ 50,000		$ 50,000		50,000
March 31, 2022 Two [Member] [Member] [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	1.95%		1.95%
Market Value (Liability)	$ 1,045		$ 1,045		1,722
Derivative Liability, Notional Amount	$ 75,000		$ 75,000		75,000
March 31, 2023 [Member] | Swap [Member]
Derivative [Line Items]
Stated Interest Rate	2.425%		2.425%
Market Value (Liability)	$ 5,127		$ 5,127		6,904
Derivative Liability, Notional Amount	$ 136,875		$ 136,875		$ 140,625
Convertible Debt [Member]
Derivative [Line Items]
Convertible note hedge shares						8,100

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Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 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	437,054
Converted (in shares)	(120,830)	(200,563)
Expired (in shares)	(1,200)	(34,100)
Forfeited (in shares)	0	(1,000)
Outstanding at end of period (in shares)	1,237,599	1,165,223
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	18.85
Converted, Weighted average grant-date fair value (in dollars per share)	25.40	19.87
Expired, Weighted average grant-date fair value (in dollars per share)	26.60	19.40
Forfeited, Weighted average grant-date fair value (in dollars per share)	0	18.90
Outstanding at end of period, Weighted average grant-date fair value (in dollars per share)	18.44	17.69
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	$ 3.5	$ 4.0
Unrecognized share-based compensation expense	$ 10.6
Unrecognized share-based compensation, weighted average recognition period	1 year 6 months
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)	1,535,949
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		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Earnings Per Share Reconciliation [Abstract]
Earnings from continuing operations	$ 79,869	$ (105,162)	$ 122,159	$ 28,571
fair value adjustment to warrants, net of tax	(25,816)	0	(31,171)	(19,312)
Undistributed Earnings (Loss) from Continuing Operations Available to Common Shareholders, Diluted	$ 54,053	$ (105,162)	$ 90,988	$ 9,259
Weighted-average shares outstanding for basic earnings per share (in shares)	68,206,000	59,130,000	63,851,000	59,085,000
Restricted stock (in shares)			482,300	365,100
Common equivalent shares:
Effect of stock-based compensation awards (in shares)	4,758,000	0	9,998,000	9,019,000
Weighted-average shares outstanding assuming dilution (in shares)	72,964,000	59,130,000	73,849,000	68,104,000
Basic earnings per share from continuing operations (in dollars per share)	$ 1.17	$ (1.78)	$ 1.91	$ 0.48
Diluted earnings per share from continuing operations (in dollars per share)	$ 0.74	$ (1.78)	$ 1.23	$ 0.14

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Segment Information (Segment Reconciliation) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Segment Reporting Information [Line Items]
Operating Expenses	$ 325,253	$ 354,616	$ 644,482	$ 694,086
REVENUES	409,872	377,794	785,960	767,071
Customer revenues	409,872	377,794	785,960	767,071
Depreciation and amortization expense	75,633	68,291	146,684	137,633
Net unallocated interest expense	(15,021)	(16,045)	(29,543)	(32,368)
Net gain (loss) on financial instruments	35,703	(109,723)	45,175	(2,679)
Pre-tax earnings from continuing operations	104,226	(106,193)	159,328	34,581
Assets	3,210,854		3,210,854		$ 3,001,745
Income Tax Expense (Benefit)		(1,031)	37,169	6,010
Net Periodic Defined Benefits Expense (Reversal of Expense), Excluding Service Cost Component	4,456	2,898	8,913	5,796
Net earnings from continuing operations	79,869	(105,162)	122,159	28,571
Income Tax (Expense) Benefit, Continuing Operations, Government Grants	38,274	9,821	66,304	9,821
Asset Impairment Charges	0	(39,075)	0	(39,075)
Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	409,872	377,794	785,960	767,071
Customer revenues	409,872	377,794	785,960	767,071
ACMI Services [Member]
Segment Reporting Information [Line Items]
REVENUES	273,301	287,604	520,432	571,769
Customer revenues	273,301	287,604	520,432	571,769
Depreciation and amortization expense	24,768	25,384	47,749	50,696
Segment earnings (loss)	44,762	29,505	66,021	47,883
Net unallocated interest expense	(4,473)	(5,645)	(8,996)	(10,946)
Assets	829,365		829,365		811,516
ACMI Services [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	273,295	287,595	520,422	571,756
Customer revenues	273,295	287,595	520,422	571,756
All other [Member]
Segment Reporting Information [Line Items]
REVENUES	97,236	77,056	190,934	157,092
Customer revenues	97,236	77,056	190,934	157,092
Depreciation and amortization expense	853	883	1,928	1,866
Segment earnings (loss)	3,161	(2,244)	3,550	(2,191)
Assets	182,227		182,227		152,601
All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	69,901	40,240	138,062	98,620
Customer revenues	69,901	40,240	138,062	98,620
CAM [Member]
Segment Reporting Information [Line Items]
REVENUES	88,594	74,870	171,871	149,033
Customer revenues	88,594	74,870	171,871	149,033
Depreciation and amortization expense	50,012	42,024	97,007	85,071
Segment earnings (loss)	22,554	19,640	44,016	35,460
Net unallocated interest expense	(9,669)	(9,707)	(18,895)	(19,962)
Assets	2,199,262		2,199,262		$ 2,037,628
CAM [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	66,676	49,959	127,476	96,695
Customer revenues	66,676	49,959	127,476	96,695
Significant Reconciling Items [Member]
Segment Reporting Information [Line Items]
Net unallocated interest expense	(870)	(681)	(1,624)	(1,336)
Non-operating charges from a non-consolidating affiliate	965	(6,513)	(218)	(9,277)
Eliminate inter-segment revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	(49,259)	(61,736)	(97,277)	(110,823)
Customer revenues	(49,259)	(61,736)	(97,277)	(110,823)
Accounting Standards Update 2014-09 [Member]
Segment Reporting Information [Line Items]
Income Tax Expense (Benefit)	(24,357)
Accounting Standards Update 2014-09 [Member] | Ground Services [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	28,791	18,851	62,839	52,686
Customer revenues	28,791	18,851	62,839	52,686
Accounting Standards Update 2014-09 [Member] | All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	69,901	40,240	138,062	98,620
Customer revenues	69,901	40,240	138,062	98,620
Accounting Standards Update 2014-09 [Member] | Ground Services [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	29,022	16,003	52,482	30,611
Customer revenues	29,022	16,003	52,482	30,611
Accounting Standards Update 2014-09 [Member] | All Other non MRO or Ground Services [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	12,088	5,386	22,741	15,323
Customer revenues	$ 12,088	$ 5,386	$ 22,741	$ 15,323

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Segment Information (Narrative) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) segments	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Segment Reporting Information [Line Items]
REVENUES	$ 409,872	$ 377,794	$ 785,960	$ 767,071
Deferred Revenue, Revenue Recognized	1,000	1,600	2,700	2,800
Deferred Revenue	1,200		$ 1,200		$ 3,000
Number of reportable segments (in segments) | segments			2
Interest expense	15,021	16,045	$ 29,543	32,368
Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	409,872	377,794	785,960	767,071
ACMI Services [Member]
Segment Reporting Information [Line Items]
REVENUES	273,301	287,604	520,432	571,769
Interest expense	4,473	5,645	8,996	10,946
Property, Plant and Equipment, Additions			48,800
ACMI Services [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	273,295	287,595	520,422	571,756
CAM [Member]
Segment Reporting Information [Line Items]
REVENUES	88,594	74,870	171,871	149,033
Interest expense	9,669	9,707	18,895	19,962
Property, Plant and Equipment, Additions			251,800
CAM [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
REVENUES	66,676	$ 49,959	127,476	$ 96,695
Flight Equipment [Member]
Segment Reporting Information [Line Items]
Operating Leases, Future Minimum Payments Receivable, Current	125,900		125,900		222,400
Operating Leases, Future Minimum Payments Receivable, in Two Years	227,000		227,000		195,500
Operating Leases, Future Minimum Payments Receivable, in Three Years	182,500		182,500		150,500
Operating Leases, Future Minimum Payments Receivable, in Four Years	131,900		131,900		99,800
Operating Leases, Future Minimum Payments Receivable, in Five Years	118,800		118,800		90,700
Operating Leases, Future Minimum Payments Receivable, Thereafter	$ 333,400		$ 333,400		$ 202,200

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Segment Information (Entity-Wide Disclosures) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Segment Reporting Information [Line Items]
Customer revenues	$ 409,872	$ 377,794	$ 785,960	$ 767,071
Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues	409,872	377,794	785,960	767,071
CAM [Member]
Segment Reporting Information [Line Items]
Customer revenues	88,594	74,870	171,871	149,033
CAM [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues	66,676	49,959	127,476	96,695
All other [Member]
Segment Reporting Information [Line Items]
Customer revenues	97,236	77,056	190,934	157,092
All other [Member] | Customer Revenues [Member]
Segment Reporting Information [Line Items]
Customer revenues	$ 69,901	$ 40,240	$ 138,062	$ 98,620

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Quarterly Results (Unaudited) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Fair Value Adjustment of Warrants	$ 33,500	$ (110,400)	$ 40,400	$ 7,500
Asset Impairment Charges	0	39,075	0	39,075
Income Tax (Expense) Benefit, Continuing Operations, Government Grants	38,274	9,821	66,304	9,821
REVENUES	409,872	377,794	785,960	767,071
Net earnings from continuing operations	79,869	(105,162)	122,159	28,571
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES	65	236	65	4,008
ACMI Services [Member]
REVENUES	$ 273,301	$ 287,604	$ 520,432	$ 571,769

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Acquisition of Business (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Business Acquisition [Line Items]
REVENUES	$ 409,872	$ 377,794	$ 785,960	$ 767,071
Goodwill	395,974		395,974		$ 395,974
Long-term Debt	1,399,092		1,399,092		1,479,077
Revolving Credit Facility [Member]
Business Acquisition [Line Items]
Long-term Debt	$ 464,000		$ 464,000		$ 140,000

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Investments in Non-Consolidated Affiliates (Unaudited) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Noncontrolling Interest [Line Items]
Assets, Current	$ 333,487		$ 333,487		$ 272,736
NET EARNINGS (LOSS)	79,934	$ (104,926)	122,224	$ 32,579
Liabilities, Current	335,868		335,868		301,988
Liabilities	2,096,127		2,096,127		$ 2,146,248
REVENUES	$ 409,872	$ 377,794	$ 785,960	$ 767,071