Segment Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment Information

SEGMENT AND REVENUE INFORMATION

The Company operates in two reportable segments - CAM and ACMI Services. The CAM segment consists of the Company's aircraft and engine 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 support services, are not large enough to constitute separate 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 Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Total revenues:
CAM	$	109,496	$	92,931	$	326,075	$	264,802
ACMI Services	357,375		330,906		1,034,963		851,338
All other	108,423		90,292		318,837		281,226
Eliminate inter-segment revenues	(58,378)		(48,174)		(167,431)		(145,451)
Total	$	516,916	$	465,955	$	1,512,444	$	1,251,915
Customer revenues:
CAM	$	79,975	$	71,070	$	237,466	$	198,546
ACMI Services	357,319		330,903		1,034,881		851,325
All other	79,622		63,982		240,097		202,044
Total	$	516,916	$	465,955	$	1,512,444	$	1,251,915

The Company's external customer revenues from other activities for the three and nine month periods ending September 30, 2022 and 2021 are presented below (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Aircraft maintenance, modifications and part sales	$	34,604	$	28,513	$	106,766	$	91,352
Ground services	28,204		22,928		80,275		75,410
Other, including aviation fuel sales	16,814		12,541		53,056		35,282
Total customer revenues	$	79,622	$	63,982	$	240,097	$	202,044

During the three and nine month periods ending September 30, 2022, the Company respectively recognized $5.8 million and $4.8 million of non lease revenue that was reported in deferred revenue at the beginning of the respective period, compared to $1.1 million and $2.9 million in the respective corresponding periods of 2021. Current deferred revenue of $13.0 million and $8.3 million as of September 30, 2022 and December 31, 2021, respectively, for contracts with customers is derived from other activities as described above and CAM non lease revenues. Revenue related to deferred revenue will be recognized based on percentage of completion. Customers are required to pay deposits and may be required to make milestone payments for these services resulting in deferred revenue. Long-term contract assets were $0.0 million and $0.8 million as of September 30, 2022 and December 31, 2021, respectively.

CAM's leases do not contain residual guarantees. Approximately 12% of CAM's leases to external customers contain purchase options at projected market values. As of September 30, 2022, minimum future payments from

external customers for leased aircraft and equipment were scheduled to be $72.2 million for the remainder of 2022, $247.5 million, $197.3 million, $183.4 million and $157.5 million for the next 4 years ending December 31, 2026, respectively, and $361.9 million thereafter. CAM's external customer revenues for non-lease activities were $9.8 million and $27.1 million for the three and nine month periods ending September 30, 2022, respectively, compared to $2.3 million and $9.2 million during the respective corresponding periods of 2021 for engine services and the sale of spare engine parts.

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Depreciation and amortization expense:
CAM	$	59,231	$	51,383	$	171,943	$	148,390
ACMI Services	23,447		25,649		72,885		73,398
All other	605		719		1,898		2,647
Total	$	83,283	$	77,751	$	246,726	$	224,435
Interest expense
CAM	7,908		9,408		21,837		28,303
ACMI Services	3,693		4,672		9,719		13,668
Segment earnings (loss):
CAM	$	36,975	$	28,502	$	111,587	$	72,518
ACMI Services	25,265		58,225		69,267		124,246
All other	(1,182)		(1,047)		560		2,503
Net unallocated interest expense	(510)		(371)		(1,391)		(1,995)
Net gain (loss) on financial instruments	695		(7,378)		9,402		37,797
Debt issuance costs	—		—		—		(6,505)
Other non-service components of retiree benefit costs, net	4,635		4,457		15,411		13,370
Loss from non-consolidated affiliate	(954)		(1,147)		(5,577)		(1,365)
Pre-tax earnings from continuing operations	$	64,924	$	81,241	$	199,259	$	240,569

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

	September 30,		December 31,
	2022		2021
Assets:
CAM	$	2,427,780	$	2,218,012
ACMI Services	959,801		872,311
All other	137,584		177,012
Total	$	3,525,165	$	3,267,335

During the first nine months of 2022, the Company had capital expenditures for property and equipment of $69.8 million and $378.3 million for ACMI Services and CAM, respectively.