EX-99.1 2 dex991.htm INVESTOR PRESENTATION Investor Presentation
0
Investor Meetings
May 2010
Exhibit 99.1

1
Safe Harbor, Non-GAAP Reconciliations
Except
for
historical
information
contained
herein,
the
matters
discussed
in
this
presentation
contain
forward-looking
statements
that
involve
risks
and
uncertainties.
There
are
a
number
of
important
factors
that
could
cause
Air
Transport
Services
Group's
("ATSG's")
actual
results
to
differ
materially
from
those
indicated
by
such
forward-looking
statements.
These
factors
include,
but
are
not
limited
to,
changes
in
market
demand
for
our
assets
and
services,
the
timely
completion
of
767
freighter
modifications
as
anticipated
under
ABX
Air’s
new
operating
agreement
with
DHL,
ABX
Air’s
ability
to
maintain
on-
time
service
and
control
costs
under
its
new
operating
agreement
with
DHL,
and
other
factors
that
are
contained
from
time
to
time
in
ATSG's
filings
with
the
U.S.
Securities
and
Exchange
Commission,
including
its
Annual
Report
on
Form
10-K
and
Quarterly
Reports
on
Form
10-Q.
Readers
should
carefully
review
this
presentation
and
should
not
place
undue
reliance
on
ATSG's
forward-looking
statements.
These
forward-looking
statements
were
based
on
information,
plans
and
estimates
as
of
the
date
of
this
release.
ATSG
undertakes
no
obligation
to
update
any
forward-looking
statements
to
reflect
changes
in
underlying
assumptions
or
factors,
new
information,
future
events
or
other
changes.
ATSG, Inc. Non-GAAP Reconciliation
EBITDA, Adjusted EBITDA and Net Debt are
non-GAAP financial measures and should not
be considered alternatives to net income
(loss) or any other performance measure
derived in accordance with GAAP.
EBITDA is defined as income (loss) from
operations plus net interest expense,
provision for income taxes, depreciation and
amortization.
Net Debt is defined as Long-term debt
obligations plus Current portion of debt
obligations minus Cash and cash equivalents.
The Company’s management uses these
adjusted financial measures in conjunction
with GAAP finance measures to monitor and
evaluate its performance, including as a
measure of liquidity.  EBITDA, Adjusted
EBITDA and Net Debt should not be
considered in isolation or as a substitute for
analysis of the Company’s results as reported
under GAAP, or as alternative measures of
liquidity.
2007
 2008
2009
1Q2009
1Q2010
25,721
(56,619)
45,358
13,193
10,784
Impairment of goodwill & intangibles
0
91,241
0
0
0
      25,721
      34,622
      45,358
      13,193
      10,784
Interest Income
      (4,557)
      (2,335)
         (449)
         (178)
           (73)
Interest Expense
      14,067
      37,002
      26,881
        7,646
        5,189
Depreciation and amortization
      51,635
      93,752
      83,964
      21,473
      20,800
86,866
163,041
155,754
42,134
    
36,700
    
2007
 2008
2009
1Q2009
1Q2010
Long term obligations
    567,987
    450,628
    325,690
    392,351
    307,865
Current portion of debt obligations
      22,815
      61,858
      51,737
      62,319
      60,438
Cash and cash equivalents
    (59,271)
  (116,114)
    (83,229)
  (124,000)
  (108,685)
Net Debt
531,531
  
396,372
  
294,198
  
330,670
  
259,618
  
Reconciliation Statement ($ in 000s)
GAAP Pre-tax Earnings (Loss)
Reconciliation Statement ($ in 000s)
Adjusted EBITDA from Cont. Oper.
from Continuing Operations
Adjusted Pre-Tax Earnings                     
from Continuing Operations
Earnings from Continuing Operations Before Interest, Taxes, Depreciation & Amortization (Adjusted EBITDA)
Net Debt

2
Investment Highlights
Differentiated Business Model
World’s largest fleet of owned and operated converted Boeing 767 freighters
Most efficient medium range, widebody cargo aircraft
Accretive 767 conversion plan will continue to fuel growth
Provide full spectrum of air transport services throughout the world
Dry leasing, ACMI (wet leasing), maintenance, technical, fuel management, logistic support services
No fuel exposure
New long-term A+CMI contract with DHL
Diversified base of other established customers, including Bax Schenker, U.S. Military, USPS, TNT and Qantas
Favorable Industry Dynamics
Demand for 767s remained strong despite recession
Customers more sensitive to price are seeking full-service, low cost producers
Limited capacity in medium-range wide-body air cargo transportation
Competitive aircraft significantly less efficient (crew, fuel and maintenance) than 767
Strong Financial Characteristics and Performance
Secure balance sheet with low levels of leverage and no off-balance sheet liabilities or large capital commitments
Strong cash flow generation
Large NOL protects Company’s cash generation
Disciplined capital allocation with established ROIC hurdles

3
ATSG Business Model
Dry Leasing Business
The
majority
of
ATSG’s
aircraft
are
leased
out
of
its
Cargo
Aircraft
Management
(“CAM”)
subsidiary
ATSG subsidiaries must pay CAM market rates and compete with third party companies for access to asset
Dry leases typically have minimum term of 5-7 years and require the assumption of operating risk
Lessee must operate, insure, fuel and maintain leased aircraft
The
dry
leasing
business
is
the
foundation
of
ATSG’s
economic
model
--
all
other
aircraft-related
services
have
to
generate acceptable incremental returns
Aircraft Crew Maintenance and Insurance (“ACMI”) Business
Three of ATSG’s subsidiaries provide ACMI services for cargo transport companies
In addition to the aircraft itself, crew, maintenance and insurance are provided to the customer
No fuel risk is assumed
Assuming market rates for aircraft, ACMI business is priced to generate incremental operating returns
Flexibility
to
offer
CMI
services
with
aircraft
provided
by
customer
–
incremental
return
without
capital
investment
Value-added Complementary Services
ATSG provides a host of services to complement its ACMI and leasing services
Standalone Maintenance, Repair, and Overhaul (“MRO”) subsidiary provides full service maintenance operations to
ATSG subsidiaries and third party customers
The Company also leverages its expertise, market knowledge and relationships to provide other services such as:
Freight sorting; facilities management; aircraft charter and truck brokerage, equipment sales and leasing

4
Summary of Business Units
Provides aircraft charter and trucking services brokerage, import / export services, and fuel sales
and management
Customers include: DHL, BAX Schenker, UPS, Emirates
Provides equipment leasing (of owned equipment) and facility management services
Customers include: Allegiant Air, Branson Airport, Tampa International Jet Center
Capabilities include heavy maintenance, component repair and overhaul, engineering and
manufacturing, and line maintenance
Provides third-party maintenance and technical services to major airlines, private operators
Provides ACMI services
Operates 727Fs, 757Fs
Customers
include
BAX
Schenker
and
DHL
Provides ACMI Services
Operates  B767s, DC8Fs, DC-8 Combis
Customers include BAX Schenker, U.S. Military and Quantas
Provides ACMI services
Operates B767 freighters
Customers include DHL, USPS and TNT
Dry leases 757, 767, 727 and DC-8 aircraft to ATSG subsidiaries and external customers
Future acquired aircraft will be owned by CAM
Offers conversion management, access to engine maintenance and component services
External customers include DHL, CargoJet, Amerijet, First Air
Description
Business

5
New A+CMI Agreement with DHL
New “A+CMI”
Agreement Terms
DHL leasing thirteen 767 aircraft from CAM under 7 year term
ABX to operate aircraft for DHL under separate 5 year CMI agreement, with 2 year extension right to DHL, 5 year
mutual
Economics based upon pre-defined fee with performance incentive bonuses, scaled for number of aircraft
operated by ABX
CMI agreement subject to break-up fee that amortizes down from $70mm should DHL elect to prematurely
terminate the agreement
Under the CMI Agreement, ABX will be able to contract with its MRO, Airborne Maintenance and Engineering
Services (“AMES”) for airframe heavy maintenance
The remaining $31mm in the DHL Note will be amortized down over the course of the CMI with no cash
requirement from ATSG
DHL to provide fuel at its own expense
Other Items Resolved
$31.4mm of Severance and Retention payments for ABX pilots was contributed directly to pilot pension
DHL agreed to pay ABX $31mm in settlement of open DC-9 and Boeing 767 aircraft put values
ABX agreed to pay down $15mm of the DHL Note, reducing the outstanding balance to $31mm
DHL agreed to pay $11.2mm for reimbursement of accrued vacation paid out to employees adversely impacted by
DHL’s restructuring in the U.S.

6
Market Overview
Airlines
47%
Forwarders
18%
Express
35%
Global Air Freight Market: $87 Billion
-15%
-10%
-5%
0%
5%
10%
15%
30-Year Global Growth Trends
Middle East
6%
Lat. Amer.
3%
Africa
3%
Europe
21%
North America
30%
Other
2%
Asia
35%
Market Share By Region
0%
2%
4%
6%
8%
10%
Japan-N.Amer.
Europe-N. Amer.
JapanEurope
Europe-Other Asia
India-N. Amer
Africa-Europe
Other Asia-N. Amer.
S. Amer.-Europe
Europe-India
China-Europe
Other Asia-China
China-North America
Growth Trends By Region, 2009-2018
Avg.
+5.8%
Source: ACMG, Boeing
ATSG markets

7
Global Freighter Fleets Today
5     B747-100s
77   B747-200s
3     B747-300s
205 B747-400s
38   DC-10-30s
2     DC-10-40s
159 MD-11s
16   777s
65   A310-200/300s
47
A300B4s
48
150 A300-600s
55   B767-200s
(37)
59   B767-300s
59
DC-10-10s
1     L1011
12   B707-320s
146
B757-200s
(2)
28
DC-8-50/60
(1*)
29
DC-8-70s
(15*)
* includes 4 combis
24   BAe
146 QTs
33   B737-200s
94   B737-300/400s
32   B727-100s
210
B727-200s
(13)
13   DC-9s
Large
Wide-body
505 Units
Medium
Wide-body
436 Units
Medium
Narrow-body
213 Units
Small
406 Units
Source: ACMG
Aircraft
Fuel
(gal./ block hr)*
Crew
Payload (lbs.)/
Capacity (cu. ft.)
Range
(NM)
767-200SF
1,380
2
100,000 / 11,138
2,800
A300-B4
1,900
3
99,200 / 11,445
1,680
DC-8 63
1,760
3
96,800 / 10,060
2,150
DC-8 73
1,600
3
111,800 / 10,060
2,470
Medium Freighter Comparisons
ATSG fleet
Prime 767 Replacement
Candidates

8
Freighter Market Outlook
Conversions Will Provide 74%
of Global Freighter Fleet Adds
Freighter Growth
2008
2027
1,940
3,250
+2,760
2,050
-1,450
710
Source: Boeing World Air Cargo Forecast
Global Freighter Fleet
Freighter Retirements
New Freighters
Passenger/Freighter Conversions
680
500
760
1,070
920
1,260
2008:
1,940
Freighters
2028:
3,250
Freighters
Standard-body <45t
Medium wide-body
Large >80t

9
Deploying Our 767SFs
11-14
11-18
April 2011
Jan. 2012
DHL-CAM
Dry
Leased
SFs
Other
Customers-CAM
Dry
Leased
SFs
11-14
11
Jan. 2011
4
Pace of 767 modifications could be affected by possible assignment of modification slots to DHL.
7
11
April 2010
DHL-
Interim
Leased
SFs
ACMI
Services
–
ACMI/Charter
SFs
13
13
4
5-8
5-8
5-12
26
30
32
36

10
Emerging Go-to-Market Strategy
Drive higher return on capital by optimally
positioning opportunities and bundling
additional services
CAM a neutral, non-airline, lead sales
organization that can drive a bundled
marketing strategy
Develop packaged programs cross-selling
entities
Amerijet International program symbolizes
this approach
Market Approach
Market Opportunities
767 ideal replacement for
less efficient aircraft
A300-B4s (47)
DC-10-10s (59)
DC-8s (57)
Growth markets
Intra-Asia: 9.3%
Domestic China: 7.5%
Europe-Asia: 5.9%
Europe-Africa: 5.7%

11
ATSG Portfolio Marketing
Individual companies continue to market and sell their own services
CAM
will bundle
and sell the
services of the individual
companies
into
short-
and
long-
term
solutions for new and
existing customers
•
ACMI / Wet Leasing
•
Cargo Handling
•
Charter Services
•
ACMI / Wet Leasing
•
Combi-freighters
•
Charter Services
•
ACMI / Wet Leasing
•
Charter Services
•
Aviation Solutions
•
Bundled Programs
•
Aircraft Leasing
•
Conversion Services
•
Heavy Maintenance
•
Line Maintenance
•
Component Overhaul & Sales
•
Engineering Services

12
Flexible
Global
Solutions
Market Differentiation
767-200 with
GE CF6-80A
engines
Low fuel cost
Low
maintenance
cost
Flexible
configuration
Power By Hour
engine services
The Global Leader of Medium Wide Body Operating and Leasing Solutions
Efficient Medium
Wide-Body
Aircraft
•
ACMI/ wet
leasing
•
CMI
•
Dry leasing
•
AMC charter
•
Full service
charter
•
Flight
operations
•
Heavy
maintenance
•
Line
maintenance
•
Maintenance
programs
•
Engineering
•
Technical
support
•
Manual services
•
Parts,
components
sales & service
•
Aircraft
conversion
services
•
Global
aircraft
deployment
•
Logistics
support
•
DHL
•
BAX
Schenker
•
TNT
•
UPS
•
Qantas
•
Amerijet
•
Air
Mobility
Command
•
CargoJet
Bundled
Maintenance
Solutions
Program
Management
Meeting Diverse
Customer Needs

13
Summary Financials
EBITDA* (from continuing operations)
Pre-tax Earnings (from continuing operations)
Net Debt*
Stockholders’
Equity
$200.0
$80.4
$246.0
2007
2008
2009
$86.9
$163.0
$155.8
2007
2008
2009
$42.1
$36.7
1Q 09
1Q 10
Year
First Quarter
Year
First Quarter
Year
First Quarter
Year
First Quarter
$330.7
$259.6
3/31/09
3/31/10
$126.8
$266.5
3/31/09
3/31/10
$25.7
-$56.6
$45.4
2007
2008
2009
$34.6**
Adjusted*
EBITDA is defined as income (loss) from operations plus net interest expense provision for income taxes, depreciation and amortization. Net Debt is defined as Long-Term Obligations plus Current
Portion of Debt Obligations minus Cash and Cash Equivalents. EBITDA, Adjusted EBITDA and Net Debt are non-GAAP financial measures and should not be considered alternatives to net income
(loss) or any other performance measure derived in accordance with GAAP. See Reconciliation Tables, slide #2
$13.2
$10.8
1Q 09
1Q 10
$443.0
$324.1
$281.3
2007
2008
2009

14
Leverage Substantially Reduced
-$46.3
Transfer of Aircraft
Transfer of Aircraft
Capital Leases to DHL
Capital Leases to DHL
-$43.1
Principal
Principal
payments
payments
$377.4
$512.5
-$45.7
DHL Promissory
DHL Promissory
Note Extinguishment
Note Extinguishment
YE 2008
YE 2009
Total Debt Reduced 26%
Credit Facility Covenant Compliance
Required *
2008
2009
1Q2010 **
First Lien Debt / EBITDA
< 2.75
2.58
2.17
2.24
Total Debt / EBITDA
< 3.25
3.10
2.44
2.53
Fixed Charge Coverage Ratio
> 1.50
2.55
1.99
1.93
Capital Expenditures
> 1.05
1.58
1.65
1.42
Employer
Employer
contributions
contributions
$152.7
$297.3
Actuarial costs &
Actuarial costs &
adjustments
adjustments
$83.2
$75.8
$71.7
Workforce
Workforce
contraction
contraction
& plan freeze
& plan freeze
$57.3
$ in millions
Gains on
Gains on
assets
assets
YE 2008
YE 2009
Post-Retirement Liabilities Reduced 49%
$ in millions
$22
$31
$32
$142
$90
$70
$82
$18
Maintenance
Growth
2007
2008
2009
2010E
$160
$112
$101
$114
$ in millions
*  Requirements at year-end 2008 were 3.00 / 3.50 / 1.50 / 1.25
** Based upon twelve months trailing EBITDA
Minimal Future Capex Commitments
Capital Spending Trends

15
Value Proposition
Strong cash returns from modified freighters
767 leases bring attractive cash returns
ACMI/CMI flexibility offers options, wide-body migration path
10
more
767
freighters
to
be
modified
through
2011
—
50%
market-value
gain
on
$12M
per
plane
invested
Long-term agreements with key customers
Lease/CMI approach an option for new customer relationships
Unlocks value of aircraft from ACMI
Opportunity to capture margin gains from fixed-price contracts
Integrated, value-added services
Increases return on invested capital
Comprehensive mix allows for turnkey customer solutions
Solid balance sheet and liquidity, growth capital capacity
No off-balance sheet obligations
Minimal future capital commitments
Expanding opportunities around the globe
Expanding presence in fastest-growing air cargo regions
Uniquely positioned to capture significant share of replacement market as less-efficient mid-sized freighters
are retired

16
Appendix

17
Balance Sheet Review
March 31,
Dec. 31,
Dec. 31,
2010
2009
2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
108,685
$                                     
83,229
$                                           
116,114
$                                         
Marketable securities - available-for-sale
-
                                                   
26
                                                    
Accounts receivable, net of allowances
19,506
                                         
25,036
                                             
24,495
                                             
Due from DHL
23,311
                                             
62,672
                                             
63,362
                                             
Inventory
5,142
                                           
5,226
                                               
11,259
                                             
Prepaid supplies and other
6,790
                                           
7,093
                                               
11,151
                                             
Deferred income taxes
31,597
                                         
31,597
                                             
20,172
                                             
Aircraft and engines held for sale
30,237
                                         
30,634
                                             
2,353
                                               
TOTAL CURRENT ASSETS
225,268
                                       
245,487
                                           
248,932
                                           
Property and equipment, net
639,240
                                       
636,089
                                           
671,552
                                           
Other assets
28,759
                                             
21,307
                                             
25,281
                                             
Deferred income taxes
-
                                                        
-
                                                   
54,807
                                             
Intangibles
9,900
                                               
10,113
                                             
11,000
                                             
Goodwill
89,777
                                             
89,777
                                             
89,777
                                             
TOTAL ASSETS
992,944
$                                         
1,002,773
$                                      
1,101,349
$                                      
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
38,614
$                                           
38,174
$                                           
36,618
$                                           
Accrued salaries, wages and benefits
29,803
                                             
44,077
                                             
63,500
                                             
Accrued severance and retention
11,030
                                             
18,959
                                             
67,846
                                             
Accrued expenses
15,897
                                         
16,429
                                             
13,772
                                             
Current portion of debt obligations
60,438
                                         
51,737
                                             
61,858
                                             
Unearned revenue
10,288
                                         
15,340
                                             
14,813
                                             
TOTAL CURRENT LIABILITIES
166,070
                                           
184,716
                                           
258,407
                                           
Long-term obligations
307,865
                                       
325,690
                                           
450,628
                                           
Post-retirement liabilities
129,084
                                       
152,297
                                           
294,881
                                           
Other liabilities
61,029
                                         
44,044
                                             
17,041
                                             
Deferred income taxes
62,024
                                             
50,044
                                             
-
                                                   
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; 75,000,000 shares authorized;
63,416,564 and 63,247,312 shares issued and outstanding
in 2009 and 2008, respectively
634
                                          
634
                                                  
632
                                                  
Additional paid-in capital
502,897
                                   
502,822
                                           
460,155
                                           
Accumulated deficit
(203,886)
                                      
(211,085)
                                          
(245,534)
                                          
Accumulated other comprehensive loss
(32,773)
                                        
(46,389)
                                            
(134,861)
                                          
TOTAL STOCKHOLDERS' EQUITY
266,872
                                           
245,982
                                           
80,392
                                             
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
992,944
$                                         
1,002,773
$                                      
1,101,349
$