Note N - Segment and Revenue Information

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Segment Reporting and Revenue Disclosure [Text Block]

NOTE N—SEGMENT AND REVENUE INFORMATION

The Company operates in two reportable segments. 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 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
	March 31,
	2024			2023
Total revenues:
CAM	$	105,549		$	112,044
ACMI Services		323,824			334,127
All other		109,040			110,588
Eliminate inter-segment revenues		(52,896	)		(55,664	)
Total	$	485,517		$	501,095
Customer revenues:
CAM	$	79,591		$	83,158
ACMI Services		323,711			334,113
All other		82,215			83,824
Total	$	485,517		$	501,095

The Company's external customer revenues from other activities for the three month period ended March 31, 2024, and 2023 are presented below (in thousands):

	Three Months Ended
	March 31,
	2024		2023
Aircraft maintenance, modifications and part sales	$	40,348	$	42,073
Ground services		23,221		23,665
Other, including aviation fuel sales		18,646		18,086
Total customer revenues	$	82,215	$	83,824

During the three month period ended March 31, 2024, the Company recognized $3.9 million, respectively, of non-lease revenue that was reported as deferred revenue at the beginning of the applicable period, compared to $6.5 million for the comparable period in 2023. Current deferred revenue of $9.1 million and $4.5 million as of March 31, 2024 and December 31, 2023, respectively, for contracts with customers is derived from other activities as described above. 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 $8.2 million as of March 31, 2024 compared to $8.7 million as of December 31, 2023. Cash will be collected over the term of the multi-year agreement based on number cycles per period while revenue is recognized as parts are provided for engine maintenance services. This may result in a contract asset or liability based on the timing of engine maintenance services.

CAM's leases do not contain residual guarantees. Approximately 16% of CAM's leases to external customers contain purchase options at projected market values. As of March 31, 2024, minimum future payments from external customers for leased aircraft and equipment were scheduled to be $217.4 million for the remainder of 2024, and $267.0 million, $235.1 million, $206.8 million and $171.9 million, respectively, for each of the next four years ending December 31, 2028 and $254.3 million thereafter. CAM's external customer revenues for non-lease activities were $4.8 million and $6.7 million for the three month period ended March 31, 2024  and 2023, respectively, 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
	March 31,
	2024			2023
Depreciation and amortization expense:
CAM	$	65,373		$	60,397
ACMI Services		24,249			23,621
All other		758			710
Total	$	90,380		$	84,728
Interest expense
CAM		15,280			10,022
ACMI Services		5,493			4,958
Segment earnings (loss):
CAM	$	13,409		$	34,200
ACMI Services		(3,485	)		(2,411	)
All other		2,307			654
Net unallocated interest expense		(976	)		(510	)
Net gain (loss) on financial instruments		2,355			(1,740	)
Other non-service components of retiree benefit costs, net		(1,085	)		(3,218	)
Loss from non-consolidated affiliate		(79	)		(406	)
Pre-tax earnings from continuing operations	$	12,446		$	26,569

The amortization of customer incentives included in revenue for CAM was $3.1 for the three month period ended March 31, 2024 compared to $5.0 million for the corresponding period in 2023. The amortization of customer incentives included in revenue for ACMI Services was $0.8 million for the three month period ended March 31, 2024 compared to $0.8 million in the corresponding period of 2023.

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

	March 31,		December 31,
	2024		2023
Assets:
CAM	$	2,929,853	$	2,885,508
ACMI Services		829,133		828,703
All other		132,751		167,879
Total	$	3,891,737	$	3,882,090

During the three months ended March 31, 2024, the Company had capital expenditures for property and equipment of $20.7 million and $82.1 million for the ACMI Services and CAM, respectively.