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|
|
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Delaware
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26-1631624
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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145 Hunter Drive, Wilmington, OH
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45177
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
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Smaller reporting company
o
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Emerging growth company
o
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Page
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PART I. FINANCIAL INFORMATION
|
|||
Item 1.
|
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||
|
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||
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Item 2.
|
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Item 3.
|
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Item 4.
|
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PART II. OTHER INFORMATION
|
|||
Item 1.
|
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Item 1A.
|
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Item 2.
|
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Item 5.
|
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Item 6.
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Three Months Ended
|
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Six Months Ended
|
||||||||||||
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June 30,
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June 30,
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||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
REVENUES
|
$
|
203,607
|
|
|
$
|
253,211
|
|
|
$
|
406,647
|
|
|
$
|
491,128
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
||||||||
Salaries, wages and benefits
|
74,049
|
|
|
65,833
|
|
|
144,832
|
|
|
138,319
|
|
||||
Depreciation and amortization
|
41,620
|
|
|
37,781
|
|
|
81,624
|
|
|
74,223
|
|
||||
Maintenance, materials and repairs
|
36,817
|
|
|
37,588
|
|
|
73,683
|
|
|
67,870
|
|
||||
Fuel
|
5,913
|
|
|
32,258
|
|
|
11,701
|
|
|
67,099
|
|
||||
Contracted ground and aviation services
|
2,444
|
|
|
32,151
|
|
|
4,828
|
|
|
52,838
|
|
||||
Travel
|
7,288
|
|
|
6,820
|
|
|
13,920
|
|
|
14,186
|
|
||||
Landing and ramp
|
1,311
|
|
|
4,357
|
|
|
2,459
|
|
|
9,656
|
|
||||
Rent
|
3,760
|
|
|
3,753
|
|
|
6,990
|
|
|
7,039
|
|
||||
Insurance
|
1,420
|
|
|
955
|
|
|
2,777
|
|
|
2,217
|
|
||||
Other operating expenses
|
5,087
|
|
|
8,590
|
|
|
12,292
|
|
|
16,626
|
|
||||
|
179,709
|
|
|
230,086
|
|
|
355,106
|
|
|
450,073
|
|
||||
OPERATING INCOME
|
23,898
|
|
|
23,125
|
|
|
51,541
|
|
|
41,055
|
|
||||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
||||||||
Interest income
|
54
|
|
|
16
|
|
|
77
|
|
|
48
|
|
||||
Non-service component of retiree benefit costs
|
2,045
|
|
|
(177
|
)
|
|
4,090
|
|
|
(354
|
)
|
||||
Net gain (loss) on financial instruments
|
11,697
|
|
|
(67,649
|
)
|
|
10,812
|
|
|
(65,780
|
)
|
||||
Loss from non-consolidated affiliate
|
(2,417
|
)
|
|
—
|
|
|
(4,953
|
)
|
|
—
|
|
||||
Interest expense
|
(5,366
|
)
|
|
(3,759
|
)
|
|
(10,728
|
)
|
|
(7,307
|
)
|
||||
|
6,013
|
|
|
(71,569
|
)
|
|
(702
|
)
|
|
(73,393
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
29,911
|
|
|
(48,444
|
)
|
|
50,839
|
|
|
(32,338
|
)
|
||||
INCOME TAX EXPENSE
|
(5,447
|
)
|
|
(5,474
|
)
|
|
(10,693
|
)
|
|
(11,784
|
)
|
||||
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
|
24,464
|
|
|
(53,918
|
)
|
|
40,146
|
|
|
(44,122
|
)
|
||||
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAXES
|
170
|
|
|
192
|
|
|
366
|
|
|
384
|
|
||||
NET EARNINGS (LOSS)
|
$
|
24,634
|
|
|
$
|
(53,726
|
)
|
|
$
|
40,512
|
|
|
$
|
(43,738
|
)
|
|
|
|
|
|
|
|
|
||||||||
BASIC EARNINGS (LOSS) PER SHARE
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.42
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.68
|
|
|
$
|
(0.75
|
)
|
Discontinued operations
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
||||
TOTAL BASIC EARNINGS (LOSS) PER SHARE
|
$
|
0.42
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.69
|
|
|
$
|
(0.74
|
)
|
|
|
|
|
|
|
|
|
||||||||
DILUTED EARNINGS (LOSS) PER SHARE
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.21
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.48
|
|
|
$
|
(0.75
|
)
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
||||
TOTAL DILUTED EARNINGS (LOSS) PER SHARE
|
$
|
0.21
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.48
|
|
|
$
|
(0.74
|
)
|
|
|
|
|
|
|
|
|
||||||||
WEIGHTED AVERAGE SHARES
|
|
|
|
|
|
|
|
||||||||
Basic
|
58,739
|
|
|
59,035
|
|
|
58,790
|
|
|
59,084
|
|
||||
Diluted
|
68,363
|
|
|
59,035
|
|
|
68,784
|
|
|
59,084
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30
|
|
June 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
NET EARNINGS (LOSS)
|
$
|
24,634
|
|
|
$
|
(53,726
|
)
|
|
$
|
40,512
|
|
|
$
|
(43,738
|
)
|
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
||||||||
Defined Benefit Pension
|
687
|
|
|
1,235
|
|
|
1,374
|
|
|
2,469
|
|
||||
Defined Benefit Post-Retirement
|
42
|
|
|
37
|
|
|
84
|
|
|
74
|
|
||||
Foreign Currency Translation
|
(123
|
)
|
|
99
|
|
|
(139
|
)
|
|
136
|
|
||||
|
|
|
|
|
|
|
|
||||||||
TOTAL COMPREHENSIVE INCOME (LOSS), net of tax
|
$
|
25,240
|
|
|
$
|
(52,355
|
)
|
|
$
|
41,831
|
|
|
$
|
(41,059
|
)
|
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
31,704
|
|
|
$
|
32,699
|
|
Accounts receivable, net of allowance of $1,130 in 2018 and $2,445 in 2017
|
100,805
|
|
|
109,114
|
|
||
Inventory
|
24,147
|
|
|
22,169
|
|
||
Prepaid supplies and other
|
13,017
|
|
|
20,521
|
|
||
TOTAL CURRENT ASSETS
|
169,673
|
|
|
184,503
|
|
||
Property and equipment, net
|
1,200,997
|
|
|
1,159,962
|
|
||
Lease incentive
|
72,232
|
|
|
80,684
|
|
||
Goodwill and acquired intangibles
|
43,999
|
|
|
44,577
|
|
||
Convertible note hedges
|
—
|
|
|
53,683
|
|
||
Other assets
|
30,573
|
|
|
25,435
|
|
||
TOTAL ASSETS
|
$
|
1,517,474
|
|
|
$
|
1,548,844
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
CURRENT LIABILITIES:
|
|
|
|
||||
Accounts payable
|
$
|
85,691
|
|
|
$
|
99,728
|
|
Accrued salaries, wages and benefits
|
34,189
|
|
|
40,127
|
|
||
Accrued expenses
|
10,833
|
|
|
10,455
|
|
||
Current portion of debt obligations
|
14,860
|
|
|
18,512
|
|
||
Unearned revenue
|
15,022
|
|
|
15,850
|
|
||
TOTAL CURRENT LIABILITIES
|
160,595
|
|
|
184,672
|
|
||
Long term debt
|
505,853
|
|
|
497,246
|
|
||
Convertible note obligations
|
—
|
|
|
54,359
|
|
||
Stock warrant obligations
|
203,426
|
|
|
211,136
|
|
||
Post-retirement obligations
|
53,032
|
|
|
61,355
|
|
||
Other liabilities
|
45,417
|
|
|
45,353
|
|
||
Deferred income taxes
|
113,571
|
|
|
99,444
|
|
||
TOTAL LIABILITIES
|
1,081,894
|
|
|
1,153,565
|
|
||
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; 110,000,000 shares authorized; 59,080,387 and 59,057,195 shares issued and outstanding in 2018 and 2017, respectively
|
591
|
|
|
591
|
|
||
Additional paid-in capital
|
469,412
|
|
|
471,456
|
|
||
Retained earnings (accumulated deficit)
|
27,278
|
|
|
(13,748
|
)
|
||
Accumulated other comprehensive loss
|
(61,701
|
)
|
|
(63,020
|
)
|
||
TOTAL STOCKHOLDERS’ EQUITY
|
435,580
|
|
|
395,279
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
1,517,474
|
|
|
$
|
1,548,844
|
|
|
|
|
|
|
Six Months Ended
|
||||||
|
June 30
|
||||||
|
2018
|
|
2017
|
||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net earnings (loss) from continuing operations
|
$
|
40,146
|
|
|
$
|
(44,122
|
)
|
Net earnings from discontinued operations
|
366
|
|
|
384
|
|
||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
94,270
|
|
|
80,097
|
|
||
Pension and post-retirement
|
1,884
|
|
|
3,990
|
|
||
Deferred income taxes
|
10,475
|
|
|
11,454
|
|
||
Amortization of stock-based compensation
|
2,304
|
|
|
1,710
|
|
||
Net (gain) loss on financial instruments
|
(10,812
|
)
|
|
65,780
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
11,006
|
|
|
1,905
|
|
||
Inventory and prepaid supplies
|
3,433
|
|
|
(1,822
|
)
|
||
Accounts payable
|
(2,067
|
)
|
|
14,244
|
|
||
Unearned revenue
|
(1,504
|
)
|
|
1,807
|
|
||
Accrued expenses, salaries, wages, benefits and other liabilities
|
(3,406
|
)
|
|
(6,793
|
)
|
||
Pension and post-retirement assets
|
(8,323
|
)
|
|
(5,847
|
)
|
||
Other
|
4,211
|
|
|
1,991
|
|
||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
141,983
|
|
|
124,778
|
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(150,816
|
)
|
|
(144,325
|
)
|
||
Proceeds from property and equipment
|
17,452
|
|
|
—
|
|
||
Acquisitions and investments in businesses
|
(5,150
|
)
|
|
(646
|
)
|
||
Redemption of long term deposits
|
—
|
|
|
9,975
|
|
||
NET CASH (USED IN) INVESTING ACTIVITIES
|
(138,514
|
)
|
|
(134,996
|
)
|
||
FINANCING ACTIVITIES:
|
|
|
|
||||
Principal payments on long term obligations
|
(29,140
|
)
|
|
(20,500
|
)
|
||
Proceeds from borrowings
|
30,000
|
|
|
90,000
|
|
||
Payments for financing costs
|
(414
|
)
|
|
—
|
|
||
Purchase of common stock
|
(3,581
|
)
|
|
(11,184
|
)
|
||
Withholding taxes paid for conversion of employee stock awards
|
(1,329
|
)
|
|
(1,436
|
)
|
||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
(4,464
|
)
|
|
56,880
|
|
||
|
|
|
|
||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(995
|
)
|
|
46,662
|
|
||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
32,699
|
|
|
16,358
|
|
||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
31,704
|
|
|
$
|
63,020
|
|
|
|
|
|
||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
||||
Interest paid, net of amount capitalized
|
$
|
6,450
|
|
|
$
|
7,101
|
|
Federal alternative minimum and state income taxes paid
|
$
|
806
|
|
|
$
|
1,220
|
|
SUPPLEMENTAL NON-CASH INFORMATION:
|
|
|
|
||||
Accrued capital expenditures
|
$
|
18,755
|
|
|
$
|
12,615
|
|
|
|
CAM
|
|
MRO Services
|
|
Total
|
||||||
Carrying value as of December 31, 2017
|
|
$
|
34,395
|
|
|
$
|
2,884
|
|
|
$
|
37,279
|
|
Carrying value as of June 30, 2018
|
|
$
|
34,395
|
|
|
$
|
2,884
|
|
|
$
|
37,279
|
|
|
|
Airline
|
|
Amortizing
|
|
|
||||||
|
|
Certificates
|
|
Intangibles
|
|
Total
|
||||||
Carrying value as of December 31, 2017
|
|
$
|
3,000
|
|
|
$
|
4,298
|
|
|
$
|
7,298
|
|
Amortization
|
|
—
|
|
|
(578
|
)
|
|
(578
|
)
|
|||
Carrying value as of June 30, 2018
|
|
$
|
3,000
|
|
|
$
|
3,720
|
|
|
$
|
6,720
|
|
|
|
Lease
|
||
|
|
Incentive
|
||
Carrying value as of December 31, 2017
|
|
$
|
80,684
|
|
Amortization
|
|
(8,452
|
)
|
|
Carrying value as of June 30, 2018
|
|
$
|
72,232
|
|
As of June 30, 2018
|
Fair Value Measurement Using
|
|
Total
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents—money market
|
$
|
—
|
|
|
$
|
20,835
|
|
|
$
|
—
|
|
|
$
|
20,835
|
|
Interest rate swap
|
—
|
|
|
4,992
|
|
|
—
|
|
|
4,992
|
|
||||
Total Assets
|
$
|
—
|
|
|
$
|
25,827
|
|
|
$
|
—
|
|
|
$
|
25,827
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Stock warrant obligations
|
—
|
|
|
(203,426
|
)
|
|
—
|
|
|
(203,426
|
)
|
||||
Total Liabilities
|
$
|
—
|
|
|
$
|
(203,426
|
)
|
|
$
|
—
|
|
|
$
|
(203,426
|
)
|
As of December 31, 2017
|
Fair Value Measurement Using
|
|
Total
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents—money market
|
$
|
—
|
|
|
$
|
1,326
|
|
|
$
|
—
|
|
|
$
|
1,326
|
|
Interest rate swap
|
—
|
|
|
1,840
|
|
|
—
|
|
|
1,840
|
|
||||
Convertible note hedges
|
—
|
|
|
53,683
|
|
|
—
|
|
|
53,683
|
|
||||
Total Assets
|
$
|
—
|
|
|
$
|
56,849
|
|
|
$
|
—
|
|
|
$
|
56,849
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Note conversion obligations
|
—
|
|
|
(54,359
|
)
|
|
—
|
|
|
(54,359
|
)
|
||||
Stock warrant obligation
|
—
|
|
|
(211,136
|
)
|
|
—
|
|
|
(211,136
|
)
|
||||
Total Liabilities
|
$
|
—
|
|
|
$
|
(265,495
|
)
|
|
$
|
—
|
|
|
$
|
(265,495
|
)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Flight equipment
|
$
|
1,870,120
|
|
|
$
|
1,801,808
|
|
Ground equipment
|
54,165
|
|
|
53,523
|
|
||
Leasehold improvements, facilities and office equipment
|
28,660
|
|
|
26,897
|
|
||
Aircraft modifications and projects in progress
|
148,999
|
|
|
121,760
|
|
||
|
2,101,944
|
|
|
2,003,988
|
|
||
Accumulated depreciation
|
(900,947
|
)
|
|
(844,026
|
)
|
||
Property and equipment, net
|
$
|
1,200,997
|
|
|
$
|
1,159,962
|
|
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Unsubordinated term loan
|
$
|
63,061
|
|
|
$
|
70,568
|
|
Revolving credit facility
|
257,000
|
|
|
245,000
|
|
||
Aircraft loans
|
—
|
|
|
3,640
|
|
||
Convertible debt
|
200,652
|
|
|
196,550
|
|
||
Total debt obligations
|
520,713
|
|
|
515,758
|
|
||
Less: current portion
|
(14,860
|
)
|
|
(18,512
|
)
|
||
Total long term obligations, net
|
$
|
505,853
|
|
|
$
|
497,246
|
|
|
|
June 30,
|
|
December 31,
|
||
|
|
2018
|
|
2017
|
||
Principal value, Convertible Senior Notes, due 2024
|
|
258,750
|
|
|
258,750
|
|
Unamortized issuance costs
|
|
(6,255
|
)
|
|
(6,685
|
)
|
Unamortized discount
|
|
(51,843
|
)
|
|
(55,515
|
)
|
Convertible debt
|
|
200,652
|
|
|
196,550
|
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
|||||||||
Expiration Date
|
Stated
Interest
Rate
|
|
Notional
Amount
|
|
Market
Value
(Liability)
|
|
Notional
Amount
|
|
Market
Value
(Liability)
|
|||||
May 5, 2021
|
1.090
|
%
|
|
31,875
|
|
|
943
|
|
|
35,625
|
|
|
719
|
|
May 30, 2021
|
1.703
|
%
|
|
31,875
|
|
|
570
|
|
|
35,625
|
|
|
240
|
|
March 31, 2022
|
1.900
|
%
|
|
50,000
|
|
|
1,444
|
|
|
50,000
|
|
|
416
|
|
March 31, 2022
|
1.950
|
%
|
|
75,000
|
|
|
2,035
|
|
|
75,000
|
|
|
465
|
|
Airline
|
Labor Agreement Unit
|
Percentage of
the Company’s
Employees
|
ABX
|
International Brotherhood of Teamsters
|
7.6%
|
ATI
|
Air Line Pilots Association
|
6.9%
|
ATI
|
Association of Flight Attendants
|
1.1%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||
|
Pension Plans
|
|
Post-Retirement Healthcare Plan
|
|
Pension Plans
|
|
Post-Retirement Healthcare Plan
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
60
|
|
|
$
|
78
|
|
Interest cost
|
7,284
|
|
|
8,775
|
|
|
32
|
|
|
36
|
|
|
14,568
|
|
|
17,550
|
|
|
64
|
|
|
72
|
|
||||||||
Expected return on plan assets
|
(10,523
|
)
|
|
(10,930
|
)
|
|
—
|
|
|
—
|
|
|
(21,046
|
)
|
|
(21,859
|
)
|
|
—
|
|
|
—
|
|
||||||||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
||||||||
Amortization of net (gain) loss
|
887
|
|
|
1,937
|
|
|
55
|
|
|
71
|
|
|
1,774
|
|
|
3,874
|
|
|
110
|
|
|
142
|
|
||||||||
Net periodic benefit cost (income)
|
$
|
(2,352
|
)
|
|
$
|
(218
|
)
|
|
$
|
117
|
|
|
$
|
133
|
|
|
$
|
(4,704
|
)
|
|
$
|
(435
|
)
|
|
$
|
234
|
|
|
$
|
266
|
|
|
|
Defined Benefit Pension
|
|
Defined Benefit Post-Retirement
|
|
Foreign Currency Translation
|
|
Total
|
||||
Balance as of March 31, 2017
|
|
(75,854
|
)
|
|
(1,264
|
)
|
|
(1,440
|
)
|
|
(78,558
|
)
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
152
|
|
|
152
|
|
Amounts reclassified from accumulated other comprehensive income:
|
|
|
|
|
|
|
|
|
||||
Actuarial costs (reclassified to non-service costs)
|
|
1,937
|
|
|
71
|
|
|
—
|
|
|
2,008
|
|
Negative prior service cost
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
Income Tax (Expense) or Benefit
|
|
(702
|
)
|
|
(21
|
)
|
|
(53
|
)
|
|
(776
|
)
|
Other comprehensive income (loss), net of tax
|
|
1,235
|
|
|
37
|
|
|
99
|
|
|
1,371
|
|
Balance as of June 30, 2017
|
|
(74,619
|
)
|
|
(1,227
|
)
|
|
(1,341
|
)
|
|
(77,187
|
)
|
|
|
|
|
|
|
|
|
|
||||
|
|
Defined Benefit Pension
|
|
Defined Benefit Post-Retirement
|
|
Foreign Currency Translation
|
|
Total
|
||||
Balance as of December 31, 2016
|
|
(77,088
|
)
|
|
(1,301
|
)
|
|
(1,477
|
)
|
|
(79,866
|
)
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
210
|
|
|
210
|
|
Amounts reclassified from accumulated other comprehensive income:
|
|
|
|
|
|
|
|
|
||||
Actuarial costs (reclassified to non-service costs)
|
|
3,874
|
|
|
142
|
|
|
—
|
|
|
4,016
|
|
Negative prior service cost
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
(26
|
)
|
Income Tax (Expense) or Benefit
|
|
(1,405
|
)
|
|
(42
|
)
|
|
(74
|
)
|
|
(1,521
|
)
|
Other comprehensive income (loss), net of tax
|
|
2,469
|
|
|
74
|
|
|
136
|
|
|
2,679
|
|
Balance as of June 30, 2017
|
|
(74,619
|
)
|
|
(1,227
|
)
|
|
(1,341
|
)
|
|
(77,187
|
)
|
|
|
Defined Benefit Pension
|
|
Defined Benefit Post-Retirement
|
|
Foreign Currency Translation
|
|
Total
|
||||
Balance as of March 31, 2018
|
|
(59,888
|
)
|
|
(1,055
|
)
|
|
(1,364
|
)
|
|
(62,307
|
)
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
(186
|
)
|
|
(186
|
)
|
Amounts reclassified from accumulated other comprehensive income:
|
|
|
|
|
|
|
|
|
||||
Actuarial costs (reclassified to non-service costs)
|
|
887
|
|
|
55
|
|
|
—
|
|
|
942
|
|
Income Tax (Expense) or Benefit
|
|
(200
|
)
|
|
(13
|
)
|
|
63
|
|
|
(150
|
)
|
Other comprehensive income (loss), net of tax
|
|
687
|
|
|
42
|
|
|
(123
|
)
|
|
606
|
|
Balance as of June 30, 2018
|
|
(59,201
|
)
|
|
(1,013
|
)
|
|
(1,487
|
)
|
|
(61,701
|
)
|
|
|
|
|
|
|
|
|
|
||||
|
|
Defined Benefit Pension
|
|
Defined Benefit Post-Retirement
|
|
Foreign Currency Translation
|
|
Total
|
||||
Balance as of December 31, 2017
|
|
(60,575
|
)
|
|
(1,097
|
)
|
|
(1,348
|
)
|
|
(63,020
|
)
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
(211
|
)
|
|
(211
|
)
|
Amounts reclassified from accumulated other comprehensive income:
|
|
|
|
|
|
|
|
|
||||
Actuarial costs (reclassified to non-service costs)
|
|
1,774
|
|
|
110
|
|
|
—
|
|
|
1,884
|
|
Income Tax (Expense) or Benefit
|
|
(400
|
)
|
|
(26
|
)
|
|
72
|
|
|
(354
|
)
|
Other comprehensive income (loss), net of tax
|
|
1,374
|
|
|
84
|
|
|
(139
|
)
|
|
1,319
|
|
Balance as of June 30, 2018
|
|
(59,201
|
)
|
|
(1,013
|
)
|
|
(1,487
|
)
|
|
(61,701
|
)
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
June 30, 2017
|
||||||||||
|
Number of
Awards
|
|
Weighted
average
grant-date
fair value
|
|
Number of
Awards
|
|
Weighted
average
grant-date
fair value
|
||||||
Outstanding at beginning of period
|
873,849
|
|
|
$
|
12.30
|
|
|
1,040,569
|
|
|
$
|
9.97
|
|
Granted
|
207,295
|
|
|
26.50
|
|
|
243,940
|
|
|
17.52
|
|
||
Converted
|
(96,616
|
)
|
|
10.89
|
|
|
(173,210
|
)
|
|
9.69
|
|
||
Expired
|
(500
|
)
|
|
28.38
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(2,600
|
)
|
|
26.76
|
|
|
(3,800
|
)
|
|
13.66
|
|
||
Outstanding at end of period
|
981,428
|
|
|
$
|
15.39
|
|
|
1,107,499
|
|
|
$
|
11.66
|
|
Vested
|
326,928
|
|
|
$
|
7.18
|
|
|
324,599
|
|
|
$
|
6.39
|
|
|
Three Months Ending
|
|
Six Months Ending
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) from continuing operations - basic
|
$
|
24,464
|
|
|
$
|
(53,918
|
)
|
|
$
|
40,146
|
|
|
$
|
(44,122
|
)
|
Gain from stock warrants revaluation, net of tax
|
(10,448
|
)
|
|
—
|
|
|
(7,473
|
)
|
|
—
|
|
||||
Earnings (loss) from continuing operations - diluted
|
$
|
14,016
|
|
|
$
|
(53,918
|
)
|
|
$
|
32,673
|
|
|
$
|
(44,122
|
)
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding for basic earnings per share
|
58,739
|
|
|
59,035
|
|
|
58,790
|
|
|
59,084
|
|
||||
Common equivalent shares:
|
|
|
|
|
|
|
|
||||||||
Effect of stock-based compensation awards and warrants
|
9,624
|
|
|
—
|
|
|
9,994
|
|
|
—
|
|
||||
Weighted-average shares outstanding assuming dilution
|
68,363
|
|
|
59,035
|
|
|
68,784
|
|
|
59,084
|
|
||||
Basic earnings per share from continuing operations
|
$
|
0.42
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.68
|
|
|
$
|
(0.75
|
)
|
Diluted earnings per share from continuing operations
|
$
|
0.21
|
|
|
$
|
(0.91
|
)
|
|
$
|
0.48
|
|
|
$
|
(0.75
|
)
|
|
Three Months Ending
|
|
Six Months Ending
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Total revenues:
|
|
|
|
|
|
|
|
||||||||
CAM
|
$
|
54,377
|
|
|
$
|
49,530
|
|
|
$
|
106,753
|
|
|
$
|
97,508
|
|
ACMI Services
|
119,606
|
|
|
144,499
|
|
|
238,980
|
|
|
289,448
|
|
||||
MRO Services
|
45,794
|
|
|
66,336
|
|
|
98,517
|
|
|
106,674
|
|
||||
All other
|
19,730
|
|
|
50,172
|
|
|
39,013
|
|
|
99,040
|
|
||||
Eliminate inter-segment revenues
|
(35,900
|
)
|
|
(57,326
|
)
|
|
(76,616
|
)
|
|
(101,542
|
)
|
||||
Total
|
$
|
203,607
|
|
|
$
|
253,211
|
|
|
$
|
406,647
|
|
|
$
|
491,128
|
|
Customer revenues:
|
|
|
|
|
|
|
|
||||||||
CAM
|
$
|
38,016
|
|
|
$
|
32,380
|
|
|
$
|
73,903
|
|
|
$
|
63,162
|
|
ACMI Services
|
119,589
|
|
|
144,499
|
|
|
238,963
|
|
|
289,448
|
|
||||
MRO Services
|
29,069
|
|
|
31,159
|
|
|
60,009
|
|
|
56,576
|
|
||||
All other
|
16,933
|
|
|
45,173
|
|
|
33,772
|
|
|
81,942
|
|
||||
Total
|
$
|
203,607
|
|
|
$
|
253,211
|
|
|
$
|
406,647
|
|
|
$
|
491,128
|
|
|
|
For the three months ending
|
|
For the six months ending
|
||||||||||||||||||||
|
|
June 30, 2018
|
|
June 30, 2018
|
||||||||||||||||||||
|
|
Revenue
|
|
Revenue
|
||||||||||||||||||||
|
|
As Reported
|
|
Without Topic 606
|
|
Increase (decrease)
|
|
As Reported
|
|
Without Topic 606
|
|
Increase (decrease)
|
||||||||||||
ACMI Services
|
|
$
|
119,589
|
|
|
$
|
167,724
|
|
|
$
|
(48,135
|
)
|
|
$
|
238,963
|
|
|
$
|
336,272
|
|
|
$
|
(97,309
|
)
|
MRO Services
|
|
29,069
|
|
|
28,549
|
|
|
520
|
|
|
60,009
|
|
|
54,918
|
|
|
5,091
|
|
||||||
Other (ground services)
|
|
16,933
|
|
|
62,682
|
|
|
(45,749
|
)
|
|
33,772
|
|
|
130,868
|
|
|
(97,096
|
)
|
|
Three Months Ending
|
|
Six Months Ending
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Depreciation and amortization expense:
|
|
|
|
|
|
|
|
||||||||
CAM
|
$
|
30,540
|
|
|
$
|
26,253
|
|
|
$
|
59,465
|
|
|
$
|
50,554
|
|
ACMI Services
|
10,327
|
|
|
10,491
|
|
|
20,552
|
|
|
21,563
|
|
||||
MRO Services
|
830
|
|
|
685
|
|
|
1,680
|
|
|
1,359
|
|
||||
All other
|
(77
|
)
|
|
352
|
|
|
(73
|
)
|
|
747
|
|
||||
Total
|
$
|
41,620
|
|
|
$
|
37,781
|
|
|
$
|
81,624
|
|
|
$
|
74,223
|
|
Segment earnings (loss):
|
|
|
|
|
|
|
|
||||||||
CAM
|
$
|
15,394
|
|
|
$
|
12,795
|
|
|
$
|
30,858
|
|
|
$
|
26,125
|
|
ACMI Services
|
991
|
|
|
258
|
|
|
4,932
|
|
|
(3,276
|
)
|
||||
MRO Services
|
1,321
|
|
|
11,103
|
|
|
5,783
|
|
|
14,291
|
|
||||
All other
|
2,749
|
|
|
1,400
|
|
|
5,330
|
|
|
3,863
|
|
||||
Inter-segment earnings eliminated
|
(1,031
|
)
|
|
(5,958
|
)
|
|
(4,356
|
)
|
|
(6,820
|
)
|
||||
Net unallocated interest expense
|
(838
|
)
|
|
(216
|
)
|
|
(1,657
|
)
|
|
(387
|
)
|
||||
Net gain (loss) on financial instruments
|
11,697
|
|
|
(67,649
|
)
|
|
10,812
|
|
|
(65,780
|
)
|
||||
Other non-service components of retiree benefit costs, net
|
2,045
|
|
|
(177
|
)
|
|
4,090
|
|
|
(354
|
)
|
||||
Loss from non-consolidated affiliate
|
(2,417
|
)
|
|
—
|
|
|
(4,953
|
)
|
|
—
|
|
||||
Pre-tax earnings from continuing operations
|
$
|
29,911
|
|
|
$
|
(48,444
|
)
|
|
$
|
50,839
|
|
|
$
|
(32,338
|
)
|
|
June 30
|
|
December 31
|
||||
|
2018
|
|
2017
|
||||
Assets:
|
|
|
|
||||
CAM
|
$
|
1,214,986
|
|
|
$
|
1,192,890
|
|
ACMI Services
|
190,309
|
|
|
189,379
|
|
||
MRO Services
|
99,129
|
|
|
87,177
|
|
||
All other
|
13,050
|
|
|
79,398
|
|
||
Total
|
$
|
1,517,474
|
|
|
$
|
1,548,844
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||
|
ACMI
Services
|
CAM
|
Total
|
|
ACMI
Services |
CAM
|
Total
|
||||||
In-service aircraft
|
|
|
|
|
|
|
|
||||||
Aircraft owned
|
|
|
|
|
|
|
|
||||||
Boeing 767-200
|
7
|
|
27
|
|
34
|
|
|
7
|
|
29
|
|
36
|
|
Boeing 767-300
|
4
|
|
25
|
|
29
|
|
|
4
|
|
21
|
|
25
|
|
Boeing 757-200
|
4
|
|
—
|
|
4
|
|
|
4
|
|
—
|
|
4
|
|
Boeing 757-200 Combi
|
4
|
|
—
|
|
4
|
|
|
4
|
|
—
|
|
4
|
|
Boeing 737-400
|
—
|
|
2
|
|
2
|
|
|
—
|
|
1
|
|
1
|
|
Total
|
19
|
|
54
|
|
73
|
|
|
19
|
|
51
|
|
70
|
|
Other aircraft
|
|
|
|
|
|
|
|
||||||
Owned Boeing 767-300 under modification
|
—
|
|
5
|
|
5
|
|
|
—
|
|
6
|
|
6
|
|
Owned Boeing 737-400 under modification
|
—
|
|
—
|
|
—
|
|
|
—
|
|
1
|
|
1
|
|
Owned Boeing 767 available or staging for lease
|
—
|
|
2
|
|
2
|
|
|
—
|
|
—
|
|
—
|
|
|
Three Months Ending
|
|
Six Months Ending
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues from Continuing Operations:
|
|
|
|
|
|
|
|
||||||||
CAM
|
|
|
|
|
|
|
|
||||||||
Aircraft leasing and related services
|
$
|
58,603
|
|
|
$
|
52,813
|
|
|
115,205
|
|
|
103,382
|
|
||
Lease incentive amortization
|
(4,226
|
)
|
|
(3,283
|
)
|
|
(8,452
|
)
|
|
(5,874
|
)
|
||||
Total CAM
|
54,377
|
|
|
49,530
|
|
|
106,753
|
|
|
97,508
|
|
||||
ACMI Services
|
119,606
|
|
|
111,851
|
|
|
238,980
|
|
|
219,917
|
|
||||
MRO Services
|
45,794
|
|
|
66,336
|
|
|
98,517
|
|
|
106,674
|
|
||||
Other Activities
|
19,730
|
|
|
21,706
|
|
|
39,013
|
|
|
53,104
|
|
||||
Total Revenues
|
239,507
|
|
|
249,423
|
|
|
483,263
|
|
|
477,203
|
|
||||
Eliminate internal revenues
|
(35,900
|
)
|
|
(57,326
|
)
|
|
(76,616
|
)
|
|
(101,542
|
)
|
||||
Customer Revenues - non reimbursed
|
$
|
203,607
|
|
|
$
|
192,097
|
|
|
$
|
406,647
|
|
|
$
|
375,661
|
|
Revenues for reimbursed expenses
|
—
|
|
|
61,114
|
|
|
—
|
|
|
115,467
|
|
||||
Customer Revenues
|
$
|
203,607
|
|
|
$
|
253,211
|
|
|
$
|
406,647
|
|
|
$
|
491,128
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Pre-Tax Earnings (Loss) from Continuing Operations:
|
|
|
|
|
|
|
|
||||||||
CAM, inclusive of interest expense
|
$
|
15,394
|
|
|
$
|
12,795
|
|
|
30,858
|
|
|
26,125
|
|
||
ACMI Services
|
991
|
|
|
258
|
|
|
4,932
|
|
|
(3,276
|
)
|
||||
MRO Services
|
1,321
|
|
|
11,103
|
|
|
5,783
|
|
|
14,291
|
|
||||
Other Activities
|
2,749
|
|
|
1,400
|
|
|
5,330
|
|
|
3,863
|
|
||||
Inter-segment earnings eliminated
|
(1,031
|
)
|
|
(5,958
|
)
|
|
(4,356
|
)
|
|
(6,820
|
)
|
||||
Net unallocated interest expense
|
(838
|
)
|
|
(216
|
)
|
|
(1,657
|
)
|
|
(387
|
)
|
||||
Net financial instrument re-measurement (loss) gain
|
11,697
|
|
|
(67,649
|
)
|
|
10,812
|
|
|
(65,780
|
)
|
||||
Other non-service components of retiree benefit costs, net
|
2,045
|
|
|
(177
|
)
|
|
4,090
|
|
|
(354
|
)
|
||||
Loss from non-consolidated affiliate
|
(2,417
|
)
|
|
—
|
|
|
(4,953
|
)
|
|
—
|
|
||||
Pre-Tax Earnings (Loss) from Continuing Operations
|
29,911
|
|
|
(48,444
|
)
|
|
50,839
|
|
|
(32,338
|
)
|
||||
Add other non-service components of retiree benefit costs, net
|
(2,045
|
)
|
|
177
|
|
|
(4,090
|
)
|
|
354
|
|
||||
Add charges for non-consolidated affiliate
|
2,417
|
|
|
—
|
|
|
4,953
|
|
|
—
|
|
||||
Add lease incentive amortization
|
4,226
|
|
|
3,283
|
|
|
8,452
|
|
|
5,874
|
|
||||
Add net loss (gain) on financial instruments
|
(11,697
|
)
|
|
67,649
|
|
|
(10,812
|
)
|
|
65,780
|
|
||||
Adjusted Pre-Tax Earnings from Continuing Operations
|
$
|
22,812
|
|
|
$
|
22,665
|
|
|
$
|
49,342
|
|
|
$
|
39,670
|
|
|
|
|
|
AIR TRANSPORT SERVICES GROUP, INC.,
|
|
|
|
|
a Delaware Corporation
|
|
|
|
|
Registrant
|
|
|
|
|
|
|
|
|
|
/S/ JOSEPH C. HETE
|
|
|
|
|
Joseph C. Hete
|
|
|
|
|
Chief Executive Officer (Principal Executive Officer)
|
Date:
|
August 8, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ QUINT O. TURNER
|
|
|
|
|
Quint O. Turner
|
|
|
|
|
Chief Financial Officer (Principal Financial Officer
|
Date:
|
August 8, 2018
|
|
|
and Principal Accounting Officer)
|
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.
|
/s/ JOSEPH C. HETE
|
Joseph C. Hete
|
Chief Executive Officer
|
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.
|
/s/ QUINT O. TURNER
|
Quint O. Turner
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
(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.
|
/
S
/ JOSEPH C. HETE
|
Joseph C. Hete
Chief Executive Officer
|
(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.
|
/s/ QUINT O. TURNER
|
Quint O. Turner
Chief Financial Officer
|