Air Transport Services Group, Inc (ATSG) has reported an 89.63 percent plunge in profit for the quarter ended Dec. 31, 2016. The company has earned $1.53 million, or $0.01 a share in the quarter, compared with $14.77 million, or $0.21 a share for the same period last year. On the other hand, adjusted net income from continuing operations for the quarter stood at $11.98 million, or $0.19 a share compared with $13.34 million or $0.21 a share, a year ago.

Revenue during the quarter grew 22.08 percent to $221.68 million from $181.58 million in the previous year period. Gross margin for the quarter contracted 119 basis points over the previous year period to 74.04 percent. Total expenses were 91.82 percent of quarterly revenues, up from 87.58 percent for the same period last year. That has resulted in a contraction of 424 basis points in operating margin to 8.18 percent.

Operating income for the quarter was $18.14 million, compared with $22.55 million in the previous year period.

However, the adjusted EBITDA for the quarter was almost stable at $56.38 million, when compared with the prior year period. At the same time, adjusted EBITDA margin contracted 573 basis points in the quarter to 25.43 percent from 31.16 percent in the last year period.

Joe Hete, president and chief executive officer of ATSG, said, "In 2016, we completed a major set of long-term agreements with Amazon in support of its new dedicated air network, and by year-end began leasing 14 of the contracted 20 Boeing 767s for that network. A 15th Boeing 767 was leased to Amazon in early January 2017. Our aircraft leasing, maintenance, and logistics businesses met aggressive targets from Amazon and other customers while generating good margins. However, our airline operations, particularly those at ABX Air, incurred significant pilot training and premium pay related to expanded CMI operations, along with lower revenues due to a November ABX pilot work stoppage. Taken together, these factors reduced our second-half 2016 pre-tax earnings by approximately $20 million. After first quarter 2017, we anticipate costs at our airlines to be normalized. That, along with minimal non-cash pension expense in 2017, is projected to result in a profitable year for our ACMI Services segment."

Debt increases substantially
Air Transport Services Group, Inc has witnessed an increase in total debt over the last one year. It stood at $458.72 million as on Dec. 31, 2016, up 44.41 percent or $141.06 million from $317.66 million on Dec. 31, 2015. Total debt was 36.43 percent of total assets as on Dec. 31, 2016, compared with 30.48 percent on Dec. 31, 2015. Debt to equity ratio was at 1.38 as on Dec. 31, 2016, up from 0.87 as on Dec. 31, 2015. Interest coverage ratio deteriorated to 5.87 for the quarter from 8.53 for the same period last year.