Turkey’s ULS Cargo Airlines to receive first A330 freighter in March

Air Transport Services Group, a major lessor and operator of freighter aircraft, expects to deliver its first Airbus A330-300 converted freighter this month to Turkey-based ULS Airlines Cargo and a second one in April, an industry source close to the company said. 

The Airbus A330-300 cargo jets are much larger than the three A310 converted freighters ULS Airlines Cargo currently operates from Istanbul Airport. 

Air Transport Services Group (NASDAQ: ATSG) said in Tuesday’s fourth-quarter earnings report that it plans to place its first four Airbus A330-300 converted freighters with customers this year after historically relying on the Boeing 767 as its platform of choice. The first two A330 freighter conversions are expected to be completed in March, ATSG added in its annual report. 

The A330’s introduction has slipped several months for undisclosed reasons. Industry publication Cargo Facts in March 2024 first reported ULS Airlines Cargo as the launch customer for ATSG’s A330 lease program and said then the planes would join the fleet last August. That month, Wilmington, Ohio-based ATSG said two A330s were nearly finished undergoing conversion by Airbus aftermarket services affiliate Elbe Flugzeugwerke GmbH and would be delivered in late 2024. EFW accepted ATSG’s first A330 passenger plane at one of its conversion facilities in October 2023.

FreightWaves previously reported that EFW was months behind schedule delivering A330 passenger-to-freighter conversions to Amazon Air and South America’s Avianca because of program mismanagement that compounded supply chain challenges across the aerospace sector.

An ATSG spokesperson didn’t respond to an email query seeking details about the A330’s conversion and delivery schedule. 

ATSG intends to acquire and convert 29 A330s for cargo to diversify its midsize aircraft offering as the availability of used 767 passenger aircraft begins to dry up, but will take longer to do so after the company in 2023 decided to scale back capital expenditures in favor of cash flow and shareholder returns.

The company several years ago formed a joint venture to design a conversion for Airbus A321 into a cargo configuration, but so far has had difficulty leasing them because of overcapacity in the global narrowbody freighter fleet, a slowdown in regional parcel demand and competition from the Boeing 737-800. There are three A321s in service and five additional conversions in storage that ATSG said it expects to lease this year.

ATSG sale moves toward completion 

Last month, stockholders voted to approve the proposed merger with Stonepeak, an alternative investment firm specializing in infrastructure and real assets. The company is working to obtain approval from the U.S. Department of Transportation and  hopes to complete the transaction in the first half of the year, according to quarterly results published on Tuesday.

The addition of 10 Boeing 767-300 freighters provided by retail and logistics giant Amazon helped improve airline revenues from the prior quarter.

Amazon last spring ended a partnership with Atlas Air and began transferring the 10 medium freighters to ATSG subsidiary ABX Air to operate on its behalf for five years. The final aircraft joined the ABX fleet in December. 

ATSG now operates 51 medium 767 freighters for Amazon, including 30 owned and leased by ATSG.

ATSG’s results improved slightly in the second half of 2024. Revenue during the fourth quarter was flat year over year at $517 million. Adjusted earnings from core operations increased 23% to $162.2 million. ATSG generated $34.7 million in free cash flow versus negative cash flow of $65.5 million in the same 2023 period. 

On a full-year basis, revenue slipped $100,000 to $2 billion, and adjusted core earnings decreased 2.2% to $549.4 million.

Straight leasing revenue decreased 12% for the fourth quarter and 6% for the year as the scheduled return of nine 767-200 and four 767-300 leased aircraft offset the placement of nine additional 767-300s with customers. At the end of the year, ATSG had 91 aircraft leased to external customers – one more than in 2023. It sold nine older 767-200s and three 767-300s during the year.

The outsourced airline business saw pretax earnings tumble to $1 million for the full year from $32 million in 2023 due to reduced flying in the Amazon and DHL Express delivery networks, as well as by passenger operator Omni International. Increased costs, including for employee compensation and capital expenses, also hurt profitability, ATSG said.

Cargo revenue block hours for ATSG airlines declined 5% in 2024 versus the prior year. 

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

Write to Eric Kulisch at ekulisch@freightwaves.com.

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