ABX Air, the US cargo airline providing domestic uplift for DHL Express, claimed “solid” resultsfor the second quarter of 2007 despite a continuing reduction in business from DHL. Pre-tax profits
rose despite a revenue decline.Pre-tax earnings from the rapidly growing, higher-margin air charter business more thanoffset reductions in pre-tax earnings from commercial agreements with DHL, the Wilmington-basedcarrier said. Its Q2 pre-tax profits improved 13% to $7.3 million.
ABX Air overall revenues dropped by 7.3% to $281.3 million in Q2, with revenues from DHLbusiness down by 12.2% to $258.9 million. ABX Air’s pre-tax earnings from its aircraft wet-leaseand ground handling agreements with DHL were $3.4 million during the second quarter of 2007. Inaddition to the $17.5 million reduction in line-haul management revenues, DHL’s mid-2006consolidation of its air network has reduced the number of ABX Air aircraft and crews dedicated toDHL service.
However, revenues from business unrelated to DHL grew by 156.8% to $22.4 million, andgenerated pre-tax earnings of $3.3 million, a 15% margin. The principal driver of these results wasthe deployment of additional Boeing 767 freighter aircraft to service other global customers,including All Nippon Airways Co. (ANA). ABX Air’s unique, two-year agreement to dedicate two of its767s in support of ANA’s Asian cargo network began in mid-May.
“These results validate our strategy of expanding our diversified, technically oriented, andhigher margin growth businesses,” President and CEO Joe Hete said. “While our two commercialagreements with DHL remain a key component of our business and generate significant earnings andcash flow, we are focused on accelerating the strong momentum we have achieved in other businesses,principally the global air charter services provided by our expanding fleet of reliable,fuel-efficient Boeing 767 freighters.”
But he continued: “At the same time, we have continued to provide extremely reliable airservice in the DHL network, with aircraft mechanical dispatch reliability again exceeding 99%. Ourmanagement of the majority of DHL’s U.S. package delivery network remains a top priority. Weunderstand that cost control is extremely important to DHL, but it must be achieved withoutcompromising DHL’s goal of being the premier package delivery provider in the United States.”
