US cargo airline ABX Holdings has renewed its linehaul deal with DHL Express and is re-branding toAir Transport Services Group after generating strong growth in the first quarter of 2008.
The company generated revenue growth of 25% for the first quarter of 2008 with a slightprofit drop. ABX increased its revenues to $382.1 million (€ 244.25 million) for the period ofJanuary-March 2008 mainly due to the acquisition of Cargo Holdings International (CHI) last yearincluding its two airlines, Air Transport International (ATI) and Capital Cargo InternationalAirlines (CCIA), and a leasing company, Cargo Aircraft Management (CAM).
The CHI companies contributed approximately $75.4 million (€ 48.2 million), or 80% of theyear-over-year increase in ABX Holdings’ first-quarter consolidated revenues. The company’snet profit, however slightly dropped from $4.3 million (€ 2.75 million) to $3.8 million (€ 2.43million) this year.
Meanwhile, ABX announced that it has renewed its hub and line haul services agreement withDHL, from which it generates the bulk of its revenues, for an additional year coming into effect inAugust.
Under the hub and line haul services agreement, ABX Air is responsible for sorting,maintenance, and other logistics services and thus supports DHL’s express package network in theUnited States, including its management of DHL’s national sorting center in Wilmington, and 15 ofits regional sorting centres across the U.S.
ABX Air earns base markup revenues that equal 1.75% of eligible expenses it incurs under theagreement, and can earn additional markup revenues based on its performance against certain costand service goals. In 2007, ABX Air’s revenues were $317 million, and its pretax earnings were $7.6million from services provided under this agreement.
The agreement took effect on August 15, 2003. A provision calls for subsequent automaticone-year renewals after the initial amended term of four years, unless either party provides noticeof intent not to renew at least 90 days before the anniversary date. ABX Air had not received anon-renewal notice from DHL before the 90-day deadline.
Separately, the company said it is changing its name to Air Transport Services Group tobetter reflect its wider range of activities following the acquisition of the CHI businesses.
