ABX Air has unveiled plans to downsize by about 75% and reinvent itself as a cargo aircraft leasingcompany once it stops flying for DHL Express due to the latter’s exit from the US domestic market.
Up to 7,000 jobs are likely to be lost.Parent company Air Transport Services Group (ATSG) generates about 75% of annual revenuesfrom operating flights and providing ground handling services for DHL Express USA. In the quarterending September 30, 2008, it generated 69% of revenues ($277 million out of $403 million) from DHLExpress services, according to its financial results. DHL package volumes handled by ABX dropped23% in the third quarter, and flown hours were down 10% as DHL scaled back operations but also lostbusiness.
Commenting on DHL’s decision to quit the US domestic market, CEO Joe Hete said: “While weunderstand DHL’s situation, we are saddened that its decision will cost the jobs of most of the7,000 remaining ABX Air employees who have loyally supported DHL in Wilmington and several otherlocations.”
In response, the company has no choice but to shrink to about 25% of its present size, hesaid during a Q3 conference call. The future strategy will be to operate outsourced AMCI, wet-leaseand dry-lease cargo flights for a range of customers, he explained. ABX Air may continue to operatesome flights for DHL Express until June 2009, however, pending agreement and implementation of DHL’s planned airlift deal with UPS.
ABX Air plans to downscale its fleet by exercising a contractual right to sell DHL its ageingDC-9 freighters. It already sold DHL 14 DC-9s for $3.7 million in October, and expects to sell upto 40 additional DC-9s to DHL for up to $11 million over the coming months as they are taken out ofservice. The company plans to use 14 of the 27 B767s currently flying for DHL for its futureleasing activities, and sell or lease out the remainder. In all, the ATSG group will operate with36 aircraft in future compared to 116 planes at present.
