Air Transport Services Group, a diversified provider of cargo aircraft and transportation services, has fired CEO Wealthy Corrado and replaced him with Joe Hete, the present chairman of the board who previously ran the corporate for 17 years.
The announcement late Monday afternoon coincided with the corporate’s publication of third-quarter earnings after the market closed. ATSG’s (NASDQ: ATSG) revenues increased 1% to $523 million, about $15 million below analysts’ expectations, with earnings per share of 32 cents, 17 cents below consensus and almost half as much as in 2022.
![](https://www.freightwaves.com/wp-content/uploads/2023/11/06/11-06-2023-Joe-Hete-CEO-1146x1200.jpg)
Adjusted earnings before accounting measures of $137 million were 16% lower than the prior-year period, with operating profit of $24 million falling by 63% 12 months over 12 months.
“Macro and operational pressures throughout the latter a part of the quarter materially affected our results. Particularly in September, our passenger airline operations experienced service related issues that drove significant unplanned travel and flight crew costs. In our CAM leasing operations, we realized lower revenues from 767-200 aircraft sales and associated engine power than forecasted through the quarter,” Hete said in a press release.
Hete, who will proceed as chairman, served as CEO of ATSG from 2003 to 2020. He previously held various senior management roles at ABX Air Inc., the predecessor to ATSG that had its roots in the previous Airborne Express.
ATSG’s two cargo airlines, ABX Air and Air Transport International, are contract carriers for Amazon air and DHL Express. Additionally they provide charter service on as needed basis for a large number of shoppers. Subsidiary Omni Air provides passenger charter service for the U.S. military, airlines and others.
“After careful consideration by the board, we determined that Joe is the correct leader to speed up our strategy and capitalize on the long-term opportunities ahead. … Joe has extensive knowledge of our business and its competitive position throughout the industry. He’s uniquely qualified to step into this role to optimize our current performance and position ATSG for the long run,” said Randy Rademacher, lead independent director, in a news release.
“Under Joe’s leadership, we consider the corporate can be well-positioned to proceed constructing on its strong foundation, solidifying its market-leading position, and dealing to deliver meaningful value for our shareholders.”
The leadership change comes one month after Tim Strauss left as CEO of Amerijet. He also was terminated abruptly, in accordance with sources with close ties to the cargo airline.
Investors have punished ATSG’s stock this 12 months due to worries the corporate is committing an excessive amount of capital toward fleet expansion when airfreight demand has plummeted for greater than a 12 months. In August, management scaled back projected spending for used passenger aircraft and freighter conversion work by $65 million in 2023 to enhance money flow. Executives insist that express carriers and other operators around the globe proceed to want converted freighters to replenish aging fleets and for growth, especially as e-commerce continues to put a premium on fast delivery. They argue that lease revenue from those planes will begin to make a cloth impact on the underside line in the following couple of years.
ATSG said leasing revenue from its Cargo Aircraft Management unit dipped 1% versus the third quarter of 2022 as a result of 11 fewer leased 767-200s and lower power-by-the hour engine maintenance contributions from those aircraft, partially offset by higher average lease rates with 11 other freighters leased since then.
The corporate said it plans to deliver 16 converted freighters to lease customers for the complete 12 months – three fewer than projected in August. Guidance now calls for deployment of a dozen Boeing 767-300s passenger-to-freighter aircraft (two lower than before) and 4 Airbus A321s (one lower than previously stated).
ATSG’s stock finished the day 1.8% lower at $20.25 per share, down from $22.97 on Aug. 4. and $29.05 a 12 months ago.
RECOMMENDED READING:
Air Transport Services Group to lease 1st freighters in Bangladesh
Wall Street sours on ATSG freighter spend during cargo slowdown
The post Air Transport Services Group dumps Corrado, names Hete CEO appeared first on FreightWaves.