Air Transport Services Group, the top air cargo partner for Amazon and largest global lessor of freighter aircraft, on Tuesday named Mike Berger, the current president, to replace Joe Hete as CEO seven months after Hete stepped in to stabilize the company’s finances and stock price during a transitional period.
Hete, who also serves as chairman, has been appointed executive chairman, which means he will continue to play a role in running the holding company. Jeffrey Dominick, who has served for seven years on the board, has been appointed president. The changes are effective immediately.
Hete has been on the CEO merry-go-round at ATSG. He led the company from 2003 to 2020 and previously held senior management roles at ABX Air Inc., the predecessor to ATSG that had its roots in the former Airborne Express.
Berger was promoted from chief strategy officer to president in October. He has been part of the executive team since 2018.
“Today’s announcement demonstrates our deep bench of talent at both the executive and board level. … With today’s appointments, we are confident we have the right team in place to continue building on our strong foundation, solidifying our market-leading position, providing opportunities for our employees, and delivering meaningful value for our shareholders,” Randy Rademacher, the lead independent director, said in a news release.
ATSG’s portfolio includes cargo airlines ABX Air and Air Transport International, which are contract carriers for Amazon Air and DHL Express and also provide charter services for other customers. Subsidiary Omni Air provides passenger charter service for the U.S. military, airlines and others. Cargo Aircraft Management leases Boeing 767, Airbus A321 and A330 converted freighters to its own airlines and other operators around the world. ATSG also has companies involved in ground handling, aircraft maintenance and conversion of A321 narrowbody freighters.
It’s been an eventful 12 months for ATSG (NASDAQ: ATSG). Hete took over daily management when Rich Corrado was dismissed in November. ATSG’s profits fell 12% last year amid a global downturn in air cargo and e-commerce from pandemic peaks, which led to fewer billable flight hours and airlines canceling some aircraft leases. Investors felt the company committed too much capital toward fleet expansion at a time of market contraction, dragging down the stock price.
When Hete stepped in as CEO, ATSG pulled back on capital expenditures. The capital spending plan is now $380 million less than the company spent last year. Most of the reduction ($330 million) reflects fewer aircraft being purchased and sent to airframe repair shops to become freighters, as well as fewer expected engine overhauls.
ATSG last month announced that Amazon will provide 10 Boeing 767-300 freighters between June and December for ABX Air to operate for five years. Amazon is pulling the aircraft from Atlas Air Worldwide’s cargo airline to operate on its behalf but continues to lease the aircraft from Atlas’ Titan Aviation Leasing. The agreement means ATSG will operate 50 medium widebody freighters for Amazon by the end of the year.
ATSG is in federally mediated talks with pilots at Air Transport International and Omni Air. Both pilot groups have authorized their unions to call a strike when the process reaches a point where such action is legally allowed.
ATSG’s revenue for the first quarter was $486 million, down 3% year over year. It reported adjusted operating income of $15.2 million, down $22.6 million from the same period in 2023. Results were better than analysts expected.
The company’s stock has dropped despite the positive news this year. The share price is down more than 2 points to $13.51 from Monday’s close and from $15.22 on May 7. The stock was at $22.97 on July 31, 2023.
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