Breaking Down Air Transport Services Group, Inc. (ATSG) Financial Health: Key Insights for Investors

You're looking at Air Transport Services Group, Inc. (ATSG) right now and wondering if the projected financial rebound is real, or just a distraction from the looming Stonepeak acquisition; honestly, the acquisition is the main play, but the underlying metrics defintely support a better 2025. Analysts project a substantial earnings per share (EPS) rebound to a strong $1.54 for the 2025 fiscal year, a 44.64% increase over the prior year's estimate, with total revenue expected to hit $2.19 billion, so the business is stabilizing after a tough cargo market. The big picture, though, is the pending acquisition by Stonepeak, which is expected to close in the first half of 2025, and that deal fundamentally changes the risk-reward profile, plus the company is managing its capital expenditure (capex) tightly, forecasting only $300 million to $400 million for 2025 to preserve cash flow. What this estimate hides is the regulatory risk: the deal still needs U.S. Department of Transportation approval, and if that onboarding takes longer than expected, the stock price could see volatility, even with the projected improvement in EBIT interest coverage to around 2x.

Revenue Analysis

You're looking for a clear picture of Air Transport Services Group, Inc. (ATSG)'s revenue health, and the 2024 full-year figures-the most recent complete data point-show a business navigating a challenging air cargo market while preparing for a major shift. The core takeaway is that while the total top-line revenue saw a dip, the underlying customer relationships remain strong, though profitability in the flight operations side is under pressure.

For the full fiscal year 2024, Air Transport Services Group, Inc. reported consolidated revenues of approximately $1.962 billion, a decrease of about 5% from the $2.071 billion recorded in 2023. This is a clear signal of the post-pandemic normalization in air freight demand, but it's defintely not a collapse. The company is currently operating under a definitive agreement to be acquired by Stonepeak, an alternative investment firm, a factor that led to the cancellation of forward-looking guidance for 2025, so we rely on this recent data.

Breakdown of Primary Revenue Sources

Air Transport Services Group, Inc.'s revenue is fundamentally built on two primary, complementary segments: Cargo Aircraft Management (CAM) and ACMI Services (Aircraft, Crew, Maintenance, and Insurance). The real story, however, is in the concentration of revenue from a few major customers, which is a double-edged sword of stability and risk.

Here's the quick math on where the cash comes from, based on 2024 consolidated revenues of $1.962 billion:

• Amazon (ASI): Accounted for approximately 33% of consolidated revenues.
• Department of Defense (DoD): Comprised about 29% of consolidated revenues, primarily from passenger and combi charter flights.
• DHL: Contributed approximately 14% of consolidated revenues.

Honestly, nearly 76% of your revenue coming from just three customers-two of which are logistics giants and one a government entity-means you have highly sticky, long-term contracts, but also significant customer concentration risk. That's a trade-off you need to price into your valuation.

Segment Contribution and Key Changes

The two main segments, CAM (leasing) and ACMI Services (flying), saw different pressures in 2024. The CAM segment is the long-term asset play, while ACMI Services is the operational, higher-cost side.

The Cargo Aircraft Management (CAM) segment, which handles aircraft leasing and related revenues, saw a revenue decrease of 6% for the full year 2024. This decline happened despite adding nine new Boeing 767-300 freighter leases to external customers. The loss was driven by the scheduled return of thirteen older aircraft (767-200s and 767-300s) and lower lease-related maintenance revenue. This is a planned fleet modernization, but it creates near-term revenue drag.

The ACMI Services segment, the majority revenue generator, felt the operational squeeze most acutely. Full-year pretax earnings for this segment plummeted from $32 million in 2023 to just $1 million in 2024. This massive drop was due to reduced flying hours in both customer delivery networks and passenger operations, coupled with higher operational expenses like depreciation, interest, and employee compensation. Reduced flying hours means lower utilization, and that's a direct hit to profitability. You can review the strategic rationale behind their operations in the Mission Statement, Vision, & Core Values of Air Transport Services Group, Inc. (ATSG).

Profitability Metrics

You need to know where Air Transport Services Group, Inc. (ATSG) is making money right now, especially with the Stonepeak acquisition closing in the first half of 2025. Since the company is no longer providing forward-looking guidance, we must focus on the most recent, complete data: the Last Twelve Months (LTM) as of mid-2025 and the full-year 2024 results. What this data shows is a profitable, albeit contracting, margin profile that still outperforms the industry average.

ATSG's profitability is driven by its Cargo Aircraft Management (CAM) leasing segment, but the overall margins have tightened. In the full 2024 fiscal year, the company generated approximately $2.0 billion in revenue. Here's the quick math on the core margins:

• Gross Profit Margin (FY 2024): Approximately 43.5%. This is a solid margin, reflecting the high-value nature of their aircraft leasing and maintenance services.
• Operating Profit Margin (FY 2024): Approximately 6.5%. This margin, which accounts for operating expenses like salaries and SG&A, shows the pressure on their core air transport services (ACMI) segment.
• Net Profit Margin (Pre-Tax, FY 2024): Just 2.16%. This is the bottom-line pressure point, largely due to increased depreciation, interest expense, and customer incentives.

The gross margin is strong, but the operating and net margins are thin. That's the story.

Operational Efficiency and Margin Trends

The trend over the last few years has been a clear downward slope for profitability, a critical point for any investor Exploring Air Transport Services Group, Inc. (ATSG) Investor Profile: Who's Buying and Why?. While the company's gross margin has remained relatively stable, the operating margin has been squeezed defintely. The LTM Operating Margin as of August 2025 stood at 6.9%.

This decline in operating efficiency is a direct result of increased costs outpacing revenue growth in the ACMI Services segment. Specifically, the full-year 2024 results showed a decline in GAAP Pretax Earnings to $42.3 million from $84.2 million in 2023. The key factors here are clear:

• Increased Depreciation: Higher capital spending on new freighter conversions (like the A330s) drives up non-cash depreciation expense.
• Interest Expense: Rising interest rates and debt financing for fleet expansion increase the cost of debt.
• Fleet Transition: Costs associated with removing older Boeing 767-200 freighters from service and transitioning to newer models impact short-term earnings.

The company is investing for the future, but it hurts the near-term bottom line.

Industry Comparison and Competitive Edge

Despite the internal margin pressure, Air Transport Services Group, Inc. (ATSG) maintains a competitive edge in the broader Air Freight & Logistics industry. When we look at the most recent LTM data, ATSG's operating efficiency is actually superior to the industry average.

Here is how the company stacks up against the sector, using LTM Operating Margin data as of August 2025:

ATSG's LTM Operating Margin of 6.9% is significantly higher than the industry average of 4.4%. This premium is a testament to the company's unique business model, which is heavily weighted toward the stable, high-margin leasing component (CAM), rather than just the volatile air transport operations. The leasing business provides a predictable, annuity-like revenue stream that buffers the volatility of the ACMI services segment.

Your action here is to recognize that while the net income trend is weak, the underlying business model is fundamentally sound and structurally more profitable than most of its peers.

Debt vs. Equity Structure

Air Transport Services Group, Inc. (ATSG) relies heavily on debt to finance its capital-intensive aircraft leasing and air cargo operations, a common practice in the logistics sector. Your key takeaway here is that while the company's debt-to-equity ratio sits at approximately 1.06, indicating a slightly higher reliance on debt than equity, this leverage is expected to moderate in 2025 as the company prioritizes debt reduction.

As a business built on acquiring, converting, and leasing expensive aircraft, Air Transport Services Group, Inc.'s balance sheet naturally carries significant debt. As of the end of the 2024 fiscal year, the company reported total debt of around $1.60 Billion. The vast majority of this is long-term debt, which was approximately $1.55 Billion, reflecting the long-life nature of their core assets-the freighter aircraft. This structure means that while the absolute dollar amount of debt is high, the repayment schedule is spread out, which helps manage near-term cash flow, but still exposes the company to interest rate risk.

To understand the company's financial risk, you need to look at the debt-to-equity (D/E) ratio, which measures total liabilities against shareholder equity (the capital invested by owners). Air Transport Services Group, Inc.'s D/E ratio is approximately 1.06. Here's the quick math: for every dollar of shareholder equity, the company has about $1.06 in debt. Now, compare that to the industry standard for Air Freight & Logistics, which sits closer to 0.73. Air Transport Services Group, Inc. is defintely more leveraged than its peers, but this isn't necessarily a red flag for a company focused on asset growth.

The company's strategy is currently focused on deleveraging, which is a clear action for you to monitor. S&P Global Ratings, for instance, has projected that Air Transport Services Group, Inc.'s Funds From Operations (FFO) to debt will remain in the 25%-30% range through 2025, with a goal to bring its debt-to-capital ratio (which was 56.4% in 2023) back down from a projected 50%-60% range. The company plans to use free cash flow to repay debt and lower its leverage, which was previously above its target of 3x Debt-to-EBITDA. This is a clear signal that management is prioritizing balance sheet health over aggressive new debt-funded expansion in the near term.

Recent activity has been dominated by the pending acquisition by Stonepeak, a leading alternative investment firm specializing in infrastructure. Stockholder approval for the deal was secured in February 2025, with the transaction expected to close in the first half of 2025. This is a significant event that will fundamentally alter the debt and equity balance, likely involving a substantial change in the capital structure and ownership. The focus on debt repayment and a more conservative capital expenditure forecast (projected at $300 million-$400 million in 2025, down from $800 million in 2023) shows a deliberate shift toward financial discipline ahead of the acquisition. You can read more about the players involved and their motivations at Exploring Air Transport Services Group, Inc. (ATSG) Investor Profile: Who's Buying and Why?

The core of Air Transport Services Group, Inc.'s financing strategy is an asset-heavy model: they use debt to buy aircraft, convert them to freighters, and then lease them out. This is a classic infrastructure play. The balance between debt and equity funding is managed through a cycle of high capital expenditure (CapEx) periods, funded by incremental debt, followed by periods of debt repayment funded by operating cash flow. The current phase is clearly one of consolidation and debt reduction.

• Total debt is approximately $1.60 Billion.
• Debt-to-Equity ratio is 1.06, above the industry average of 0.73.
• A key action is debt repayment to lower leverage, with CapEx projected lower at $300 million-$400 million in 2025.

Liquidity and Solvency

Air Transport Services Group, Inc. (ATSG) maintains a tight but manageable short-term liquidity position, with a key strength being its robust operating cash flow which helps fund its significant capital expenditures. The company's liquidity ratios, as of the most recent quarterly data in early 2025, signal a reliance on asset conversion to meet immediate obligations, but the pending acquisition by Stonepeak changes the entire near-term financial picture.

You need to look past the typical warning signs on the balance sheet and focus on cash generation. Here's the quick math on their short-term health, using the most recent quarter (MRQ) data available in 2025:

• Current Ratio: 0.98
• Quick Ratio: 0.73

A Current Ratio of 0.98 means Air Transport Services Group, Inc. has 98 cents of current assets (cash, receivables, etc.) for every dollar of current liabilities (bills due in the next year). This is just under the ideal 1.0 mark, which tells us there's a degree of working capital (current assets minus current liabilities) tightness. The Quick Ratio, which strips out less-liquid inventory, drops to 0.73. This shows the company is defintely relying on its inventory and other current assets to cover its most immediate debts, which is typical for an asset-heavy leasing business, but still something to watch.

Cash Flow: The Real Liquidity Driver

For an asset-intensive business like Air Transport Services Group, Inc., cash flow is a more telling measure of financial health than the static balance sheet ratios. The company's ability to generate significant cash from operations is its primary financial strength, which funds its core business of aircraft conversion and leasing.

The full fiscal year 2024 results, reported in March 2025, show a clear trend of strong operational cash generation that is largely offset by heavy investment in their fleet. This is the capital expenditure (CapEx) needed to fuel future growth by converting passenger jets into freighters.

The $532.815 million in Operating Cash Flow is a solid number, confirming the business model works. But, the ($304.705 million) in Investing Cash Flow shows they are spending heavily on aircraft acquisitions and freighter conversions. The resulting Free Cash Flow (FCF), which is the cash left over after these necessary investments, was a positive $228.1 million in 2024, a significant turnaround from the negative FCF in the prior year. This positive FCF is a major strength, proving the company can internally fund its growth and debt obligations.

Near-Term Liquidity Outlook: The Stonepeak Factor

The biggest near-term liquidity factor isn't a ratio; it's the pending acquisition by Stonepeak, which received stockholder approval in February 2025 and is expected to close in the first half of 2025. This transaction fundamentally changes the liquidity risk profile for current investors. The acquisition provides a clear, near-term cash exit for shareholders, effectively eliminating the immediate concern about the company's operating liquidity or debt load, which sits around $1.56 billion to $1.77 billion in long-term debt.

The short-term liquidity is tight, but the long-term capital structure is being addressed through the sale. For more on the strategic implications of this deal, check out Breaking Down Air Transport Services Group, Inc. (ATSG) Financial Health: Key Insights for Investors.

Valuation Analysis

You want to know if Air Transport Services Group, Inc. (ATSG) is overvalued or undervalued right now. Honestly, the picture is mixed, which is common in the air freight and logistics sector, especially given the recent market volatility. The stock looks pricey on a trailing basis but quite reasonable when you look forward and factor in the core business value.

The core takeaway: ATSG appears to be a Hold based on its current price of around $22.48 conflicting with the average analyst target of $20.60, but its forward-looking valuation metrics suggest it's defintely undervalued.

The Mixed Message from Core Ratios

We need to look past the simple Price-to-Earnings (P/E) ratio, which compares the current stock price to earnings per share (EPS). As of November 2025, ATSG's trailing twelve-month (TTM) P/E ratio is a negative -449.6, which tells you the company had TTM losses, making the ratio meaningless for comparison. Here's the quick math: you can't value a company on losses.

However, the forward-looking metrics paint a clearer picture of the company's expected performance. The Forward P/E ratio is a much more palatable 12.41, which is a healthy sign for a company expected to grow earnings. More importantly, the Enterprise Value-to-EBITDA (EV/EBITDA) ratio, which is a better measure for capital-intensive businesses like aircraft leasing, is sitting at 5.42 as of November 17, 2025. This is a strong number that suggests the company's assets and operating income are undervalued relative to its total enterprise value.

• P/E (TTM): -449.6 (Not useful due to TTM loss)
• Forward P/E: 12.41 (Suggests reasonable future value)
• EV/EBITDA: 5.42 (Suggests undervaluation)

Stock Price Trend and Analyst Consensus

Over the last 12 months, the stock price has fallen by 36.55%, which is a significant drop that reflects market concerns over air cargo demand and capital spending. The 52-week trading range shows a high of $22.49 and a low of $13.16. The stock is currently trading near the top of that range, which is why some investors might feel it's stretched.

The analyst community is generally positive, despite the recent price action. The consensus rating from five analysts is a Buy. Still, their average 12-month price target is $20.60. This is the tricky part: if the stock is trading at $22.48, and the average target is lower, it implies the stock is technically overvalued right now, even with the 'Buy' rating. You need to look for a move toward the high estimate of $25.00 to confirm the bullish view.

Dividend Policy and Corporate Structure

For investors looking for income, ATSG is not the play. The company has a 0.00% dividend yield and a 0.00% payout ratio. This is a growth company focused on reinvesting its cash flow into its fleet and operations, specifically its Cargo Aircraft Management (CAM) segment, which leases aircraft. They are not paying out cash.

A major structural factor to consider is the news that Air Transport Services Group, Inc. was taken private as of April 11, 2025. While we are using the public financial data for valuation, this corporate action is a critical risk you must be aware of, as it fundamentally changes the investment thesis for public shareholders. This is why you must always check the latest corporate filings before making a move. For a deeper dive into the company's fundamentals, you can read the full analysis here: Breaking Down Air Transport Services Group, Inc. (ATSG) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Air Transport Services Group, Inc. (ATSG) and asking the right question: What are the near-term risks that could trip up this investment? Honestly, the biggest factor right now isn't an operational hiccup; it's the pending acquisition by Stonepeak, an infrastructure investment firm. That deal, expected to close in the first half of 2025, changes everything for public shareholders, but it still has its own set of risks, plus the underlying operational challenges remain.

The Stonepeak deal, valued at approximately $3.1 billion in enterprise valuation, is the ultimate strategic risk. While the cash-out price of $22.50 per share provides a clear return for existing shareholders, any unexpected regulatory hurdle or financing issue could delay or even derail the closing. If that happens, the stock price would defintely re-rate lower, given the company's full-year 2024 Net Income was only $27.43 million, a sharp decrease from prior years. The merger is the primary short-term risk and opportunity all rolled into one.

External and Industry Headwinds

Beyond the merger, the core business faces a few clear external risks. The air cargo market is not as hot as it was during the peak of the pandemic. This shows up in the numbers: full year 2024 cargo block hours declined 5% compared to 2023. This is a direct measure of demand for their core service.

• Market Demand Fluctuation: The risk of losing customers or seeing a reduction in service demand is constant, especially as major clients like Amazon continually optimize their own logistics networks.
• Macroeconomic Conditions: Inflationary pressures and a competitive labor market are ongoing concerns. The cost to maintain on-time service and control employee compensation remains high.
• Interest Rate Exposure: Higher interest rates increase the cost of capital. Analysts project ATSG's EBIT (Earnings Before Interest and Taxes) interest coverage to improve to around 2x in 2025, but that's still a metric to watch, especially with high capital spending.

Operational and Financial Risks

On the operational side, the company is managing a significant fleet transition, which is expensive and complex. Their Cargo Aircraft Management (CAM) segment is moving away from older 767-200 freighters, which has led to scheduled returns of aircraft and lower lease revenues in that segment. This is a necessary move, but it creates near-term revenue pressure.

Here's the quick math on their capital commitment: Capital spending is projected to be between $300 million and $400 million in 2025, largely to purchase and convert new aircraft like the Airbus A330 and A321 freighters. That's a huge outlay, and any delay in the conversion process-a supply chain constraint on parts or labor-means that capital sits idle longer, pushing out the revenue stream. This is a classic operational risk in the aircraft leasing space.

The table below summarizes the core financial risks and the company's mitigation strategies, based on recent filings:

The overarching strategy is to transition to a more modern, efficient fleet, which is smart, but it's a capital-intensive process that requires flawless execution. The Stonepeak acquisition, if it closes, provides the financial stability to execute this long-term strategy away from the scrutiny of the public market. For a deeper dive into the company's valuation, you should check out Breaking Down Air Transport Services Group, Inc. (ATSG) Financial Health: Key Insights for Investors. Anyway, the near-term action is clear: monitor the Stonepeak merger closing timeline.

Growth Opportunities

You need to know the immediate future of Air Transport Services Group, Inc. (ATSG) is less about organic growth and more about the major corporate action underway: the pending acquisition by Stonepeak. This infrastructure-focused private equity deal, valued at approximately $3.1 billion, is set to close in the first half of 2025 and fundamentally changes the risk-reward equation for investors.

The Stonepeak deal, which received stockholder approval on February 10, 2025, signals confidence in ATSG's long-term asset value, particularly its fleet and critical partnerships. This transition, however, doesn't stop the underlying business from performing; the company is still projecting a strong financial rebound for fiscal year 2025.

Future Revenue and Earnings Estimates (FY 2025)

The consensus among analysts points to a significant earnings per share (EPS) recovery in 2025, largely driven by the stabilization of the air cargo market and strategic fleet placements. Here's the quick math on the expected financial lift:

An EPS jump of over 163% is defintely a headline number, but remember it's off a lower 2024 base of $0.40 per share. Still, the projected revenue growth to $2.10 billion shows the core business is expanding again, not just recovering.

Key Growth Drivers and Fleet Diversification

ATSG's growth is anchored in its ability to convert and lease mid-sized freighter aircraft, a niche where demand remains solid, especially from e-commerce giants. The company is actively diversifying its fleet beyond the Boeing 767, which is a smart move to capture new market segments and reduce reliance on a single airframe.

• Airbus A330/A321 Rollout: The company is scheduled to deliver its first four converted Airbus A330 freighters in 2025, a critical product innovation that opens up a new class of wide-body cargo operations. They also leased their first EASA-Certified Airbus A321 converted freighter in July 2025.
• Amazon Partnership Extension: The long-term commercial flying agreement with Amazon.com Services LLC was extended until May 2029, with an option for five additional years. This provides a stable, high-volume revenue floor for the ACMI (Aircraft, Crew, Maintenance, and Insurance) services segment.
• CAM Leasing Momentum: The Cargo Aircraft Management (CAM) leasing business continues to place converted Boeing 767-300 freighters with external customers under long-term leases, ensuring predictable, annuity-like revenue streams.

Competitive Advantages: The Lease+Plus Model

ATSG's primary competitive edge isn't just owning planes; it's the 'Lease+Plus' model. This integrated solution combines aircraft leasing with the operational support needed to fly them, which few competitors can match at this scale.

The company is the largest lessor of freighter aircraft globally. This specialization in medium wide-body freighters gives them an advantage in the express and e-commerce markets, where speed and network flexibility are paramount. They offer a full suite of services-leasing, air cargo transport, and MRO (Maintenance, Repair, and Overhaul) services-making them a one-stop shop for air logistics customers. This integration makes it harder for a customer to switch, plus it creates multiple revenue streams from a single asset. You can find a more detailed breakdown of the company's financial health and valuation in this post: Breaking Down Air Transport Services Group, Inc. (ATSG) Financial Health: Key Insights for Investors.