Air Transport Services Group to Acquire Omni Air International

Air Transport Services Group, Inc. (NASDAQ:ATSG) today announced that it has agreed to acquire Omni Air International LLC (Omni Air), a passenger ACMI and charter services provider with significant experience serving U.S. and allied foreign governments and commercial customers, for $845 million, subject to customary adjustments. The company did not assume any debt in connection with the acquisition.

Omni Air is a leading provider of passenger airlift services to the U.S. Department of Defense (DoD) via the Civil Reserve Air Fleet (CRAF) program, and a worldwide provider of full-service passenger charter and ACMI services. Omni Air also carries passengers worldwide for a variety of private sector customers and government services firms. Omni Air, founded in 1993, is an FAR Part 121 certificated and IATA Operational Safety Audit registered airline.

The combination with Omni Air is anticipated to add over $430 million in annualized revenues to ATSG. It also exceeds ATSG’s investment hurdle and is expected to be immediately accretive to ATSG’s adjusted earnings per share in 2019, with Adjusted EBITDA in line with ATSG’s margin profile. After adjusting for the present value of tax benefits, which are estimated to be approximately $85 million, the implied acquisition multiple is 5.8x Omni Air’s adjusted EBITDA for the trailing 12 months ending August 2018.

The acquisition of Omni Air will further diversify ATSG’s customer base, add significant presence in the growing government passenger charter services market, add 13 aircraft to ATSG’s fleet, and broaden the ATSG carriers’ operating capabilities to include three Boeing 777-200 extended range (ER) aircraft. The transaction will further ATSG’s strategic goals by adding growth opportunities with long-time and blue-chip customers, and by positioning it to meet customers’ global cargo needs with the longer-range 777 platform. The strong recurring cash flows from Omni Air’s operations augment the sustainable cash flow generated by ATSG’s dry leasing business model.

Omni Air’s fleet, which includes seven 767-300ER, three 767-200ER and three 777-200ER aircraft, complements ATSG’s industry leading fleet of Boeing 737, 757, and 767 aircraft, and further solidifies its position as the world’s largest source of dedicated 767 cargo aircraft to selected air-express and other operators. Eleven of the thirteen aircraft Omni Air operates are owned, with one 767-200ER and one 767-300ER leased. In total, the ATSG companies will have a combined fleet of more than 90 aircraft in service by year-end.

Joe Hete, President and Chief Executive Officer of ATSG, said, "Combining ATSG and Omni Air’s operating expertise and array of aircraft options fulfills several of our principal goals – to broaden ATSG’s ACMI capabilities; grow and diversify our revenue streams with government and commercial customers; and reach new global markets with our full range of leasing, operating, and aircraft maintenance capabilities. We look forward to working with Omni’s excellent management team to pursue new growth opportunities, including serving the expanding global e-commerce demand.”

Jeff Crippen, President and Chief Executive Officer of Omni Air, welcomed the acquisition, noting the two companies’ complementary cultures and a strong strategic fit.

"We have tremendous respect for the ATSG team," Crippen said. "Combining Omni Air and ATSG’s experience and skillsets unquestionably makes for a stronger company that can better serve its customers worldwide."

Omni Air will operate as a separate subsidiary within ATSG under Jeff Crippen’s leadership from its existing Tulsa, Oklahoma, headquarters. An invitation has been extended to Rob Coretz, chairman, co-founder, and former CEO of Omni Air, to join ATSG’s board.

ATSG plans to fund the all-cash acquisition of Omni Air by expanding the term loan under its existing credit facility. The agreement is expected to close during the fourth quarter of 2018, subject to regulatory approvals. ATSG was advised by Goldman Sachs & Co LLC and Vorys Sater Seymour and Pease LLP, and its committed financing was arranged by SunTrust Robinson Humphrey. Omni Air was advised by BDT & Company as financial adviser and Conner & Winters, LLP as legal adviser.