WILMINGTON, OH – August 5, 2019 – Air Transport Services Group, Inc. (Nasdaq: ATSG), the leading provider of medium wide-body aircraft leasing, contracted air transportation and related services, today reported consolidated financial results for the quarter and six months ended June 30, 2019. Results as compared with the second quarter of 2018 include:

• Customer revenues were $334.6 million, up $131.0 million, or 64 percent.
Each of ATSG's principal business segments, aircraft leasing and air transport, reported higher revenues for the second quarter. Revenues from Omni Air International, which ATSG acquired in November 2018, were the largest contributor to the year-over-year revenue gain.

• GAAP Earnings from Continuing Operations were a loss of $26.6 million, versus a profit of $24.5 million. GAAP Earnings per Share were a loss of $0.45, versus a profit of $0.21.
The unrealized effect of re-measurement of financial instrument values reduced ATSG's second quarter 2019 after-tax earnings by $33.6 million and increased second quarter 2018 after-tax earnings by $11.1 million. The majority of the loss and gain related to changes in values of warrants issued to Amazon.com Services, Inc. Increases in interest expense, depreciation and amortization expense, and in retiree benefit costs were also significant factors.

• Adjusted Earnings from Continuing Operations (non-GAAP) increased by $1.7 million, or 10 percent, to $18.7 million. Adjusted Earnings Per Share (non-GAAP) were $0.27 diluted, up $0.02.
Adjusted Earnings from Continuing Operations and Adjusted EPS exclude elements from GAAP results that in management's opinion differ distinctly in predictability among periods or are not closely related to operations. Adjustments from GAAP include financial instrument revaluations, amortization of aircraft lease incentives, retiree benefit costs, and losses of non-consolidated ATSG affiliates.

• Adjusted EBITDA from Continuing Operations (non-GAAP) were $104.8 million, up $35.0 million, or 50 percent.
Contributions from Omni Air and from the increase in externally leased 767 freighters since June 2018 drove the majority of the Adjusted EBITDA increase.
Adjusted Earnings per Share, Adjusted Earnings from Continuing Operations and Adjusted EBITDA from Continuing Operations are non-GAAP financial measures and are defined in the non-GAAP reconciliation tables at the end of this release. (See the paragraph entitled "Non-GAAP Financial Measures")

• First-half capital spending was $216.8 million, up 44 percent.
Capital expenditures in the first half of 2019 included $159.0 million for the purchase of seven Boeing 767 aircraft, including three in the second quarter, and for freighter modification costs.

Joe Hete, President and Chief Executive Officer of ATSG, said that ATSG's operating momentum continued during the second quarter, as flight operations for the Department of Defense and Amazon increased versus prior-year periods. ATSG now expects a 36 percent increase in Adjusted EBITDA in the second half versus a year ago, thanks to both increased flight operations and more leased aircraft in service.

"In December 2018, ATSG agreed to lease ten more Boeing 767-300 converted freighters to Amazon, anticipating five deliveries in each of the next two years," Hete said. "At Amazon's request, we now expect to deliver them six 767 freighters this year, and the remaining four in 2020. The first of those six was delivered in June, the second in early July, and the third is due later this month. At the same time, we have agreed to lease four 767 freighters to United Parcel Service this year, starting in September."

Hete added that in both the leasing of converted freighter aircraft and flight and maintenance operations for customers, ATSG is executing according to its plans and on track for a very good 2019. “We look forward to growth in our operations for the Department of Defense, and in fulfilling signed lease commitments from Amazon and United Parcel Service in 2019 for a total of ten converted Boeing 767 freighters. In 2020, we expect to deploy at least 10 more aircraft, four of which are under customer commitments to Amazon and one that we expect to lease to UPS next year,” he said.