Air Transport Services Group, Inc. (NASDAQ:ATSG) today said its subsidiary, Cargo Aircraft Management, has reached agreement with Northern Aviation Services, Inc. for the lease of three Boeing 767-300 freighters to be operated by subsidiary Northern Air Cargo. The aircraft will provide service to its cargo brands Aloha Air Cargo based in Hawaii, StratAir based in Florida, and Northern Air Cargo based in Alaska.

Northern Aviation Services, Inc. operates Boeing 737 freighters and provides 767 freighter services under ACMI (Aircraft, Crew, Maintenance, and Insurance) agreements with ATSG’s airline subsidiaries.

Under the agreements, CAM will lease three 767-300 freighters to Northern Aviation Services, Inc. for seven-year terms, beginning with the first lease in October 2017. The agreements also provide for the potential lease of additional 767-300s from CAM in 2018. These long-term lease placements will add to the already greater than 80 percent of CAM’s 767 fleet contracted under multi-year dry lease.

Some of the leased 767-300s will replace CAM-owned 767-200/300s currently operating on an ACMI basis under ATSG’s Wet-2-Dry program, which allows carriers to prove their business case for 767s under ACMI arrangements, then transition to long-term dry lease arrangements.

ATSG President and CEO Joe Hete said, “Our relationship with Northern Aviation Services and its affiliates began in 2015 and is expanding based on the solid relationship the companies have developed over that time. We are pleased that NAS has come to appreciate the advantages of our midsize Boeing 767s and the benefits they can provide to regional air cargo networks like the one that NAS is developing. We hope to provide more details about our continuing role as a provider of reliable midsize freighters to NAS in the coming months.”

NAS President and CEO David Karp said, “We’re pleased to be moving forward with our transition from wet leasing to dry leasing with CAM. Our experience over the past two years has given us the confidence to move ahead with this initiative. We look forward to continued mutually beneficial collaboration with ATSG, CAM, and their family of companies. We have already commenced hiring and training of pilots to accommodate this expansion and our operating companies are excited about providing expanded services to our valued customers.”