TAMPA, Florida – October 19, 2017 – PEMCO World Air Services (PEMCO), a wholly owned subsidiary of Air Transport Services Group, Inc. (NASDAQ:ATSG), held a ceremony here today to mark the cutting of a cargo-door opening in a passenger airframe for the conversion of its first Boeing Next Generation 737-700 Passenger-to-FlexCombiTM aircraft.

“To reach this moment in the development of the B737-700 passenger-to-freighter conversion program solidifies our presence as a global leader in the B737 aircraft conversion marketplace,” said PEMCO Director of Conversion Programs Mike Andrews. “We are pleased with the performance of our Tampa cargo conversion team and continue to move forward developing innovative products that meet increasing customer demand for B737 conversions.”

The event is a major milestone for Bahrain-based Chisholm Enterprises, an internationally recognized provider of tailored aviation and business solutions in the Middle East, which is the customer for this aircraft. Its subsidiary Texel Air, a non-scheduled cargo airline, will operate the B737-700 FlexCombiTM from Bahrain International Airport. The FlexCombiTM design provides separate main-deck compartments for passengers and cargo.

Those in attendance for the ceremony witnessed the final cuts of the door completed by John Chisholm, Owner of Chisholm Enterprises. “Today we have witnessed an important milestone in the development of the Flex-Combi. We look forward to certification of the aircraft next year.” said Chisholm.

PEMCO expects to receive U.S. Federal Aviation Administration supplemental type certification (STC) approval for its B737-700 conversion programs by the third quarter of 2018. After the initial FAA issuance, PEMCO plans to certify the programs with the European Aviation Safety Agency and the Civil Aviation Administration of China shortly thereafter.

PEMCO intends to offer three configurations of the PEMCO B737-700 FlexCombiTM: a 24-passenger cabin plus a 2,640-cubic-foot cargo hold for up to 30,000 pounds of payload in six pallet positions; a 12-passenger cabin plus a 3,005-cubic-foot cargo hold for up to 35,000 pounds of payload in seven pallet positions; or full- freighter mode consisting of a 3,370-cubic-foot cargo hold for up to 40,000 pounds of payload in eight pallet positions. The available positions will accommodate 88” x 125” or 88” x 108” pallets, with the seventh and eighth positions accommodating smaller pallets.

PEMCO also intends to offer a full-freighter version, the B737-700F, featuring nine pallet positions, up to 45,000 pounds of payload, and 3,844 cubic feet of total volume. The available positions will accommodate 88” x 125” or 88” x 108” pallets, with the ninth position accommodating a smaller pallet.

PEMCO is the global leader in narrow-body passenger-to-freighter aircraft conversions, having developed over 70 STCs and modified over 350 aircraft. PEMCO’s 60-plus customers select the company’s passenger- to-freighter conversion for its superior cargo door and system, superior operating functions, on-time turnaround, and a track record of 2 million hours of safe, reliable operation.