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Future Of Air Transport Services Group

|Includes: Air Transport Services Group, Inc (ATSG)

Air service company Air Transport Services Group (NASDAQ: ATSG) shares rose 16 percent on Thursday after the company announced the fourth quarter earnings report. The company's fourth quarter revenue dipped 7.2 percent from last year to $154.6 million. There is not too much difference in the figure estimated by analysts, who were expecting the revenue to be around $159 million. But the bottom line has been a talking point since the company's EPS of $0.18 easily overtook the expected $0.13 per share.

Overall, the falling revenue and profit margin remained a point of concern. There are other factors associated with the financial future of the company which might play a critical role as far as stock performance in the near-term is concerned. The company's performance in the next few quarters will decidedly affect share price.

The revenues generated during the fourth quarter this year for the company's airline operations stood at $103.6 million, excluding fuel charges and other expenses. This is a dip from $108.3 million in the same quarter last year. The pre-tax loss of $3 million in this fourth quarter is down from the pre-tax profit of $1.8 million in the last year's same quarter. The fourth-quarter revenues of other businesses of ATSG went up 9 percent to $30.5 million. The pre-tax profit from other businesses was down 30 percent from the same quarter last year stood at $3 million.

Air Transport Services Group is expected to conclude the merger of Air Transport International and Capital Cargo International Airlines. While anticipating the proposed merger, some of the airline operations have been deferred to Wilmington, Ohio, and their employee base has also been reduced.

The company's projects, keeping in view its current agreements, scale of operations and synergistic value of the proposed ATI-CCIA merger, are expected to collect an adjusted EBITDA of $175 to $180 million during 2013. This in comparison to adjusted EBITDA $163 million in 2012. EBITDA year-over-year gains in the first quarter of 2013 are expected to maintain a consistency in terms of percentage increment in as a whole. The company has projected its adjusted EBITDA to go up by 8 to 10 percent from the baseline range of 2013.

Assuming the programs go forward as anticipated "2013 could turn out to be a very good year for our shareholders", opines Joe Hete, President and CEO of Air Transport Services Group.