Originally Posted by wjcandee

Well, I don't see ATSG shutting down ABX as long as it continues to want the DHL business and DHL still wants to use ABX. Remember that, as between the two ATSG carriers, the DHL 767 flying (or at least most of it) would appear to be locked in at ABX, so there's no potential whipsaw with ATI. This is in part due to the scope language concerning transfer by ATSG of ABX aircraft to directly-competing carriers.

However, DHL seems to have some kind of antipathy for ABX, because it has consistently-reduced the number of frames that ABX flies, while farming the work out to other carriers, notably Atlas and Kalitta. DHL has called upon ABX to fly aircraft (and ATSG to lease it aircraft) when it has needed the lift, but the general trajectory has been downhill.

ABX has some work rules that make certain flights less-expensive to operate with Atlas and Kalitta. So new business might be inclined to go to other carriers, to the extent that the other carriers can staff it. Some of the forwarders, etc., who hire the lift on the low-margin South American and Caribbean stuff seem to be using some of the smaller carriers, like the revitalized Amerijet and the new NAC operation in MIA. I understand that that business was generally sneered-at, and susceptible to competition from the little guys insofar as it is somewhat less time-definite, but it did generate some flight hours.

I personally don't anticipate that Amazon is going to be expanding its fleet beyond 40 aircraft anytime soon, so even if it was inclined to give ABX any more work, it's hard to see that happening within the next year or so. It's also not clear what size of aircraft Amazon is going to be looking at to serve whatever new nodes it adds to its network, given that Amazon will have picked off the low-hanging fruit by the time it reaches 40 aircraft. 767s may be larger than needed for a good number of potential new routes.

The six 767-200 dry leases were only for 5 years, so whether they will be extended and if so for how long is another open question. ATSG can't move those frames directly to a competing carrier, but there's nothing to prevent Amazon from chucking them and replacing them with 767-300s to be converted three or so years from now, when the supply of used -300ERs in the right price range will be on the rise (absent some decision by FedEx or UPS to enter the converted-767 market in a big way). And those frames could be flown by anyone.

I do think that the idea of a Target or WalMart or similar big logistics player using a private air fleet to serve a limited number of lanes is realistic, even advisable, and ATSG is at least competitive in its proven ability to help set up such a system. But I don't see that as yielding an opportunity for more than a limited number of frames. Nevertheless, it is one of a number of opportunities that might be available to ABX in a rising domestic economy, which I hope will continue.

Originally Posted by nitefr8dog

You keep mentioning" moving aircraft to a direct competitor " you are talking about ATI correct? There is nothing in the scope language preventing ATSG from moving ABX 767's to another carrier other than ATI to fly DHL freight.

Originally Posted by wjcandee

I personally don't anticipate that Amazon is going to be expanding its fleet beyond 40 aircraft anytime soon, so even if it was inclined to give ABX any more work, it's hard to see that happening within the next year or so. It's also not clear what size of aircraft Amazon is going to be looking at to serve whatever new nodes it adds to its network, given that Amazon will have picked off the low-hanging fruit by the time it reaches 40 aircraft. 767s may be larger than needed for a good number of potential new routes.

Originally Posted by nitefr8dog

"Well, the scope is broader than that. But as a practical matter for right now, yeah, ATI."

Not the part that matters!