Segment Reporting

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Reporting

11. Segment Reporting

Our business is organized into three operating segments based on our service offerings: ACMI, Charter and Dry Leasing.  All segments are directly or indirectly engaged in the business of air transportation services but have different commercial and economic characteristics.  Each operating segment is separately reviewed by our chief operating decision maker to assess operating results and make resource allocation decisions.  We do not aggregate our operating segments and, therefore, our operating segments are our reportable segments.

We use an economic performance metric called Direct Contribution, which shows the profitability of each segment after allocation of direct operating and ownership costs.  Direct Contribution includes Income (loss) from continuing operations before income taxes and excludes the following: Special charges, Transaction-related expenses, nonrecurring items, Gain (losses) on the disposal of aircraft, Losses on early extinguishment of debt, Unrealized losses (gains) on financial instruments, Gains on investments and Unallocated income and expenses, net.  Direct operating and ownership costs include crew costs, maintenance, fuel, ground operations, sales costs, aircraft rent, interest expense on the portion of debt used for financing aircraft, interest income on debt securities and aircraft depreciation.  Unallocated income and expenses, net include corporate overhead, nonaircraft depreciation, noncash expenses and income, interest expense on the portion of debt used for general corporate purposes, interest income on nondebt securities, capitalized interest, foreign exchange gains and losses, other revenue, other non-operating costs and Payroll Support Program grant income.

The following table sets forth Operating Revenue and Direct Contribution for our reportable segments reconciled to Operating Income and Income (loss) before income taxes:

	For the Three Months Ended						For the Six Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Operating Revenue:
ACMI	$	291,951		$	307,278		$	570,695		$	613,845
Charter		497,547			315,679			825,176			620,793
Dry Leasing		40,906			43,535			82,832			113,481
Customer incentive asset amortization		(9,534	)		(6,936	)		(18,556	)		(13,222	)
Other		4,383			4,362			8,608			8,704
Total Operating Revenue	$	825,253		$	663,918		$	1,468,755		$	1,343,601

Direct Contribution:
ACMI	$	14,495		$	40,640		$	66,802		$	80,647
Charter		185,969			14,084			236,750			43,217
Dry Leasing		9,721			11,091			20,420			46,618
Total Direct Contribution for Reportable Segments		210,185			65,815			323,972			170,482
Unallocated expenses and (income), net		(50,308	)		(81,927	)		(139,029	)		(162,064	)
Loss on early extinguishment of debt		(74	)		-			(74	)		(245	)
Unrealized gain (loss) on financial instruments		(30,671	)		42,300			(29,747	)		(4,275	)
Special charge		(15,934	)		(3,269	)		(15,934	)		(3,269	)
Transaction-related expenses		(1,275	)		(734	)		(1,796	)		(3,261	)
Gain (loss) on disposal of aircraft		(2	)		-			6,715			-
Income (loss) before income taxes		111,921			22,185			144,107			(2,632	)
Add back (subtract):
Interest income		(224	)		(1,278	)		(704	)		(3,322	)
Interest expense		28,950			30,045			58,225			60,398
Capitalized interest		(132	)		(627	)		(325	)		(1,090	)
Loss on early extinguishment of debt		74			-			74			245
Unrealized (gain) loss on financial instruments		30,671			(42,300	)		29,747			4,275
Other (income) expense, net		(50,598	)		945			(49,392	)		(2,030	)
Operating Income	$	120,662		$	8,970		$	181,732		$	55,844

The following table disaggregates our Charter segment revenue by customer and service type:

	For the Three Months Ended
	June 30, 2020							June 30, 2019
		Cargo		Passenger		Total		Cargo		Passenger		Total
Commercial customers		$	394,062	$	17	$	394,079	$	133,178	$	3,054	$	136,232
AMC			49,762		53,706		103,468		92,017		87,430		179,447
Total Charter Revenue		$	443,824	$	53,723	$	497,547	$	225,195	$	90,484	$	315,679
	For the Six Months Ended
		June 30, 2020						June 30, 2019
		Cargo		Passenger		Total		Cargo		Passenger		Total
Commercial customers		$	568,551	$	3,122	$	571,673	$	282,082	$	10,661	$	292,743
AMC			112,236		141,267		253,503		149,463		178,587		328,050
Total Charter Revenue		$	680,787	$	144,389	$	825,176	$	431,545	$	189,248	$	620,793

Given the nature of our business and international flying, geographic information for revenue, long-lived assets and total assets is not presented because it is impracticable to do so.

We are exposed to a concentration of revenue from the AMC, Polar and DHL (see above and Note 4 to our Financial Statements for further discussion regarding Polar).  No other customer accounted for more than 10.0% of our Total Operating Revenue.  Revenue from DHL was $151.9 million for the three months ended June 30, 2020 and $87.4 million for the three months ended June 30, 2019.  Revenue from DHL was $250.2 million for the six months ended June 30, 2020 and $177.1 million for the six months ended June 30, 2019. We have not experienced any credit issues with these customers.