Significant Customers

6 Months Ended

Jun. 30, 2011

Significant Customers [Abstract]

Concentration Risk Disclosure [Text Block]

SIGNIFICANT CUSTOMERS

DHL

The Company, through ABX, has had contracts with DHL since August of 2003. The Company and DHL terminated the former DHL ACMI agreement and executed new follow-on agreements, effective March 31, 2010. Under the new agreements, DHL leases 13 Boeing 767 freighter aircraft from CAM, while ABX operates those aircraft for DHL under a separate CMI agreement. The CMI agreement is not based on a cost-plus pricing arrangement, but instead pricing is based on a pre-defined fee, scaled for the number of aircraft operated and the number of crews provided to DHL for its U.S. network. The initial term of the CMI agreement is five years, while the term of the aircraft leases are seven years. Under the CMI agreement, ABX contracted with Airborne Maintenance and Engineering Services, Inc. (“AMES”), a wholly-owned subsidiary of the Company, to provide scheduled maintenance for the 13 Boeing 767 aircraft for at least the first three years of the CMI agreement.

Continuing revenues from leases and contracted services for DHL were approximately 34% and 35% of the Company's consolidated revenues from continuing operations for the three and six month periods ended June 30, 2011, respectively, compared to 32% and 36% for the corresponding periods of 2010. The Company’s balance sheets include accounts receivable and other long-term receivables with DHL of $15.3 million and $19.0 million as of June 30, 2011 and December 31, 2010, respectively.

BAX/Schenker

A substantial portion of the Company’s revenues, and cash flows have historically been derived from providing airlift to BAX/Schenker's network in North America. Under their agreements with BAX/Schenker, ATI and CCIA have the right to be the exclusive providers of main deck freighter lift in the BAX/Schenker U.S. network through December 31, 2011. Revenues from the services performed for BAX/Schenker were approximately 31% and 32% of the Company’s total revenues from continuing operations for the three and six month periods ended June 30, 2011, respectively, compared to 30% and 29% for the corresponding periods of 2010. (Excluding directly reimbursable revenues, the revenues from the services performed for BAX/Schenker were approximately 22% and 23% of the Company's revenues for the three and six month periods ended June 30, 2011.) The Company has eight Boeing 727 and eight DC-8 aircraft that are currently dedicated to supporting the BAX/Schenker network in North America.

On July 22, 2011, BAX/Schenker announced its plans to adopt a new operating model that phases out the dedicated air cargo network in North America supported by the Company. BAX/Schenker has notified the Company that starting September 1, 2011, it will cease air cargo operations at its air hub in Toledo, Ohio and instead conduct air operations from the Cincinnati/Northern Kentucky airport, which is also the location of DHL's U.S. air hub. Further, BAX/Schenker notified the Company that starting September 1, 2011, the air network will be reduced to four DC-8 and three Boeing 727 freighters operated by ATI and CCIA through the end of 2011, after which BAX/Schenker expects to outsource its air cargo operations to DHL. DHL has informed the management that it wishes to negotiate terms during the fourth quarter of 2011 whereby it would directly contract for all or some portion of those seven aircraft depending on its anticipated 2012 requirements.

Management is assessing the impact that the BAX/Schenker's announcement will have on its operating results, the number of Boeing 727 and DC-8 aircraft which may remain in service, their demand in other air cargo markets and the value of Boeing 727 and DC-8 aircraft if sold as parts. As of June 30, 2011, the Company's operating assets included a carrying value of approximately $48 million for aircraft, engines and aircraft parts in support of the BAX/Schenker air network.

As a result of BAX/Schenker's July decision, management plans to test the carrying value of its aircraft, engines, related operating assets, goodwill and other intangibles during the third quarter of 2011. Depending on the alternative demand that may be identified for excess aircraft, the Company will need to record impairment charges in the third quarter of 2011 due to prolonged recessionary conditions and trends toward higher fuel prices. Management expects the Company will incur wind-down costs beginning in August 2011. The wind-down costs will include employee severance and benefits, airport lease termination payments, aircraft and equipment repositioning and other expenses. Management expects that a portion of the wind-down costs will be recovered from BAX/Schenker. The amount of impairment charges, the costs and duration of the wind-down, as well as amounts which may be recoverable from BAX/Schenker are presently not reasonably estimable by management.

The Company’s balance sheets include accounts receivable with BAX/Schenker of $3.8 million and $5.5 million as of June 30, 2011 and December 31, 2010, respectively.

U.S. Military

A substantial portion of the Company's revenues are also derived from the U.S. military. The U.S. Military awards flights to U.S. certificated airlines through annual contracts and through temporary "expansion" routes. Revenues from services performed for the U.S. Military were approximately 12% and 11% of the Company's total revenues from continuing operations for the three and six month periods ended June 30, 2011, respectively, compared to 15% and 14% for the corresponding periods of 2010. The Company's balance sheets included accounts receivable with the U.S. Military of $16.4 million and $8.4 million as of June 30, 2011 and December 31, 2010, respectively.