Significant Customers

9 Months Ended

Sep. 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 pre-defined fees, scaled for the number of aircraft operated and the number of crews provided to DHL for its U.S. network. In addition to the 13 CAM-owned Boeing 767 aircraft, ABX also operates four DHL-owned Boeing 767 aircraft under the CMI agreement. 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. AMES also provides scheduled maintenance for the four DHL-owned aircraft operated by ABX under the CMI agreement.

Continuing revenues from leases and contracted services for DHL were approximately 35% of the Company's consolidated revenues from continuing operations for the three and nine month periods ended September 30, 2011, respectively, compared to 33% and 35% for the corresponding periods of 2010. The Company’s balance sheets include accounts receivable and other long-term receivables with DHL of $15.2 million and $19.0 million as of September 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 had 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 27% and 30% of the Company’s total revenues from continuing operations for the three and nine month periods ended September 30, 2011, respectively, compared to 29% for the corresponding periods of 2010. (Excluding directly reimbursable revenues, the revenues from the services performed for BAX/Schenker were approximately 16% and 17% of the Company's revenues for the three and nine month periods ended September 30, 2011.)

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. To execute that plan, on September 2, 2011, BAX/Schenker ceased air cargo operations at its air hub in Toledo, Ohio and began to conduct air operations from the Cincinnati/Northern Kentucky airport, utilizing DHL's U.S. air hub. In conjunction with the transfer to the Cincinnati/Northern Kentucky airport, BAX/Schenker reduced the dedicated aircraft to five DC-8 and four Boeing 727 freighters operated by ATI and CCIA; respectively. Previously, the Company had been providing eight Boeing 727 and eight DC-8 freighters to the BAX/Schenker network in North America. In October 2011, BAX/Schenker further reduced the number of DC-8 freighters to two aircraft in a back-up capacity. The Company expects to provide limited airlift directly to BAX/Schenker through the peak delivery season, until mid-December, 2011. After which time, the airlines' contracts with BAX/Schenker will expire and the Company expects DHL to supplement its U.S. air network to fully service BAX/Schenker freight volumes on DHL's expanded air network with only limited use of Boeing 727 and DC-8 aircraft during a transitional period. Management believes that DHL prefers more efficient Boeing 767 and 757 aircraft.

Beginning in August 2011, the Company began to incur wind-down costs related to the phase-out of the BAX/Schenker air network in North America. During the third quarter of 2011, the Company's wind-down costs included employee severance benefits, airport lease termination payments, aircraft and equipment repositioning and other expenses. These expenses were approximately $0.4 million and were primarily recovered from BAX/Schenker under contractual terms. Additional wind-down costs may be incurred as BAX/Schenker completes the phase-out of its domestic air network.

As certain aircraft are phased-out, the Company is entitled to aircraft maintenance reimbursements under contractual obligations from BAX/Schenker. The Company’s balance sheets include accounts receivable with BAX/Schenker of $8.6 million and $5.5 million as of September 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% of the Company's total revenues from continuing operations for the three and nine month periods ended September 30, 2011, respectively, compared to 14% for the corresponding periods of 2010. The Company's balance sheets included accounts receivable with the U.S. military of $5.3 million and $8.4 million as of September 30, 2011 and December 31, 2010, respectively.