Note N - Segment and Revenue Information

6 Months Ended

Jun. 30, 2024

Notes to Financial Statements

Segment Reporting and Revenue Disclosure [Text Block]

NOTE N—SEGMENT AND REVENUE INFORMATION

The Company operates in two reportable segments. The CAM segment consists of the Company’s aircraft and engine leasing operations. The ACMI Services segment consists of the Company’s airline operations, including CMI agreements as well as ACMI, charter service and passenger service agreements that the Company has with its customers. The Company’s aircraft maintenance services, aircraft modification services, ground services and other support services, are not large enough to constitute reportable segments and are combined in All other. Intersegment revenues are valued at arms-length market rates.

The Company’s segment information from continuing operations is presented below (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
Total revenues:
CAM	$	104,469		$	111,378		$	210,018		$	223,422
ACMI Services		338,179			366,187			662,003			700,314
All other		97,640			110,789			206,680			221,377
Eliminate inter-segment revenues		(51,878	)		(59,015	)		(104,774	)		(114,679	)
Total	$	488,410		$	529,339		$	973,927		$	1,030,434
Customer revenues:
CAM	$	78,498		$	84,194		$	158,090		$	167,352
ACMI Services		338,168			366,179			661,878			700,292
All other		71,744			78,966			153,959			162,790
Total	$	488,410		$	529,339		$	973,927		$	1,030,434

The Company’s external customer revenues from other activities for the three- and six-month periods ended June 30, 2024, and 2023 are presented below (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Aircraft maintenance, modifications and part sales	$	36,573	$	39,165	$	76,921	$	81,238
Ground services		22,234		24,987		45,455		48,652
Other, including aviation fuel sales		12,937		14,814		31,583		32,900
Total customer revenues	$	71,744	$	78,966	$	153,959	$	162,790

During the three- and six-month periods ended June 30, 2024, the Company recognized $3.3 million and $4.8 million, respectively, of non-lease revenue that was reported as deferred revenue at the beginning of the applicable period, compared to $12.2 million and $6.5 million for the comparable periods in 2023. Current deferred revenue of $14.8 million and $4.5 million as of June 30, 2024 and December 31, 2023, respectively, for contracts with customers is derived from other activities as described above. Revenue related to deferred revenue will be recognized based on percentage of completion. Customers are required to pay deposits and may be required to make milestone payments for these services resulting in deferred revenue. Long-term contract assets were $6.2 million as of June 30, 2024 compared to $8.7 million as of December 31, 2023. Cash will be collected over the term of the multi-year agreement based on number cycles per period while revenue is recognized as parts are provided for engine maintenance services. This may result in a contract asset or liability based on the timing of engine maintenance services.

CAM’s leases do not contain residual guarantees. Approximately 17% of CAM’s leases to external customers contain purchase options at projected market values. As of June 30, 2024, minimum future payments from external customers for leased aircraft and equipment were scheduled to be $146.6 million for the remainder of 2024, and $272.5 million, $247.7 million, $218.7 million and $183.8 million, respectively, for each of the next four years ending December 31, 2028 and $267.1 million thereafter. CAM’s external customer revenues for non-lease activities were $5.0 million and $9.9 million for the three- and six-month periods ended June 30, 2024 and 2023, respectively, for engine services and the sale of spare engine parts compared to $8.7 million and $15.4 million during the comparable periods in the prior year

The Company’s other segment information from continuing operations is presented below (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
Depreciation and amortization expense:
CAM	$	66,894		$	58,091		$	132,267		$	118,488
ACMI Services		24,375			23,835			48,624			47,456
All other		610			765			1,368			1,475
Total	$	91,879		$	82,691		$	182,259		$	167,419
Interest expense
CAM		14,699			10,908			29,979			20,930
ACMI Services		5,478			5,058			10,971			10,016
Customer incentive contra revenue
CAM		3,097			3,903			6,193			8,933
ACMI Services		4,076			816			4,892			1,608
Segment earnings (loss):
CAM	$	15,247		$	31,020		$	28,656		$	65,220
ACMI Services		(7,076	)		24,054			(10,561	)		21,643
All other		2,973			(1,299	)		5,280			(645	)
Net unallocated interest expense		(1,008	)		(526	)		(1,984	)		(1,036	)
Net gain on financial instruments		2,946			1,818			5,301			78
Other non-service components of retiree benefit costs, net		(1,086	)		(3,218	)		(2,171	)		(6,436	)
Loss from non-consolidated affiliate		(1,254	)		(2,107	)		(1,333	)		(2,513	)
Pre-tax earnings from continuing operations	$	10,742		$	49,742		$	23,188		$	76,311

The Company’s assets are presented below by segment (in thousands). Cash and cash equivalents are reflected in Assets - All other.

	June 30,		December 31,
	2024		2023
Assets:
CAM	$	2,875,527	$	2,885,508
ACMI Services		917,690		828,703
All other		146,268		167,879
Total	$	3,939,485	$	3,882,090

During the six months ended June 30, 2024, the Company had capital expenditures for property and equipment of $41.9 million and $131.5 million for the ACMI Services and CAM, respectively.