Air Transport Services Group Inc's Customers Performance

CAM leases aircraft to ATSGs airlines and to external customers, including DHL, usually under multi-year contracts with a schedule of fixed monthly payments.

Our airlines provide airlift to the Air Mobility Command ("AMC") through contracts awarded by the U.S. Transportation Command ("USTC"), both of which are organized under the U.S. Military. ATI contracts with the AMC for the operation of its unique fleet of four Boeing 757 "combi" aircraft, which are capable of simultaneously carrying passengers and cargo containers on the main flight deck. ATI has been operating combi aircraft for the U.S. Military since 1993. During 2013, ATI retired its four DC-8 combi aircraft and replaced the aircraft with the more modern Boeing 757 combi aircraft. The USTC awards flights to U.S. certificated airlines through annual contracts and awarded ATI three international routes for combi aircraft through September of 2015. These routes are not based on or related to conflicts in the Middle East. Additionally, our airlines may operate temporary "expansion" routes for the U.S Military using its Boeing 757 combi and Boeing 767 freighter aircraft.

CCIA and ATI each provided airlift to BAX/Schenkers North American network through ACMI agreements using Boeing 727 and DC-8 aircraft, respectively. However, in 2011, BAX/Schenker announced its decision to phase out its dedicated air cargo network in North America, which was supported by the Company. Instead of a dedicated aircraft network, BAX/Schenker began to utilize DHL and other delivery services for its air transportation delivery requirements. Beginning in January 2012, the Company contracted with DHL to supplement DHLs U.S. air network to service BAX/Schenkers freight volumes on DHLs expanded air network. By the end of 2012, we retired the remaining Boeing 727 and DC-8 freighter aircraft, replacing their capacity with Boeing 767 aircraft. To further streamline our operations, we completed the merger of ATI and CCIAs airline operations in the first quarter of 2013. The combined operation benefits from a standardized fleet, two person flight crew, common pilot type rating and the improved reliability of the Boeing 767 and Boeing 757 aircraft as compared to the Boeing 727 and DC-8 freighter aircraft formerly operated.

Approximately 13% of the Companys consolidated revenues were derived from providing airline operations for customers other than DHL and the U.S. Military. These ACMI and charter operations are typically provided to freight forwarders or other airlines and have non-U.S. destinations.

We have limited exposure to fluctuations in the price of aviation fuel under contracts with our customers. DHL, like most of our ACMI customers, procures the aircraft fuel and fueling services necessary for their flights. Our charter agreements with the U.S. Military are based on a preset pegged fuel price and include a subsequent true-up to the actual fuel prices.

Since September 2004, we have provided mail sorting services under contracts with the USPS. Our subsidiary, LDS, manages USPS mail sort centers in Indianapolis, Dallas and Memphis. Under each of these three contracts, we are compensated at a firm price for fixed costs and an additional amount based on the volume of mail handled at each sort center. LDS also provides labor for load transfer services to the USPS at two facilities.

CAM leases aircraft to ATSGs airlines and to external customers, including DHL, usually under multi-year contracts with a schedule of fixed monthly payments.

Our airlines provide airlift to the Air Mobility Command ("AMC") through contracts awarded by the U.S. Transportation Command ("USTC"), both of which are organized under the U.S. Military. ATI contracts with the AMC for the operation of its unique fleet of four Boeing 757 "combi" aircraft, which are capable of simultaneously carrying passengers and cargo containers on the main flight deck. ATI has been operating combi aircraft for the U.S. Military since 1993. During 2013, ATI retired its four DC-8 combi aircraft and replaced the aircraft with the more modern Boeing 757 combi aircraft. The USTC awards flights to U.S. certificated airlines through annual contracts and awarded ATI three international routes for combi aircraft through September of 2015. These routes are not based on or related to conflicts in the Middle East. Additionally, our airlines may operate temporary "expansion" routes for the U.S Military using its Boeing 757 combi and Boeing 767 freighter aircraft.

CCIA and ATI each provided airlift to BAX/Schenkers North American network through ACMI agreements using Boeing 727 and DC-8 aircraft, respectively. However, in 2011, BAX/Schenker announced its decision to phase out its dedicated air cargo network in North America, which was supported by the Company. Instead of a dedicated aircraft network, BAX/Schenker began to utilize DHL and other delivery services for its air transportation delivery requirements. Beginning in January 2012, the Company contracted with DHL to supplement DHLs U.S. air network to service BAX/Schenkers freight volumes on DHLs expanded air network. By the end of 2012, we retired the remaining Boeing 727 and DC-8 freighter aircraft, replacing their capacity with Boeing 767 aircraft. To further streamline our operations, we completed the merger of ATI and CCIAs airline operations in the first quarter of 2013. The combined operation benefits from a standardized fleet, two person flight crew, common pilot type rating and the improved reliability of the Boeing 767 and Boeing 757 aircraft as compared to the Boeing 727 and DC-8 freighter aircraft formerly operated.

Approximately 13% of the Companys consolidated revenues were derived from providing airline operations for customers other than DHL and the U.S. Military. These ACMI and charter operations are typically provided to freight forwarders or other airlines and have non-U.S. destinations.

We have limited exposure to fluctuations in the price of aviation fuel under contracts with our customers. DHL, like most of our ACMI customers, procures the aircraft fuel and fueling services necessary for their flights. Our charter agreements with the U.S. Military are based on a preset pegged fuel price and include a subsequent true-up to the actual fuel prices.

Since September 2004, we have provided mail sorting services under contracts with the USPS. Our subsidiary, LDS, manages USPS mail sort centers in Indianapolis, Dallas and Memphis. Under each of these three contracts, we are compensated at a firm price for fixed costs and an additional amount based on the volume of mail handled at each sort center. LDS also provides labor for load transfer services to the USPS at two facilities.