Air Transport Services Group Inc. (ATSG) (NASDAQ: ATSG) observed its stock price rise by over 26 per cent Monday after revealing that a major New York investment firm will acquire it.
Stonepeak will be purchasing the freighter aircraft leasing company for US$3.1 billion in cash. The aviation operator is being taken private through the deal. ATSG’s primary business involves buying used passenger aircraft and converting them into freighters to lease out to customers.
“We view that as a reasonable valuation based on what the market has given the company for the past 10 years,” Frank Galanti, a research analyst at Stifel Financial Corp (NYSE: SF), noted.
ATSG is known to operate freighter planes for Amazon.com Inc (NASDAQ: AMZN) — a top client and major shareholder with a 19.5 per cent stake in the air transporter. It also has experience working with the U.S. Department of Defense and provides cargo handling services for DHL.
“With Stonepeak’s investment and extensive expertise in transportation, logistics and asset leasing, ATSG will be well positioned to further expand its global presence in the air cargo leasing market,” ATSG chief executive Mike Berger said in a statement.
The aviator primarily uses converted Boeing Co (NYSE: BA) 767 aircraft, holding about 100 of them.
Stonepeak currently has approximately US$56 billion worth of assets under management.
$ATSG Air Transport Services Group at Miami-Opa Locka Airport is a major player in converting retired passenger planes into cargo jets, a process that requires specialized skills and FAA certification. With high demand for cargo planes and delays in new models, companies like… pic.twitter.com/hgTaFvvzMk
— Market Rebellion (@MarketRebels) November 4, 2024
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ATSG shows young people the ropes
The air transport provider recently held a four-month summer camp for youth in grades 6 to 12 at Ohio’s Wilmington Air Park. ATSG aims to inspire a new generation of aviators.
“We believe that by investing in education and training activities like Aviation Camp, we can help build a strong pipeline of future aviation professionals,” Berger said.
They will be taught about aerospace technology production, pilot careers, aircraft maintenance and safety protocols.
Recent predictions by market research firms like Mordor Intelligence and The Business Research Company have determined that the global market for freighter aircraft will expand significantly. In the years to come, a compound annual growth rate ranging between 5 and 8 per cent is expected.
Other companies that have been capitalizing on this growing demand for cargo planes include the United Parcel Service, Inc (NYSE: UPS) airlines subsidiary, Dubai’s Emirates Sky Cargo and Texas-based Ameriflight.
rowan@mugglehead.com
