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Tuesday, April 16, 2024
Logistics

Amerijet lost $33M in 12 months, downsizes Atlanta operation

Struggling freighter operator Amerijet International will close its small shipping station in Atlanta at the end of March in the latest attempt to reduce costs amid mounting financial losses driven by a prolonged downturn in freight markets and the end of some key contracts.

The Miami-based cargo airline will shutter the warehouse it operated a few miles from Hartsfield-Jackson Atlanta International Airport and outsource freight transfers to Worldwide Flight Services, a large airport ground handling agent, Marketing Director Christine Richard confirmed.

The change will reduce headcount by four employees, who will have the opportunity to join WFS, she said in an email message. The warehouse supported Amerijet’s road feeder network, which operated to and from the company’s air hub at Miami airport. The WFS location on airport property will provide customers a more convenient location to drop and receive freight, Richard said.

Amerijet has taken a series of steps over the past year to regain its footing, culminating in the replacement of CEO Tim Strauss in October and a January restructuring that resulted in new ownership and the return of six Boeing 757-200 converted freighters to lessors after barely one year.

The company rapidly expanded during the unprecedented boom in air cargo fueled by the pandemic and had too much capacity when the market normalized and some large customers pulled their business.

In the 12-month period ending Sept. 30, Amerijet lost $33 million, according to data compiled by the U.S. Bureau of Transportation Statistics. Revenue decreased 10% to $542 million, outpacing cost reductions. Operating profit went from $22 million in the prior 12-month period to negative $10 million. Average monthly cargo volume through November is down 63% since the peak in July 2021 and revenue cargo traffic is nearly half the amount for 2021.

Amerijet’s workforce is also down from a high of nearly 1,100 at the end of 2022 to 951, according to the latest figures compiled by the Bureau of Labor Statistics.

In addition to getting rid of the 757 cargo jets, Amerijet has parked at least two of its flagship Boeing 767s. The Amerijet fleet currently stands at 14, down from a high of 22 in 2022, according to data from aviation analytics firm Cirium. Three 767-300 freighters are owned and controlled by Maersk Air Cargo, with Amerijet providing crews, maintenance and insurance for international flights. The 11 other 767s are leased and wear the Amerijet name.

Aircraft database Planespotters.com shows one 767-200 has been parked since December at Wilmington Air Park in Ohio. Another 767-200, which was operated by Amerijet on behalf of DHL Express and provided by DHL’s in-house airline, arrived Feb. 21 at the Pinal Airport boneyard in Marana, Arizona. Both aircraft were more than 40 years old.

FreightWaves previously reported that DHL had canceled its contract with Amerijet to fly scheduled service in its package delivery network and took back the aircraft it owned. Cirium data shows Amerijet was flying five 767-200s for DHL last year and none in 2024. DHL previously said it is still doing business with Amerijet, which suggests Amerijet fills in when called using its own aircraft.

Meanwhile, the U.S. Postal Service last year did not renew two contracts for daily service between Philadelphia and Sacramento, California, and Philadelphia and Ontario, California, as it shifts more mail to ground transportation for economic and environmental reasons. Amerijet continues to fly mail on a San Juan, Puerto Rico-to-Newark, New Jersey-to-Orlando, Florida-to-San Juan route.

The blow from two major customers was compounded by recessionary conditions in freight markets, with air cargo volumes contracting by more than 8% in 2022, and by double digits at the turn of the year, before bottoming out last summer and starting to recover.

New CEO Joe Mozzali informed employees in October that Amerijet was pulling all available levers to improve performance in a challenging market. 

“Every decision is being questioned to make sure that business units are making the right amount of net contribution. Everything’s under the microscope,” as it should be, said a former Amerijet manager who did not want to be identified. 

Before Strauss was dismissed, the all-cargo carrier also closed a small freight forwarding unit, laid off a handful of administrative staff and outsourced accounting functions to Trinidad and Tobago.

No pilots have been furloughed because of the reduced flying, but Amerijet appears to have stopped hiring new crew members, according to a current employee, who asked to remain anonymous to avoid any retaliation.

“Amerijet continues to pursue growth strategies to increase our top-line revenue. We continually evaluate measures to ensure our long-term viability and competitiveness,” said Richard.

RECOMMENDED READING:

Cargo airline Amerijet in distress sale, terminates 6 aircraft leases

Amerijet feels financial pinch as cargo business deteriorates

The post Amerijet lost $33M in 12 months, downsizes Atlanta operation appeared first on FreightWaves.

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