Air T helps FedEx deliver the goods. The company owns two overnight air cargo subsidiaries -- Mountain Air Cargo (MAC) and CSA Air -- which operate under contracts with FedEx. MAC and CSA Air fly mainly in the Eastern and Midwest regions of the US, as well as the Caribbean and South America. Its combined fleet consists of about 80 turboprop Cessna aircraft, most of which are leased from FedEx. Air Cargo Services accounts for about half of its sales. Air T's Aircraft Ground Service Equipment and Service business comprises Global Ground Support (GGS; de-icing and scissor-lift equipment used at airports) and Global Aviation Services (GAS; provides related maintenance services).
Although the company's revenues showed a modest increase (nearly 3%) in fiscal 2011, Air T's operating income tumbled more than 35% and net income was down nearly 45%. The primary cause for the drop in profitability can be attributed to the company's GGS unit. A shift in GGS' customer base from military orders to the more competitive commercial market drove gross margins down. Although it renewed its deicer contract with the US Air Force in fiscal 2011, GGS did not deliver any orders during the year. Capital expenditures for the company as a whole was about 100% higher than the previous year but up more than 750% for GGS alone. Air T's GAS segment was also hindered by changes in its contract with Delta; the airline accounted for nearly 65% of the segments revenues in fiscal 2010 but only 41% in 2011.
On a more positive note, revenues and operating income for overnight air cargo were up. The unit, which accounts for more than 50% of sales, improved revenues by nearly 9% and operating income by more than 25%.
Chairman and CEO Walter Clark controls an almost 6% stake in Air T.
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