CFO: ABX Air on track to achieve FY07 markup goals

ABX Air, Inc. (Nasdaq: ABXA) CFO Quint Turner said the airline cargo transporter was on track to achieve “nearly 100%” of its incremental markup goals at the end of the third quarter. Turner made the comments during a morning conference call. The chief financial officer cautioned that all of ABX Air’s markup incentives are realized in the fourth quarter “so we won’t know for sure what we have achieved until early next year.”

On Nov. 2, ABX announced it agreed to acquire Orlando-based Cargo Holdings International, Inc. for $350 million in a cash and stock deal. The acquisition will be funded by the issuance of four million shares of ABX common stock and cash from a new $345 million credit facility. ABX said it expects the acquisition to increase earnings during fiscal 2008.

Earlier in the week, ABX Air reported third-quarter revenue of $285.96 million, from $281.35 million a year earlier. Included in the quarter’s revenue was an $8.8 million payment from DHL Global Forwarding. The payment was initially withheld by DHL because the shipping company said it wasn’t responsible to pay ABX for some overhead expenses. CEO Joe Hete said DHL wired the payment to ABX on Thursday afternoon.

“We hope to use this opportunity not only to continue this relationship on a more normalized basis, but to find ways to improve it for the benefit of both companies,” Hete said. “Although arbitration will likely take several months, we fully expect that our point of view will be upheld. Until that occurs, we will continue to provide [DHL] with the same high-quality level of service that we have for years.”

Despite the payment problems, Hete said the company doesn’t have liquidity issues.

“As of Sept. 30, the company has strong and growing cash flow from operations, no outstanding borrowings under our $45 million credit agreement, so as you can see we don’t have a liquidity problem,” Turner said.

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