Revenues declined $81.1 million from $369.2 million in the first quarter of last year. Net earnings declined to $4.3 million from $8.1 million, or $0.14 per share, in the first quarter of 2006.

Comparisons of ABX Air’s results in the first quarter of 2007 with its results in the first quarter of 2006 are principally affected by two significant items:

• Net earnings for the first quarter of 2007 included a deferred (non-cash) income tax expense of $2.6 million, or $0.04 per share. No such expense was recorded in the first quarter of 2006 as the amount was offset by a reduction in the tax valuation allowance. While ABX expects to record deferred income tax expense in 2007 at approximately 38% of pre-tax earnings, existing net operating loss carryforwards are such that the Company does not expect to be a cash payer of federal income taxes until 2009 or later.

• Net earnings for the first quarter of 2006 included $1.3 million, or $0.02 per share, in income from line-haul management operations for ABX Air’s principal customer, DHL. DHL assumed those operations from ABX Air in the second quarter of 2006.

"As expected, the 2007 non-cash income tax expense and last year’s transition of line-haul to DHL had a significant effect on year-over-year comparisons," stated Joe Hete, President and CEO of ABX. "On the other hand, our business is better positioned for growth as an independent provider of air cargo services than it was a year ago, and our new agreement with All Nippon Airways launches us into new global markets."

Pre-tax earnings declined $1.2 million to $6.9 million compared to $8.1 million a year ago. The declines in revenues and pre-tax earnings were expected as a result of DHL assuming management of its line-haul trucking operations from ABX Air in May of last year. ABX Air’s pre-tax earnings from those line-haul management operations were approximately $1.3 million on revenues of $65.3 million in the first quarter of 2006.

Revenues from ABX Air’s charter segment increased 83% to $7.0 million in the first quarter of 2007 compared to the corresponding period in 2006. ABX continues to deploy additional aircraft into its charter segment, as demand for these aircraft is strong, giving ABX the opportunity to further diversify its customer base and grow earnings. Pre-tax earnings from this segment increased to $1.0 million in the first quarter of 2007 compared to $0.2 million in the first quarter of 2006.

"We are looking forward to expanding our own ACMI operations via our new agreement with All Nippon Airways, under which we will operate two of our Boeing 767-200 aircraft in support of ANA's cargo operations throughout the Asian market. We’re particularly honored to be the first non-Japanese carrier approved to conduct air cargo operations on behalf of a Japanese airline," stated Hete.

ABX Air’s commercial agreements with DHL are an aircraft, crew, maintenance and insurance agreement ("ACMI agreement"), and a hub services agreement ("Hub Services agreement"). Under each agreement, ABX Air earns a base mark-up of 1.75% on eligible costs and can earn incremental mark-ups for meeting certain quarterly cost-related goals as well as other annual cost-related and service goals. Any earnings from attainment of annual cost-related and service-related goals are recognized in the fourth quarter.

ABX Air's pre-tax earnings from its two commercial agreements with DHL were $3.8 million during the first quarter of 2007, compared to $5.3 million in the first quarter of 2006, or $4.0 million excluding line-haul operations that transitioned to DHL in May 2006. The 2007 pre-tax results included $3.2 million from the base mark-up and $0.6 million in incremental mark-up, the latter representing 100% of the maximum, cost-related incremental mark-up possible under the ACMI agreement. No incremental mark-up was realized from the Hub Services agreement in the first quarter of 2007.

In the first quarter of 2006, ABX Air recognized $3.7 million of pre-tax earnings from the base mark-up and $1.5 million from incremental mark-up, including $0.7 million related to the ACMI agreement and $0.8 million under the Hub Services agreement. The maximum incremental mark-up was earned under both the ACMI and Hub Services agreements in 2006. The decline in incremental mark-up in 2007 is primarily related to lower package volumes handled and comparatively more severe winter weather during the first quarter of 2007, which negatively impacted Hub Services costs.

Charter revenues grew to $7.0 million for the first quarter of 2007 compared with $3.9 million in the first quarter of 2006. Additional Boeing 767 freighter aircraft that ABX Air has deployed since the first quarter of 2006 drove charter revenue growth. ABX Air began 2007 with four Boeing 767 aircraft in this segment, added one more aircraft during the first quarter and added two more in April. During the first quarter of 2006, the Company operated two Boeing 767 aircraft in its charter operations. Charter pre-tax earnings were $1.0 million, 14% of charter revenues, for the first quarter of 2007, as compared to pre-tax earnings of $0.2 million, or 6% of charter revenues in the first quarter of 2006. As a percentage of revenues, 2007 margins improved due to the deployment of lower cost aircraft compared to the first quarter of 2006.

"We are pleased with our charter results during what is traditionally a soft quarter for ACMI markets," stated Hete. "The outlook for the remainder of the year is encouraging. We expect to deploy five more Boeing 767 in 2007 along with one in 2008 for a total of thirteen aircraft in this segment. Our new agreement with All Nippon Airways to place two Boeing 767 aircraft in Asia starting this month is expected to generate a minimum of $22 million in additional revenues per year and will provide us with the momentum to expand into the fast growing Asian cargo markets," continued Hete. Including the two aircraft under contract to All Nippon Airways Co., Ltd., three of the five remaining aircraft that ABX plans to add in 2007 are already under contract.

Other non-DHL revenues increased $3.6 million to $8.1 million in the first quarter of 2007 compared to the first quarter of 2006, driven by mail handling services for the United States Postal Service and aircraft maintenance services. During 2007, margins as a percentage of revenues declined due to a revenue mix weighted more toward lower-margin mail handling compared to 2006. Pre-tax earnings from other non-DHL activities declined slightly during the first quarter of 2007 compared to the first quarter of 2006 due to additional expenditures for supporting and expanding other non-DHL business opportunities.