Feb 26, 2021
Operator
Welcome to the Fourth Quarter 2020 Air Transport Services Group Incorporated Earnings Conference Call. My name is Hilda and I will be your operator for today.
At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.
. Please note that this conference is being recorded.
I will now turn the call over to Mr. Joe Payne, Chief Legal Officer of ATSG.
Mr. Payne you may begin.
Joe Payne
Good morning, and welcome everyone to our fourth quarter 2020 earnings conference call. We issued our earnings release yesterday after the market closed.
It's on our website atsginc.com.
Rich Corrado
Thanks Joe, and welcome everyone. I want to begin by again thanking our employees for the outstanding service they provided this past year to our customers under all kinds of adverse conditions.
We continue to invest more on safety and productivity measures to improve performance across all of our businesses. This is ATSG's culture and action.
We'll keep improving and innovating to improve service long after the pandemic ends. Additionally, all three of our airlines have flown vaccines and other COVID-related supplies in support of our customers.
For all of 2020, we exceeded our adjusted EBITDA goal with revenue and growth from all of our principal businesses. The pandemic continues to affect our results overall and our passenger flying in particular.
But demand for our Boeing 767 freighters both leasing and flying remains very strong and not just for those coming out of conversion every month. We are redeploying return freighters to new customers at a faster pace than before.
I have great confidence in our results for 2021 and beyond, based on the strongest order book in our history for our 767 freighters and support from customers who choose us to fly for them. But I'm also tempered by the knowledge that the end of the pandemic, has proven hard to predict, including the willingness of the flying public to return to the air in pre-pandemic numbers.
I'll have more to say about our outlook shortly. Quint Turner, our CFO is standing by to recap our 2020 results.
Quint?
Quint Turner
Thanks, Rich, and welcome to everyone on the call this morning. As Rich said, we beat our $490 million target for 2020 adjusted EBITDA by a healthy margin.
On a consolidated basis, fourth quarter revenues were down a bit from $403 million to $399 million. The principal factor was lower block hours for passenger flying at Omni from a year ago and ATI's combi flying.
Our fourth quarter GAAP earnings of $2.3 million or $0.04 per share basic, was substantially better than our loss of $41 million or $0.70 per share a year ago. The quarterly non-cash loss from revaluing our liability for the Amazon warrants was $38 million roughly half of what it was a year earlier.
We also booked $12 million in fourth quarter benefits from our 2020 CARES Act grants. Finally, we had a $4.5 million positive swing in our retiree benefit adjustment and a smaller loss from our joint venture than the prior year.
Interest expense was down for both the quarter and year. We had lower rates on our credit facility balances and lower debt levels overall than in 2019.
Depreciation and amortization expense increased $5 million for the quarter and $20.5 million for the year from more aircraft in service.
Rich Corrado
Thanks Quint. A year ago in the early stages of the pandemic, we took note of the risks it posed but advised you that our business model was resilient enough to adjust and we would achieve good results for the year.
That was true in those early days of 2020 and remains true now in early 2021 as we look ahead toward what we hope will be a year of recovery for the economy and the transportation sector as a whole. Despite continuing uncertainty, we expect our business model to provide another year of revenue and adjusted EBITDA growth in 2021.
When the pandemic took hold last year, we had to dial back our expectations. We were fortunate last spring and summer to pick up several short-term passenger charter assignments to offset the loss of commercial passenger charter demand resulting from the pandemic.
But as fall arrived the vacation and other commercial charter companies we typically serve were facing their own pandemic effects, which impacted our fourth quarter and will continue at a minimum through the first half of this year.
Operator
Thank you. The first question comes from David Ross from Stifel.
Please go ahead.
David Ross
Yes. Thank you and good morning, Rich and team.
Wanted to talk first I guess about the A321 freighter. Some are – I guess there's an article that DHL is already putting some into service overseas.
How do you expect to be able to compete with the others that are maybe already doing their conversions? And what's the appetite look like from the customers you're talking to over the next couple of years?
Rich Corrado
Yes. It's a good question, Dave.
So the A321, we're hoping to have the STC approval by the end of March. And there's only one other conversion house that's delivering aircraft right now and that's EFW and I think they have a couple of aircraft out there, one of which was produced for a lessor called Vallair and Vallair is leasing that aircraft to SmartLynx, which is the operator that's flying for DHL.
Our first aircraft are – that's in conversion right now, that's our prototype model is actually a Vallair aircraft as well and slated to go to SmartLynx. And so we believe that that will enter that same profile network.
In that article, I believe they indicated that SmartLynx was lined up for a couple more aircraft for this year. And so – and we believe – we welcome the competition as it relates to DHL and SmartLynx, looking at both aircraft.
We believe our design is superior. We worked with Precision and as an operator we focused on looking at this aircraft as the way an operator would want to view it.
And so there are some differences in our design that would make the aircraft more operator-friendly both on the sortation and container loading and also on the way the crews would utilize the aircraft both in jump seating and being able to have their luggage on the upper deck. So we welcome that opportunity.
We're hoping to start the production line midyear this year. We're also getting PEMCO, our conversion subsidiary that's part of our airborne maintenance and engineering services group, that's located in Tampa in the conversion business midyear as well and start a line going to deliver more aircraft.
Mike Berger
Yes. I would just add Rich that DHL has indicated they do plan to compare the airplanes as you mentioned.
David Ross
Okay. And then just a follow-up on that.
As we think about the opportunity over the next several years because the idea is that there's a lot of 757s being retired that need to be replaced. If you think about ATSG's revenue stream from the 321 conversions, are you expecting most of the business to come through the traditional ACMI route or the A plus CMI in CAM and the other segment, or is there going to be a bigger revenue stream coming out of PEMCO and the conversions?
And then how do you think about that on the 321 opportunity?
Rich Corrado
Yes. So initially beginning this year 2021, we'll be taking advantage of the joint ventures STC, so that we'll be participating in kind of the kit and the conversion piece of this.
On the touch labor side, as I said PEMCO will also be participating, so they'll be converting the aircraft directly. So those two segments will go into play this year.
We'll be in the market this year, call it the second half of the year, looking for – we're looking for feedstock now, but we'll be looking to make some transactions towards the second half of the year into 2022 to start building a leasing portfolio at CAM. The prognosis of whether we would fly the aircraft or not depends on our large customers or where they want us to fly it.
As we have in the past, we generally don't do a lot of spec work and throw aircraft onto our certificates to try to leverage new charter business. It's not a big robust piece of what we do.
And so we're going to move in that direction. Our existing – one of our existing customers, DHL does fly a lot of 757s as does UPS and FedEx.
There are a number of airlines around the world in Europe and in Asia that fly 757s as well. So the – on the kind of the operating and leasing side, there should be robust demand.
The other interesting thing and you see this in most situations with new conversions, is leasing companies that have passenger aircraft portfolios that are coming off lease, generally look to, whether they can get a second a third lease on an airplane passenger-wise. And if not, then they look to -- may look to convert that aircraft and create a new revenue stream and a new life frankly on the aircraft.
We've already gotten a lot of interest from leasing companies that have portfolios. Obviously, with the pandemic and the utility if you will of new leases and putting those passenger aircraft back into service is more challenged right now.
So, we're seeing an uptick certainly of interest on the conversion -- on the STC and conversion side from leasing companies looking to get in as well. So it's a unique stream that we're watching closely.
David Ross
Excellent. Thank you.
Operator
Thank you. Our next question comes from Jack Atkins from Stephens.
Jack Atkins
Great. Good morning.
Thanks guys. So I guess maybe just to kind of go back to the outlook for 2021, Rich or Quint, maybe if you want to take this as well.
Just curious, you're absorbing a fair amount of costs related to the passenger charter and the combi flying that I guess that the hope is that will come back at some point once the world normalizes. Is there a way to think about the headwind that that's maybe serving the profitability in 2021?
Just kind of help us think about that, because the idea would be one day that would return back closer to normal and you'd be able to absorb that overhead and that would go from being a headwind to more of a tailwind.
Quint Turner
Yes. I mean, Jack this is Quint.
I mean, as you noted, if we have a headwind going into this year, it's related strictly to the pandemic and the passenger operations. And we talked a lot in earlier quarters about our successful efforts to really mitigate some of that through taking the opportunity to do some charters.
Some of those charters were also driven by pandemic requirements, PPE and taking -- and repatriating citizens and so forth. And so, we saw more and I think we told you guys when we talked in November or October, we expected to see more of that in the fourth quarter because, we didn't foresee as many of those opportunities.
And that's kind of what we're looking at, as we head into at least the first half of this year. Our view is that we're going to continue to see those pandemic effects.
The primary places you see them obviously is in Omni's commercial operations in particular and also in the combi flying that we do. I mean, we've been -- we've seen our hours drop for example on the combi by something like 40% over what they had been.
And the opportunities to mitigate that, while they may come about, there may be some of those or not as clearly visible as they were heading into the pandemic. So that's kind of the -- I think Rich mentioned that, the first half we're expecting about 43% of our EBITDA in the first half and 57% in the second and that reflects our view that we'll see recovery in some of those opportunities as we move forward.
And we also get more scale as we put additional CAM leases in place, moving through the second half of the year. Some of the opportunities we had early on in 2020 for those charters, tended to be pretty profitable opportunities.
As is often the case with charters that need to be done in a compressed time frame, you typically are able to realize a little better margin on some of those. And so, that again presents a little bit of a headwind going into the coming year.
But in terms of where we invest our capital for aircraft, as Rich said, on the cargo side, we've not really seen any more robust environment for demand than we're seeing right now. And we're achieving the returns we're getting there.
And of course that was also a big part of our story last year.
Jack Atkins
Absolutely, absolutely. And all that makes sense Quint and thanks for that additional sort of color there.
I mean, Rich, when you sort of think about where the business is today, you've got I think just an unprecedented level of visibility into customer demand. And I think there's a concern in the market that, air freight has been a beneficiary from the pandemic to some degree.
But I guess, what your customers are telling you with their desire to lease planes in 2022, and then you've got visibility you said through 2025 for multiple aircraft, what is that telling you about the stickiness of what's happening in the business right now and the rise of e-commerce penetration not just in the United States but more globally?
Rich Corrado
Well, Jack, I think before the – even before the pandemic, e-commerce was dominating growth in air cargo. If you look at air cargo in general, you've got two broad segments generally air cargo, which is your intercontinental large aircraft moves that ebb and flow with global trade.
And you saw in 2019, the market dipped by 3% and you saw the impact that that had on large charter operators that have large aircraft and they had a very rough and rocky year. 2019 was a record year for us, and 2020 was an even better year because we're finally tuned towards express and that's being powered by e-commerce.
So that's the other second – the other segment is this express network operator. And that's over 50% of the global fleet of aircraft is with the integrators.
And so – and that's where we play. Now, if you look at e-commerce now, it's growing significantly.
It's up – depending on which analyst you look at it's up 30% to 40% in the US, depending on which month you look at and it's – in 2020. Obviously, that was powered by the pandemic, but it's bought – it's brought a whole host of new consumers that would not have otherwise used e-commerce that are now using e-commerce and are predicted to stay and continue to use that even when the pandemic is finally over.
So that stickiness in your words is predicted to stay. What's great for us and we've talked about this a lot is we're not – other than our passenger operations on the cargo side we don't – we're not a big charter operator.
We don't have a lot of assets hanging around waiting for charters. They're all utilized on – generally on CMI for customers.
And so what's great about what's happening with our business model is this spike in cargo is leading to long-term dry leases. So long after this pandemic's over, we'll still be getting very strong cash flow from these aircraft that are leased, and will be leased all over the world both into the large integrated cargo networks and into networks in other parts of the globe.
I don't know, Mike, if you have more –
Mike Berger
I'd just add a little bit and then – Jack I appreciate you bringing up some of the growth opportunities that happened on e-commerce. As Rich said, it really stands up for what our model is all about, right?
I mean we saw great support and great growth pre-pandemic and certainly through the pandemic, and we're going to see it coming out of it. But the statistical side of e-commerce, you've gone from 14% e-commerce in terms of retail U.S.
retail sales in 2018, all the way to well over 21% now. But what we're excited about is that from a global standpoint, retail e-commerce sales across the globe are really starting to propel in places that, we're starting to grow into.
So for Latin America, for example, over 36% growth in e-commerce, and we talked about we're putting airplanes down in that part of the world into places like Africa, where they're just under 20%. So we see great e-commerce growth across the globe.
And as we penetrate, new markets that's what makes us really excited. And as Rich talked about, it's not only our dry lease piece of it it's where they're going to and who our customers are serving.
And that plays right into where the growth engine is and that's e-commerce and m-commerce across the board.
Jack Atkins
Okay. Okay.
That makes sense. Maybe last question, and I'll turn it over.
But just given the level of demand that you're seeing for your assets right now, is that giving you incremental positive opportunities to maybe price more aggressively on some of these leases? That's question one.
Question two, are you seeing opportunities to maybe extend the term of these leases? I think the Amazon leases are 10 years at least the most recent leases.
What about some of these other customers? Are they multiyear leases?
Could you maybe kind of help us kind of think about that? So curious on pricing and then lease terms as well.
Mike Berger
Yes. We see our leases are normally, Jack, five to seven-plus years or so.
And we have seen a tick-up for our lease -- our monthly leases. So you're absolutely right about that.
The demand has allowed us, not only to stabilize prices, but also take increases. The other thing it's done, it's allowed us to -- on our re-leases we've gone out and been able to -- as leases end and we go into new ones with different customers or the same customers, that's allowed us also to go out for multiple years, five-plus years, not only on our 300s but even on our 200s, which has really done a great job and it still remains a very reliable plane.
So, yes, no doubt about it. The market has certainly allowed us to take our rates up slightly and also allow us to take our lease terms out into multiple years for the future.
Jack Atkins
Okay. That's great to hear.
Thanks again for the time, guys. Congratulations on a great 2020.
Mike Berger
Thank you, Jack
Rich Corrado
Thanks, Jack.
Operator
Thank you. Our next question comes from Helane Becker from Cowen.
Helane Becker
Thanks very much. everybody I think in the time.
I just have a couple of questions. When you're out there looking at feedstock are you seeing a lot of competition to the same aircraft?
And is it driving up prices?
Rich Corrado
That's a good question, Helane. It's interesting, because there's a lot of talk in the market about, because of the pandemic operators are looking to get out of aircraft or they're parking aircraft and looking to flip airplanes in the cash flow, et cetera, et cetera.
But frankly, we have not seen any spike in demand related to aircraft. There's -- the competition we tend to see out there is from the large integrators and operators.
We don't see it from -- necessarily, from other leasing companies. The other thing is, we did this program with Air Canada that we thought was unique.
We were in the process of acquiring two Air Canada jets from a leasing company and then we got into a conversation with Air Canada directly. And one of the things we thought about, as a result of the pandemic, combination carriers or carriers that were combination carriers, handling both passengers and cargo, or even passenger carriers, were going to rethink that -- what cargo means and cargo revenue means to their overall growth profile, particularly, as you saw in the pandemic, where a lot of them were -- were customizing, if you will, their passenger jets to operate them as freighters.
So we got in this deal with Air Canada where we acquired their two 767-300s from them. We're going to convert them and then we're going to lease them back.
And so, that was a unique program and we've talked to a few other operators about the potential to do that too. So that is one area where, there's kind of some availability, but it's a stickiness availability where we could take advantage of those types of things.
On the competition side, some of the things that we see is that, some operators that are looking for feedstock only want really young airplanes. Your Chinese operator, as an example, SF Express, they want an aircraft that's 15 years or younger and we'll take 15 years or older.
So we don't really butt heads with them when we're bidding on things. But we've been able to -- we've got our order book full for this year.
We've got all the feedstock aircraft we need to deliver, all the airplanes that we're delivering this year and we're working on 2022 right now. We've got slots lined up for 2022 and we've got, probably, about half of them pulled with feedstock for 2022.
So where we sit right now in the end of February, we're in really good shape for next year. And that's what we're planning and looking forward to as we go forward.
I don't know, Mike, if you have any --
Mike Berger
The only thing I would add Rich is that we -- there's plenty of feedstock in regards to other engine types and we're in the midst of evaluating Pratt-powered 767-300s. Traditionally, the majority of our fleet, as you guys know, is GE-powered and we're now taking a hard look at the Pratt-powered engine.
Now we do fly three today in our ABX network today, so we're familiar with it and it flies just fine from a reliability standpoint. So we're not concerned about feedstock, specifically when we think about the broader piece of it in engine types and we'll go from there.
Helane Roukas
That's very helpful. Thank you.
I just have two clarifying questions if you don't mind. On the Air Canada leases, are you -- because they were leased aircraft before.
So do you just keep the same monthly lease rate or do they renegotiate that lease rate with you?
Mike Berger
The two aircraft that we acquired from them they were owned. So they had some fleet that was owned and some of that was leased.
And so these two particular aircraft are owned and were -- those are the ones we bought.
Helane Roukas
Okay. So when they pay you every monthly rent rate is that negotiated?
How is that negotiated I guess I'm trying to figure out?
Quint Turner
It's no different Helane that any feedstock plan we would buy and convert and lease at a market rate.
Mike Berger
Yeah, we purchase the airplane. We'll convert the airplane Helane and the lease won't commence until we redeliver the airplane back to them and that's when they'll start paying the monthly rent.
Helane Roukas
Okay. That's very helpful.
Thank you. And then just on the pilot pay increase, is that all in January then that full $7 million or $8 million you mentioned is that all in the first quarter?
Quint Turner
No that's an annual impact Helane.
Helane Roukas
Okay. All right.
So we should think about it as like whatever $2 million a quarter kind of thing?
Quint Turner
Exactly.
Helane Roukas
Perfect. All right.
Thanks guys.
Rich Corrado
Thanks, Helane.
Quint Turner
Thanks, Helane. Bye.
Operator
Thank you. The next question comes from Steve O'Hara from Sidoti & Company.
Steve O'Hara
Yeah. Hi, good morning.
Thanks for taking the questions.
Rich Corrado
Good morning,Steve.
Steve O'Hara
Good morning. Just on the CARES Act benefit that you exclude from earnings, I mean is there some sort of -- is there a mismatch there in terms of the -- you're kind of carrying extra salaries things like that.
I guess I can understand excluding the benefit, but you're also carrying heavier expenses too. I mean, is there the right way to think about maybe what EBITDA would have been kind of on an apples-to-apples basis, if you kind of factor in the benefit from CARES and what that offset in terms of the cost that you're carrying the extra cost that you were carrying?
Quint Turner
Thanks, Steve. It's a good question.
The benefit is based on the formula that's in the legislation and it tends to be based on a view more of the total payroll. And when it comes to impacted positions that might be furloughed due to reductions that's more predicated on the -- those that are direct involved with loss of flying.
So it's not a perfect -- it's not as if you can equate the benefit with the dollar-for-dollar or anything with the potential furloughs.
Steve O'Hara
Okay. I guess I'm just trying to figure out maybe with the negative impact on the quarter was from carrying those extra salaries.
Quint Turner
Yes. I mean it depends upon I guess the timing and the level of impact to specific operations comm and so forth and we haven't really -- we haven't calculated exactly what that might have been.
It's just more of -- we want to make sure that you understand the relationship between what's in and what's out of our adjusted results and the rest of the impacts.
Steve O'Hara
Okay, okay. And then just maybe on the pandemic headwind that you're considering for 2021.
And I had a user error here on the call early, but is there a way to think about what you're factoring in kind of in the first half of the year? I think you said 57% in the second half.
How do you think about the -- what you're factoring in? Without the pandemic what's the run rate earnings look like, or at least what are you factoring in for the pandemic in the first half of the year?
Quint Turner
Yes. Again, I guess the -- if you look at where the year-over-year changes are and what we've got in there, the biggest impacts we've said are obviously the passenger portions of our operation, which is Omni and which is also ATI.
We haven't really, you're talking about an earnings impact or are you talking about an EBITDA impact, or what was your question?
Steve O'Hara
Either.
Quint Turner
Yes. I mean, it's tough to, I guess, calculate exactly what is related to that and we haven't.
If we were going to put something like that out, I think, we probably would have included in the materials we've published last night Steve. We can tell you that the biggest year-over-year drop is at Omni.
And if you look at the portion of their business for example that is commercial passenger driven, it's probably about 20% of their revenue, which is about $100 million a year. And you can figure an EBITDA margin on that revenue.
If you -- which -- you can see what the overall EBITDA margin is. If you look at the combi flying, its flight hours are down about 40%.
You're talking about probably another EBITDA margin on about call it $40 million of revenue for the combi. So you've probably got about $140 million of revenue that's impacted at an EBITDA margin.
And that's about as good a gauge as I could give you because to do a more refined estimate would involve a lot of assumptions. But if you apply that to that that might be one way to think about the EBITDA impact related to the pandemic.
And remember we're expecting that to improve in the second half. We've made assumptions in our guidance about an improving picture in the second half.
Mike Berger
I mean, the other headwind you have around the commercial Omni business is that just the competitive nature of it with all the available capacity that's in the marketplace as they go for opportunities. In the first half, it will come at a lower profitability, but those headwinds will ease as we progress through the balance of the year.
Quint Turner
Yes, okay. Certainly, the good news is if you look beyond if you believe the pandemic as we do, we'll see that lessening impact in the second half.
And you look out very far at all into 2022, those aren't impactful beyond the pandemic period. And in the meantime other portions of our business particularly the cargo portion well as Mike and Rich just described is performing extremely well and continuing to make gains looking into 2022.
Steve O'Hara
Okay. No, that's helpful.
And then two last ones. Just if you think about the run rate heading into 2022, I mean, it should seem like you should have, I guess, if I take the second half and maybe annualize that and haircut it a little bit for maybe first half is slower typically, I mean, it seems like you have a pretty good runway for 2022 EBITDA.
I mean, is there a way to think about the run rate heading into 2022?
Quint Turner
Well, I think we're going to -- we're -- I don't think today we'd necessarily want to give you a 2022 guidance Steve. But again, assuming that the pandemic impacts clear up certainly with the onset of at least 15 additional leased aircraft and you can kind of know what those contributions are like on a per unit basis.
I think you're -- you can sort of make your own assumptions there. We'll say more about it obviously as we move through the year, and we get more visibility on exactly where the pandemic effects are going and at what rate.
But I think it's true that if you assume that things are resolved on that issue by the end of the year, 2022 would certainly be accelerated because you wouldn't have these passenger flying impacts that we're talking about.
Mike Berger
I mean, you get back to the core of it. With the number of airplanes that we're going to put into service in 2021, the number that we're providing in terms of high-single digits for 2022, the feedstock 13 airplanes, all plays to the model that Rich talked about in the beginning of really turnkey solutions, right, because the more airplanes we're putting out in the marketplace, specifically customers that not only are leasing airplanes from us but we're also doing the maintenance on through our MROs, as well as our logistics company, as well as flying and when our customers need them.
Really, really pleased to how the model has performed and will perform even at higher levels with incremental numbers.
Steve O'Hara
Okay. And maybe just lastly on the A321.
How long does that take to get on your certificate, or – and is there in terms of the airlines how long does it take them to get up to speed? If you were to buy the aircraft tomorrow when could you start flying it for customers?
Rich Corrado
It generally takes about six to nine months to get an aircraft on certificate with an airline. And usually you need an MSN serial number to do that.
So that's how long it takes to get at that. And that includes training pilots and getting your maintenance, your flight, your operations, your ground and your cargo handling manuals all straightened out and approved by the FAA.
That's kind of what the view would look like.
Steve O'Hara
Okay. Got it.
Thanks very much for the time.
Rich Corrado
Thanks, Steve.
Operator
Thank you. The next question comes from Chris Stathoulopoulos from Susquehanna.
Chris Stathoulopoulos
Good morning. Thanks for taking my question.
Rich Corrado
Hey, Chris.
Chris Stathoulopoulos
So Quint or Rich I understand the conservatism around the EBITDA guide for this year given the uncertainty with COVID. But assuming the vaccine rollout here continues to move forward and we're at let's say 50% of the US population has at least one shot by mid-July.
Could you walk us through what your utilization assumptions are for commercial passenger and US military flying in that $525 million? And of the 15 dry leases this year how many of those are CMI?
And for 2022 just – I think you said you have nine plans in terms of dry leases. And of those what do you have locked in for CMI?
Quint Turner
Yes. Rich do you want to take the lease part and I'll take a shot at the...
Rich Corrado
Yes. Out of the 15 leases this year 11 will be at this point CMI operations all for Amazon.
And then in – right now on the nine going in next year we're – there's no – nothing firm on the CMI. And I should also say on the remainder of this year there may be additional CMI for other customers as well.
So we may have an upside on the CMI both in 2021 and 2022.
Chris Stathoulopoulos
Okay. And on the utilization assumptions?
Quint Turner
I don't know Rich, if you mentioned but we do anticipate we might have a shot to fly some of the – a couple of the Amazon-owned planes.
Rich Corrado
Correct.
Quint Turner
Yes, right, right. Okay.
So 13. I think we had assumed about – that was – maybe as many as 13 will be added to CMI this year.
Rich Corrado
Right. So there may be an upside there as well.
On the utilization piece, it's not just US. And part of the disruption of service and activity has been particularly on the combi side and even with Omni, when they're flying for the military, it's not that the – on the combi side, let's take that first.
It's not that the military doesn't want to fly. It's that the venues that they're flying into have significant restrictions: Singapore, Bahrain, Ascension Island, where for us to fly in, the pilots would get quarantined for an excessive amount of time, those types of things.
And so it's a situation where it's not that the customer doesn't want to fly into these venues it's they're unable to effectively and productively do that. And the same goes for some of the Omni flying.
Some of the airports they normally would service are not allowing foreign operators to fly through. And so that's disrupted on the military side some of their opportunity going forward.
So it's not just the vaccine rollout in the US. It's the success of the vaccine in other countries and in the military for which we would – for those areas which we fly to.
So that's what's impacting kind of the utilization on how we feel we'll rollout of this. We have some commercial customers such as, Vacations Hawaii that was a regular charter business for many years for Omni flying between Honolulu and Las Vegas.
They're projecting mid-year to be back in service. But depending on, how the pandemic goes that may get disrupted.
And so we don't have that in our first half, but we do have some of that revenue in our second half, is a good example. And we're in regular dialogue with that customer about their opportunity.
So it's just a matter of how the markets are in terms of -- and how the public is buying into going -- utilizing that vacation type option. So those are kind of some examples of how we're thinking about getting utilization improved in the second half of the year.
Chris Stathoulopoulos
Okay. And of the 116 aircraft, I think you have in your release for this year-end that's nine additional for next year.
Should we think about the fleet around 125, 124-ish for 2022?
Quint Turner
I think, we'll add to the nine Chris. That's sort of what we currently have…
Mike Berger
Correct.
Quint Turner
… are working specifically on. But I think that, it'll probably -- we'll add a few aircraft to that.
Chris Stathoulopoulos
Okay. And then, Quint, cash flow from operations for this year ex-PSP2 and the aircraft impairment?
Quint Turner
Well, of course, it'll all be in our cash flow statement here, that we'll publish on Monday with the K. But hang on here.
Are you talking for 2020 or 2021?
Chris Stathoulopoulos
For 2021, I'm sorry, for last year 2020.
Quint Turner
For last year, yeah, cash flow from operations is about what $512 million for the full year. Now that includes about $76 million of CARES proceeds.
Chris Stathoulopoulos
Okay, all right. And then, I can just take out the aircraft impairment.
Last question, just how should we think about G&A maintenance and interest expense for 2021? Thanks.
Quint Turner
Interest expense is rough -- roughly in terms of cash interest, because we do have some non-cash components. In terms of 2021, you're looking at around just over $50 million call it, $53 million of cash interest expense.
And as far as -- what was your other question on D&A?
Chris Stathoulopoulos
Maintenance and D&A.
Quint Turner
You're not -- you're talking about CapEx, or you're talking about the Omni expense side?
Chris Stathoulopoulos
On the expense -- just for modeling here on the income statement, I'm guessing that there's going to be some maintenance associated with the new -- as you ready the new 767s.
Quint Turner
Yeah. I really -- I don't know, if we want to get into the specific modeling stuff here.
Obviously, we can talk about that later, I guess Chris. I don't have an income statement here in front of me for the 2021 budget that breaks it down that way.
Chris Stathoulopoulos
Okay. Thanks for the time everyone.
Quint Turner
Okay. Thank you.
Operator
Thank you. We have no further questions at this time.
I will turn the call to Mr. Rich Corrado for final remarks.
Rich Corrado
Thank you. I'd like to again thank all of the employees at ATSG.
All of our companies have been operating at full speed during the pandemic delivering essential transportation, maintenance and logistics services to the economy. We have delivered for our customers and for our shareholders.
I know I speak for everyone at ATSG, when I say, we're proud of the results achieved in 2020. And we're confident, that we'll do better this year.
Our strategy has always been about long-term cash flow. And that's not going to change, simply because of a pandemic.
We hope to see many of you online via Zoom or other investor conferences this spring. And we thank you for your support of ATSG.
Operator
Thank you. Ladies and gentlemen, this concludes today's conference.
We thank you for participating. You may now disconnect.