What changed in this filing

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Item 1. Business

2022-06-28 compared with 2021-06-25 · 45 added, 21 removed, 165 unchanged (29% of the section changed)

4 unchanged sentences

• Ground equipment sales, which manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the military and industrial customers;

• Commercial aircraft, engines and parts, which manages and leases aviation assets;

• Commercial jet engines and parts, which manages and leases aviation assets;

supplies surplus and aftermarket commercial jet engine components;

4 unchanged sentences

Further, Corporate and other is also comprised of insignificant businesses that do not pertain to other reportable segments.

Wolfe Lake HQ, LLC.

On December 2, 2021, the Company, through its wholly-owned subsidiary Wolfe Lake HQ, LLC ("Wolfe Lake"), completed the purchase of the real estate located at 5000 36th Street West, St.

Louis Park, Minnesota for $13.2 million pursuant to the real estate purchase agreement with WLPC East, LLC, a Minnesota limited liability company dated October 11, 2021.

The real estate purchased consists of a 2-story office building, asphalt-paved driveways and parking areas, and landscaping.

The building was constructed in 2004 and contains an estimated 54,742 total square feet of space.

Air T's Minnesota executive office is currently located in the property.

With this purchase, the Company assumed 11 leases from existing tenants occupying the building.

Wolfe Lake HQ, LLC is included within the Corporate and other segment.

See Note 2 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this report.

GdW Beheer B.V.

On February 10, 2022, the Company acquired GdW Beheer B.V.

("GdW"), a Dutch holding company in the business of providing global aviation data and information for EUR 12.5 million.

The acquisition was completed through a wholly-owned subsidiary of the Company, Air T Acquisition 22.1, LLC ("Air T Acquisition 22.1", “Subsidiary”), a Minnesota limited liability company, through its Dutch subsidiary, Shanwick B.V.

("Shanwick"), and was funded with cash, investment by executive management of the underlying business, and the loans described in Note 14 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this report.

As part of the transaction, the executive management of the underlying business purchased 30% of Shanwick.

Air T Acquisition 22.1 and its consolidated subsidiaries are included within the Corporate and other segment.

See Note 2 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this report.

Unconsolidated Investments

On May 5, 2021, the Company helped form an aircraft asset management business called Contrail Asset Management, LLC (“CAM”), and an aircraft capital joint venture called Contrail JV II LLC (“CJVII”).

The Company and Mill Road Capital (“MRC”) agreed to become common members in CAM.

CAM serves two separate and distinct functions:

1) to direct the sourcing, acquisition and management of aircraft assets owned by CJVII (“Asset Management Function”), and 2) to directly invest into CJVII alongside other institutional investment partners (“Investment Function”).

For the Asset Management Function, CAM receives origination fees, management fees, consignment fees (where applicable) and a carried interest.

For its Investment Function, CAM has an initial commitment to CJVII of approximately $53.0 million, which is comprised of an $8.0 million initial commitment from the Company and an approximately $45.0 million initial commitment from MRC.

Any investment returns are shared pro-rata between the Company and MRC.

See Note 24 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this report.

The Company also has ownership interests in Insignia Systems, Inc.

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See Note 10 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this report.

On September 30, 2019, we completed the sale of 100% of the equity ownership in the Company's wholly-owned subsidiary, Global Aviation Services, LLC ("GAS"), which previously constituted the ground support services segment.

See Note 2 , Discontinued Operations, of Notes to Consolidated Financial Statements included under Part II, Item 8 of this report.

Each business segment has separate management teams and infrastructures that offer different products and services.

We evaluate the performance of our business segments based on operating income and Adjusted EBITDA.

We evaluate the performance of our business segments based on operating income (loss) and Adjusted EBITDA.

Discontinued Operations

On September 30, 2019, the Company completed the sale of Global Aviation Services, LLC ("GAS").

The results of operations of GAS are reported as discontinued operations in the condensed consolidated statements of operations for the year ended

March 31, 2021.

Unless otherwise indicated, the disclosures accompanying the condensed consolidated financial statements reflect the Company's continuing operations.

Certain financial data with respect to the Company’s geographic areas and segments is set forth in Notes 21 and 22 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this report.

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The principal place of business of Jet Yard, LLC (“Jet Yard”) and Jet Yard Solutions, LLC ("Jet Yard Solutions") is Marana, Arizona.

The principal place of business of Wolfe Lake is Minneapolis, Minnesota.

The principal place of business of GdW is Amsterdam, the Netherlands.

We maintain an Internet website at http://www.airt.net and our SEC filings may be accessed through links on our website.

The information on our website is available for information purposes only and is not incorporated by reference in this Annual Report on Form 10-K.

Acquisitions .

Cadillac Casting, Inc.

On November 8, 2019, the Company made an investment of $2.8 million to purchase a 19.9% ownership stake in CCI.

The Company determined that CCI is a variable interest entity and that the Company is not the primary beneficiary.

This is primarily the result of the Company's conclusion that it does not have the power to direct the activities that most significantly impact the economic performance of CCI.

Accordingly, the Company does not consolidate CCI and has determined to account for this investment using equity method accounting.

See Notes 10 and 14 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this report.

Overnight Air Cargo.

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On June 1, 2021, MAC and CSA entered into new dry-lease agreements with FedEx which together cover all of the aircraft operated by MAC and CSA and replaced all prior dry-lease service contracts.

These dry-lease agreements provide for the lease of specified aircraft by MAC and CSA in return for the payment of monthly rent with respect to each aircraft leased, which monthly rent was increased from the prior dry-lease service contracts to reflect an estimate of a fair market rental rate.

These dry-lease agreements provide for the lease of specified aircraft by MAC and CSA in return for the payment of monthly rent with respect to each aircraft leased, which monthly rent reflected an estimate of a fair market rental rate.

These dry-lease agreements provide that FedEx determines the type of aircraft and schedule of routes to be flown by MAC and CSA, with all other operational decisions made by MAC and CSA, respectively.

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MAC and CSA operate in a niche market within a highly competitive contract cargo carrier market.

MAC and CSA are two of seven carriers that operate within the United States as FedEx feeder carriers.

MAC and CSA are two of nine carriers that operate within the United States as FedEx feeder carriers.

MAC and CSA are benchmarked against the other five FedEx feeders based on safety, reliability, compliance with federal, state and applicable foreign regulations, price and other service-related measurements.

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The market for aviation ground service equipment is highly competitive.

Certain of GGS' competitors may have substantially greater financial resources than we do.

Certain of GGS' competitors may have substantially

greater financial resources than we do.

These entities or investors may be able to accept more risk than the Company believes is in our best interest.

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The Company has continued its efforts to reduce GGS’s seasonal fluctuation in revenues and earnings by broadening its international and domestic customer base and its product line.

In July 2009, GGS was awarded a new contract to supply deicing trucks to the USAF.

In October 2021, GGS was awarded a new contract to supply deicing trucks to the USAF.

This agreement renewed GGS' original agreement with the USAF entered into in July 2009.

Per the contract, GGS has to provide pricing that will be contractual for each one-year period within the years that the contract is awarded.

Further, based upon volume of commercial items purchased during that year, there may be discounts calculated into the pricing and are reflective of the submitted pricing.

This contract expired on July 13, 2020, and GGS has submitted its bid for contract renewal.

As of March 31, 2021, the USAF has not yet responded to the bid.

GGS sold a total of 47 and 26 deicers under this contract with the USAF including both GL 1800 and ER 2875 models during fiscal years ended March 31, 2021 and March 31, 2020, respectively and all of the units were accepted by the USAF.

GGS also completed and delivered an additional USAF delivery order for both GL 1800 and ER 2875 models during the first quarter of fiscal year 2022.

With all option years expected to be executed by the government, this contract would expire on October 21, 2027.

GGS sold a total of 7 and 47 deicers under the previous contract with the USAF including both GL 1800 and ER 2875 models during fiscal years ended March 31, 2022 and March 31, 2021, respectively and all of the units were accepted by the USAF.

GGS has already received confirmed orders of 18 deicers under the new agreement and currently expects delivery of both GL 1800 and ER 2875 models to begin in the second quarter of fiscal year 2023.

Commercial Jet Engines and Parts.

3 unchanged sentences

Contrail Aviation Support acquires commercial aircraft, jet engines and components for the purposes of sale, trading, leasing and disassembly/overhaul.

Contrail Aviation holds an ASA-100 accreditation from the Aviation Suppliers Association.

As of March 31, 2021 and March 31, 2020, Contrail contributed approximately 18% and 31% of the Company's total consolidated revenue for the years then ended, respectively.

Contrail holds an ASA-100 accreditation from the Aviation Suppliers Association.

Jet Yard and Jet Yard Solutions offer commercial aircraft storage, storage maintenance and aircraft disassembly/part-out services at facilities leased at the Pinal Air Park in Marana, Arizona.

55 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business