ABX Air posted a 14.3% profit increase in the first quarter to $8.1 million, rebounding from a difficult 2005 that saw profits drop as primary customer DHL Worldwide Express struggled to compete against FedEx and UPS in the US market.The carrier earned $7.1 million in the year-ago period. "Our operating results reflect the success of our initiatives to drive down costs and improve productivity in our sort, line-haul and air operations for DHL," President and CEO Joe Hete said.

ABX, which was spun off from Airborne Express when the delivery company's ground operations were acquired by DHL in 2003, is the largest airline serving DHL's express operations in the US. DHL lost a combined $950 million in 2004 and 2005 on US operations and ABX suffered as a result. DHL's troubled integration of two US air hubs into one site at ABX base Wilmington, Ohio, was cited as a big driver of US losses.

ABX said first-quarter revenues grew 6.5% to $369.2 million, with non-DHL 767 charter revenues jumping 78% to $3.9 million. Operating expenses rose 6.5% to $359.4 million and operating income improved 6.6% to $9.8 million. While the carrier has said it plans to build up non-DHL operations, DHL contracts accounted for $360.8 million of the revenues. ABX said it worked with DHL to optimize aircraft routing and remove costs from ground operations.

DHL, hugely profitable in most of the world, projects that it will lose another $360 million in the US this year but hopes to break even in the market by the second half of 2007.