Category Archives: Atlas Air Worldwide Holdings

Atlas Air Worldwide reports second quarter adjusted net income of $29.4 million

Atlas Air Worldwide Holdings, Inc. (Atlas Air and Polar Air Cargo) (New York) today announced adjusted net income attributable to common stockholders of $29.4 million, or $1.17 per diluted share, for the three months ended June 30, 2015, compared with $15.9 million, or $0.63 per diluted share, for the three months ended June 30, 2014.

Atlas Air Worldwide logo

On a reported basis, net income attributable to common stockholders in the second quarter of 2015 totaled $28.4 million, or $1.13 per diluted share, compared with $29.6 million, or $1.17 per diluted share, in the year-ago quarter.

Free cash flow of $68.5 million in the second quarter of 2015 compared with $59.2 million in the second quarter of 2014.

“Earnings in the second quarter were driven by contribution and margin strength in ACMI, Charter and Dry Leasing,” said William J. Flynn, President and Chief Executive Officer.

“We are seeing good demand for our aircraft and services as we enter the second half of 2015, as many of our customers are outperforming the overall market. We are working closely with our customers to provide them with the most efficient aircraft and effective operating services for their needs.

“As we gather additional insight into second-half demand, yields and military requirements, we continue to look forward to a strong year and a significant increase in earnings compared with 2014.”

Responding to market demand and customer requirements, we are implementing several previously announced fleet initiatives that are incorporated in our framework outlook for the year: placing an additional 747-400 freighter in ACMI service with DHL Express at the start of the third quarter; acquiring a new 747-8 freighter scheduled to be delivered to us in November; returning an owned, unencumbered 747-400 converted freighter to active service to meet additional Charter demand; securing a short-term operating lease on a second 747-400 converted freighter in Charter with more favorable terms; and expanding our Titan Dry Leasing portfolio by acquiring and converting two 767 passenger aircraft into freighter configuration. The freighters will be leased to DHL on a long-term basis when they are delivered in the fourth quarter.

 

Second-Quarter Results

Revenue and direct contribution in ACMI in the second quarter benefited from an increase in block hour volumes, driven by the start-up of four additional 767 CMI aircraft and an improvement in 747 cargo aircraft utilization. Segment contribution also benefited from lower heavy maintenance expense. These were partially offset by a reduction in revenue per block hour, which reflected the impact of payments received from a customer in 2014 in connection with the return of an aircraft as well as an increase in CMI flying in 2015.

In Charter, significantly higher segment revenues reflected an increase in commercial cargo demand and improvements in military passenger and cargo demand. In addition, segment contribution benefited from those higher flying levels and a reduction in heavy maintenance expense. The decrease in revenue per block hour was primarily driven by the impact of lower fuel prices.

In Dry Leasing, revenue and profitability grew as we realized revenue from maintenance payments related to the scheduled return of a 757-200 cargo aircraft in April. This aircraft was subsequently leased to DHL Express on a long-term basis during the quarter.

Reported earnings for the second quarter of 2015 included an effective income tax rate of 31.0%, which reflected our continued reinvestment of the net earnings of certain foreign subsidiaries outside of the U.S.

Half-Year Results

For the six months ended June 30, 2015, adjusted net income attributable to common stockholders totaled $55.2 million, or $2.20 per diluted share, compared with $27.1 million, or $1.07 per diluted share, for the six months ended June 30, 2014.

On a reported basis, first-half 2015 net income attributable to common stockholders totaled $57.6 million, or $2.29 per diluted share, compared with $37.5 million, or $1.49 per diluted share, in the first half of 2014.

Free cash flow totaled $148.8 million in the first six months of 2015 compared with $96.1 million in the first six months of 2014.

Liquidity and Capital Resources

At June 30, 2015, our cash, cash equivalents, restricted cash and short-term investments totaled $554.9 million, compared with $330.7 million at December 31, 2014.

The change in position reflected net cash of $171.1 million provided by operating activities; net cash of $104.4 million provided by financing activities, which included $99.1 million of debt payments; and net cash of $59.4 million used for investing activities.

In June 2015, we issued $224.5 million of convertible senior notes due June 2022 with a cash coupon of 2.25%. We used a portion of the approximately $218 million of net proceeds from the offering in June to fund the $16.6 million net cost of convertible note hedges and warrants related to the notes. These transactions are intended to offset any actual dilution from the conversion of the notes and to effectively increase the overall conversion price from $74.05 to $95.01 per share.

During the third quarter of 2015, we expect to use approximately $113 million of the net proceeds to retire higher-rate Enhanced Equipment Trust Certificates (EETCs) related to five of our 747-400 freighter aircraft. The redemption amount gives effect to the company’s ownership interests in the EETCs being retired, which have an average cash coupon of 8.1%.

We expect to use the remaining net proceeds from the convertible note issuance for working capital and capital expenditures, repayment or refinancing of debt, and general corporate purposes.

Outlook

We are encouraged by our strong first-half performance. We are seeing good demand for our aircraft and services this quarter and for the remainder of the year. And we continue to anticipate significant growth in adjusted diluted earnings per share in 2015.

On a sequential basis, we expect earnings per share in the third quarter of 2015 to be slightly better than our second-quarter 2015 adjusted earnings, followed by further earnings improvement in the fourth quarter.

Taking our first-half 2015 earnings strength into account, we continue to expect approximately 55% of our earnings to occur in the second half.

In addition, we anticipate that block-hour volumes this year will increase approximately 10% compared with 2014, including the impact of the 747-8 freighter scheduled to be delivered in November and 747-400BCF that we returned to service at the end of the second quarter. More than 70% of our total block hours should be in ACMI and the balance in Charter. Our ACMI outlook reflects expected growth in both 747 freighter operations as well as CMI flying. Our Charter outlook reflects our strong presence in the global charter market and military demand that is holding up well compared with 2014 levels.

In Dry Leasing, our portfolio is expected to include our recent acquisition and subsequent conversion of two 767 passenger aircraft to freighter configuration. Following their conversion, which should be completed during the fourth quarter of this year, the aircraft will be leased to DHL Express.

Given the flying levels that we anticipate, we continue to expect that aircraft maintenance expense in 2015 should total approximately $190 million. In addition, depreciation should be approximately $125 million. We also anticipate an effective income tax rate of approximately 30%. Core capital expenditures, excluding aircraft and engine purchases, are expected to total approximately $45 million, mainly for spare parts for our fleet. Expenditures for additional aircraft and engines should total approximately $240 million.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Polar Air Cargo’s Boeing 747-46NF N454PA (msn 30812) in DHL colors departs from scenic Anchorage, Alaska.

Atlas Air aircraft slide show: AG Airline Slide Show

Polar Air Cargo aircraft slide show: AG Airline Slide Show

DHL-Polar Air Cargo aircraft slide show: AG Airline Slide Show

AG Prints-6 Sizes

Advertisements

Atlas Air Worldwide to acquire another Boeing 747-800F freighter, provides a fleet update

Atlas Air Worldwide Holdings (Atlas Air and Polar Air Cargo) (New York) has agreed to acquire a new 747-8 freighter from Boeing with delivery scheduled for November 2015. Prior to its expected placement in longer-term ACMI (aircraft, crew, maintenance and insurance) service, the company intends to deploy the aircraft in profitable charter operations, taking advantage of the aircraft’s superior fuel efficiency, range, capacity and loading capabilities.

Atlas Air Worldwide logo

To meet additional charter demand, Atlas Air Worldwide is also returning an owned and unencumbered 747-400 converted freighter to active service. The aircraft is resuming operations this month. At the same time, the company has entered into a short-term operating lease expected to begin in late June for a second 747-400 converted freighter. This lease is intended to replace a similar aircraft, with a lease that expires this month, on terms that are more favorable to the company.

Atlas Air logo

In addition, the company has expanded its Titan Dry Leasing portfolio by acquiring two Boeing 767 aircraft. These will be leased to DHL Express following their conversion from passenger to freighter configuration in the fourth quarter of this year. They complement a Boeing 757 Freighter recently dry leased to DHL by Titan following the conclusion of a previous customer lease.

Fleet Plan Update

By year-end 2015, Atlas Air Worldwide’s cargo operations are expected to include ten 747-800Fs and 23 747-400 freighters. It also expects to have two 747-400s and three 767-300s providing passenger service to the U.S. military and other charter customers.

In addition, the company expects to operate at least 18 customer-owned aircraft in its CMI (crew, maintenance and insurance) operations. These operations include four 747 Large Cargo Freighters for Boeing, two VIP-configured 747-400 passenger aircraft for SonAir, eleven 767 freighters for DHL Express, and one VIP-configured 767 passenger aircraft for MLW Air.

In Dry Leasing, the company anticipates its portfolio to include at least 11 aircraft, including six 777 freighters, two 767 freighters, one 757 freighter, one 737 freighter, and one 737 passenger aircraft.

In other news, Atlas Air Worldwide Holdings announced the placement of an additional Boeing 747-400 freighter into ACMI service.Polar Air Cargo logo

The aircraft will be operated by Polar Air Cargo Worldwide, Inc. to expand its express network for the benefit of DHL Express. Operations are scheduled to begin on July 1, 2015.

DHL logo (LRW)

 

When the new service begins, Polar’s express network will consist of six 747-8Fs and seven 747-400Fs in ACMI on behalf of DHL and Polar’s other customers. Atlas also will continue to operate a fleet of eleven Boeing 767 Freighters in CMI service for DHL, including nine in North America and two in the Asia-Pacific region.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 747-87UF N852GT (msn 37571) of Atlas Air taxies at Ted Stevens Anchorage International Airport (ANC).

Atlas Air aircraft slide show: AG Airline Slide Show

Polar Air Cargo aircraft slide show: AG Airline Slide Show

JustPlanes 25 Years banner

Atlas Air Worldwide Holdings reports adjusted net income of $27.4 million for the third quarter

Atlas Air Worldwide Holdings, Inc. (Atlas Air and Polar Air Cargo) (New York) has issued this financial statement for the third quarter:

Atlas Air Worldwide Holdings, Inc. announced adjusted net income attributable to common stockholders of $27.4 million, or $1.09 per diluted share, for the three months ended September 30, 2014, compared with $28.6 million, or $1.13 per diluted share, for the three months ended September 30, 2013.

On a reported basis, net income attributable to common stockholders in the third quarter of 2014 totaled $27.6 million, or $1.10 per diluted share, compared with $23.7 million, or $0.94 per diluted share, in the year-ago quarter.

AAWH recently placed three incremental Boeing 747 freighters, a 747-8F and two 747-400Fs, into ACMI service for the benefit of DHL Express and Etihad Cargo, the fast-growing freight division of Etihad Airways. The placements increase the number of our aircraft in ACMI to 22 from 19.

In addition, AAWH recently announced the expansion of our 767 CMI service in North America for DHL Express. This expansion covers four incremental 767-200 freighter aircraft owned by DHL that we expect to begin flying during the first quarter of 2015.

Adjusted earnings in the third quarter of 2014 excluded a tax adjustment of $0.1 million, or $0.01 per diluted share, related to the company’s Global Supply Systems Limited subsidiary. Adjusted earnings in the third quarter of 2013 excluded an after-tax loss of $4.5 million, or $0.18 per diluted share, on the early extinguishment of debt, and a loss of $0.3 million, or $0.01 per diluted share, on the disposal of aircraft.

Third-Quarter Results

Profitability in our ACMI business during the third quarter reflected an increase in 747-8F revenue and an increase in CMI flying, offset by an increase in maintenance expense on our -8F aircraft and lower 747-400 flying by certain ACMI customers.

In Dry Leasing, revenue and profitability grew following the addition of three 777F aircraft in January 2014 and two in July 2013, which raised our 777F fleet count to six. Each of these aircraft are leased to customers on a long-term basis.

Results in AMC Charter benefited from an increase in block hours and aircraft utilization, partially offset by a decrease in revenue per block hour due to a reduction of the average “pegged” fuel price set by the AMC. Stronger than expected demand for cargo flying and incremental passenger flying as a result of former competitors exiting the AMC Charter market drove contribution growth in the third quarter.

Profitability in Commercial Charter primarily reflected an increase in volumes and improvement in aircraft utilization compared with the third quarter of 2013. Charter operations during the quarter benefited from the broad-based uptick in demand, partially offset by additional travel and ground handling expenses from flying to high-cost locations.

Reported earnings for the period included an effective income tax rate of 29.1%, reflecting the ongoing beneficial impact of lower taxes for certain foreign subsidiaries in our Dry Leasing business.

Nine-Month Results

For the nine months ended September 30, 2014, adjusted net income attributable to common stockholders totaled $54.7 million, or $2.17 per diluted share, compared with $54.9 million, or $2.13 per diluted share, for the nine months ended September 30, 2013.

On a reported basis, nine-month 2014 net income attributable to common stockholders totaled $65.1 million, or $2.59 per diluted share, compared with $63.9 million, or $2.48 per diluted share, in the first nine months of 2013.

Cash and Short-Term Investments

At September 30, 2014, our cash, cash equivalents, short-term investments and restricted cash totaled $287.7 million, compared with $339.2 million at December 31, 2013.

The change in position reflected cash provided by operating and financing activities offset by cash used for investing activities.

Net cash used for investing activities during the first nine months of 2014 primarily related to the purchase of three 777F aircraft for our Dry Leasing business.

Net cash provided by financing activities primarily reflected proceeds from the issuance of debt in connection with the acquisitions of these aircraft. Those proceeds were partially offset by payments on debt obligations and debt issuance costs.

Share Repurchases

During the third quarter, we repurchased 458,937 shares of our common stock for $15.0 million, or 1.8% of our outstanding common stock at June 30, 2014.

Future repurchases under our remaining $45.0 million authority may be made at our discretion, and the actual timing, form and amount will depend on company and market conditions.

Outlook

Airfreight volumes continue to improve, and recent industry reports suggest that airfreight demand will grow by several percentage points in 2014 – outpacing supply and driving the first real growth since 2010. We are seeing a general increase in demand across all regions, with the greatest growth in the transpacific market. An increase in online shopping and several new high-tech product launches during peak season also continue to favor airfreight.

As a result, AAWH anticipates adjusted and reported fully diluted earnings per share of approximately $1.33 to $1.43 in the fourth quarter. AAWH is also raising its full-year 2014 adjusted earnings outlook to approximately $3.50 to $3.60 per diluted share, and our reported earnings outlook to approximately $3.92 to $4.02.

For the full year, the company expects to fly approximately 160,000 block hours, with more than 70% in ACMI, approximately 10% in AMC Charter, and the balance in Commercial Charter. The Dry Leasing segment should show dramatic growth compared with 2013. While our share of military flying, mainly in passenger service, has increased due to our ability to capitalize on additional flying opportunities and a reduction in the number of carriers serving the market, we expect an overall decline in military demand in the fourth quarter of 2014 compared with 2013.

The company also expects aircraft maintenance expense to total approximately $190 to $195 million in 2014, primarily due to performing several conditions-based engine overhauls for our 747-400 fleet during the fourth quarter. Depreciation this year is anticipated to total approximately $120 million, and core capital expenditures are expected to total about $30 to $35 million, mainly for spare parts for our expanded fleet.

Copyright Photo: The relationship with DHL continues to expand. Polar Air Cargo’s Boeing 747-47UF N416MC (msn 32838) taxies at Los Angeles.

Atlas Air: AG Slide Show

Polar Air Cargo: AG Slide Show

DHL-Polar Air Cargo: AG Slide Show

Polar Air Cargo to operate two additional Boeing 747s for DHL Express

Atlas Air Worldwide Holdings, Inc. (New York) today announced the placement of two incremental Boeing 747 freighters into ACMI service with DHL Express.

The two aircraft, a Boeing 747-800F and a 747-400F, will be operated in Polar Air Cargo Worldwide’s express network under an ACMI arrangement for the benefit of DHL Express. Operations are scheduled to begin on October 26, 2014.

When the new ACMI service begins, Polar’s express network will total twelve 747 freighters, consisting of five Boeing 747-800Fs and seven 747-400Fs, in ACMI on behalf of DHL and Polar’s other customers. Atlas also will continue to operate a fleet of Boeing 767 Freighters in CMI service for DHL, with 11 aircraft in operation by the end of January 2015.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Polar Air Cargo’s Boeing 747-46NF N451PA (msn 30809) arrives in Los Angeles.

DHL-Polar Air Cargo: AG Slide Show

Atlas Air expands operations for DHL Express

Atlas Air Worldwide Holdings, Inc. (New York) today (August 27) said that its Atlas Air, Inc. (New York) unit will provide expanded operating service for DHL Express’ North American route network using four additional Boeing 767-200 freighter aircraft owned by DHL. Atlas Air expects to start flying the first incremental aircraft in December 2014, and to operate all four by the end of January 2015.

The operation represents a continued expansion of Atlas Air’s non-asset-intensive CMI (Crew, Maintenance and Insurance) service solution, as well as its Boeing 767 platform. With the addition of the aircraft to Atlas Air’s operating certificate, the company’s fleet of Boeing 767s will increase to 15 aircraft, including nine operated for DHL in North America and two for DHL in the Asia-Pacific region.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Atlas Air also operates Boeing 767-300F freighters for DHL. Atlas Air’s Boeing 767-3JHF N644GT (msn 37810) dressed in DHL’s well-known yellow and red livery arrives in Tokyo (Narita).

DHL-Atlas Air: AG Slide Show

Atlas Air: AG Slide Show

Atlas Air Worldwide Holdings reports 2Q adjusted net income of $15.9 million

Atlas Air Worldwide Holdings (Atlas Air and Polar Air Cargo) (New York) reported adjusted net income of $15.9 million for the second quarter.

The company issued this statement:

Atlas Air Worldwide Holdings, Inc., a leading global provider of outsourced aircraft and aviation operating services, announced adjusted net income attributable to common stockholders of $15.9 million, or $0.63 per diluted share, for the three months ended June 30, 2014, compared with $20.4 million, or $0.79 per diluted share, for the three months ended June 30, 2013.

On a reported basis, net income attributable to common stockholders in the second quarter of 2014 totaled $29.6 million, or $1.17 per diluted share, compared with $20.1 million, or $0.78 per diluted share, in the year-ago quarter.

“We are off to a good start in 2014. Airfreight demand is improving, and we are encouraged about our full-year outlook,” said William J. Flynn, President and Chief Executive Officer. “As we continue to gather additional insight into second-half yields, demand and military requirements, we are maintaining our full-year earnings framework.”

Mr. Flynn added: “Atlas is an entrepreneurial company. Our second-quarter results illustrate the positive contributions being generated by the investments we’ve made and the initiatives we’ve undertaken. In the face of an uncertain airfreight market and an anticipated decline in military cargo demand, we have diversified our business mix and are driving business resilience.

“Results within our ACMI segment are benefiting from modern 747-8 freighters as well as an increase in flying for our CMI customers. In Dry Leasing, the investments we’ve made since early 2013 in attractive 777 freighters on long-term leases with strong customers are driving a significant increase in contribution from highly predictable revenue and earnings streams.

“In addition, the expansion of our 767 platform and our growth into military and commercial passenger charter operations are providing added strength, complementing the improvement in airfreight demand.

“Led by the strength of our brand, our global market leadership in outsourced aircraft assets and services, and our ability to work closely with our customers as they enhance their route networks and grow their businesses, we are well-positioned to take advantage of market opportunities and improvement – and to continue our focus on longer-term business growth.”

Adjusted earnings in the second quarter of 2014 exclude an income tax benefit of $24.0 million, or $0.95 per diluted share, due to beneficial tax planning related to the tax treatment of extraterritorial income. This was partly offset by a noncash loss of $9.4 million after tax, or $0.37 per diluted share, resulting from the trade-in of used spare engines for new engines under the company’s engine-acquisition program, as well as additional charges totaling $1.0 million after tax, or $0.04 per diluted share, which were primarily related to the company’s U.K. affiliate, Global Supply Systems Limited.

Adjusted earnings in the second quarter of 2013 exclude an after-tax loss of $0.6 million, or $0.02 per diluted share, on the early extinguishment of debt, partly offset by an after-tax gain of $0.3 million, or $0.01 per diluted share, on the disposal of aircraft.

Second-Quarter Results

Profitability in our ACMI business during the second quarter reflected an increase in 747-8F revenue and an increase in CMI flying, offset by higher maintenance expense for aircraft operating in this segment.

ACMI revenues benefited from an increase in our average rate per block hour driven by our 747-8Fs, but were impacted by a decline in block-hour volumes related to the return of three 8Fs from British Airways in April and early May. This decline was partially offset by the placement of two of the 8Fs with DHL Express in May, the start-up of ACMI 8F flying for BST Logistics in February 2014 and Etihad in May 2013, as well as the start-up of ACMI 747-400 flying for Astral Aviation in September 2013. Block-hour volumes during the second quarter also reflected an increase in CMI Dreamlifter flying for Boeing and the initiation of CMI 767-200 passenger aircraft service for MLW Air during the third quarter of 2013.

In Dry Leasing, revenue and profitability grew following the addition of three 777F aircraft in January 2014 and two in July 2013, which raised our 777F fleet count to six. Each of these aircraft are leased to customers on a long-term basis.

In AMC Charter, results benefited from an increase in the volume of passenger flying on higher-yielding 747-400 aircraft, partially offset by a decrease in demand for cargo flying. Segment results in Commercial Charter reflected a decrease in market rates and increases in maintenance and crewmember travel expense, partially offset by an increase in block-hour volumes.

Reported earnings for the period reflected an effective income tax rate benefit of 461.0%, driven by tax-planning efforts regarding a federal income tax benefit related to the treatment of extraterritorial income from the offshore leasing of certain of our aircraft.

Half-Year Results

For the six months ended June 30, 2014, adjusted net income attributable to common stockholders totaled $27.3 million, or $1.08 per diluted share, compared with $26.3 million, or $1.01 per diluted share, for the six months ended June 30, 2013.

On a reported basis, first-half 2014 net income attributable to common stockholders totaled $37.5 million, or $1.49 per diluted share, compared with $40.1 million, or $1.54 per diluted share, in the first half of 2013.

Cash and Short-Term Investments

At June 30, 2014, our cash, cash equivalents, short-term investments and restricted cash totaled $299.2 million, compared with $339.2 million at December 31, 2013.

The change in position reflected cash provided by operating and financing activities offset by cash used for investing activities.

Net cash used for investing activities during the first half of 2014 primarily related to the purchase of three 777F aircraft for our Dry Leasing business.

Net cash provided by financing activities primarily reflected proceeds from the issuance of debt in connection with the acquisitions of these aircraft. Those proceeds were partially offset by payments on debt obligations and debt issuance costs.

Outlook

We are encouraged by our performance in the first half of 2014 and the positive direction of market trends so far this year.

Airfreight volumes continue to improve, and recent forecasts suggest that airfreight demand may grow by several percentage points in 2014 – the first real growth after three essentially flat years. Airfreight yields continue to lag behind, however, and there is still limited visibility into peak-season yields, demand and second-half military requirements. As a result, we are maintaining our earnings outlook for the full year.

On a sequential basis, per-share earnings in the third quarter of this year should improve over our adjusted second-quarter results by an increment similar to the increase between our first- and second-quarter adjusted earnings.

For the full year, we expect total block hours to be comparable to 2013, with more than 70% in ACMI, approximately 10% in AMC Charter, and the balance in Commercial Charter. Our Dry Leasing segment should show dramatic growth compared with 2013. While our share of military flying, mainly in passenger service, has increased due to a reduction in the number of carriers serving the market and our ability to capitalize on additional flying opportunities, we continue to expect an overall decline in military demand, primarily in cargo, compared with 2013.

We also expect aircraft maintenance expense to total approximately $180 million in 2014, with depreciation of approximately $120 to $125 million. Core capital expenditures this year are expected to total approximately $45 to $50 million, mainly for spare parts for our expanded fleet.

We remain confident in the resilience of our business model, as well as our ability to adapt to the market and to leverage the scale and efficiencies in our operations. The business initiatives we have undertaken and the investments we have made have enabled the company to deliver meaningful earnings in any environment.

Should 2014 be the inflection point when growth returns to commercial airfreight and yields improve, our business initiatives and the investments we have made have positioned Atlas to be one of the prime beneficiaries.

Atlas Air Worldwide is the parent company of Atlas Air, Inc. (Atlas) and Titan Aviation Leasing (Titan), and is the majority shareholder of Polar Air Cargo Worldwide, Inc. (Polar). Through Atlas and Polar, Atlas Air Worldwide operates the world’s largest fleet of Boeing 747 freighter aircraft.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 747-87UF N852GT (msn 37571) of Atlas Air taxies at Anchorage, AK.

Atlas Air: AG Slide Show

Polar Air Cargo: AG Slide Show

Atlas Air Worldwide Holdings reports first quarter net income of $7.9 million, places two Boeing 747-8F freighters with DHL

Atlas Air Worldwide Holdings (Atlas Air and Polar Air Cargo) (New York) reported first quarter net income of $7.9 million, down 60.4 percent from the same quarter a year ago

Atlas Air Worldwide Holdings is the parent company of Atlas Air and Titan Aviation Leasing and majority owner of Polar Air Cargo.

The company issued this full statement:

Atlas Air Worldwide Holdings, Inc. announced adjusted net income attributable to common stockholders of $11.3 million, or $0.45 per diluted share, for the three months ended March 31, 2014, compared with $5.9 million, or $0.22 per diluted share, for the three months ended March 31, 2013.

On a reported basis, net income attributable to common stockholders in the first quarter of 2014 totaled $7.9 million, or $0.32 per diluted share, compared with $20.1 million, or $0.76 per diluted share, in the year-ago quarter.

Adjusted earnings in the first quarter of 2014 exclude a special charge of $3.4 million after tax, or $0.13 per diluted share, mainly related to the company’s U.K. affiliate, Global Supply Systems Limited. Adjusted earnings in the first quarter of 2013 exclude an income tax benefit of $14.2 million, or $0.54 per diluted share, related to the tax treatment of extraterritorial income.

“2014 is off to a good start, led by the initiatives we’ve undertaken to diversify our business mix, expand our aircraft and service offerings, develop new customers and position Atlas to take advantage of market opportunities,” said William J. Flynn, President and Chief Executive Officer.

“Within our ACMI segment, results benefited from an increase in the number of new 747-8 freighters in operation as well as an increase in flying for our CMI customers. In Dry Leasing, the investments we’ve made since early 2013 in attractive, modern 777 freighters on long-term leases with strong customers drove a significant increase in contribution from sources with highly predictable revenue and earnings streams.

“In addition, the expansion of our 767 aircraft service solutions and our growth into passenger charter operations supported the improvement in our results despite a seasonally soft contribution in Commercial Charter and the continued reduction in AMC Charter cargo volumes.

“Reflecting our global market leadership in outsourced aircraft assets and services, we have developed several new strategic customer relationships since the first quarter of 2013 that have enhanced the resilience of our business model.

“In ACMI, these include Astral Aviation, BST Logistics and Chapman Freeborn. We’ve also expanded with Etihad Airways, introduced new 767 cargo CMI service for DHL Express, and added VIP 767 passenger CMI service for MLW Air. And in Dry Leasing, we now provide 777Fs to Aerologic, Emirates Airlines and TNT Transport International.”

Separately, the company announced the placement of two 747-8 freighters in ACMI service for DHL Express. The state-of-the-art aircraft will provide additional revenue cargo volume for DHL’s transpacific network growth. They replace two 747-400 freighters currently in service for DHL that will enter immediate revenue service for Atlas.

Outlook

We are encouraged by our first-quarter performance and the positive direction of market trends so far in 2014, but we are maintaining our earnings outlook for the full year.

Airfreight volumes are improving, and recent forecasts suggest that airfreight demand will grow by a few percentage points in 2014 – the first real growth after three essentially flat years. Forecast airfreight yields continue to lag behind, however.

With still limited visibility into second-half airfreight market demand and yields, we continue to expect results in 2014 to approximate 2013, excluding an expected decline in our AMC Charter operations as we have previously discussed.

On a per share basis, earnings in the second quarter of this year should be similar to or slightly higher than our adjusted first-quarter earnings. As the majority of our earnings are typically generated in the second half of the year, we expect to update our expectations as the year progresses.

For the full year, we expect total block hours to be a few percentage points lower than 2013 block hours, with more than 70% in ACMI, less than 10% in AMC Charter, and the balance in Commercial Charter. Our Dry Leasing segment should show dramatic growth, with a contribution run rate in subsequent quarters that should be similar to the first quarter of 2014. Aircraft maintenance expense in 2014 should total approximately $175 to $180 million, and depreciation should be approximately $115 to $120 million. In addition, we anticipate an effective income tax rate of approximately 30%.

We remain confident in the resilience of our business model and our ability to leverage the scale and efficiencies in our operations. The business initiatives we have undertaken and the investments we have made have transformed the company to deliver meaningful earnings in any environment.

Should 2014 be the inflection point when growth returns to commercial airfreight and yields improve, our business initiatives and the investments we have made have positioned Atlas to be one of the prime beneficiaries.

Copyright Photo: Manuel Negrerie/AirlinersGallery.com. Atlas Air also operates the Boeing 767-300F freighter for DHL. Boeing 767-3JHF ER N643GT (msn 37809) arrives at Taipei (Taoyuan).

DHL-Atlas Air: AG Slide Show

Atlas Air: AG Slide Show

Polar Air Cargo: AG Slide Show