Atlas Air Worldwide Holdings, Inc. has announced record 2021 results, including revenue that rose to $4.0 billion, and net income that increased to $493.3 million, or $16.16 per diluted share, compared with $3.2 billion in revenue, and net income of $360.3 million, or $13.50 per diluted share, in 2020.

On an adjusted basis, EBITDA increased to a record $1.1 billion in 2021 compared with $844.2 million in 2020. For the twelve months ended December 31, 2021, adjusted net income rose to a record $551.0 million, or $18.51 per diluted share, compared with $379.0 million, or $13.67 per diluted share, in 2020.

“2021 was another outstanding year with excellent financial and operating performance. Our greatest strength is our people and I’d like to thank everyone at Atlas for working together to deliver these very strong results. We are also very pleased to have achieved a long-term labor agreement with our pilots that recognizes their significant contributions to Atlas. With the strength, flexibility and resiliency of our global business model, our experienced and dedicated team delivered high-quality service to our customers in an operating environment with persistent pandemic-related obstacles,” said Atlas Air Worldwide President and Chief Executive Officer John W. Dietrich.

“We are leveraging our world-class fleet and global operating capabilities to increase aircraft utilization and capitalize on strong demand for our services and dedicated freighters, as well as on higher airfreight yields.”

He continued: “We have now placed our new 747-8Fs under long-term agreements, enhanced numerous long-term contracts with strategic customers and further diversified our customer base. In 2021, we deepened relationships with valued customers, including Cainiao, CEVA Logistics, DB Schenker, DHL, DSV, FedEx, Flexport, Geodis, HP Inc., Icelandair, JAS, Kuehne+Nagel, SF Group and UPS.

“We take a disciplined and balanced approach to capital allocation. We have strengthened our balance sheet, made significant investments in our fleet, including new 747-8 and 777 freighter aircraft, and are returning capital to our shareholders. Consistent with our balanced capital allocation approach, our Board has authorized a new $200 million share repurchase program, and we are starting by implementing $100 million in accelerated repurchases.

“Atlas is very well positioned for the future. We have a dedicated and talented team of employees, a strong balance sheet, a formidable fleet of aircraft, an unparalleled network of customers and unrivaled global operating capabilities. We also have a strong position and look forward to growing our Titan dry leasing business. And our strategic focus on express, e-Commerce and fast-growing markets will continue to drive our business forward.”

Mr. Dietrich added: “We expect strong performance in the first quarter of 2022, with adjusted EBITDA and adjusted net income similar to the first quarter of 2021. We also anticipate revenue of about $1.0 billion from flying approximately 85,000 block hours.

“This outlook reflects higher yields, including the contribution from numerous new or enhanced long-term customer contracts, as well as higher pilot costs from our new joint collective bargaining agreement that went into effect in September 2021.

“Due to the uncertainty related to the pandemic, ongoing supply chain disruptions and other factors, we are not providing additional guidance at this time.”

Full-Year Results

Volumes in 2021 grew to 364,061 block hours compared with 344,821 in 2020, with revenue increasing to $4.0 billion in 2021 from $3.2 billion in 2020.

For the twelve months ended December 31, 2021, our reported net income rose to $493.3 million, or $16.16 per diluted share, compared with $360.3 million, or $13.50 per diluted share, in 2020.

On an adjusted basis, EBITDA grew to $1.1 billion in 2021 compared with $844.2 million in 2020. For the twelve months ended December 31, 2021, adjusted net income increased to $551.0 million, or $18.51 per diluted share, compared with $379.0 million, or $13.67 per diluted share, in 2020.

Reported results in 2021 included an effective income tax rate of 23.8%. On an adjusted basis, our results reflected an effective income tax rate of 22.0%.

Fourth-Quarter Results

Volumes in the fourth quarter of 2021 totaled 91,985 block hours compared with 96,079 in the fourth quarter of 2020, with revenue rising to $1.2 billion compared with $932.5 million in the prior-year quarter.

For the three months ended December 31, 2021, our reported net income totaled $176.7 million, or $5.55 per diluted share, compared with net income of $184.0 million, or $6.15 per diluted share, in the fourth quarter of 2020.

On an adjusted basis, EBITDA was $361.8 million in the fourth quarter this year compared with $279.7 million in the fourth quarter of 2020. Adjusted net income in the fourth quarter of 2021 totaled $211.6 million, or $7.05 per diluted share, compared with $143.2 million, or $4.83 per diluted share, in the prior-year period.

Reported earnings in the fourth quarter of 2021 also included an effective income tax rate of 24.3%. On an adjusted basis, our results reflected an effective income tax rate of 21.7%.

Higher Airline Operations revenue primarily reflected an increase in the average rate per block hour. The higher average rate per block hour was primarily due to an increased proportion of higher-yielding flying, including the impact of new and extended long-term contracts, the ongoing reduction of available cargo capacity in the market, the continued disruption of global supply chains, as well as higher fuel costs. Block-hour volumes during the period reflected a reduction in less profitable smaller gauge CMI service flying, partially offset by our ability to increase the utilization of our current fleet to meet strong customer demand. Block-hour volumes benefited from the operation of a 747-400 freighter we reactivated during the fourth quarter of 2020.

Higher Airline Operations segment contribution in the fourth quarter of 2021 was primarily driven by the positive factors benefiting segment revenue mentioned above as well as lower heavy maintenance expense. These improvements were partially offset by higher pilot costs related to our new joint collective bargaining agreement (JCBA).

In Dry Leasing, segment revenue and contribution in the fourth quarter of 2021 were relatively unchanged compared with the prior-year period.

Unallocated income and expenses, net, increased during the quarter, primarily due to $67.2 million in CARES Act grant income in 2020 and a $14.1 million increase related to adjustments to paid time-off benefits in our new JCBA in 2021 (both of which were excluded from our adjusted results), as well as a $6.6 million reduction in refunds of aircraft rent paid in previous years.

Fleet Management

We have now placed all four of our new and incoming 747-8Fs under long-term agreements. We expect delivery of these aircraft between May and October this year.

In addition, we look forward to the deliveries and placements of the four new 777-200LRFs we recently announced, for which there is very strong demand. We expect one to be delivered late in the fourth quarter of this year and three more throughout 2023.

As previously disclosed, we purchased six of our existing 747-400Fs during 2021 that were formerly on lease to us. We are also purchasing another five of our other 747-400Fs at the end of their leases during the course of this year, which range from February to December.

Acquiring these widebody freighters underscores our confidence in the demand for dedicated international airfreight capacity, particularly in express, e-Commerce and fast-growing global markets. These investments are consistent with our long-term strategic growth plan and will provide customers with modern and environmentally-efficient aircraft, which will drive strong returns for Atlas in the years ahead.

Cash

At December 31, 2021, our cash, including cash equivalents and restricted cash, totaled $921.0 million compared with $856.3 million at December 31, 2020.

The increase resulted from cash provided by operating activities, partially offset by cash used for investing and financing activities.

Net cash used for investing activities during 2021 primarily related to payments for flight equipment and modifications, including all pre-delivery payments for 747-8F aircraft, as well as capital expenditures, spare engines and GEnx performance upgrade kits.

Net cash used for financing activities during the period primarily related to payments on debt obligations, partially offset by proceeds from debt issuance.

Share Repurchases

In February 2022, our Board of Directors approved the establishment of a new share repurchase program authorizing up to $200.0 million of our common stock. Purchases may be made at our discretion in the form of accelerated share repurchase programs, open market repurchase programs, privately negotiated transactions, or a combination of these methods.

As part of the share repurchase program, the company will enter into a $100.0 million accelerated share repurchase program (ASR). Purchases under the ASR are expected to be completed by the end of the second quarter.

Outlook*

We expect strong performance in the first quarter of 2022, with adjusted EBITDA and adjusted net income similar to the first quarter of 2021. We anticipate revenue of about $1.0 billion from flying approximately 85,000 block hours.

This outlook reflects higher yields, including the contribution from numerous new or enhanced long-term customer contracts, as well as higher pilot costs from our new JCBA.

We expect first-quarter results to continue to be impacted by ongoing pandemic-related expenses, including premium pay for employees flying into locations significantly impacted by COVID-19 and other operational costs, including for regulatory compliance and providing a safe working environment for our employees.

For the full year in 2022, we expect aircraft maintenance expense to be similar to 2021, and depreciation and amortization to total about $300 million. In addition, core capital expenditures, which exclude aircraft and engine purchases, are projected to total approximately $135 to $145 million, mainly for parts and components for our fleet.

Due to the uncertainty related to the pandemic, ongoing supply chain disruptions and other factors, we are not providing additional guidance at this time.

Other than with regard to revenue, we provide guidance on an adjusted basis because we are unable to predict with reasonable certainty and without unreasonable effort the effects on future gains and losses on asset sales, special charges and other unanticipated items that could be material to our reported results.*

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