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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

Alaska Airlines today launches nonstop Seattle/Tacoma-Tampa flights

Alaska Airlines (Seattle/Tacoma) today (June 20) launched daily round-trip service between its Seattle/Tacoma hub (SEA) and Tampa, Florida (TPA).

Alaska Airlines is the only carrier offering nonstop service between Seattle and Tampa.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. The new route also increases the transit time from Tampa to the state of Alaska, especially during the peak summer travel market. Boeing 737-890 N588AS (msn 35685) departs from Anchorage International Airport (ANC) with the new Aviation Partners Boeing Split Scimitar Winglets.

Alaska Airlines: AG Slide Show

Alaska Airlines brings the first seasonal Copper River salmon shipment to the “Lower 48”

Alaska Air Cargo (Alaska Airlines) (Seattle/Tacoma) today (May 16) delivered 24,100 pounds of the season’s first shipment of Alaska Copper River salmon to Seattle-Tacoma International Airport. The arrival of the fish-filled Boeing 737 marks the start of the summer salmon season and is an annual rite of passage anticipated by seafood lovers throughout the Pacific Northwest.

At least five more Alaska Airlines flights today will transport salmon from Cordova, Alaska, to Anchorage, Seattle and throughout the United States. The flights will have fresh fish from three Alaska seafood processors: Copper River Seafoods, Ocean Beauty Seafoods and Trident Seafoods.

Alaska Airlines plays a significant role in supporting the Alaska seafood industry, which is recognized worldwide for its sustainable fishing practices. Last year, the carrier flew more than 24.5 million pounds of fresh Alaska seafood to the Lower 48 states and beyond, including 1 million pounds of Copper River salmon.

“No other airline delivers more Copper River salmon to the Lower 48 than Alaska Airlines, and making that happen within 24 hours after the fish is pulled from the water is no small feat,” said Betsy Bacon, managing director of Alaska Air Cargo. “Hundreds of employees from across the state of Alaska, Seattle and beyond spend months getting ready for the busy summer fish season.”

5th annual Copper Chef Cook-off

Following the arrival of the first fish, three Seattle-area top chefs — John Howie, owner of Seastar, Jason Franey of Canlis and Ethan Stowell, owner of Tavolata — will compete for the best salmon recipe in Alaska Air Cargo’s fifth annual Copper Chef Cook-off. The chefs will have 30 minutes to prepare and serve the first catch of the season to a panel of judges, which include Seahawks place kicker Steven Hauschka; Jay Buhner, Seattle Mariners Hall of Famer; and Ben Minicucci, Alaska Airlines’ chief operating officer. The airline will announce the winner of the cook-off on Twitter @AlaskaAir. Fish lovers can follow the competition and share their favorite salmon recipes on Facebook, Twitter and Instagram using the hashtag #SalmonChef.

Among the onlookers awaiting the arrival of the first fish were 10 Alaska Airlines Mileage Plan MVP Gold members, and representatives from USO Northwest, the U.S. Marines and U.S. Coast Guard, who were invited to sample the season’s first Copper River salmon.

Anchorage hosts First Fish parade

Farther north, Copper River Seafoods and local Anchorage-area restaurants are also welcoming the arrival of Copper River salmon with festivities planned at Alaska Air Cargo at Ted Stevens Anchorage International Airport. Later this afternoon, the seafood company will deliver a ceremonial first fish to seven downtown Anchorage restaurants.

Enhanced seafood quality training program

Copper River salmon shipped on Alaska Air Cargo arrives as fresh as possible to grocery stores and restaurants across the nation, thanks in part to a cool chain training program required of all airline employees who handle perishables. Alaska Air Cargo employees are required to adhere to strict seafood quality standards and pass an annual food quality course.

Seafood processors and shippers follow these cool-chain standards to provide a temperature-controlled environment for proper food handling. The goal is to keep seafood moving rapidly throughout its journey on Alaska Airlines and maintain a consistent temperature range from the time it leaves the water to when it arrives at stores and restaurants.

The first Copper River salmon was brought to SEA with their Boeing 737-400 Combi N765AS.

In other news, Alaska Airlines was awarded its seventh J. D. Power award as the best traditional network carrier.

Top Copyright Photo: Mark Durbin/AirlinersGallery.com. Beautifully displayed, Boeing 737-890 N559AS (msn 35178) is the second Alaska 737 to wear the special “Salmon-Thirty-Salmon” livery in support of the Alaska fisheries industry.

Alaska Airlines: AG Slide Show

Video: the ceremonial fish head “kick-off”:

Bottom Copyright Photo: Michael B. Ing/AirlinersGallery.com. Dedicated as a freighter, Boeing 737-490 (F) N709AS (msn 28896) climbs away from the runway at Ted Stevens Anchorage International Airport (ANC).

Atlas Air and QANTAS extend their ACMI agreement

Atlas Air Worldwide Holdings, Inc. (New York) today said that its Atlas Air, Inc. unit (New York) and QANTAS Airways Ltd. (Sydney) have extended their long-standing ACMI (aircraft, crew, maintenance and insurance) relationship.

Under the terms of the agreement, Atlas Air will continue to operate two Boeing 747-400 freighters in ACMI service for QANTAS on trans-Pacific routes linking Australia and Asia with the United States.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 747-47UF N492MC (msn 29253) departs from Anchorage, Alaska after a cargo and fuel stop. The freighter also carries small QANTAS Airways sub-titles.

Atlas Air: AG Slide Show

Atlas Air to fly for Astral Aviation

Atlas Air Worldwide Holdings, Inc. today announced that its Atlas Air, Inc. (New York) unit has entered into a contract with Astral Aviation Limited (Nairobi), a Kenya-based cargo airline, to provide Boeing 747-400 Freighter service.

The contract is for one aircraft under an ACMI (Aircraft, Crew, Maintenance and Insurance) agreement, with service expected to begin in the next few weeks. This is the first 747-400F in Astral Aviation’s global network, and it will provide all-cargo operations between Europe and Africa.

Astral Aviation operates in partnership with UK-based ANA Airline Management Limited. ANA specializes in the development and operation of all-cargo aircraft across a wide range of scheduled routes as well as providing air charter capacity on a worldwide basis to the various airlines it works in partnership with. ANA was founded in 1985 and has offices throughout Europe, Africa and North America.

Copyright Photo: Tony Storck/AirlinersGallery.com. Atlas Air’s Boeing 747-47UF N492MC (msn 29253) climbs beautifully away from Anchorage International Airport.

Atlas Air: AG Slide Show

 

Nippon Cargo Airlines is coming to Dallas/Fort Worth

Nippon Cargo Airlines-NCA (Tokyo) has announced it will launch new freighter flights connecting Tokyo’s Narita International Airport and DFW International Airport, starting November 5. Nippon Cargo’s twice weekly flights will be the first direct freighter connections for the Dallas/Fort Worth area into Japan, and will bolster DFW cargo lift capacity to Asia while also providing a new connection to a strategically important destination.

Nippon Cargo Airlines will operate the route from Tokyo Narita to Chicago O’Hare, then to DFW Airport, Anchorage, Alaska, and then back to Narita.  Nippon Cargo Airlines will fly 747-400 aircraft on the route, and the carrier ultimately plans to phase-in 747-8’s, the most fuel-efficient planes in the industry.

Copyright Photo: Michael B. Ing. Boeing 747-481F JA04KZ (msn 34283) in the special “NCA Green Freighter” scheme climbs majestically away from Anchorage International Airport.

NCA-Nippon Cargo Airlines: