JOC Staff | Aug 07, 2009 9:24AM EDT
Freighter operator Atlas Air says big capacity reductions across the international air cargo market helped the carrier post a better-than seven-fold increase in net profit in the second quarter, to $11.3 million, despite a 45 percent drop in revenue.
“We are somewhat encouraged by the rate of reduction of widebody freight capacity that we see in the Asia-Pacific region,” said Atlas Air Worldwide Holdings President and CEO William J. Flynn.
Flynn said the rate of capacity reduction “in this key air freight market has begun to approach the rate of reduction in demand.”
International air freight traffic in the Asia-Pacific region fell more than 22 percent in the first six months of this year from the same period a year ago, and carriers in the region have cut available freight capacity by more than 16 percent over the same period.
The industry-wide capacity reduction was almost equal to the reduction in air freight in June, and Flynn says the improving balance between shipping and capacity suggests “any improvement in demand could have an early and meaningful impact” on Atlas’ bottom line.
Atlas has been restructuring its business to focus more tightly on long-term freighter leasing operations, in part by collapsing the scheduled all-cargo business of Polar Air Cargo into its leasing business since Polar struck a space-sharing agreement last year with DHL.
The restructuring, along with the drop in demand, left Atlas’ overall revenue down 45 percent to $240 million in the quarter ending June 30. But Atlas also cut its expenses almost in half and Flynn says that leaves the airline in a strong position in an air freight market that appears to have stabilized.
“We have improved our earnings visibility and our risk profile, and we are generating strong performance deep into a difficult cycle,” he said in a statement.
