Atlas Air Profit Surges

Aircraft leasing company Atlas Air Worldwide Holdings earned a record profit of $23.4 million in the first quarter after deconsolidating subsidiary Polar Air Cargo Worldwide for reporting purposes.

The profit compares with a net loss of $5.3 million in the first quarter of 2008. Revenue in the first quarter declined from $373 million a year ago to $244.5 million, also mainly due to the deconsolidation.

Beginning on Oct. 27, 2008 Polar Air Cargo entered on a long-term blocked space agreement with DHL Express, effectively eliminating the impact of fuel prices. DHL Express now covers virtually all fuel costs for six aircraft. In reporting operating expenses for the first quarter this year, Atlas was able to lop off $67.7 million in fuel consumed due to the deconsolidation of Polar. The company combined $21.6 million in improved income from aircraft-crew-maintenance-insurance leasing with $12.6 million in benefits from avoiding scheduled-service losses for a direct contribution from the two segments of $34.2 million, primarily due to the business transformation, said William J. Flynn, president and chief executive officer of AAWW.

The company also reduced costs by retiring aging 747-200 aircraft. Revenue got a boost from a $10 million fee for the effective early termination of a contract for two 747-400F aircraft operated in express network ACMI.

Flynn was sanguine about the recession. “While global airfreight traffic remains weak,” he said, “it appears to be showing signs of bottoming. Capacity reductions, particularly the retirement of older-generation freighter aircraft, are accelerating, which will mitigate the impact of reduced demand. Given these reductions, and the delays in the deliveries of newer-generation freighters, any improvement in demand could have an early and meaningful impact on AAWW.”

Contact Thomas L. Gallagher at tgallagher@joc.com .