Atlas Air Profit Soars to $14.7 Million

After major shifts in operations and structure, Atlas Air Worldwide Holdings increased net profit by 181 percent in the third quarter to $14.7 million. The strong gain follows sharp year-over-year improvements in earnings reported for the first and second quarters of 2009. The holding company, whose subsidiaries include Atlas Air, 51 percent of Polar Air Cargo, and a 49 percent share of Global Supply Systems, expects to earn more than $18 million in the coming fourth quarter.

“Net earnings in the third quarter were well over two and one-half times the amount that we reported in the third quarter of 2008, despite a still challenging though improving business environment and despite a smaller total fleet size than we had last year,” said William J. Flynn, president and chief executive officer.

AAWW has transformed its business, operating cost base and fleet throughout 2008 and 2009. Demand for charter flights for the U.S. military was stable through the first nine months of 2009. Wet leasing, or contracts for aircraft, crew, maintenance and insurance, improved as did charter yields, Flynn said.

The higher earnings came as AAWW drastically slashed revenue from $460.7 million in third quarter 2008 to $255.5 million this year. The lower revenue was partially the result of deconsolidating Polar Air Cargo for financial reporting purposes in October 2008 and consolidating Global Supply Systems in April of this year.

“We have seen an ongoing improvement in both supply and demand in global airfreight since earlier this year,” said Flynn. “Older, less-efficient, wide-body freighter aircraft continue to be retired, and recent rate increases announced by major air cargo carriers are a tangible sign of improvement in the market. We expect to see improving trends continuing through the fourth quarter and expect our fourth-quarter net earnings to exceed $18 million on that basis.”

“While we are encouraged by positive trends in airfreight and in the broader economy, significant uncertainty still exists regarding the pace of recovery heading into 2010. In our AMC segment, although our visibility is limited, we expect demand to remain consistent with current levels through 2010. Assuming a modest pace of recovery, we expect that 18 of our 747-400F aircraft will be operating in our ACMI segment by year-end 2010 compared with 17 currently. Based on these assumptions, we expect net earnings in 2010 will be consistent with current expected 2009 levels of earnings before one-time items and 2010 will continue to benefit from the commercial and operating transformations we have achieved. Should we see a more substantial economic recovery, the operating leverage in our model should stimulate additional bottom-line earnings growth for the Company,” Flynn said.

Flynn said the company has completed its transformation and is now focused on growth. AAWW expects to begin outsourced passenger aircraft operations in the first half of 2010 and to pursue dry leasing opportunities in its Titan subsidiary.

The company expects to introduce 747-8 freighters into service in 2010. But Boeing rescheduled three aircraft into 2012 and 2013.

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