Atlas Air results worse than expected

Atlas Air results worse than expected

Atlas Air Worldwide Holdings warned that it may have to cease operations if it is unable to reach agreement with creditors and lessors on new payment terms and cut the number of planes in its fleet.

The air-cargo company said it had planned to file a pre-packaged bankruptcy plan today but that it had to delay the move until Feb. 1 because of its inability to come to terms with lessors and creditors.

If it cannot reach agreement on a pre-negotiated bankruptcy filing, Atlas said it could be forced by its creditors into bankruptcy or to take other actions, including a halt to its operations or the sale of aircraft to pay off part of its debt.

Atlas said its operating results for both the third quarter and the nine months ended Sept. 30 were significantly below earlier projections. It attributed the poor performance to fewer military charters than anticipated, the termination of a wet-leasing agreement with another airline and lower revenue than expected from scheduled services offered by its Polar Air Cargo subsidiary due to a weak peak season. Higher than expected fuel prices also contributed to the disappointing performance.

Operating revenue for the third quarter was $326.2 million. While its operating loss was $742,000, Atlas had a net loss of $19.8 million due to interest expenses. Operating revenue for the first nine months was just over $1 billion, with an operating loss of $23.4 million and a net loss of $81.1 million.

Atlas said it continues to negotiate with its lessors and creditors in an effort to bring the terms and conditions of its debt and aircraft leases in line with market conditions.

The company had previously reached agreements in principle with several major creditors and lessors to restructure its debt and leases. Those accord, however, were based on financial projections that turned out to be too optimistic.