Atlas Air Shrugs Off Bankruptcy

Atlas Air Shrugs Off Bankruptcy

Copyright 2004, Traffic World, Inc.

Long-troubled Atlas Air Worldwide Holdings is fully out of bankruptcy protection and free again to test whether the worldwide air freight market has enough demand for the carrier''s widebody all-cargo services.

Seven months after it filed for Chapter 11, the parent of Atlas Air and Polar Air Cargo came out with some $60 million in exit financing, critical agreements with creditors and its heavy debt burden some $600 million lighter. The company said it had emerged with "enhanced profitability," although it did not disclose its operating and financial results.

Jeffrey Erickson, the former TWA chief who is now president and CEO of AAWH, said the operator made it through bankruptcy without cutting employee pay or benefits. "Indeed, we hit every one of our targets during our time in Chapter 11, and we did so without interruption to the quality of service and reliability expected by our customers," he said.

The company also came out with what appears to be most of the fleet that it flew into bankruptcy, the world''s largest fleet of 747 freighters. Atlas now has 26 planes and Polar 15. The operator had about 50 at the height of its operations but several have been returned to lessors and parked in the desert in recent years as Atlas'' market for outsourced freighter service to commercial passenger airlines withered under the global economic downturn.

With global trade on the upswing, international air freight traffic was up 13 percent in the first six months of 2004, according to the International Air Transport Association. The growth comes after several weak years, however, and the market in the first half of this year was only 16.2 percent better than it was in 2000.

At the same time, many industry observers say it is uncertain whether international passenger airlines still have much appetite for long-term wet-leased planes - or ACMI for the aircraft, crew, maintenance and insurance costs covered by Atlas in the leasing contracts.

Atlas has not been able to sell its services to American air carriers because of restrictive labor contracts. And the Chinese airlines targeted as new customers by company founder Michael Chowdry, who died in 2001, appear to be more interested in operating their own aircraft.