Atlas sees revenues grow on increasing demand

Atlas Air Worldwide Holdings (AAWW) saw adjusted profits increase in the first quarter of the year as a result of increasing customer demand.

The aircraft lessor and operator reported first-quarter operating revenues of $680m, while adjusted income for the period was up 14.7% to $27.3m and adjusted earnings before interest, tax, depreciation and amortisation improved by 29.1% to $121.1m.

On a non-adjusted basis the company reported a loss of $29.7m as a result of an unrealised loss on outstanding warrants of $46.6m.

 “Our first-quarter results exceeded our expectations,” said Atlas Air Worldwide president and chief executive William Flynn. “We are benefitting from a full year of flying the 16 aircraft we added during 2018 for customers such as Amazon, Asiana Cargo, DHL Express, Inditex and SF Express, as well as the three aircraft for Nippon Cargo Airlines that we are adding this year.

“Our focus on express, e-commerce and fast-growing markets provides a solid foundation to deliver continued business and earnings growth this year.

“We were pleased to announce an expansion of our relationship with Amazon in March. We are scheduled to begin flying five B737-800 aircraft on a CMI basis for Amazon this year, including two starting this month, with up to 15 more by May 2021.

“This opportunity provides a path to continued expansion in a desirable aircraft type, and it will enhance scale in the B737 platform we operate through Southern Air.

“Reflecting the scale and scope of our domestic and worldwide operations, we continue to anticipate that our adjusted net income in 2019 will grow by a mid- to upper-single-digit percentage compared with the record adjusted net income of $204.3m that we reported in 2018.

“In providing our current outlook, it is important to note that we are now including start-up expenses that we expect to incur in 2019 in connection with our new B737 CMI service. These start-up expenses were not incorporated in the full-year outlook we announced in February 2019.”

Volumes in the first quarter of 2019 increased 16% to 77,061 block hours.

Increased ACMI segment revenue in the first quarter of 2019 primarily reflected an increase in flying partially offset by a slight decline in average rate per block hour.

Block-hour growth during the period reflected increased B767 flying for Amazon, incremental B777 flying for DHL and the start-up of B747-400 flying for new customers. The change in average rate per block hour was primarily due to an increase in smaller-gauge B767 CMI flying.

The airline will begin flying two B737 freighters for Amazon this month. These represent the first B737s in the e-commerce company’s fleet  – until now it has exclusively operated with B767s.

Higher Charter segment revenue during the period was primarily driven by increased flying and an increase in average rate per block hour.

Higher block-hour volumes primarily reflected increases in military passenger and commercial cargo demand that were partially offset by a decrease in military cargo flying related to the unusually late cancellations of a number of flights by the military.

In dry Leasing, higher segment revenue and contribution primarily reflected $22.3m from maintenance payments related to the scheduled return of a B777 freighter in March 2019 as well as the placement of incremental aircraft with customers.