Atlas Air parks up B747Fs as market conditions take their toll

By Damian Brett

Atlas Air Boeing 747-400F

Atlas Air has parked four of its B747-400 converted freighters and plans to reduce the use of more widebody aircraft as it reports a loss for 2019.

The aircraft lessor’s full-year results show a net loss of $293.1m, while revenues rose slightly to $2.7bn from $2.6bn a year earlier.

The company said the results reflected a non-cash special charge of $638.4m as it wrote down the value of its B7474-400 freighter fleet due to global airfreight and macroeconomic conditions resulting in lower B747-400 commercial cargo yields and utilisation.

It said that as a result of the outlook for the year it had parked four of its less-efficient B747-400 converted freighters since the beginning of 2020. The aircraft were part of its charter fleet.

Being converted freighters, these aircraft also do not offer nose loading capabilities. The aircraft will take between a week and 45 days to get back in the air if required.

“We also plan to return one 747-400 freighter to its lessor in the first half of this year,” it said “In addition, we have sold a 757 freighter and expect to sell a 777 freighter and a 737 passenger aircraft.”

At the end of last year, the company operated 35 B747-400Fs, 10 B747-8Fs and 14 B777-200LRFs.

Looking ahead, new chief executive John Dietrich said: “The airfreight industry, like most others, is experiencing the impacts of the unfortunate coronavirus outbreak.

“The effects are yet to be fully determined, and therefore our visibility into the full year ahead is evolving.

“In these unprecedented circumstances, we are playing a key role in our customers’ operating networks as they navigate this challenging time. We are also currently accommodating special charter demand, and we are well-prepared for the anticipated surge of volumes once manufacturing resumes in full force.”

He concluded: “Our focus remains on express, e-commerce, the US military and faster-growing markets, where the demand for our aircraft and services is solid.

“As the global supply chain rebalances, we will continue to leverage our significant commercial charter business to capitalize on customer demand. Looking ahead, we anticipate that our financial performance in 2020 will be an improvement over 2019.”

The company also reported a loss – of $410m – for the fourth quarter, reflecting the B747 write down.

Operating revenues for the Q4 period were (ironically) $747m compared with $765m for the same period last year.

Dietrich said the fourth quarter figures reflected a pick-up in demand and improved yields compared with the middle of the year.

Performance for the period also reflected from the peak season flying it does for express customers, an increase in military passenger and cargo flying, lower heavy maintenance expense, lower aircraft rent and depreciation, and a refund of excess aircraft rent paid in previous years.

However, pulling performance down was weakness in the global airfreight market, macro-economic conditions, global trade tensions and geo-political unrest in certain countries in South America as well as certain labour-related service disruption.

Dietrich also commented on the ongoing pilot negotiations, saying that reaching a new agreement was a top priority.

Negotiating teams are meeting regularly, he said, and significant progress had been made, although he added that there was still a lot to discuss and that an agreement wouldn’t be reached overnight.

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