27-Oct-2009 11:10 AM

Atlas Air Worldwide "encouraged" by strengthening charter yields and air freight market trends

Atlas Air Worldwide released (26-Oct-2009) the following commentary upon the release of its 3Q2009 financial results:

  • Yields/Traffic: Stated it is “encouraged” by a strengthening in charter yields, which has continued into the 4Q2009. CEO, William Flynn, added that the company is “encouraged by trends in the global air freight market”, adding that while only international air freight traffic volumes through Aug-2009 is down on a year-over-year basis, they have been trending up on a sequential basis since early in 2Q2009. The company expects the ongoing improvement in global air freight supply and demand to continue in 4Q2009;
  • Capacity/Aircraft retiring: Continues to see retirements of “aging and inefficient capacity” from the market which is helping to improve the balance between traffic and capacity, particularly in the Asia Central markets. Accordingly, the company expects that “substantially more” of the remaining 78 'classic' freighters in service in mid-Oct-2009 will come out of the market in 2009 and beyond;
  • Fleet News: Has an active fleet currently totals 26 aircraft, comprised of 22 B747-400s and four B747-200s. In addition, the company has temporarily parked three other B747-200Fs pending an assessment of demand in 2010. The carrier added that it still plans to introduce its new B747-8Fs into service in late-2010. In other fleet news, Atlas Air stated it is “continuing” discussions with Boeing and have agreed on the rescheduling of three aircraft into 2012 and 2013. As a result of its agreement with Boeing, future aircraft purchase commitments, including arrangements for spare engines, flight equipment and other related items, will now be spread out more evenly over the next few years rather than concentrated in the 2010 and 2011 timeframe.
  • Outlook: Based on current trends, Atlas expects 4Q2009 net earnings will exceed USD18 million. The company also anticipates that net earnings in 2010 will be “ consistent with our currently expected 2009 earnings level, excluding one time items from 2009”;
  • ACMI Contract: Has an agreement to renew the contract on the ACMI aircraft that was up for renewal in 2H2009 and has entered into a long-term contract with a new customer, SonAir, to provide premium passenger service on an outsourced CMI basis. The new service is expected to commence in 1H2010.

Atlas Air Worldwide: “Our outlook for 2010 is based on encouraging trends in air freight and in the broader economy, but also recognizes some continuing uncertainty regarding the pace of economic recovery. In ACMI, assuming a modest pace of recovery, we expect that 18 of our 747-400F aircraft will be operating in our wet lease segment by year end 2010, up from 17 in the fourth quarter 2009. In our AMC segment, although our visibility is limited, we currently expect demand to remain consistent with the expected full year 2009 levels,” William Flynn, CEO. Source: Source: Seeking Alpha, 26-Oct-2009.

Atlas Air Worldwide: “Our third quarter earnings represent a sharp improvement over our results for the third quarter of 2008. Like our previous quarterly results this year, our third quarter earnings reflect our successful efforts throughout 2008 and 2009 to transform our business, our operating cost base and our fleet,” William J Flynn, President and CEO. Source: Seeking Alpha, 26-Oct-2009.

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