Atlas Air earnings tumble in Q3

Atlas Air’s parent company Atlas Air Worldwide Holdings (AAWW) saw its net income drop 50% year over year in the third quarter to $60.1 million compared with $119.5 million for the same quarter in 2021. WHY IT MATTERS: Atlas Worldwide entered into an agreement this summer to be acquired by an Apollo-led investor group and therefore did not hold an earnings call for the second quarter in a row . The investor group will hold a special shareholder meeting Nov. 29. [caption id="attachment_57131590" align="alignright" width="316"] A cargo aircraft operated by Atlas Air at Miami International Airport in Miami. Photo / Bloomberg[/caption] THE BIG PICTURE: The airfreight industry experienced unusual highs in 2021, making a less profitable than expected Q3, but external factors — including higher pilot costs, high jet fuel rates, lower aircraft utilization and hurricanes — further reduced profitability, Atlas reported. BY THE NUMBERS: Atlas saw a 46% YoY decline in its adjusted net income, ending the quarter at $78.8 million, down from $145.4 million. EBITDA was $194 million, 31% less than 2021’s $280.5 million; Volumes fell 12% YoY, completing only 79,274 block hours; Atlas paid $290.1 million in pre-delivery payments for its new aircraft; and Jet fuel expenses skyrocketed 62%, with Atlas paying $352 million in jet fuel in Q3. WHAT THEY’RE SAYING: Atlas Air Worldwide saw “strong demand for its services,” in the past quarter, President and Chief Executive John Dietrich said in today’s release. “Notwithstanding this strong demand, our third-quarter performance was impacted by operational disruptions related to an increase in COVID-19 cases, particularly in July and August, as well as the effects of Hurricane Ian at the end of the quarter,” he added. STATE OF PLAY: AAWW revenue grew 10% YoY to $1.1 billion in Q3. Atlas’s Airline Operating division remained its most profitable, at $1 billion; However, the segment saw decreases YoY due to pilot costs — particularly higher overtime pay and a higher premium pay for pilots working in areas significantly impacted by COVID-19; and Dry Leasing brought $41 million in operating revenue, similar to 2021 numbers. NOTEWORTHY: Atlas Air has a long-term aircraft, crew, maintenance and insurance (ACMI) agreement with MSC Mediterranean Shipping company for its new, self-owned airfreight services . The first aircraft was delivered in October, with three more to arrive in early 2023. MSC Air Cargo plans to start operations next year, following delivery of the freighters. MARKET REACTION: Q3 revenue was $70 million lower than the expected $1.12 billion. Shares of Atlas Air Worldwide Holdings Inc. (NASDAQ:AAWW) were trading at $100.25 at market close on Nov. 3, down .64%. AAWW has a market capitalization of $2.85 billion. FUTURE LOOK: Atlas opted not to disclose future-looking statements as it settles its acquisition, which is expected to close in Q4 2022 or Q1 2023. However, Chief Commercial Officer Michael Steen told our sister publication Cargo Facts the freighter market outlook is positive , despite the challenges ahead for 2023. Atlas Air ranked No. 4 in Air Cargo World’s Freight 50 ranking of the world’s top cargo carriers, based on 2020 tonnage. Join Air Cargo World for our next webinar, “Dangerous goods in focus: Shoring up air cargo logistics,” on Tuesday, Nov. 15, at 11 a.m. ET. Click here for more information and to register.

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