Atlas posts $400M loss, parks four converted 747Fs

Atlas Air Worldwide Holdings today reported a net loss of $410.2 million for the fourth quarter of 2019, partly resulting from a non-cash special charge of $485.2 million related to the write-down of the company’s whole 747-400F fleet due to lower cargo yields and aircraft utilization.

Atlas posted the loss despite block hours in the fourth quarter of 2019 increasing by 1.3% year over year. The company said charter and ACMI revenue during the quarter was lower because of decreased 747-400F flying due to tariffs and trade tensions, but this was offset by growth in 737, 747 and 777 CMI cargo flying and an increase in volumes in the company’s charter segment.

For 2019 overall, block hours grew by 8.4% compared with 2018, and operating revenue increased by 2.2%, but Atlas ended the year with a net loss of $293.1 million.

During Atlas Air Worldwide’s 4Q2019 results conference call, President and CEO John Dietrich said the company had parked four freighter-converted 747-400Fs in the past couple of months because of soft demand. The aircraft had been previously flying in charter service. Based on flight-tracking tools, Dietrich was referring to two 747-400BCFs (24833 and 26557), parked at Marana (MZJ) since Jan. 2, and at Lleida-Alguaire (ILD) since Feb. 2, respectively, and two 747-400BDSFs (27062 and 27174), parked at MZJ since Dec. 29 and Dec. 24, respectively. These aircraft could be reactivated with the appropriate lead times to bring them back into service, Dietrich said.

Dietrich said he does not anticipate parking any production 747Fs, but one 747-400F is expected to be returned to its lessor during the first half of 2020. Atlas also began flying a 747-400F (26553) on an ACMI basis for Israel-based El Al on Jan. 1, and recently extended leases for two 777Fs for ten more years.

According to Dietrich, Atlas is selling three “non-essential” aircraft in its portfolio. One 757-200F has already been sold, while a 777F and a passenger 737-400 are expected to be sold in the year ahead. The company confirmed to Cargo Facts that the 777F being offered for sale is unit 35606, which was previously dry leased to Emirates and was returned to Titan Aviation Holdings, Atlas’ leasing arm, in 2019. Atlas had previously said this aircraft, parked in Leipzig (LEJ) since the first half of 2019, was “awaiting placement with a customer.”

Dietrich expects Atlas’ performance in 2020 to be an improvement over 2019, subject to developments related to the coronavirus. To that end, Atlas has been handling special charter demand arising from the cancellation of passenger flights and the ensuing lack of belly capacity on a number of trade lanes, most notably to and from China. Atlas is anticipating a peak when production picks up and also when belly capacity resumes due to “significant pent-up demand which favors freighters,” he said.