Atlas to acquire Southern Air – but it’s all about DHL

Worldwide Holdings (AAWW) signed a definitive agreement to acquire Holdings, a privately held US company with two airline subsidiaries – , and International Airways – for US$110 million. Atlas said it expected the acquisition to close “in the next few months,” assuming regulatory approval by the US Department of Transportation.

AAWW fleet, including SouthernWhile the deal will increase Atlas’ already-large freighter fleet (see chart), it is, in many ways, more about Express than anything else. Not many years ago, AAWW was an and charter operator, with a somewhat troubled scheduled-service subsidiary, . That changed in 2009, when Express took a 49% equity stake in Polar, and began using Polar to fly several 747-400Fs in support of its US international business.

Since then, the Atlas/ partnership has considerably strengthened, and (by our estimate) AAWW now operates twelve 747-8 and 747-400 freighters for on an basis (through Polar), and two 767-300 and nine 767-200 freighters for on a basis. That is, AAWW is operating twenty-three of the fifty-eight aircraft in its operating fleet – 40% of the fleet – in service to . In addition, AAWW’s dry-leasing subsidiary, Leasing, leases two 777Fs and one 757-200F to carriers operating for .

Southern operates five 777Fs and five 737-400Fs for DHL Express.

Southern operates five 777Fs and five 737-400Fs for Express.

Like Atlas, has evolved considerably since Jim Neff resurrected it from the ashes of the bankrupt Transport in 1999. From that point through 2007, offered and charter service with a fleet of up to eighteen 747-200Fs, eventually supplemented with some 747-400Fs. Things began to change in 2007 when US-based private equity firm Capital Partners acquired majority ownership, and merged Southern with the smaller all-cargo carrier, Cargo 360. subsequently put four of its own 777Fs into the Southern fleet and gradually shed all of the 747 freighters. In 2013, transferred the leases on its 777Fs to Express and entered into a long-term contract with the German integrator under which Southern would operate the freighters on basis.  In the last two years, that contract has expanded to include five freighter-converted 737-400Fs, and a fifth 777F.

While may be the number-one customer at Atlas, it is the only customer at .  So Atlas’ description of Southern’s operation as a “highly complementary business”  is spot on.

As to International Airways (FWIA), while its operation is not particularly complementary, it is also not very big. At present, Cargo Facts believes FWIA leases one 767-300F from Lan Cargo, and operates that freighter for Lan Cargo. The carrier has historically operated throughout Latin America and the Caribbean region from its base in Miami, but how Atlas plans to use FWIA’s certificate remains to be seen.

Now, some details:

  • Capital Partners is the majority owner of Holdings, which is the parent of Worldwide Air Logistics Group, which in turn is the parent of the two airlines, and International Airways.
  • AAWW says the acquisition will be an all-cash transaction, funded “using available cash on hand,” with no debt being assumed. AAWW also said the acquisition would be “immediately accretive,” with Southern adding “approximately $100 million to Worldwide’s annual revenues.”
  • Taking over an ongoing operation with active 777F and 737F fleets will allow AAWW to add more of those types (either for or other customers) without having to suffer the “adding a new type to your fleet” headaches.
  • As subsidiaries of Worldwide, will continue to operate from ’s hub at Cincinnati/Northern Kentucky International Airport (CVG), and will continue to operate from Miami International (MIA).
  • Atlas’ customers include (in addition to ), Etihad Airways, Qantas, Panalpina, Astral Aviation, BST Logistics, and Chapman Freeborn.
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