Green grass and high tides for Atlas

  • David Harris
  • August 2, 2017
  • 0

Not only did Atlas Air Worldwide Holdings (AAWW) report an extremely strong second quarter and first half, CEO Bill Flynn said the company expected the good momentum “to carry through 2017, into 2018, and beyond.”

In the second quarter, Atlas reported net income up 89.3% over 2Q16 to $40 million, as revenues increased 16.7% to $517 million. Operating income for the quarter was up 181% to $58 million. Even after adjusting for several one-time financial impacts, net income was still up 44.4% to $29 million.

The gains were spread across all three of AAWW’s operating segments, and details can be seen in the chart at right, but it is worth underlining some of the company’s background comments.

First, demand in its core ACMI segment not only grew strongly in the quarter, but is going to continue to increase. In August, AAWW announced that it had signed a contract to operate three 747-400 freighters for Hong Kong Air Cargo Carrier Ltd (the cargo arm of Hong Kong Airlines). The first aircraft will enter service in September 2017 (serving routes between Asia and the US), with the second and third aircraft to follow in 2018. This follows four other recent ACMI contracts with Asia carriers including Yangtze River Airlines (which, like Hong Kong Air Cargo, is a subsidiary of the HNA Group), Cathay Pacific Airways, Asiana Airlines, and Nippon Cargo Airlines.

Second, yields in the charter segment are rising along with demand, so not only is Atlas flying more charter flights, it is getting more revenue per flight.

Third, Atlas expects the shift to e-commerce will continue to push more cargo onto airplanes, and says that it is well placed to take advantage of this shift, as 70% of its current freighters operate for customers in the e-commerce and express markets – a percentage that will increase “as we ramp up from six aircraft for Amazon currently to an expected 20 by the end of 2018.”

Finally, it was interesting to hear CEO Bill Flynn address the question of whether the industry in general, and Atlas in particular, should scale back its optimism. That question was raised by one of the financial analysts on a conference call following publication of the 2Q results this morning. He pointed out that IATA, in its monthly summary of the freight industry’s performance in June, said there were signs that the current growth cycle may have peaked. In response, Flynn said “I disagree with IATA.” Explaining why, he said that IATA’s data was based on reports from member carriers, and missed a lot of express traffic – the part of the industry with the strongest growth potential. He also pointed out that the penetration of e-commerce currently stood at just 6% to 7%, and that there was still plenty of opportunity for continued growth.

To learn more about Atlas and its view of, and plans for, the future, join us at the Cargo Facts Symposium in Miami, 2 – 4 October, where CEO Bill Flynn will participate as a special guest in a one-on-one Fireside Chat. For more information, or to register, visit www.cargofactssymposium.com.

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