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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  November 5, 2020

 

 

 

Atlas Air Worldwide Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-16545   13-4146982

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

         
2000 Westchester Avenue, Purchase, New York   10577
(Address of principal executive offices)   (Zip Code)

 

914-701-8000

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.01 per share   AAWW   The NASDAQ Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On November 5, 2020, Atlas Air Worldwide Holdings, Inc. issued a press release announcing its financial results for the quarter ended September 30, 2020, among other things. A copy of this press release is attached as Exhibit 99 to this Current Report on Form 8-K.

 

The information in this Current Report on Form 8-K, including Exhibit 99, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

 

Item 9.01 Financial Statements and Exhibits.

 

99 - Atlas Air Worldwide Holdings, Inc. press release, dated November 5, 2020, announcing its financial results for the quarter ended September 30, 2020.

 

104 – Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

 

Exhibit Index

 

Exhibit No.  Description
99  Atlas Air Worldwide Holdings, Inc. press release, dated November 5, 2020, announcing its financial results for the quarter ended September 30, 2020.
104   Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Atlas Air Worldwide Holdings, Inc.
   
November 5, 2020 By:   /s/ Adam R. Kokas  
    Name: Adam R. Kokas
    Title: Executive Vice President, General Counsel and Secretary

 

 

Exhibit 99

 

 

2000 Westchester Avenue, Purchase, New York 10577 • (914) 701-8000

 

FOR IMMEDIATE RELEASE

 

Contacts: Investors – InvestorRelations@atlasair.com

  Media – CorpCommunications@atlasair.com

 

Atlas Air Worldwide

Reports Third-Quarter 2020 Results

 

·Business Growth Driven by Strong Airfreight Demand
·Reported Net Income of $74.1 Million
·Adjusted EBITDA of $196.3 Million and Adjusted Net Income of $82.7 Million
·Raising Outlook

 

PURCHASE, NY, November 5, 2020 – Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced third-quarter 2020 net income of $74.1 million, or $2.78 per diluted share, compared with net income of $60.0 million, or $2.32 per diluted share, in the third quarter of 2019.

 

On an adjusted basis, EBITDA totaled $196.3 million in the third quarter this year compared with $95.6 million in the third quarter of 2019. Adjusted net income in the third quarter of 2020 totaled $82.7 million, or $2.84 per diluted share, compared with $9.5 million, or $0.37 per diluted share, in the third quarter of 2019.

 

“The positive momentum of our business continued in the third quarter, despite a more complex, costly and challenging operating environment caused by the COVID-19 pandemic.” said Chief Executive Officer John W. Dietrich. “Our performance is the result of our entire team pulling together to increase utilization of our aircraft and execute on strong market demand and higher yields.

 

“We continue to broaden our customer base and grow with existing customers to maximize market opportunities. We further increased our roster of long-term charter customers, including the addition of Cainiao, the logistics arm of Alibaba, as well as expanding with HP Inc. and several large global freight forwarders.

 

“We also expanded operations for Amazon, where we began CMI flying three additional 737 freighters since September. We are now operating eight 737s for Amazon, complementing the large fleet of 767s that we have with them.

 

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“Importantly, these long-term customer agreements provide secure and attractive earnings streams and deepen our strategic position in the fast-growing e-commerce sector, as well as in important global markets like China and South America.

  

“We are seeing substantial demand for our long-haul widebody services, both near- and long-term, at attractive yields. We are leveraging the agility of our business model and the scale of our fleet and global operations to serve this increased customer demand.

 

“We are also excited to announce that Titan Aircraft Investments, the joint venture between our Titan subsidiary and Bain Capital Credit, has arranged $500 million in financing facilities. The funds are available for the acquisition of freighter aircraft on lease and passenger aircraft for conversion to freighters. This important step will enable the joint venture to serve the strong market demand for leasing freighters.

 

“I am proud of the important role Atlas is playing in responding to this pandemic globally, and thank our crew and ground staff for their dedication in delivering safe and reliable service. We are taking wide-ranging precautions to safeguard our employees, while navigating through this complex operating backdrop.

 

“Air cargo has always been a vital component in the global supply chain as it provides speed, security and reliability that are unmatched by other modes of transportation. We remain committed to moving goods the world needs most, including medical equipment, pharmaceuticals, personal protective equipment, e-commerce, and other manufacturing and consumer products. We are also actively preparing for our expected role in the timely distribution of vaccines.”

 

Mr. Dietrich continued: “Looking to the fourth quarter, and subject to any material COVID-19 developments, we anticipate solid volumes and yields driven by continued e-commerce growth and end-of-the-year airfreight demand, coupled with the reduction of available cargo capacity in the market. To meet customer demand, we are reactivating our fourth 747 freighter that had been previously parked. This will add to the three 747 freighters and the 777 we placed back into service during the second quarter of 2020.

 

“As a result, we anticipate fourth-quarter revenue of about $850 million and adjusted EBITDA of approximately $215 million.*

 

“We also expect fourth-quarter 2020 adjusted net income to grow approximately 25% compared with adjusted net income of $82.7 million in the third quarter of this year.

 

“On a full-year basis, we now anticipate revenue of approximately $3.1 billion and adjusted EBITDA of about $780 million in 2020.”

 

He concluded: “Atlas is continuing to adapt and navigate through the challenges of 2020. With our talented team, world-class fleet, strong balance sheet and agile business model, we will continue to serve the demand for airfreight and deliver high-quality service for our customers – in these uncertain times and beyond.”

 

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Third-Quarter Results

 

Volumes in the third quarter of 2020 increased to 90,528 block hours compared with 79,310 in the third quarter of 2019, with revenue rising to $809.9 million compared with $648.5 million in the prior-year quarter.

 

Higher ACMI segment revenue during the period primarily reflected an increase in the average revenue per block hour and increased flying, partially offset by the redeployment of 747-400 aircraft to the Charter segment. ACMI segment contribution during the quarter was primarily driven by increased aircraft utilization, reflecting strong demand from our customers, and a reduction in aircraft rent and depreciation. Partially offsetting these improvements were higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19 and increased pay rates resulting from our recent interim agreement with our pilots. In addition, ACMI segment contribution reflected higher heavy maintenance, including additional engine overhauls to take advantage of slot availability and opportunities for vendor pricing discounts, and the redeployment of 747-400 aircraft to the Charter segment to support long-term charter programs.

 

Higher Charter segment revenue during the quarter was primarily due to an increase in flying, partially offset by a decrease in the average revenue per block hour due to lower fuel costs. Charter segment contribution was primarily driven by the increase in commercial cargo yields (excluding fuel) and demand for freighter aircraft, reflecting a reduction of available capacity in the market, the disruption of global supply chains due to the pandemic and our ability to increase utilization. In addition, segment contribution benefited from a reduction in aircraft rent and depreciation, and the redeployment of 747-400 aircraft from ACMI and the operation of a 777-200 freighter from Dry Leasing. These improvements were partially offset by: higher heavy maintenance expense, including additional engine overhauls to take advantage of slot availability and opportunities for vendor pricing discounts; higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19; and increased pay rates resulting from our recent interim agreement with our pilots.

 

In Dry Leasing, lower segment revenue and contribution in the third quarter of 2020 primarily related to changes in leases and the disposition of certain nonessential Dry Leased aircraft during the first quarter of 2020.

 

Lower unallocated income and expenses, net, during the quarter primarily reflected CARES Act grant income of $64.2 million.

 

Reported earnings in the third quarter of 2020 included an unrealized loss on outstanding warrants of $43.6 million, compared with an unrealized gain on outstanding warrants of $83.2 million in the year-ago period.

 

Reported earnings in the third quarter of 2020 also included an effective income tax rate of 32.8%, due mainly to nondeductible changes in the value of outstanding warrants. On an adjusted basis, our results reflected an effective income tax rate of 22.8%.

 

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Nine-Month Results

 

Reported results for the nine months ended September 30, 2020 reflected net income of $176.3 million, or $6.72 per diluted share, which included a $73.4 million unrealized loss on financial instruments. Results compared with net income of $117.1 million, or $1.34 per diluted share, which included an unrealized gain on financial instruments of $78.9 million, for the nine months ended September 30, 2019.

 

On an adjusted basis, EBITDA totaled $564.5 million in the first nine months of 2020 compared with $300.1 million in the first nine months of 2019. For the nine months ended September 30, 2020, adjusted net income totaled $235.8 million, or $8.71 per diluted share, compared with $41.4 million, or $1.54 per diluted share, in the first nine months of 2019.

 

Cash

 

At September 30, 2020, our cash and cash equivalents, restricted cash and short-term investments totaled $729.3 million, compared with $114.3 million at December 31, 2019.

 

Our improved cash balance primarily reflected cash provided by operating activities, and also included the funds we received through the Payroll Support Program available to air cargo carriers under the CARES Act, partially offset by cash used for investing and financing activities.

 

Net cash used for investing activities during the first nine months of 2020 primarily related to capital expenditures and payments for flight equipment and modifications, including spare engines and GEnx engine performance upgrade kits, partially offset by proceeds from the disposal of aircraft.

 

Net cash used for financing activities during the first nine months of 2020 primarily related to payments on debt obligations, including our revolving credit facility, partially offset by debt issuances.

 

To mitigate the impact of any continuation or worsening of the pandemic, we have implemented a number of cost-reduction initiatives, including a significant reduction in nonessential employee travel and the use of contractors. We have also taken actions to increase liquidity and strengthen our financial position, such as the sale of certain nonessential assets and our participation in the Payroll Support Program under the CARES Act.

 

Amazon Warrants

 

On October 9, 2020, Amazon elected a cashless exercise with respect to 3,607,477 shares vested under a Warrant issued in 2016. As a result, Amazon acquired 1,375,421 shares of AAWW common stock, representing approximately 4.99% (after the exercise) of our outstanding common shares.

 

2020 Outlook*

 

Looking to the fourth quarter, and subject to any material COVID-19 developments, we anticipate solid volumes and yields driven by continued e-commerce growth and end-of-the-year airfreight demand, coupled with the reduction of available cargo capacity in the market.

 

 4 

 

 

To meet customer demand, we are reactivating our fourth 747 freighter that had been previously parked. This will add to the three 747 freighters and the 777 we placed back into service during the second quarter of 2020.

 

As a result, we expect to fly approximately 95,000 block hours in the fourth quarter of 2020, with about 65% of the hours in ACMI and the remainder in Charter.

 

We also anticipate revenue of about $850 million and adjusted EBITDA of approximately $215 million. In addition, we expect fourth-quarter 2020 adjusted net income to grow approximately 25% compared with adjusted net income of $82.7 million in the third quarter of this year.*

 

Aircraft maintenance expense in the fourth quarter of 2020 is expected to total about $116 million, with depreciation and amortization totaling around $65 million. Core capital expenditures, which exclude aircraft and engine purchases, are projected to total approximately $25 to $35 million, mainly for parts and components for our fleet.

 

We also now anticipate full-year 2020 revenue of approximately $3.1 billion and adjusted EBITDA of about $780 million.

 

We estimate our full-year 2020 adjusted effective income tax rate will be approximately 23%.

 

We provide guidance on an adjusted basis because we are unable to predict, with reasonable certainty, the effects of outstanding warrants and other items that could be material to our reported results.*

 

Conference Call

 

Management will host a conference call to discuss Atlas Air Worldwide’s third-quarter 2020 financial and operating results at 11:00 a.m. Eastern Time on Thursday, November 5, 2020.

 

Interested parties may listen to the call live at Atlas Air Worldwide’s Investor site or at https://edge.media-server.com/mmc/p/ps7u7bvv.

 

For those unable to listen to the live call, a replay will be archived on the Investor site following the call. A replay will also be available through November 12 by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.) and using Access Code 1347526#.

 

About Non-GAAP Financial Measures

 

To supplement our financial statements presented in accordance with U.S. GAAP, we present certain non-GAAP financial measures to assist in the evaluation of our business performance. These non-GAAP measures include Adjusted EBITDA; Adjusted net income; Adjusted Diluted EPS; Adjusted effective tax rate; and Free Cash Flow, which exclude certain noncash income and expenses, and items impacting year-over-year comparisons of our results. These non-GAAP measures may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for Net income (loss); Diluted EPS; Effective tax rate; and Net Cash Provided by Operating Activities, which are the most directly comparable measures of performance prepared in accordance with U.S. GAAP.

 

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Our management uses these non-GAAP financial measures in assessing the performance of the company’s ongoing operations and in planning and forecasting future periods. We believe that these adjusted measures, when considered together with the corresponding U.S. GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance. For example:

 

·Adjusted EBITDA; Adjusted net income; and Adjusted Diluted EPS provide a more comparable basis to analyze operating results and earnings and are measures commonly used by shareholders to measure our performance. In addition, management’s incentive compensation is determined, in part, by using Adjusted EBITDA and Adjusted net income.

 

·Adjusted effective tax rate provides improved insight into the tax effects of our ongoing business operations.

 

·Free Cash Flow helps investors assess our ability, over the long term, to create value for our shareholders as it represents cash available to execute our capital allocation strategy.

 

*We provide guidance on an adjusted basis and are unable to provide forward-looking guidance on a U.S. GAAP basis or a reconciliation to the most directly comparable U.S. GAAP measures because we are unable to predict with reasonable certainty the ultimate outcome of certain significant items. The principal item is the impact on our results of our outstanding warrant liability, which is highly dependent on the change in our stock price during the period reported. These items are uncertain, depend on various factors, and could have a material impact on our U.S. GAAP results.

 

About Atlas Air Worldwide:

 

Atlas Air Worldwide is a leading global provider of outsourced aircraft and aviation operating services. It is the parent company of Atlas Air, Inc., Southern Air Holdings, Inc. and Titan Aviation Holdings, Inc., and is the majority shareholder of Polar Air Cargo Worldwide, Inc. Our companies operate the world’s largest fleet of 747 freighter aircraft and provide customers the broadest array of Boeing 747, 777, 767 and 737 aircraft for domestic, regional and international cargo and passenger operations.

 

Atlas Air Worldwide’s press releases, SEC filings and other information may be accessed through the company’s home page, www.atlasairworldwide.com.

 

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect Atlas Air Worldwide’s current views with respect to certain current and future events and financial performance. Those statements are based on management’s beliefs, plans, expectations and assumptions, and on information currently available to management. Generally, the words “will,” “may,” “should,” “expect,” “anticipate,” “intend,” “plan,” “continue,” “believe,” “seek,” “project,” “estimate,” and similar expressions used in this release that do not relate to historical facts are intended to identify forward-looking statements.

 

Such forward-looking statements speak only as of the date of this release. They are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of Atlas Air Worldwide and its subsidiaries (collectively, the “companies”) that may cause the actual results of the companies to be materially different from any future results, express or implied, in such forward-looking statements.

 

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Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: our ability to effectively operate the network service contemplated by our agreements with Amazon; our ability to coordinate with Amazon to accept newly converted aircraft; the possibility that Amazon may terminate its agreements with the companies; the ability of the companies to operate pursuant to the terms of their financing facilities; the ability of the companies to obtain and maintain normal terms with vendors and service providers; the companies’ ability to maintain contracts that are critical to their operations; the ability of the companies to fund and execute their business plan; the ability of the companies to attract, motivate and/or retain key executives, pilots and associates; the ability of the companies to attract and retain customers; the continued availability of our wide-body aircraft; demand for cargo services in the markets in which the companies operate; changes in U.S. and foreign government trade policies; economic conditions; the impact of geographical events or health epidemics such as the COVID-19 pandemic; our compliance with the requirements and restrictions under the Payroll Support Program; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; significant data breach or disruption of our information technology systems; labor costs and relations, work stoppages and service slowdowns; the outcome of pending negotiations with our pilots’ union; financing costs; the cost and availability of war risk insurance; aviation fuel costs; security-related costs; competitive pressures on pricing (especially from lower-cost competitors); volatility in the international currency markets; weather conditions; government legislation and regulation; consumer perceptions of the companies’ products and services; anticipated and future litigation; and other risks and uncertainties set forth from time to time in Atlas Air Worldwide’s reports to the United States Securities and Exchange Commission.

 

For additional information, we refer you to the risk factors set forth under the heading “Risk Factors” in the most recent Annual Report on Form 10-K and subsequent reports on Form 10-Q filed by Atlas Air Worldwide with the Securities and Exchange Commission. Other factors and assumptions not identified above may also affect the forward-looking statements, and these other factors and assumptions may also cause actual results to differ materially from those discussed.

 

Except as stated in this release, Atlas Air Worldwide is not providing guidance or estimates regarding its anticipated business and financial performance for 2020 or thereafter.

 

Atlas Air Worldwide assumes no obligation to update such statements contained in this release to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law and expressly disclaims any obligation to revise or update publically any forward-looking statement to reflect future events or circumstances.

 

 

*      *      *

 

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Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30,
2020
   September 30,
2019
   September 30,
2020
   September 30,
2019
 
                 
Operating Revenue  $809,886   $648,539   $2,278,641   $1,992,140 
                     
Operating Expenses                    
Salaries, wages and benefits   194,265    145,987    534,600    432,911 
Maintenance, materials and repairs   116,634    88,240    379,086    305,331 
Aircraft fuel   118,113    123,132    309,673    351,611 
Depreciation and amortization   65,595    62,499    189,005    190,669 
Travel   37,731    49,110    114,749    140,513 
Navigation fees, landing fees and other rent   42,870    32,270    109,909    110,468 
Passenger and ground handling services   36,266    34,453    98,355    97,138 
Aircraft rent   24,239    40,048    72,522    122,271 
Gain on disposal of aircraft   (163)   -    (6,878)   - 
Special charge   547    18,861    16,481    22,130 
Transaction-related expenses   490    324    2,286    3,585 
Other   54,107    54,494    157,929    160,548 
Total Operating Expenses   690,694    649,418    1,977,717    1,937,175 
                     
Operating Income (Loss)   119,192    (879)   300,924    54,965 
                     
Non-operating Expenses (Income)                    
Interest income   (225)   (653)   (929)   (3,975)
Interest expense   28,524    30,117    86,749    90,515 
Capitalized interest   (203)   (853)   (528)   (1,943)
Loss on early extinguishment of debt   7    559    81    804 
Unrealized loss (gain) on financial instruments   43,604    (83,175)   73,351    (78,900)
Other (income) expense, net   (62,689)   1,434    (112,081)   (596)
Total Non-operating Expenses (Income)   9,018    (52,571)   46,643    5,905 
Income before income taxes   110,174    51,692    254,281    49,060 
Income tax expense (benefit)   36,120    (8,282)   77,962    (68,072)
                     
Net Income  $74,054   $59,974   $176,319   $117,132 
                     
Earnings per share:                    
Basic  $2.83   $2.32   $6.76   $4.54 
Diluted  $2.78   $2.32   $6.72   $1.34 
                     
Weighted average shares:                    
Basic   26,135    25,854    26,077    25,814 
Diluted   26,619    25,854    26,256    26,909 

 

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Atlas Air Worldwide Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except share data)

(Unaudited)

 

   September 30,
2020
   December 31,
2019
 
Assets          
Current Assets          
Cash and cash equivalents  $717,867   $103,029 
Restricted cash   11,466    10,401 
Short-term investments   -    879 
Accounts receivable, net of allowance of $776 and $1,822, respectively   268,376    290,119 
Prepaid expenses, assets held for sale and other current assets   171,780    228,103 
Total current assets   1,169,489    632,531 
Property and Equipment          
Flight equipment   5,001,481    4,880,424 
Ground equipment   88,327    83,584 
Less:  accumulated depreciation   (1,113,964)   (977,883)
Flight equipment modifications in progress   49,246    67,101 
Property and equipment, net   4,025,090    4,053,226 
Other Assets          
Operating lease right-of-use assets   182,657    231,133 
Deferred costs and other assets   373,074    391,895 
Intangible assets, net and goodwill   72,334    76,856 
Total Assets  $5,822,644   $5,385,641 
           
Liabilities and Equity          
Current Liabilities          
Accounts payable  $92,805   $79,683 
Accrued liabilities   645,094    481,725 
Current portion of long-term debt and finance leases   296,112    395,781 
Current portion of long-term operating leases   139,152    141,973 
Total current liabilities   1,173,163    1,099,162 
Other Liabilities          
Long-term debt and finance leases   2,073,855    1,984,902 
Long-term operating leases   281,394    392,832 
Deferred taxes   145,952    74,040 
Financial instruments and other liabilities   130,857    42,526 
Total other liabilities   2,632,058    2,494,300 
Commitments and contingencies          
Equity          
Stockholders Equity          
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued   -    - 
Common stock, $0.01 par value; 100,000,000 shares authorized;
31,497,228 and 31,048,842 shares issued, 26,138,539 and 25,870,876
shares outstanding (net of treasury stock), as of September 30, 2020
and December 31, 2019, respectively
   315    310 
Additional paid-in-capital   813,858    761,715 
Treasury stock, at cost; 5,358,689 and 5,177,966 shares, respectively   (217,786)   (213,871)
Accumulated other comprehensive loss   (2,126)   (2,818)
Retained earnings   1,423,162    1,246,843 
Total stockholders equity   2,017,423    1,792,179 
Total Liabilities and Equity  $5,822,644   $5,385,641 

 

1Balance sheet debt at September 30, 2020 totaled $2,370.0 million, including the impact of $55.2 million of unamortized discount and debt issuance costs of $31.3 million, compared with $2,380.7 million, including the impact of $68.6 million of unamortized discount and debt issuance costs of $35.1 million at December 31, 2019.
2The face value of our debt at September 30, 2020 totaled $2,456.5 million, compared with $2,484.4 million on December 31, 2019.

 

 9 

 

 

Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

 

   For the Nine Months Ended 
   September 30,
2020
   September 30,
2019
 
         
Operating Activities:          
Net Income  $176,319   $117,132 
           
Adjustments to reconcile Net Income to net cash provided by operating activities:          
Depreciation and amortization   240,826    241,284 
Accretion of debt securities discount   (2)   (237)
Provision for (reversal of) expected credit losses   76    (83)
Loss on early extinguishment of debt   81    804 
Special charge, net of cash payments   16,481    22,130 
Unrealized loss (gain) on financial instruments   73,351    (78,900)
Gain on disposal of aircraft   (6,878)   - 
Deferred taxes   75,331    (68,552)
Stock-based compensation   15,816    16,553 
Changes in:          
Accounts receivable   23,072    1,397 
Prepaid expenses, current assets and other assets   (39,823)   (69,254)
Accounts payable, accrued liabilities and other liabilities   208,058    11,016 
Net cash provided by operating activities   782,708    193,290 
Investing Activities:          
Capital expenditures   (45,134)   (107,594)
Payments for flight equipment and modifications   (102,777)   (153,706)
Proceeds from insurance   -    38,133 
Proceeds from investments   881    14,367 
Proceeds from disposal of aircraft   45,660    - 
Net cash used for investing activities   (101,370)   (208,800)
Financing Activities:          
Proceeds from debt issuance   401,419    93,723 
Payment of debt issuance costs   (5,172)   (1,316)
Payments of debt and finance lease obligations   (353,795)   (273,142)
Proceeds from revolving credit facility   75,000    50,000 
Payment of revolving credit facility   (175,000)   - 
Customer maintenance reserves and deposits received   10,465    11,717 
Customer maintenance reserves paid   (14,437)   (8,174)
Treasury shares withheld for payment of taxes   (3,915)   (9,336)
Net cash used for financing activities   (65,435)   (136,528)
Net increase (decrease) in cash, cash equivalents and restricted cash   615,903    (152,038)
Cash, cash equivalents and restricted cash at the beginning of period   113,430    232,741 
Cash, cash equivalents and restricted cash at the end of period  $729,333   $80,703 
           
Noncash Investing and Financing Activities:          
           
Acquisition of property and equipment included in Accounts payable and accrued liabilities  $11,357   $55,610 
Acquisition of property and equipment acquired under finance and operating leases  $19,521   $32,794 
Customer maintenance reserves settled with sale of aircraft  $6,497   $- 

 

 10 

 

 

Atlas Air Worldwide Holdings, Inc.
Direct Contribution

(in thousands)
(Unaudited)

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30,
2020
   September 30,
2019
   September 30,
2020
   September 30,
2019
 
Operating Revenue:                    
ACMI  $302,756   $289,024   $873,451   $902,869 
Charter   470,835    324,046    1,296,011    944,839 
Dry Leasing   40,740    43,847    123,572    157,328 
Customer incentive asset amortization   (9,858)   (12,796)   (28,414)   (26,018)
Other   5,413    4,418    14,021    13,122 
Total Operating Revenue  $809,886   $648,539   $2,278,641   $1,992,140 
                     
Direct Contribution:                    
ACMI  $42,822   $33,401   $109,624   $114,048 
Charter   136,619    36,339    373,371    79,554 
Dry Leasing   9,627    12,028    30,046    58,646 
Total Direct Contribution for Reportable Segments   189,068    81,768    513,041    252,248 
                     
Unallocated expenses and (income), net   (34,409)   (93,507)   (173,439)   (255,569)
Loss on early extinguishment of debt   (7)   (559)   (81)   (804)
Unrealized gain (loss) on financial instruments   (43,604)   83,175    (73,351)   78,900 
Special charge   (547)   (18,861)   (16,481)   (22,130)
Transaction-related expenses   (490)   (324)   (2,286)   (3,585)
Gain on disposal of aircraft   163    -    6,878    - 
Income before income taxes   110,174    51,692    254,281    49,060 
                     
Add back (subtract):                    
Interest income   (225)   (653)   (929)   (3,975)
Interest expense   28,524    30,117    86,749    90,515 
Capitalized interest   (203)   (853)   (528)   (1,943)
Loss on early extinguishment of debt   7    559    81    804 
Unrealized (gain) loss on financial instruments   43,604    (83,175)   73,351    (78,900)
Other (income) expense, net   (62,689)   1,434    (112,081)   (596)
Operating Income (Loss)  $119,192   $(879)  $300,924   $54,965 

 

Atlas Air Worldwide uses an economic performance metric, Direct Contribution, to show the profitability of each of its segments after allocation of direct operating and ownership costs. Atlas Air Worldwide currently has the following reportable segments: ACMI, Charter, and Dry Leasing. Each segment has different commercial and economic characteristics, which are separately reviewed by our chief operating decision maker.

 

Direct Contribution consists of income before taxes, excluding loss on early extinguishment of debt, unrealized gain (loss) on financial instruments, special charge, transaction-related expenses, gain (loss) on disposal of aircraft, nonrecurring items, and unallocated expenses and (income), net.

 

Direct operating and ownership costs include crew costs, maintenance, fuel, ground operations, sales costs, aircraft rent, interest expense on the portion of debt used for financing aircraft, interest income on debt securities, and aircraft depreciation.

 

Unallocated income and expenses, net include corporate overhead, nonaircraft depreciation, noncash expenses and income, interest expense on the portion of debt used for general corporate purposes, interest income on nondebt securities, capitalized interest, foreign exchange gains and losses, other revenue, other nonoperating costs and CARES Act grant income.

 

 11 

 

 

Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)

 

   For the Three Months Ended 
   September 30,
2020
   September 30,
2019
   Percent
Change
 
             
Net Income  $74,054   $59,974    23.5%
Impact from:               
CARES Act grant income1   (64,211)   -      
Customer incentive asset amortization   9,858    12,796      
Special charge   547    18,861      
Leadership transition costs   2,176    2,852      
Noncash expenses and income, net2   4,527    4,696      
Unrealized loss (gain) on financial instruments   43,604    (83,175)     
Other, net3   462    2,371      
Income tax effect of reconciling items   11,731    (8,859)     
Adjusted Net Income  $82,748   $9,516    NM 
                
Weighted average diluted shares outstanding   26,619    25,854      
Add: dilutive warrant4   2,478    -      
Adjusted weighted average diluted shares outstanding   29,097    25,854      
                
Adjusted Diluted EPS  $2.84   $0.37    NM 

 

   For the Nine Months Ended 
   September 30,
2020
   September 30,
2019
   Percent
Change
 
             
Net Income  $176,319   $117,132    50.5%
Impact from:               
CARES Act grant income1   (84,378)   -      
Customer incentive asset amortization   28,414    26,018      
Special charge   16,481    22,130      
Leadership transition costs   5,933    3,393      
Noncash expenses and income, net2   13,372    13,743      
Unrealized loss (gain) on financial instruments   73,351    (78,900)     
Other, net3   (3,845)   4,653      
Income tax effect of reconciling items   10,170    (12,540)     
Special tax item5   -    (54,272)     
Adjusted Net Income  $235,817   $41,357    NM 
                
Weighted average diluted shares outstanding   26,256    26,909      
Add: dilutive warrant4   826    -      
Adjusted weighted average diluted shares outstanding   27,082    26,909      
                
Adjusted Diluted EPS  $8.71   $1.54    NM 

 

 12 

 

 

Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)

 

   For the Three Months Ended
   September 30,
2020
   September 30,
2019
   Percent
Change
            
Income before taxes  $110,174   $51,692   NM
Impact from:             
CARES Act grant income1   (64,211)   -    
Customer incentive asset amortization   9,858    12,796    
Special charge   547    18,861    
Leadership transition costs   2,176    2,852    
Noncash expenses and income, net2   4,527    4,696    
Unrealized loss (gain) on financial instruments   43,604    (83,175)   
Other, net3   462    2,371    
Adjusted income before income taxes   107,137    10,093   NM
Interest expense, net   23,568    24,388    
Other (income) expense, net   (62,689)   1,640    
Adjusted operating income  $68,016   $36,121   NM
              
Income tax expense (benefit)  $36,120   $(8,282)   
Income tax effect of reconciling items   11,731    (8,859)   
Adjusted income tax expense (benefit)   24,389    577    
Adjusted income before income taxes  $107,137   $10,093    
Effective tax expense (benefit) rate   32.8%   (16.0)%   
Adjusted effective tax expense rate   22.8%   5.7%   

 

   For the Nine Months Ended
   September 30,
2020
   September 30,
2019
   Percent
Change
            
Income before taxes  $254,281   $49,060   NM
Impact from:             
CARES Act grant income1   (84,378)   -    
Customer incentive asset amortization   28,414    26,018    
Special charge   16,481    22,130    
Leadership transition costs   5,933    3,393    
Noncash expenses and income, net2   13,372    13,743    
Unrealized loss (gain) on financial instruments   73,351    (78,900)   
Other, net3   (3,845)   4,653    
Adjusted income before income taxes   303,609    40,097   NM
Interest expense, net   71,922    72,273    
Other (income) expense, net   (112,081)   3,059    
Adjusted operating income  $263,450   $115,429   NM
              
Income tax expense (benefit)  $77,962   $(68,072)   
Income tax effect of reconciling items   10,170    (12,540)   
Special tax item5   -    (54,272)   
Adjusted income tax expense (benefit)   67,792    (1,260)   
Adjusted income before income taxes  $303,609   $40,097    
Effective tax expense (benefit) rate   30.7%   (138.8)%   
Adjusted effective tax expense (benefit) rate   22.3%   (3.1)%   

 

 13 

 

  

Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)

 

   For the Three Months Ended 
   September 30,
2020
   September 30,
2019
   Percent
Change
 
             
Net Income  $74,054   $59,974    23.5%
Interest expense, net   28,096    28,611      
Depreciation and amortization   65,595    62,499      
Income tax expense (benefit)   36,120    (8,282)     
EBITDA   203,865    142,802      
CARES Act grant income1   (64,211)   -      
Customer incentive asset amortization   9,858    12,796      
Special charge   547    18,861      
Leadership transition costs   2,176    2,852      
Unrealized loss (gain) on financial instruments   43,604    (83,175)     
Other, net3    462    1,474      
Adjusted EBITDA  $196,301   $95,610    105.3%

 

 

   For the Nine Months Ended 
   September 30,
2020
   September 30,
2019
   Percent
Change
 
             
Net Income  $176,319   $117,132    50.5%
Interest expense, net   85,292    84,597      
Depreciation and amortization   189,005    190,669      
Income tax expense (benefit)   77,962    (68,072)     
EBITDA   528,578    324,326      
CARES Act grant income1   (84,378)   -      
Customer incentive asset amortization   28,414    26,018      
Special charge   16,481    22,130      
Leadership transition costs   5,933    3,393      
Unrealized loss (gain) on financial instruments   73,351    (78,900)     
Other, net3   (3,845)   3,156      
Adjusted EBITDA  $564,534   $300,123    88.1%

 

1CARES Act grant income in 2020 is related to income associated with the Payroll Support Program.

 

2Noncash expenses and income, net in 2020 and 2019 is primarily related to amortization of debt discount on the convertible notes.

 

3Other, net in 2020 is primarily related to a $6.9 million net gain on the sale of aircraft, costs associated with the Payroll Support Program, costs associated with the refinancing of debt, costs associated with our acquisition of Southern Air and accrual for legal matters and professional fees. Other, net in 2019 is primarily related to a net insurance recovery, loss on early extinguishment of debt, unique training aircraft costs required for a customer contract and costs associated with a customer transaction with warrants, costs associated with our acquisition of Southern Air and accrual for legal matters and professional fees.

 

4Dilutive warrants in 2020 represented potentially dilutive common shares related to vested warrants issued to a customer. These warrants are excluded from Diluted EPS prepared in accordance with GAAP when they would have been antidilutive.

 

5Special tax item in 2019 represented income tax benefits from the completion of the 2015 IRS examination that are not related to ongoing operations.

 

 14 

 

 

Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)

 

   For the Three Months Ended 
   September 30,
2020
   September 30,
2019
 
         
Net Cash Provided by Operating Activities  $222,318   $84,293 
Less:          
  Capital expenditures   20,039    30,840 
  Capitalized interest   203    853 
Free Cash Flow1  $202,076   $52,600 

 

 

   For the Nine Months Ended 
   September 30,
2020
   September 30,
2019
 
         
Net Cash Provided by Operating Activities  $782,708   $193,290 
Less:          
  Capital expenditures   45,134    107,594 
  Capitalized interest   528    1,943 
Free Cash Flow1  $737,046   $83,753 

  

1Free Cash Flow = Net Cash from Operations minus Base Capital Expenditures and Capitalized Interest.

 

 Base Capital Expenditures excludes purchases of aircraft.

 

 15 

 

 

Atlas Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results
(Unaudited)

 

   For the Three Months Ended       For the Nine Months Ended     
   September 30,
2020
   September 30,
2019
   Increase/
(Decrease)
   September 30,
2020
   September 30,
2019
   Increase/
(Decrease)
 
                         
Block Hours                              
ACMI   61,154    60,337    817    175,064    182,060    (6,996)
Charter   27,819    18,142    9,677    70,069    52,463    17,606 
Cargo   23,333    12,717    10,616    57,749    37,084    20,665 
Passenger   4,486    5,425    (939)   12,320    15,379    (3,059)
Other   1,555    831    724    3,609    2,128    1,481 
Total Block Hours   90,528    79,310    11,218    248,742    236,651    12,091 
                               
Revenue Per Block Hour                              
ACMI  $4,951   $4,790   $161   $4,989   $4,959   $30 
Charter  $16,925   $17,862   $(937)  $18,496   $18,010   $486 
Cargo  $16,758   $16,745   $13   $18,560   $17,379   $1,181 
Passenger  $17,792   $20,480   $(2,688)  $18,199   $19,530   $(1,331)
                               
Average Utilization (block hours per day)                              
ACMI1   9.3    8.1    1.2    8.6    8.5    0.1 
Charter                              
Cargo   10.7    7.7    3.0    9.8    8.0    1.8 
Passenger   5.0    6.6    (1.6)   4.6    6.3    (1.7)
All Operating Aircraft1,2   9.4    8.0    1.4    8.6    8.3    0.3 
                               
Fuel                              
Charter                              
Average fuel cost per gallon  $1.35   $2.27   $(0.92)  $1.42   $2.29   $(0.87)
Fuel gallons consumed (000s)   87,460    54,296    33,164    217,507    153,764    63,743 

 

1ACMI and All Operating Aircraft averages in the third quarter and first nine months of 2020 reflect the impact of increases in the number of CMI aircraft and amount of CMI flying compared with the same periods of 2019.

 

2Average of All Operating Aircraft excludes Dry Leasing aircraft, which do not contribute to block-hour volumes.

 

 16 

 

  

Atlas Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results
(Unaudited)

 

   For the Three Months Ended       For the Nine Months Ended     
   September 30,
2020
   September 30,
2019
   Increase/
(Decrease)
   September 30,
2020
   September 30,
2019
   Increase/
(Decrease)
 
                         

Segment Operating Fleet

(average aircraft equivalents

during the period)

                              
ACMI1                              
747-8F Cargo   8.1    7.7    0.4    8.6    8.3    0.3 
747-400 Cargo   13.0    18.3    (5.3)   13.0    18.1    (5.1)
747-400 Dreamlifter   2.7    3.5    (0.8)   2.7    3.6    (0.9)
777-200 Cargo   8.0    8.0    -    8.0    6.8    1.2 
767-300 Cargo   23.0    25.0    (2.0)   23.6    25.2    (1.6)
767-200 Cargo   9.0    9.0    -    9.0    9.0    - 
767-200 Passenger   1.0    1.0    -    1.0    1.0    - 
737-800 Cargo   5.5    3.7    1.8    5.2    1.8    3.4 
737-400 Cargo   0.8    5.0    (4.2)   3.5    5.0    (1.5)
Total   71.1    81.2    (10.1)   74.6    78.8    (4.2)
Charter                              
747-8F Cargo   1.9    2.2    (0.3)   1.3    1.6    (0.3)
747-400 Cargo   19.9    15.7    4.2    19.2    15.3    3.9 
747-400 Passenger   5.0    4.1    0.9    5.0    4.0    1.0 
777-200 Cargo   1.0    -    1.0    0.5    -    0.5 
767-300 Cargo   1.0    -    1.0    0.4    -    0.4 
767-300 Passenger   4.8    4.8    -    4.8    4.9    (0.1)
Total   33.6    26.8    6.8    31.2    25.8    5.4 
Dry Leasing                              
777-200 Cargo   7.0    7.0    -    7.0    7.3    (0.3)
767-300 Cargo   21.0    21.0    -    21.0    21.2    (0.2)
757-200 Cargo   -    1.0    (1.0)   0.2    1.0    (0.8)
737-300 Cargo   1.0    1.0    -    1.0    1.0    - 
737-800 Passenger   -    1.0    (1.0)   0.2    1.0    (0.8)
Total   29.0    31.0    (2.0)   29.4    31.5    (2.1)
Less: Aircraft Dry Leased to
CMI customers
   (21.0)   (22.7)   (1.7)   (21.0)   (23.1)   (2.1)
Total Operating Average Aircraft Equivalents   112.7    116.3    (3.6)   114.2    113.0    1.2 
                               
Out-of-Service2   1.0    1.0    -    2.7    0.7    2.0 

 

1ACMI average fleet excludes spare aircraft provided by CMI customers.

 

2Out-of-service includes aircraft that are either temporarily parked or held for sale.

 

 17 

v3.20.2
Cover
Nov. 05, 2020
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Nov. 05, 2020
Entity File Number 001-16545
Entity Registrant Name Atlas Air Worldwide Holdings, Inc.
Entity Central Index Key 0001135185
Entity Tax Identification Number 13-4146982
Entity Incorporation, State or Country Code DE
Entity Address, Address Line One 2000 Westchester Avenue
Entity Address, City or Town Purchase
Entity Address, State or Province NY
Entity Address, Postal Zip Code 10577
City Area Code 914
Local Phone Number 701-8000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01 per share
Trading Symbol AAWW
Security Exchange Name NASDAQ
Entity Emerging Growth Company false