On the back of strong air freight demand Atlas Air Worldwide is reactivating three of its parked B747 converted freighters and is also now operating a B777F that was previously in its dry-leasing business.
Atlas saw its net income for the first quarter rising to USD 23.4 million on the back of revenue of $643.5 million, down 5.0 per cent from the first quarter 2019.
Adjusted EBITDA for the first quarter of this year was $121.2 million – 0.6 per cent higher than the same period of 2019.
“After a slow start, and despite the continual and varying operational challenges and uncertainties related to COVID-19, we ended the quarter with results that exceeded our expectations,” says Atlas Air Worldwide president and chief executive officer John W. Dietrich.
“Our results reflected increased charter cargo demand and higher airfreight yields in March. They also reflect the vital role that Atlas plays in supporting the global economy and our customers by keeping goods moving.
“From parts and components used in manufacturing processes to finished products, food, pharmaceuticals, supplies and other cargo, businesses and individuals count on Atlas,” he adds.
Volumes in the first quarter of 2020 totaled 73,247 block hours compared with 77,061 in the first quarter of 2019, with revenue of $643.5 million compared with $679.7 million in the prior-year period.
Revenues in Atlas’ ACMI division dropped 9.0 per cent year-on-year in Q1, to $278.7 million.
Lower ACMI segment revenue in the first quarter of 2020 reflected a decrease in flying, primarily driven by the redeployment of B747-400 aircraft to the Charter segment, as well as customer flight cancellations caused by the COVID-19 pandemic. This was partially offset by an increase in B777, B737 and B747-400 CMI flying, Atlas says.
Block-hour volume growth primarily reflected the strong demand for commercial cargo, driven by a reduction of available capacity in the market and the disruption of global supply chains due to the COVID-19 pandemic alongside the redeployment of B747-400 aircraft from the ACMI segment.
The ACMI division’s direct contribution in the first quarter increased by 31 per cent — from $40 million in Q1 2019 to $52.3 million in 2020.
The company’s charter division saw revenues increase by 7.0 per cent year-on-year in the first quarter of the year, to $327.6 million in 2020.
The charter division’s direct contribution increased by 74 per cent y-o-y to $50.8 million in Q1 2020.
Atlas says Charter contribution was primarily driven by an increase in commercial cargo yields (excluding fuel), reflecting a reduction of available capacity in the market and the disruption of global supply chains due to the Covid-19 pandemic.
“We expect the positive trends that we are currently experiencing to continue throughout the remainder of the year, and expect a majority of our earnings to occur in the second half of this year,” says Dietrich.
“The evolving and uncertain environment related to COVID-19 makes it difficult to accurately predict the future impact on our results.”
As a result Atlas is revising its Q2 outlook and will only update its full-year outlook at a later date.
Atlas expects to fly approximately 80,000 block hours in the second quarter of 2020, with revenue of approximately $770 million, and adjusted EBITDA of about $165 million.
It anticipates adjusted net income to grow approximately 40 to 50 per cent compared with adjusted net income of $29.9 million in the first quarter of 2020 with adjusted net income to more than double compared with the first quarter of 2020.
“We expect that earnings in the second quarter will benefit from continued charter demand, including several long-term charter programs at higher yields, driven by a reduction of airfreight capacity, increased demand for transporting goods and the disruption of global supply chains related to COVID-19; a refund of excess aircraft rent paid in previous years; flying the incremental CMI aircraft added to our fleet during 2019; and improved operating efficiencies and cost savings,” Dietrich adds.
“As always, safety is our top priority, and we are focused on supporting our pilots and ground staff through this challenging time. We are very fortunate to be able to continue to carry the goods that the world needs.”
Atlas Worldwide also reached an agreement with its pilot unions at Atlas Air and Southern Air for an interim pay increase of 10 per cent, effective 1 May.
“This recognises the outstanding efforts that our pilots provide every day, and especially in this challenging operating environment. We also remain focused on completing the joint collective bargaining agreement we have been pursuing in connection with our merger between Atlas Air and Southern Air,” Dietrich says.