ATLAS Air Worldwide, the world’s largest B747 freighter operator and a provider of outsourced aircraft and flight operating services, saw its revenue increase to US$3.21billion last year from $2.74billion in 2019, “exceeding expectations” amidst the global health pandemic, writes Thelma Etim.
Last year, the airline’s block-hours grew impressively to 344,821 in comparison with 321,140 in 2019.
For the 12 months to 31 December, 2020, Atlas’ reported net income totalling $360.3million, a figure which includes a $71.1million “unrealised loss on financial instruments” explains a statement.
The company points out reported results for the previous 12 months ending 31 December, 2019, reflected a net loss of $293.1 million, which included a non-cash special charge of $638.4 million ($503.1 million after tax), partially offset by an unrealised gain on financial instruments of $75.1 million.
In a big turn around, on an adjusted basis, earnings before interest, taxes, depreciation and amortisation (EBITDA) grew to $844.2 million in 2020, in comparison with $504.8 million in 2019. Adjusted net income also increased to $379.0 million in comparison with $139.6 million the year before.
John Dietrich, president and chief executive of Atlas Air Worldwide, emphasises the company ended this unprecedented year “on a strong note, with financial and operating results that exceeded our expectations.
“In the face of unrelenting operational complexities driven by the COVID-19 pandemic, we added widebody capacity, increased aircraft utilisation and grew block-hours to carry historic volumes, including essential goods that businesses, communities and individuals require as well as holiday e-commerce packages,” he adds.
Atlas’ 2020 fourth-quarter, peak period results were particularly impressive in the pandemic year, when net income totalled $184million for the three months ending 31 December 2020. “[These] results compare with a reported loss of $410.2million for the three months ended 31 December, 2019, which was primarily due to a non-cash special charge of $616.2million ($485.2 million after tax),” explains the statement.
In the final quarter, on an adjusted basis, EBITDA rose to $279.7million in comparison with $204.7 million in the same period of 2019. Adjusted net income also rose to $143.2million from $98.2million in the previous year.
In the final three months, block-hour volumes increased to 96,079 compared with 84,488 in the fourth quarter of 2019, with revenue growing to $932.5million versus $747million in 2019, notes the statement.
Dietrich continues: “The strong demand for our aircraft and services has continued into this [current] quarter. We expect to fly approximately 85,000 block-hours in the first quarter of 2021, with revenue of approximately $820million, and adjusted EBITDA of about $150million,” he predicts. “In addition, we expect first-quarter 2021 adjusted net income to grow approximately 60 per cent to 65 per cent compared with adjusted net income of $29.9million in the first quarter of 2020.
In contrast, the airline group’s ACMI segment revenues primarily reflected lower levels of flying due to the re-deployment of B747-400 aircraft to the company’s charter segment – to support “long-term charter programmes with customers seeking to secure committed cargo capacity”. This was partially offset by an increase in aircraft utilisation and higher CMI flying, it says.
“ACMI segment contribution included higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19 and increased pay rates we provided to our pilots in May 2020,” the statement adds.
Additionally, the ACMI segment contribution reflected higher heavy maintenance expenses, including additional engine overhauls to take advantage of slot availability and vendor pricing discounts.
Atlas Air’s charter segment’s contribution was primarily propelled by a rise in commercial cargo yields and strong demand for main-deck cargo capacity, reflecting the reduction of available cargo capacity in the passenger aircraft belly-hold market and the disruption of global supply chains.
The segment also benefited from a reduction in aircraft rent and depreciation, the more profitable re-deployment of B747-400 aircraft from the ACMI segment and the operation of a B777-200 freighter previously allocated to the airline’s dry leasing business.
“These improvements were partially offset by higher heavy maintenance expenses, including additional engine overhauls performed to take advantage of slot availability and vendor pricing discounts; fewer charters for sports teams and fans as sports leagues cancelled their games; higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19; and increased pay rates we provided to our pilots in May 2020,” outlines the statement.
The airline group is currently in consultation with its pilots over a new joint collective bargaining agreement, in connection with the merger between Atlas Air and Southern Air. “Formal negotiations with the pilots’ union have recently concluded, and we are moving on to binding interest arbitration on the remaining open issues. This arbitration is scheduled to begin in mid-March 2021,” adds the statement.
Dietrich is quick to highlight that Atlas Air has ordered four new B747-8Fs from Boeing. “This acquisition underscores that commitment and also demonstrates our focus on environmental stewardship through the reduction of aircraft noise, emissions and fuel consumption,” he enthuses.
“The B747-8F provides 20 per cent higher payload capacity and 16 per cent lower fuel consumption than the very capable B747-400F, and has 25 per cent higher capacity than the new-technology B777-200LRF. In addition, the advanced engines on the B747-8F reduce noise by approximately 30 per cent compared to the previous generation of aircraft,” he adds.
“As the world’s largest B747 freighter operator, the -8F is core to our business and complements our diverse fleet of B747-400s, B777s, B767s and B737s. We are expecting delivery of these new aircraft from May through October 2022, and they will play a key role in advancing Atlas’ strategic growth plans for decades to come,” Dietrich asserts.
Regarding liquidity at the end of last year, Atlas’ cash and cash equivalents, short-term investments and restricted cash totalled $856.3 million, in comparison with $114.3 million at 31 December, 2019.
The company’s improved cash balance primarily reflects the cash provided by improved operating activities, and also included the funds received through the USA’s Payroll Support Programme available to airfreight carriers under the United States Department of the Treasury’s Coronavirus Aid, Relief, and Economic Security (CARES) Act, partially offset by cash utilised for investing and financing activities.
The airline group anticipates the current first-quarter results will continue to be impacted by ongoing pandemic-related expenses, including pilot premium pay and operational costs for providing a safe working environment for staff. The airline also expects higher pilot costs related to increased pay rates for its pilots implemented in May 2020 and higher scheduled heavy maintenance expenses.
Dietrich concludes: “Due to ongoing uncertainty related to the pandemic and associated market dynamics, including ever-changing border restrictions, new variants of COVID-19 and surges in cases globally, we are not providing a full-year 2021 earnings outlook at this time.
“I’d like to thank everyone at Atlas for stepping up to deliver an extraordinary peak season and full year for our business and our customers.”
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