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Atlas Air Second Quarter Performance Exceeds Expectations
While the passenger segment of the airline business continues to struggle with rebounding from the COVID-19 pandemic, Atlas Air’s parent company issued its second-quarter report today reporting a better than anticipated performance and signaling a very positive outlook for the year ahead.
Atlas Air Worldwide Holdings, parent to Atlas Air, Polar Air Cargo, Southern Air, and Titan Aviation Leasing, announced in a press release issued today a 2nd quarter net income of $78.9 million, compared to $86.9 million in 2019. But its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $247 million, significantly higher than the $84.1 million earned in 2019.
“Revenue and earnings in the second quarter continued to exceed our expectations,” said Chief Executive Officer John W. Dietrich.
The performance was primarily driven by a very strong demand for cargo lift, which hasn’t been impacted as severely by the pandemic driven cutbacks in flying. Additionally, the strong gains were bolstered by stronger than expected performance in its aircraft charter, South America businesses, U.S. military contracts, and its Aircraft, Crew, Maintenance, and Insurance (ACMI) business segments.
To meet the increased demand, the carrier reactivated three 747-400 converted freighters and operationalized a 777 freighter from their dry leasing business. Atlas also expanded its long-term charter business to include new agreements with manufacturers such as HP Inc., and large freight forwarders like DHL Global Forwarding, APEX Logistics, DB Schenker, Flexport and Geodis.
The carrier sees the outlook for the rest of 2020 to continue to be positive. “Reflecting our first-half results and our current market expectations, and subject to any material COVID-19 developments, we anticipate full-year 2020 revenue of just over $3 billion and adjusted EBITDA of approximately $750 million,” said Mr. Dietrich.
Cargo lift continues to be in high demand despite the virus adjustments made by many governments worldwide. The need for additional capacity was in part driven by the pandemic itself as medical equipment and supplies were shipped from manufacturers worldwide in an expedited fashion. Several passenger airlines are also stepping deeper into the cargo market through aircraft modifications and cargo-only flights.
Atlas’ ACMI business struggled somewhat with lower block hours than expected and partially due to loss of aircraft availability due to scheduled and opportunistic maintenance requirements.
Historically, the vast majority of Atlas’ earnings are earned in the second half of the year. However, due to the strength of the first half, Atlas anticipates it’s full-year 2020 adjusted net income to be more evenly split between the first and second half.
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