PURCHASE, N.Y., Nov. 03, 2021 (GLOBE NEWSWIRE) — Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced strong third-quarter 2021 results, including net income of $119.5 million, or $3.91 per diluted share, compared with net income of $74.1 million, or $2.78 per diluted share, in the third quarter of 2020.
On an adjusted basis, EBITDA grew sharply to $280.5 million in the third quarter this year compared with $196.3 million in the third quarter of 2020. Adjusted net income in the third quarter of 2021 increased to $145.4 million, or $4.88 per diluted share, compared with $82.7 million, or $2.84 per diluted share, in the third quarter of 2020.
“We delivered outstanding financial and operating results in the third quarter. We flew over 90,000 block hours and generated quarterly revenue that exceeded $1.0 billion for the first time in our company’s history,” said Atlas Air Worldwide President and Chief Executive Officer John W. Dietrich.
“Our strategic focus on express, e-commerce and fast-growing global markets is driving robust demand for our services and producing strong financial performance. In a very challenging pandemic operating environment, our team pulled together to increase utilization of our aircraft, and safely serve our customers and the global supply chain.
“We recently announced long-term contract extensions for 20 aircraft with DHL Express as well as a new long-term ACMI agreement with FedEx. We have also extended or entered into other new long-term agreements with additional strategic customers. Collectively, these agreements demonstrate our ability to capitalize on market opportunities and deepen long-standing relationships with our customers.
“As we served the needs of our customers and their businesses, we were also extremely proud to support the U.S. government’s historic evacuation from Afghanistan. In total, we operated over 30 missions, transporting about 10,000 U.S. personnel as well as Afghan evacuees and their families from various locations into the United States.”
Mr. Dietrich added: “At Atlas, our people are our greatest asset, and we are pleased to have reached a new five-year joint collective bargaining agreement with our pilots. Under this agreement, all of our pilots will receive higher pay, quality of life improvements and enhanced benefits in line with our competitive landscape. We look forward to continuing to work collaboratively with our pilots and their new union leadership to build an even stronger company.
“We are operating in a very strong airfreight market, and we expect industry conditions to remain favorable for the foreseeable future. Global airfreight volumes continue to exceed pre-pandemic levels, while industry capacity, particularly on long-haul international routes, has not kept pace with demand. Supply chain bottlenecks, including the widely reported challenges at ocean ports worldwide, are driving increased modal shift to air as manufacturers, retailers and shippers strive to replenish very low inventory levels, especially ahead of the holiday shopping season. This current environment has also led to a structural acceleration of express growth and e-commerce adoption, which will drive both current and longer-term airfreight demand.”
He concluded: “We expect record revenue and adjusted earnings in the fourth quarter of 2021, with revenue of nearly $1.1 billion and adjusted EBITDA of about $325 million. We also anticipate adjusted net income to grow in excess of 20% compared with our prior fourth-quarter adjusted net income record of $143.2 million in 2020.*
“This outlook includes the impact of our new joint collective bargaining agreement and our proactive initiatives to help mitigate the higher costs of the new agreement. It also reflects the increased contribution of numerous new and extended long-term customer agreements, high levels of aircraft utilization driven by strong customer demand, and solid peak-season volumes and yields.”
Third-Quarter Results
Volumes in the third quarter of 2021 totaled 90,363 block hours compared with 90,528 in the third quarter of 2020, with revenue rising to a record $1.02 billion compared with $809.9 million in the prior-year quarter.
Higher Airline Operations revenue primarily reflected an increase in the average rate per block hour. The higher average rate per block hour was primarily due to an increased proportion of higher-yielding flying, including the impact of new and extended long-term contracts, the ongoing reduction of available cargo capacity in the market, the continued disruption of global supply chains due to the pandemic, as well as higher fuel costs. Block-hour volumes during the period were relatively unchanged as we reduced less profitable smaller gauge CMI service flying, while increasing utilization of our current fleet to meet strong customer demand. Block-hour volumes benefited from the operation of a 747-400 freighter we reactivated during the fourth quarter of 2020 as well as increased AMC passenger Charter flying related to Afghanistan evacuation efforts in 2021.
Higher Airline Operations segment contribution in the third quarter of 2021 was primarily driven by the positive factors benefiting segment revenue mentioned above as well as lower heavy maintenance expense. These improvements were partially offset by higher pilot costs related to our new joint collective bargaining agreement (JCBA).
In Dry Leasing, segment revenue in the third quarter of 2021 was relatively unchanged compared with the prior-year period. Higher segment contribution was primarily due to lower interest expense related to the scheduled repayment of debt.
Unallocated income and expenses, net, increased during the quarter, primarily due to $64.2 million in CARES Act grant income in 2020 (which was excluded from our adjusted results) and a $15.2 million increase related to adjustments to paid time-off benefits in our new JCBA in 2021.
Reported earnings in the third quarter of 2021 also included an effective income tax rate of 23.4%. On an adjusted basis, our results reflected an effective income tax rate of 22.3%.
Cash
At September 30, 2021, our cash, including cash equivalents and restricted cash, totaled $784.1 million compared with $856.3 million at December 31, 2020.
The change in position, which reflects significant pre-delivery payments for our new 747-8F aircraft, resulted from cash used for investing and financing activities, partially offset by cash provided by operating activities.
Net cash used for investing activities during the first nine months of 2021 primarily related to capital expenditures and payments for flight equipment and modifications, including pre-delivery payments for 747-8F aircraft, spare engines, GEnx engine overhauls and performance upgrade kits.
Net cash used for financing activities during the period primarily related to payments on debt obligations, partially offset by proceeds from debt issuance.
Nine-Month Results
Reported results for the nine months ended September 30, 2021 increased to net income of $316.6 million, or $10.52 per diluted share. Results compared with net income of $176.3 million, or $6.72 per diluted share, which included an unrealized loss on financial instruments of $73.4 million, for the nine months ended September 30, 2020.
On an adjusted basis, EBITDA grew to $705.6 million in the first nine months of 2021 compared with $564.5 million in the first nine months of 2020. For the nine months ended September 30, 2021, adjusted net income increased to $339.4 million, or $11.44 per diluted share, compared with $235.8 million, or $8.71 per diluted share, in the first nine months of 2020.
Fleet Management
As previously announced, we acquired three of our existing 747-400Fs between May and August 2021 that were formerly on lease to us. In October 2021, we acquired three additional 747-400Fs that were previously leased to us. We also reached agreement with lessors in May and June 2021 to purchase five of our other 747-400Fs at the end of their existing lease terms, which occur throughout 2022.
Acquiring these eleven aircraft underscores our confidence in the demand for widebody freighters and will provide strong returns for Atlas in the years ahead.
Labor
As previously disclosed, we reached a new five-year JCBA with our Atlas Air and Southern Air pilots in September 2021. This new agreement will provide our pilots with industry-competitive pay, quality of life improvements and enhanced benefits. The new pay rates became effective as of September 1, 2021. The company and the union are working collaboratively to implement all of the other terms of the JCBA in the coming months. The new JCBA also paves the way for us to complete the merger between Atlas Air and Southern Air, which we expect to occur during the fourth quarter.
Outlook*
We are very proud of our performance during the first nine months of 2021, and we are continuing to see strong business conditions in the fourth quarter. Subject to any material COVID-19 or other developments, we anticipate solid peak-season volumes and yields, reflecting strong global demand for our aircraft and services.
As a result, we expect the fourth quarter of 2021 to have the highest quarterly revenue and adjusted earnings in the company’s history, with revenue of nearly $1.1 billion and adjusted EBITDA of about $325 million from flying more than 90,000 block hours. In addition, we anticipate adjusted net income to grow in excess of 20% compared with our prior fourth-quarter adjusted net income record of $143.2 million in 2020.*
This outlook includes the impact of our new JCBA, as well as our proactive initiatives to help mitigate the higher costs from the new agreement. It also reflects the increased contribution of numerous new and extended long-term customer agreements, as well as our expectation of continued high levels of aircraft utilization.
We expect fourth-quarter results to continue to be impacted by ongoing pandemic-related expenses, including premium pay for employees flying into certain locations significantly impacted by COVID-19 and other operational costs for providing a safe working environment for our employees.
For the full year in 2021, we expect aircraft maintenance expense to total approximately $450 million, and depreciation and amortization to total about $280 million. In addition, core capital expenditures, which exclude aircraft and engine purchases, are projected to total approximately $90 to $100 million, mainly for parts and components for our fleet.
Other than with regard to revenue, we provide guidance only on an adjusted basis because we are unable to predict, with reasonable certainty and without unreasonable effort, the effects of future gains and losses on asset sales, special charges and other unanticipated items that could be material to our reported 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.
