Atlas Air Worldwide reports Q2 results

Eleanor Steed
By Eleanor Steed August 4, 2017 16:06

Atlas Air Worldwide reports Q2 results

Atlas Air Worldwide has announced income from continuing operations, net of taxes, of $39.0 million, which included an unrealized gain on financial instruments of $13.8 million related to outstanding warrants, for the three months ended June 30, 2017. Results compared with income from continuing operations, net of taxes, of $20.9 million, which included an unrealized gain on financial instruments of $26.5 million related to outstanding warrants, for the three months ended June 30, 2016.

On an adjusted basis, income from continuing operations, net of taxes, in the second quarter of 2017 totaled $29.1 million compared with $20.2 million in the year-ago quarter.

Diluted earnings per share from continuing operations, net of taxes, were $0.92 for the three months ended June 30, 2017 and a loss of $0.26 for the three months ended June 30, 2016, reflecting the impact of warrant accounting and transaction-related expenses.

Adjusted diluted EPS from continuing operations, net of taxes, totaled $1.09 in the second quarter of 2017 and $0.80 in the second quarter of 2016.

“Earnings growth in the second quarter reflected a 17% increase in revenue, 15% increase in block hours, and higher direct contribution in all of our segments,” said President and Chief Executive Officer William J. Flynn. “Our growth also reflected an increase in aircraft utilization and a rise in commercial charter yields. During the quarter, we started flying for Cathay Pacific and Yangtze River Airlines and added four 767-300 freighters for Amazon, including our fifth and sixth aircraft in June.

“We are experiencing good momentum in our business, and we expect that to carry through 2017, into 2018 and beyond. As a result, we are increasing our full-year 2017 outlook.

“We anticipate that our adjusted income from continuing operations, net of taxes, will grow by a percentage in the mid-teens this year, approximately double the midpoint of our previous outlook.

“We continue to move more deeply into the faster-growing express and e-commerce markets. More than 70% of our current freighters operate for customers in these markets, and that percentage will increase as we ramp up from six aircraft for Amazon currently to an expected 20 by the end of 2018.

“The evolution of e-commerce is transforming the global supply chain and creating significant new opportunities for Atlas. Freighter aircraft in scaled route networks, such as those that we operate, provide the just-in-time service that enables consumers to receive their orders as quickly as possible.”

Higher ACMI contribution in the second quarter of 2017 was primarily driven by an increase in flying, partially offset by higher heavy maintenance costs. Segment revenue growth benefited from an increase in block-hour volumes, reflecting greater 767 and 747-400 CMI flying as well as higher aircraft utilization. Average rates reflected the growth in 767 and 747-400 CMI flying.

Higher Charter segment contribution during the period was primarily due to improved commercial cargo yields, lower costs related to crew training, and an increase in commercial and military demand. These impacts were partially offset by higher heavy maintenance costs and lower rates paid by the military. Segment revenue growth was driven by an increase in block-hour volumes and average rates.

In Dry Leasing, higher revenue and segment contribution were primarily driven by the placement of six 767-300 converted freighter aircraft with Amazon between August 2016 and June 2017. Segment contribution also benefited from a reduction in interest expense due to the scheduled repayment of debt related to dry leased 777 aircraft in our portfolio.

Higher unallocated income and expenses in the second quarter of 2017 primarily reflected an increase in unallocated interest expense, growth initiatives, and amortization of a customer incentive asset, partially offset by an accrual for legal matters in the year-ago period.

Both reported and adjusted income from continuing operations in the second quarter of 2017 included a $2.7 million, or $0.10 per diluted share, benefit related to the timing of heavy maintenance that has moved to the third quarter of 2017 from the second quarter.

Reported earnings in the second quarter also included an effective income tax rate of 21.6%, due mainly to non-taxable changes in the value of outstanding warrants and our assertion to indefinitely reinvest the net earnings of foreign subsidiaries outside the U.S. On an adjusted basis, our results reflected an effective income tax rate of 29.4%.

Eleanor Steed
By Eleanor Steed August 4, 2017 16:06