Atlas Air posts pre-tax loss of $7.5 million in Q3

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Atlas Air Boeing 747-8F
Atlas Air Boeing 747-8F

Atlas Air Worldwide has announced a loss from continuing operations, net of taxes, of $7.5 million for the third quarter (Q3) ending 30 September 2016.

Atlas says results for Q3 were primarily due to the impact of non-deductible expenses triggered by shareholder approval of warrants granted to Amazon in connection with long-term agreements to dry lease and operate Boeing 767-300 aircraft.

Results compared with a loss from continuing operations, net of taxes, of $12.8 million for the three months ending September 30, 2015. On an adjusted basis, income from continuing operations, net of taxes, in Q3 of 2016 totaled $27.4 million, compared with $30.7 million, in Q3 2015, which included income tax benefits primarily from the favorable resolution of an IRS exam.

Atlas president and chief executive officer, William J. Flynn says: “During the third quarter, we continued to focus on increasing our alignment with the faster-growing express and e-commerce markets.

“We placed our first aircraft into service for Amazon in August, and we moved forward with preparations to ramp up to 20 by the end of 2018. We also made significant progress toward integrating Southern Air and the two new operating platforms that it adds. Thus far, the contributions and synergies from Southern Air and its express-focused 777 and 737 CMI services have exceeded our expectations.

“Reflecting our expanding business base and the ongoing development of our strategic platform, our third-quarter results were at the upper end of the range that we expected. In ACMI, we started flying for Amazon and benefited from accretion generated by Southern Air.

“In charter, our results reflected an increase in military cargo and passenger demand. And our dry leasing business maintained its steady, annuity-like performance. Despite publicity about the Hanjin Shipping bankruptcy during the quarter, we did not observe any noticeable impact on airfreight demand or rates.”

Flynn adds: “We are looking forward to a strong fourth quarter, led by our superior fleet, the strength of our brand and our global market leadership in outsourced aircraft and services.

Atlas Air

“We expect peak-season demand to be solid and accompanied by a seasonal improvement in commercial airfreight yields. Together with our additional seasonal flying for express operators and a lower level of maintenance expense, we expect both a sequential and a year-over-year improvement in our block-hour volumes, revenue, profitability and margins in the fourth quarter, which we anticipate will account for slightly more than 50 per cent of our 2016 adjusted diluted EPS.”

Flynn concludes: “We continue to believe strongly in the future of airfreight, express and e- commerce, and we are shaping Atlas to make the most of that future – through the quality and scale of our fleet, through the efficiency of our operations, and through the strength of our business relationships.

“As we announced recently, we have entered into a five-year agreement with FedEx Express to provide it with five 747-400 freighter aircraft for peak-season flying beginning in 2017 and lasting through 2021. We have worked closely and successfully with FedEx for many years, with an agreement to provide five aircraft for 2016 peak-season flying already in place. This new agreement will enable both of our companies to better plan for the longer term.”

For the nine months ending September 30, 2016, continuing operations generated income of $13.9 million compared to the same period to September 30, 2015, when income from continuing operations was $44.9 million.

On an adjusted basis, income from continuing operations in the first nine months of 2016 totaled $55.3 million, compared with $85.9 million, in the first nine months of 2015.

Atlas says both reported and adjusted results in 2016 reflect the “impact of startup expenses for our new service for Amazon, while reported and adjusted results in 2015 benefited from US West Coast port-congestion-related earnings”.