Atlas posts Q4 income surge and hails ‘historic’ year

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

Atlas Air Worldwide Holdings posted income from continuing operations, net of taxes, of $28.7 million for the three months ended on 31 December, 2016.

Results compared with a loss from continuing operations, net of taxes, of $37.6 million for the three months ended 31 December, 2015, which was primarily due to charges of $102.8 million associated with an air cargo cartel litigation settlement.

On an adjusted basis, income from continuing operations, net of taxes, in the fourth quarter of 2016 totaled $59 million, compared with $39.4 million, in the year-ago quarter.

Adjusted earnings per share for the fourth quarter and full year of 2016 were affected by the increase in the market price of the company’s shares, which, as a consequence of warrant accounting, led to an increase in the number of diluted shares.

President and chief executive officer, William J. Flynn says: “2016 was a historic year for Atlas, and we finished it on a strong note.

“We acquired Southern Air, expanding the array of aircraft and services that we provide, especially to the fast-growing express market. We entered into strategic, long-term agreements with Amazon to serve its rapidly growing e-commerce business.

“And we generated strong sequential and year-over-year improvements in our block-hour volumes, revenue, profitability and margins in the fourth quarter. In addition to record revenues in the quarter, we delivered a significant increase in reported earnings and record adjusted earnings for the period.

“Our performance in the fourth quarter was driven by the additional seasonal flying we did for express operators, growing e-commerce demand, and a lower level of maintenance expense.

“It also reflected a solid peak season and a seasonal improvement in commercial airfreight yields.

“In ACMI, we benefited from Southern Air’s 777 and 737 express CMI services and better contributions and synergies than originally anticipated. We also continued ramping up for Amazon, which enabled us to place the second of 20, 767-300 aircraft into service for the this month.

“In charter, our results reflected an increase in commercial cargo demand. And our dry leasing business maintained its steady, annuity-like performance.”

Flynn adds: “With our expanding business base and the ongoing development of our strategic platform, we are well-positioned to grow earnings this year.

“In addition to the demand we are seeing for our aircraft and services, including our recently announced agreements with Asiana Cargo, Nippon Cargo Airlines and FedEx, we expect to see initial accretion from our operations for Amazon and a full year of contribution from Southern Air in 2017.

“We expect those positives to be partially offset by an increase in maintenance expense and lower cost-based rates paid by the military.

“As a result, we expect to increase adjusted income from continuing operations, net of taxes, by a mid-single-digit to low-double-digit percentage in 2017.”

For the 12 months ending 31 December, 2016, continuing operations generated income of $42.6 million. For the 12 months ended 31 December, 2015, income from continuing operations totaled $7.3 million.

On an adjusted basis, income from continuing operations in 2016 totaled $114.3 million,  compared with $125.3 million, in 2015. Both reported and adjusted results in 2016 reflected 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.

Atlas expects adjusted income in the first quarter of 2017, which is usually the lowest demand and highest maintenance-expense quarter of the year, to be consistent with or slightly better than the first quarter of 2016.