Atlas Air Worldwide Reports Second-Quarter Earnings, Reaffirms 2012 EPS Expectation

PURCHASE, N.Y.—(BUSINESS WIRE)—Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW), a leading global provider of outsourced aircraft and aviation operating services, today announced earnings for the second quarter of 2012 and reaffirmed guidance for full-year earnings in excess of $5.10 per diluted share on both a reported and adjusted basis.

For the three months ended June 30, 2012, adjusted net income attributable to common stockholders totaled $31.2 million, or $1.18 per diluted share, compared with $26.0 million, or $0.98 per diluted share, for the three months ended June 30, 2011.

On a reported basis, second-quarter 2012 net income attributable to common stockholders totaled $30.9 million, or $1.16 per diluted share, compared with $23.8 million, or $0.90 per diluted share, in the second quarter of 2011.

Revenues totaled $424.7 million in the second quarter of 2012 and $349.6 million in the second quarter of 2011.

“Earnings in the second quarter of 2012 were driven by the strength and resilience of our business model as well as our ability to leverage the scale and efficiencies inherent in our operations,” said William J. Flynn, President and Chief Executive Officer. “We also saw an increase in contributions from the investments we’ve made to diversify and grow our revenue and earnings streams.

“Our new 747-8F aircraft, which are providing efficient, wide-body, long-haul cargo service for our customers, supported volumes and profitability in our core ACMI business during the quarter. ACMI customers flew more than 4% above contractual minimums during the period, and CMI flying for Boeing and DHL Express continued to ramp up.

“In AMC Charter, volumes and profitability increased as strong growth in our military passenger service outweighed a moderation in AMC cargo demand. And in Commercial Charter, higher volumes and profitability reflected the scale and flexibility of our operations. We deployed an additional 747-400 aircraft to support increased demand in South America, and we responded to relatively solid demand in other markets, particularly from the high-tech and automotive industries, with two 747-400 cargo aircraft that were available during their ACMI remarketing periods. These aircraft returned to ACMI service in June and July 2012, demonstrating the strong interest in our 747-400 aircraft.”

During the second quarter, an average of 1.1 Dreamlifter large cargo freighters were in CMI service for Boeing, up from 0.7 last year. CMI cargo service for DHL increased to three 767 freighters at the end of the quarter from none last year and one at the end of the first quarter. A fourth 767 freighter entered service in July, and a fifth is expected to enter service in October 2012.

Earnings in the second quarter of 2012 also reflected a reduction in maintenance expense, primarily due to the retirement of 747-200 aircraft. Results in each segment, however, were partially offset by increased crew costs and other volume-driven operating expenses compared with the second quarter of 2011. In addition, AMC Charter and Commercial Charter incurred higher aircraft ownership costs related to the deployment of 747-400 aircraft in each segment in lieu of 747-200 aircraft.

Adjusted results in the second quarter of 2012 exclude incremental costs related to the retirement of the company’s 747-200 fleet, costs incurred to refinance certain debt, and a gain on the disposal of aircraft. Adjusted results in the second quarter of 2011 exclude pre-operating expenses for the introduction of new aircraft types, including incremental costs incurred as a result of aircraft delivery delays, as well as a gain on the disposal of aircraft.

Half-Year Results

For the six months ended June 30, 2012, adjusted net income attributable to common stockholders totaled $44.9 million, or $1.69 per diluted share, compared with $38.7 million, or $1.47 per diluted share, for the six months ended June 30, 2011.

On a reported basis, first-half 2012 net income attributable to common stockholders totaled $43.7 million, or $1.65 per diluted share, compared with $34.4 million, or $1.30 per diluted share, in the first half of 2011.

Revenues totaled $784.0 million in the first six months of 2012 and $647.2 million in the first six months of 2011.

Outlook

“During the past several years,” Mr. Flynn noted, “we have significantly transformed our business model. We have aggressively managed and modernized our existing fleet, developed and grown our express network ACMI service for DHL Express, and added our new 747-8F aircraft.

“In addition, we are driving improved operating efficiencies, and implementing a growth strategy that leverages our core competencies. And we are capitalizing on new organizational capabilities such as our AMC passenger flying, CMI operations and 767 service.

“Together, our transformed business model and our initiatives are enabling us to generate additional earnings and cash flow while maintaining a solid balance sheet.

“As a result, we continue to expect strong earnings growth in 2012. Demonstrating our operating leverage, we anticipate that reported and adjusted fully diluted earnings will increase approximately 24% compared with adjusted 2011 EPS, to more than $5.10 per share, as our block hours increase approximately 17%.”

In reaffirming guidance for 2012, the company continues to expect further sequential improvement in its third- and fourth-quarter results, with third-quarter earnings to be moderately higher than the second quarter and fourth-quarter earnings to be substantially higher than the third quarter.

Anticipated airfreight market growth during the second half will be led by high-tech product launches and supported by current low inventory levels.

While our outlook acknowledges near-term uncertainties about the global economy and the impact that may have on airfreight demand, we have seen and continue to expect increasing contributions in 2012 from the investments we have made in our business.

Our new 747-8 and our 747-400 cargo aircraft are driving growth and profitability in our ACMI business. We have taken delivery of our fourth and fifth 747-8Fs and placed them into service for Panalpina. We also began flying for a new customer, Etihad Airways, in June and placed a ninth -400F with DHL Express in July. These placements show the growing interest in 747-8Fs and the continuing attractiveness of factory-built 747-400 freighters.

Volumes in our AMC Charter business, including our new 767 operations, should total approximately 20,000 block hours in 2012, with passenger block hours likely to contribute more than 50% of that level.

Maintenance expense in 2012 is expected to total approximately $175 million. Line maintenance, which is based on block hours operated, should account for about 57% of these expenditures in 2012. As block hours are expected to increase over 2011 levels, line maintenance will grow accordingly. Approximately 38% of maintenance expense should be for heavy airframe checks and engine maintenance, with the balance for non-heavy maintenance. From a timing perspective, about 55% of total maintenance expense in 2012 occurred in the first and second quarters, with approximately 24% expected in the third quarter and 21% in the fourth quarter.

Mr. Flynn concluded: “We have built a resilient business model, and we are executing on an exciting strategic growth plan. With our modern, efficient fleet, business mix and solid balance sheet, we are positioned to do well in all economic conditions and to drive our revenues and earnings to higher sustained levels over the next several years and beyond.”