Air, Business, Freight News

Atlas Air Worldwide Reports Strong First-Quarter 2021 Results

[ May 6, 2021   //   ]

Atlas Air Worldwide Holdings, Inc. announced first-quarter 2021 net income of $89.9 million, compared with $23.4 million in the first quarter of 2020.
On an adjusted basis, EBITDA rose to $181.3 million in the first quarter of 2021 compared with $121.2 million in the prior-year period. Adjusted net income grew to $72.2 million in the first quarter of 2021 compared with $29.9 million in the prior-year period.
“Our performance was driven by the strength and flexibility of our global business model and our team continuing to capitalize on the current airfreight environment, with demand and yields that are well above typical seasonal levels,” said Atlas Air Worldwide President and Chief Executive Officer John W. Dietrich.
“Our results also benefited from flying four 747 freighters and one 777 freighter that we reintroduced to our fleet throughout 2020 to serve customer demand.
Dietrich maintained that the carrier is off to a very good start in 2021 and is seeing continued business momentum in the second quarter. “We are closely monitoring the market and leveraging the diversity of our business model,” he said. “This includes being prepared to capitalize on global market conditions as well as being able to successfully adjust to any changes.
“With the strong global demand for airfreight outpacing air cargo supply, we anticipate airfreight demand and yields to remain strong, with capacity on long-haul trade lanes remaining tight. International passenger flying on widebody aircraft has been slow to recover, and will likely be last to return as countries continue to struggle with COVID-19 and many borders remain closed. Recent passenger air traffic has largely been driven by pent-up demand for domestic and regional leisure travel with smaller-gauge aircraft, which is less impactful to international airfreight.
In the second quarter of 2021, Dietrich expects Atlas Air Worldwide will fly approximately 90,000 block hours, with revenue of approximately $950 million, and adjusted EBITDA of about $210 million.
“Given ongoing economic and market-related uncertainties, including COVID-19, new variants of the virus, surges in cases globally, travel restrictions, low international passenger travel and other factors, we are providing a second-quarter outlook, but not issuing a full-year 2021 earnings outlook at this time,” he added.
First-Quarter Results
Volumes in the first quarter of 2021 increased to 88,523 block hours compared with 73,247 in the first quarter of 2020, with revenue growing to $861.3 million versus $643.5 million in the prior-year period.
Higher Airline Operations revenue primarily reflected a significant increase in flying and a higher average rate per block hour. Block-hour growth during the period was driven by increased demand for the carrier’s commercial cargo Charter and CMI services, reflecting higher airfreight volumes and a reduction of available cargo capacity in the market, the disruption of global supply chains due to the pandemic and our ability to increase aircraft utilization. In addition, segment revenue benefited from the operation of four 747-400 freighters it reactivated throughout 2020 and a 777-200 freighter that was previously in Atlas Air Worldwide’s Dry Leasing business. Partially offsetting these improvements was lower AMC passenger Charter flying as the U.S. military has taken precautionary measures to limit the movement of military personnel. The increase in the average rate per block hour was primarily due to an increase in higher-yielding commercial cargo
Charter flying, partially offset by lower fuel costs and an increase in CMI flying.
Higher Airline Operations segment contribution in the first quarter of 2021 was primarily driven by the positive factors benefiting segment revenue mentioned above. These improvements were partially offset by: higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19; increased pay rates we provided to our pilots in May 2020; and higher heavy maintenance.
In Dry Leasing, segment revenue and contribution in the first quarter of 2021 was relatively unchanged compared with the prior-year period.
Lower unallocated income and expenses, net, during the quarter primarily reflected CARES Act grant income of $40.9 million, which has been excluded from our adjusted results.
Reported earnings in the first quarter of 2021 also included an effective income tax rate of 23.7%. On an adjusted basis, our results reflected an effective income tax rate of 21.9%.
Dietrich reports that he expects Atlas Air Worldwide to fly approximately 90,000 block hours in the second quarter of 2021, with revenue of approximately $950 million, and adjusted EBITDA of about $210 million. “In addition, we expect second-quarter 2021 adjusted net income to grow approximately 30% compared with adjusted net income of $72.2 million in the first quarter of 2021,” he said. “Our outlook anticipates commercial cargo charter yields in the second quarter of 2021 to remain above typical seasonal levels, but below the historically high yields experienced during the second quarter of 2020.”