Atlas air worldwide posts $9.6 million 1q profit, raises 2018 outlook airline financials content from atwonline electricity and magnetism

Air cargo operator Atlas Air Worldwide Holdings reported a $9.6 million net profit for the first quarter of 2018, reversed from a $752,000 net loss in 1Q 2017. The turnaround encouraged the Purchase, New York-based company to revise its full-year 2018 revenue outlook upward to over $2.5 billion. Atlas earned $2.2 billion in revenue in 2017.

For the 2018 first quarter, Atlas’ revenues totaled $590 million, up 24.1% year-over-year (YOY), with strong growth in each of Atlas’ major reportable segments aircraft, crew, maintenance & insurance (ACMI) revenue was up 32.7 YOY; charter revenue up 16.9%; and dry leasing revenue up 36%. Expenses were up 21.7% to $549.4 million. Operating income for the quarter increased 68.8% YOY to $40.6 million.

Atlas said its increased ACMI revenue were primarily driven by growth in block-hour volumes as well as a higher average rate per block hour, offset somewhat by higher heavy maintenance and amortization of deferred maintenance expenses. The 28% growth in ACMI block hours during the quarter reflected increased Boeing 767 flying for Amazon, the startup of 747-400 flying for additional customers and the transfer of 747-8F aircraft from the charter segment to ACMI. Charter’s revenue during the quarter came primarily from an increase in yields and higher aircraft utilization. Dry Leasing’s revenue reflected the placement of additional 767-300 converted freighters as well as the placement of a 777-200 freighter.

“We are off to a strong start in 2018 … our focus on express, e-commerce and fast-growing global markets has broadened our customer base and fleet [and] we are operating in a strong air freight environment and a growing global economy,” Atlas president and CEO Bill Flynn said. Flynn noted that traffic between South and North America was particularly strong during the first quarter, with shipments of flowers and produce showing robust movement.

“With respect to future business growth we announced the acquisition of two 777 freighters that will strengthen and expand our relationship with DHL Express [and] we placed and began operating an additional 767 for Amazon in early April, raising the current number to 13,” Flynn said. Atlas expects to have an additional seven 767s in operation for Amazon by the end of 2018. “We’ve secured the aircraft, we’ve secured all of the conversion slots that we need from the two companies providing the conversion and we remain on target to deliver on time for our commitment to Amazon,” Flynn said.

Additionally, Atlas announced May 3 that it is placing a second 747-400 ACMI freighter with DHL Global Forwarding which will begin serving routes between the US, Europe and Asia this month. Atlas recently added six second-hand 747-400 freighters to its fleet, two of which were delivered in 2017, with the additional four coming in through the balance of 2018.

In additional updated guidance for the year, Flynn said volumes are “expected to rise approximately 19% to 300,000 block hours… we expect that our full-year adjusted net income will increase more than the mid 20% level we previously shared; [and] we now expect our adjusted net income to increase by a low- to mid-30% level compared to 2017.”