Atlas Air Worldwide Holdings, Inc. 2Q07 Net Income Totals USD 43.2 Million, Up 304 pct
Atlas Air Worldwide Holdings reported sharply higher earnings for the second quarter of 2007 compared with second quarter of 2006. This reflects a continuing improvement in aircraft utilization due to proactive asset management, sustained operational execution, the positive impact of Continuous Improvement initiatives, increased AMC charter demand, and reduced net interest expense.
Earnings for the quarter included a substantial tax benefit related to DHL Express’ investment in Polar Air Cargo Worldwide, Inc., in which DHL acquired a 49 pct equity interest (including a 25pct voting stake) in exchange for USD150 million in cash; USD75 million was received at closing in late June, with the balance scheduled to be received in 2008.
For the June 30, 2007 quarter, AAWW earned USD 43.2 million, 304 pct more than in the second quarter of 2006. Earnings per diluted share equaled USD 2.01, nearly four times the year-ago level. Revenues for the quarter totaled USD 370.4 million, with operating income of USD3 1.2 million and pretax income of USD25.2 million. Net income reflected a tax benefit of USD 18.0 million, which was driven by a net tax benefit in connection with the DHL transaction that reduced income tax expense in the quarter by USD 27.7 million, or the equivalent of USD1.29 per diluted share.
The Company recorded a deferred gain of USD 151.4 million in the quarter as a result of the DHL transaction. The gain will be recognized as income in the period in which the blocked-space agreement between Polar Air Cargo Worldwide and DHL commences, which is scheduled to occur no later than October 31, 2008.
Operating income increased to 8.4pct of revenues in the second quarter of 2007 from 8.3 pct in the second quarter of 2006, while EBITDA increased to 11.1pct of revenues versus 9.4pct, and EBITDAR improved to 21.6pct of revenues from 19.8 pct. Operating income in the second quarter of 2006 benefited from a USD 2.8 million gain on sale of aircraft and approximately USD 3.5 million in lower depreciation expense. Adjusting for these items, operating income margin improved 180 basis points, from 6.6 pct in the second quarter of 2006 to 8.4 pct in the latest quarter.
Average utilization of operating aircraft on a block-hours-per-day basis increased 15.3 pct during the quarter compared with the year-ago quarter. Including the Company’s dry leasing activities, operating income per aircraft on a total fleet basis increased 13.4 pct to USD 0.8 million, with EBITDA per aircraft rising 33.0 pct to USD1.1 million and EBITDAR per aircraft rising 22.3 pct to USD 2.2 million. Adjusting for the second-quarter 2006 items noted above, operating income per aircraft increased 43 pct.
Continuous Improvement initiatives contributed approximately USD14 million of cost savings to AAWW’s second-quarter results. In addition to savings and efficiency improvements in maintenance, fuel, procurement and inventory, AAWW is beginning to realize benefits from longer lead-time projects which reduce aircraft down-time, lower cargo and ramp handling costs, and improve productivity. By year-end 2007, the Company expects to realize in excess of USD65 million in annualized savings, and the Company remains on track to achieve at least USD100 million of annualized savings in 2008.
