Atlas Air Worldwide (AAWW) 8-K Atlas Air Worldwide Reports Third-Quarter 2014 Results

FOR IMMEDIATE RELEASE

Contacts: Dan Loh (Investors) – (914) 701-8200
Bonnie Rodney (Media) – (914) 701-8580

Atlas Air Worldwide
Reports Third-Quarter 2014 Results

• Adjusted Net Income of $27.4 Million, $1.09 per Share

• Reported Net Income of $27.6 Million, $1.10 per Share

• Repurchased 1.8% of Shares Outstanding in the Third Quarter

• Raising Fourth-Quarter and Full-Year Earnings Outlooks

PURCHASE, N.Y.,November 6, 2014 –Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW), a leading global provider of outsourced aircraft and aviation operating services, today announced adjusted net income attributable to common stockholders of $27.4 million, or $1.09 per diluted share, for the three months ended September 30, 2014, compared with $28.6 million, or $1.13 per diluted share, for the three months ended September 30, 2013.

On a reported basis, net income attributable to common stockholders in the third quarter of 2014 totaled $27.6 million, or $1.10 per diluted share, compared with $23.7 million, or $0.94 per diluted share, in the year-ago quarter.

“Both our third-quarter results and our recently announced placements of three additional ACMI aircraft and four more CMI aircraft illustrate the strength of our business and the demand for our industry-leading assets and services,” said William J. Flynn, President and Chief Executive Officer.

“With airfreight volumes continuing to improve and market yields beginning to pick up, we expect our diversified mix and new placements to drive sequential EPS growth in the fourth quarter. We anticipate adjusted fully diluted earnings per share of approximately $1.33 to $1.43 in the fourth quarter, and we are raising our full-year 2014 adjusted earnings outlook to approximately $3.50 to $3.60 per diluted share.”

Mr. Flynn added: “ACMI earnings in the third quarter were complemented by a profit in Commercial Charter, growth in our Dry Leasing business, and an improved contribution by our military charter operations. Earnings in Commercial Charter were driven by a sharp increase in block hours flown, reflecting the broad-based uptick in airfreight demand. In Dry Leasing, our results benefited from our addition of 777 freighters that generate predictable, long-term revenue and earnings streams. And in AMC Charter, we benefited from an enhanced share of available military flying requirements.

“Reflecting our commitment to shareholder value, we acquired 1.8% of our outstanding common stock through our share repurchase program during the third quarter. Our capital allocation strategy is dedicated to creating, enhancing and returning value to our shareholders, both through business growth and returns of capital.”

We recently placed three incremental Boeing 747 freighters, a 747-8F and two 747-400Fs, into ACMI service for the benefit of DHL Express, the world’s leading international express shipping company, and Etihad Cargo, the fast-growing freight division of Etihad Airways. The placements increase the number of our aircraft in ACMI to 22 from 19.

In addition, we recently announced the expansion of our 767 CMI service in North America for DHL Express. This expansion covers four incremental 767-200 freighter aircraft owned by DHL that we expect to begin flying during the first quarter of 2015.

Adjusted earnings in the third quarter of 2014 excluded a tax adjustment of $0.1 million, or $0.01 per diluted share, related to the company’s Global Supply Systems Limited subsidiary. Adjusted earnings in the third quarter of 2013 excluded an after-tax loss of $4.5 million, or $0.18 per diluted share, on the early extinguishment of debt, and a loss of $0.3 million, or $0.01 per diluted share, on the disposal of aircraft.

Third-Quarter Results

Profitability in our ACMI business during the third quarter reflected an increase in 747-8F revenue and an increase in CMI flying, offset by an increase in maintenance expense on our -8F aircraft and lower 747-400 flying by certain ACMI customers.

In Dry Leasing, revenue and profitability grew following the addition of three 777F aircraft in January 2014 and two in July 2013, which raised our 777F fleet count to six. Each of these aircraft are leased to customers on a long-term basis.

Results in AMC Charter benefited from an increase in block hours and aircraft utilization, partially offset by a decrease in revenue per block hour due to a reduction of the average “pegged” fuel price set by the AMC. Stronger than expected demand for cargo flying and incremental passenger flying as a result of former competitors exiting the AMC Charter market drove contribution growth in the third quarter.

Profitability in Commercial Charter primarily reflected an increase in volumes and improvement in aircraft utilization compared with the third quarter of 2013. Charter operations during the quarter benefited from the broad-based uptick in demand, partially offset by additional travel and ground handling expenses from flying to high-cost locations.

Reported earnings for the period included an effective income tax rate of 29.1%, reflecting the ongoing beneficial impact of lower taxes for certain foreign subsidiaries in our Dry Leasing business.

Nine-Month Results

For the nine months ended September 30, 2014, adjusted net income attributable to common stockholders totaled $54.7 million, or $2.17 per diluted share, compared with $54.9 million, or $2.13 per diluted share, for the nine months ended September 30, 2013.

On a reported basis, nine-month 2014 net income attributable to common stockholders totaled $65.1 million, or $2.59 per diluted share, compared with $63.9 million, or $2.48 per diluted share, in the first nine months of 2013.

Cash and Short-Term Investments

At September 30, 2014, our cash, cash equivalents, short-term investments and restricted cash totaled $287.7 million, compared with $339.2 million at December 31, 2013.

The change in position reflected cash provided by operating and financing activities offset by cash used for investing activities.

Net cash used for investing activities during the first nine months of 2014 primarily related to the purchase of three 777F aircraft for our Dry Leasing business.

Net cash provided by financing activities primarily reflected proceeds from the issuance of debt in connection with the acquisitions of these aircraft. Those proceeds were partially offset by payments on debt obligations and debt issuance costs.

Share Repurchases

During the third quarter, we repurchased 458,937 shares of our common stock for $15.0 million, or 1.8% of our outstanding common stock at June 30, 2014.

Future repurchases under our remaining $45.0 million authority may be made at our discretion, and the actual timing, form and amount will depend on company and market conditions.

Outlook

We are encouraged by our performance in the first nine months of 2014 and the positive direction of market trends so far this year.

Airfreight volumes continue to improve, and recent industry reports suggest that airfreight demand will grow by several percentage points in 2014 – outpacing supply and driving the first real growth since 2010. We are seeing a general increase in demand across all regions, with the greatest growth in the transpacific market. An increase in online shopping and several new high-tech product launches during peak season also continue to favor airfreight.

As a result, we anticipate adjusted and reported fully diluted earnings per share of approximately $1.33 to $1.43 in the fourth quarter. We are also raising our full-year 2014 adjusted earnings outlook to approximately $3.50 to $3.60 per diluted share, and our reported earnings outlook to approximately $3.92 to $4.02.

For the full year, we expect to fly approximately 160,000 block hours, with more than 70% in ACMI, approximately 10% in AMC Charter, and the balance in Commercial Charter. Our Dry Leasing segment should show dramatic growth compared with 2013. While our share of military flying, mainly in passenger service, has increased due to our ability to capitalize on additional flying opportunities and a reduction in the number of carriers serving the market, we expect an overall decline in military demand in the fourth quarter of 2014 compared with 2013.

We also expect aircraft maintenance expense to total approximately $190 to $195 million in 2014, primarily due to performing several conditions-based engine overhauls for our 747-400 fleet during the fourth quarter. Depreciation this year is anticipated to total approximately $120 million, and core capital expenditures are expected to total about $30 to $35 million, mainly for spare parts for our expanded fleet.

We remain confident in the resilience of our business model, as well as our ability to adapt to the market and to leverage the scale and efficiencies in our operations. The business initiatives we have undertaken and the investments we have made have enabled the company to deliver meaningful earnings in any environment.

With a resilient business model, a superior fleet, strong customer relationships, and outstanding employees, we are well-positioned to capitalize on market improvements and to continue to focus on the long-term growth of our business.

Conference Call

Management will host a conference call to discuss Atlas Air Worldwide’s third-quarter 2014 financial and operating results at 11:00 a.m. Eastern Time on Thursday, November 6, 2014.

Interested parties are invited to listen to the call live over the Internet at www.atlasair.com (click on “Investor Information”, click on “Presentations” and on the link to the third-quarter call) or at the following Web address:

http://www.media-server.com/m/p/mfukjxmu

For those unable to listen to the live call, a replay will be available on the above Web sites following the call. A replay will also be available through November 12 by dialing (855) 859-2056 (domestic) and (404) 537-3406 (international) and using Access Code 24791883#.

About Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with U.S. GAAP, we present certain non-GAAP financial measures to assist in the evaluation of our business performance. These non-GAAP measures include EBITDAR, as adjusted; EBITDA, as adjusted; Direct Contribution; Adjusted Net Income Attributable to Common Stockholders; Adjusted Diluted EPS; and Free Cash Flow, which exclude certain items. These non-GAAP measures may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.

Our management uses these non-GAAP financial measures in assessing the performance of the Company’s ongoing operations and in planning and forecasting future periods. We believe that these adjusted measures provide meaningful information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance.

About Atlas Air Worldwide:

Atlas Air Worldwide is the parent company of Atlas Air, Inc. (Atlas) and Titan Aviation Holdings, Inc. (Titan), and is the majority shareholder of Polar Air Cargo Worldwide, Inc. (Polar). Through Atlas and Polar, Atlas Air Worldwide operates the world’s largest fleet of Boeing 747 freighter aircraft.

Atlas, Titan and Polar offer a range of outsourced aircraft and aviation operating services that include ACMI service – in which customers receive an aircraft, crew, maintenance and insurance on a long-term basis; CMI service, for customers that provide their own aircraft; express network and scheduled air cargo service; military cargo and passenger charters; commercial cargo and passenger charters; and dry leasing of aircraft and engines.

Atlas Air Worldwide’s press releases, SEC filings and other information can be accessed through the Company’s home page, www.atlasair.com.

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect Atlas Air Worldwide’s current views with respect to certain current and future events and financial performance. Such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of Atlas Air Worldwide and its subsidiaries (collectively, the “companies”) that may cause the actual results of the companies to be materially different from any future results, express or implied, in such forward-looking statements.

Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of the companies to operate pursuant to the terms of their financing facilities; the ability of the companies to obtain and maintain normal terms with vendors and service providers; the companies’ ability to maintain contracts that are critical to their operations; the ability of the companies to fund and execute their business plan; the ability of the companies to attract, motivate and/or retain key executives and associates; the ability of the companies to attract and retain customers; the continued availability of our wide-body aircraft; demand for cargo services in the markets in which the companies operate; economic conditions; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; labor costs and relations; financing costs; the cost and availability of war risk insurance; our ability to maintain adequate internal controls over financial reporting; aviation fuel costs; security-related costs; competitive pressures on pricing (especially from lower-cost competitors); volatility in the international currency markets; weather conditions; government legislation and regulation; consumer perceptions of the companies’ products and services; anticipated and future litigation; and other risks and uncertainties set forth from time to time in Atlas Air Worldwide’s reports to the United States Securities and Exchange Commission.

For additional information, we refer you to the risk factors set forth under the heading “Risk Factors” in the most recent Annual Report on Form 10-K and subsequent reports on Form 10-Q filed by Atlas Air Worldwide with the Securities and Exchange Commission. Other factors and assumptions not identified above may also affect the forward-looking statements, and these other factors and assumptions may also cause actual results to differ materially from those discussed.

Except as stated in this release, Atlas Air Worldwide is not providing guidance or estimates regarding its anticipated business and financial performance for 2014 or thereafter.

Atlas Air Worldwide assumes no obligation to update such statements contained in this release to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law.

* * *

1

Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)

			For the Three Months Ended								For the Nine Months Ended
			September 30, 2014					September 30, 2013			September 30, 2014			September 30, 2013
Operating Revenue
	ACMI				$	184,068		$	189,583		$	568,929		$	552,710
	AMC Charter					109,780			95,668			263,935			287,840
	Commercial Charter					143,075			104,605			391,527			313,488
	Dry Leasing					25,411			11,874			75,611			21,844
	Other					3,467			3,660			10,331			10,417
	Total Operating Revenue				$	465,801		$	405,390		$	1,310,333		$	1,186,299
Operating Expenses
	Aircraft fuel					115,690			93,434			301,276			289,535
	Salaries, wages and benefits					78,834			74,167			229,637			219,216
	Maintenance, materials and repairs					35,084			31,306			144,516			133,152
	Aircraft rent					34,183			40,405			104,419			118,753
	Navigation fees, landing fees and other rent					35,336			24,481			93,368			58,851
	Depreciation and amortization					29,865			23,661			88,401			61,840
	Passenger and ground handling services					24,876			18,037			66,106			52,109
	Travel					21,642			14,535			57,698			43,485
	Loss on disposal of aircraft					-			501			14,679			79
	Special charge					90			-			9,567		—
	Other					29,212			27,157			84,890			80,515
	Total Operating Expenses					404,812			347,684			1,194,557			1,057,535
	Operating Income					60,989			57,706			115,776			128,764
Non-operating Expenses (Income)
	Interest income					(4,588	)		(4,849	)		(14,034	)		(15,003	)
	Interest expense					25,960			22,594			78,777			61,711
	Capitalized interest					(44	)		(291	)		(423	)		(1,985	)
	Loss on early extinguishment of debt					-			4,524			-			5,518
	Other expense (income), net					767			(241	)		831			1,415
	Total Non-operating Expenses					22,095			21,737			65,151			51,656
				767
	Income before income taxes					38,894			35,969			50,625			77,108
	Income tax expense (benefit)					11,318			11,247			(9,958	)		11,320
Net Income						27,576			24,722			60,583			65,788
	Less: Net income (loss) attributable
	to noncontrolling interests					-			981			(4,530	)		1,909
Net Income Attributable
		to Common Stockholders		$		27,576		$	23,741		$	65,113		$	63,879
Earnings per share:
	Basic				$	1.10		$	0.94		$	2.59		$	2.48
	Diluted				$	1.10		$	0.94		$	2.59		$	2.48
Weighted average shares:
	Basic					24,983			25,124			25,106			25,710
	Diluted					25,064			25,212			25,164			25,784

2

Atlas Air Worldwide Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)

				September 30,
				2014			December 31, 2013
Assets
Current Assets
	Cash and cash equivalents			$	262,224		$	321,816
	Short-term investments				11,931			10,904
	Restricted cash				13,563			6,491
	Accounts receivable, net of allowance of $1,748 and $1,402, respectively				167,845			132,159
	Prepaid maintenance				11,389			31,620
	Deferred taxes				29,203			54,001
	Prepaid expenses and other current assets				26,835			36,962
	Total current assets				522,990			593,953
Property and Equipment
	Flight equipment				3,485,877			2,969,379
	Ground equipment				50,305			46,951
			Less: accumulated depreciation		(328,953	)		(256,685	)
	Purchase deposits for flight equipment				5,947			69,320
	Property and equipment, net				3,213,176			2,828,965
Other Assets
	Long-term investments and accrued interest				126,002			130,267
	Deposits and other assets				136,438			131,216
	Intangible assets, net				69,676			33,858
Total Assets				$	4,068,282		$	3,718,259
Liabilities and Equity
Current Liabilities
	Accounts payable			$	39,234		$	65,367
	Accrued liabilities				229,072			194,292
	Current portion of long-term debt1,2				191,487			157,486
	Total current liabilities				459,793			417,145
Other Liabilities
	Long-term debt1,2				1,829,148			1,539,139
	Deferred taxes				340,444			371,655
	Other liabilities				66,822			68,195
	Total other liabilities				2,236,414			1,978,989
	Commitments and contingencies
Equity
	Stockholders’ Equity
		Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued			¯			¯
		Common stock, $0.01 par value; 50,000,000 shares authorized; 28,556,909 and
			28,200,213 shares issued, 24,804,020 and 25,038,629, shares outstanding
			(net of treasury stock), as of September 30, 2014 and December 31, 2013, respectively	286			282
	Additional paid-in-capital				569,230			561,481
	Treasury stock, at cost; 3,752,889 and 3,161,584 shares, respectively				(145,305	)		(125,826	)
	Accumulated other comprehensive loss				(9,762	)		(10,677	)
	Retained earnings				957,626			892,513
	Total stockholders’ equity				1,372,075			1,317,773
	Noncontrolling interest				¯			4,352
	Total equity				1,372,075			1,322,125
Total Liabilities and Equity				$	4,068,282		$	3,718,259

¹ Balance sheet debt at September 30, 2014 totaled $2,020.6 million, including the impact of $37.4 million of unamortized discount.

² The face value of our debt at September 30, 2014 totaled $2,058.0 million, compared with $1,738.0 million on December 31,

2013.

Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

		For the Nine Months Ended
		September 30, 2014			September 30, 2013
Operating Activities:
Net Income Attributable to Common Stockholders		$	65,113		$	63,879
Net Income (loss) attributable to noncontrolling interests			(4,530)			1,909
Net Income			60,583			65,788
Adjustments to reconcile Net Income to net cash provided by operating activities:
	Depreciation and amortization		101,493			73,324
	Accretion of debt securities discount		(6,022	)		(6,758	)
	Provision for allowance for doubtful accounts		420			217
	Special charge, net of cash payment		6,484			¯
	Loss on early extinguishment of debt		¯			5,518
	Loss (gain) on disposal of aircraft		14,679			79
	Deferred taxes		(10,282	)		10,511
	Stock-based compensation expense		9,769			12,176
Changes in:
	Accounts receivable		(27,147	)		6,818
	Prepaid expenses and other current assets		36,931			12,494
	Deposits and other assets		(5,978	)		2,834
	Accounts payable and accrued liabilities		(12,402	)		22,092
Net cash provided by operating activities			168,528			205,093
Investing Activities:
	Capital expenditures		(17,509	)		(24,860	)
	Purchase deposits and delivery payments for flight equipment		(502,782	)		(561,979	)
	Changes in restricted cash		(7,072	)		(5,886	)
	Proceeds from short-term investments		2,886			4,672
	Proceeds from insurance		¯			9,109
	Proceeds from disposal of aircraft		¯			4,250
Net cash used for investing activities			(524,477	)		(574,694	)
Financing Activities:
	Proceeds from debt issuance		572,552			709,484
	Maintenance reserves received		12,950			2,195
	Refund of accelerated share repurchase		¯			21,886
	Prepayment of accelerated share repurchase		¯			(21,886	)
	Purchase of treasury stock		(19,479	)		(80,946	)
	Excess tax benefit from stock-based compensation expense		¯			850
	Payment of debt issuance costs		(17,117	)		(19,682	)
	Payments of debt		(252,549	)		(371,096	)
Net cash provided by financing activities			296,357			240,805
Net decrease in cash and cash equivalents			(59,592	)		(128,796	)
Cash and cash equivalents at the beginning of period			321,816			409,763
Cash and cash equivalents at the end of period		$	262,224		$	280,967
Non-cash Investing and Financing Activities:
Acquisition of flight equipment and assumed debt		$	¯		$	90,498
Acquisition of flight and ground equipment included in Accounts payable
and Accrued liabilities		$	29,087		$	¯
Disposition of aircraft included in Accounts receivable		$	5,072		$	¯

Atlas Air Worldwide Holdings, Inc.
Direct Contribution
(in thousands)
(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Operating Revenue:
ACMI	$	184,068		$	189,583		$	568,929		$	552,710
AMC Charter		109,780			95,668			263,935			287,840
Commercial Charter		143,075			104,605			391,527			313,488
Dry Leasing		25,411			11,874			75,611			21,844
Other		3,467			3,660			10,331			10,417
Total Operating Revenue	$	465,801		$	405,390		$	1,310,333		$	1,186,299
Direct Contribution:
ACMI	$	54,228		$	62,587		$	143,554		$	157,594
AMC Charter		17,603			14,749			42,691			40,144
Commercial Charter		571			(3,859	)		(17,731	)		(15,023	)
Dry Leasing		8,721			4,681			25,630			8,294
Total Direct Contribution	$	81,123		$	78,158		$	194,144		$	191,009
Add back (subtract):
Unallocated income and expenses, net	(42,139)			(37,164)			(119,273)			(108,304)
Loss on early extinguishment of debt	-			(4,524)			-			(5,518)
Special charge		(90)			-			(9,567)			-
Loss on disposal of aircraft		-			(501	)		(14,679)			(79	)
Income before Income Taxes		38,894			35,969			50,625			77,108
Add back (subtract):
Interest income		(4,588	)		(4,849	)		(14,034	)		(15,003	)
Interest expense		25,960			22,594			78,777			61,711
Capitalized interest		(44	)		(291	)		(423	)		(1,985	)
Loss on early extinguishment of debt	-			4,524			-			5,518
Other expense (income), net		767			(241	)		831			1,415
Operating Income	$	60,989		$	57,706		$	115,776		$	128,764

Atlas Air Worldwide uses an economic performance metric, Direct Contribution, to show the profitability of each of its segments after allocation of direct ownership costs. Atlas Air Worldwide currently has the following reportable segments: ACMI, AMC Charter, Commercial Charter, and Dry Leasing. Each segment has different operating and economic characteristics, which are separately reviewed by senior management.

Direct Contribution consists of income (loss) before taxes, excluding special charges, nonrecurring items, losses (gains) on the sale of aircraft, and unallocated fixed costs.

Direct costs include crew costs, maintenance costs, fuel, ground operations, sales costs, aircraft rent, interest expense related to aircraft debt and aircraft depreciation.

Unallocated income and expenses include corporate overhead, non-aircraft depreciation, interest income, foreign exchange gains and losses, other revenue and other non-operating costs, including one-time items.

3

Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)

	For the Three Months Ended
	September 30, 2014			September 30, 2013			Percent Change
Net Income Attributable to Common Stockholders	$	27,576		$	23,741			16.2	%
After-tax impact from:
Loss on disposal of aircraft		-			319
Special charge1		(135	)	—
Loss on early extinguishment of debt2		-			4,524
Adjusted Net Income Attributable to Common Stockholders	$ 27,441			$ 28,584			(4.0%)
Diluted EPS	$	1.10		$	0.94			17.0	%
After-tax impact from:
Loss on disposal of aircraft		-			0.01
Special charge1		(0.01	)	—
Loss on early extinguishment of debt2		-			0.18
Adjusted Diluted EPS	$	1.09		$	1.13			(3.5	%)
	For the Nine Months Ended
	September 30, 2014			September 30, 2013			Percent Change
Net Income Attributable to Common Stockholders	$	65,113		$	63,879			1.9	%
After-tax impact from:
ETI tax benefit		(24,013	)		(14,160	)
Loss on disposal of aircraft		9,389			50
Special charge1		3,905		—
Accrual for legal matters		300		—
Loss on early extinguishment of debt2		-			5,157
Adjusted Net Income Attributable to Common Stockholders	$ 54,694			$ 54,926			(0.4%)
Diluted EPS	$	2.59		$	2.48			4.4	%
After-tax impact from:
ETI tax benefit		(0.95	)		(0.55	)
Loss on disposal of aircraft		0.37		—
Special charge1		0.16		—
Accrual for legal matters		0.01		—
Loss on early extinguishment of debt2		-			0.20
Adjusted Diluted EPS	$ 2.173			$	2.13			1.9	%

¹ Included in Special charge in 2014 were employee termination benefits, a loan reserve, professional fees and tax adjustments related to

GSS, and an adjustment to lease termination costs for two 747-400BCFs.

² Loss on early extinguishment of debt was related to the financing of 747-8F aircraft.
³ Items do not sum due to rounding.

Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)

	4Q14		Full-Year 2014
	Diluted EPS		Diluted EPS
	Guidance1 Guidance1,2
			$
GAAP Measure	$	1.33-1.43		3.92-4.02
ETI tax benefit		—		(0.95	)
Loss on disposal of aircraft		-		0.37
Special charge		—		0.16
Accrual for legal matters		-		0.01
Non-GAAP Measure	$	1.33-1.43	$	3.50-3.60
1 Approximate $/share.
2 Items do not sum due to rounding.

	For the Three Months Ended
		September 30, 2014		September 30, 2013
Net Cash Provided by Operating Activities		$	61,402	$	78,462
Less:
Capital expenditures			6,856		5,369
Capitalized interest			44		291
Free Cash Flow1		$	54,502	$	72,802

	For the Nine Months Ended
		September 30, 2014		September 30, 2013
Net Cash Provided by Operating Activities		$	168,528	$	205,093
Less:
Capital expenditures			17,509		24,860
Capitalized interest			423		1,985
Free Cash Flow1		$	150,596	$	178,248

¹ Free Cash Flow = Cash Flows from Operations minus Base Capital Expenditures and Capitalized Interest.

Base Capital Expenditures excludes purchases of aircraft.

4

Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands)
(Unaudited)

	For the Three Months Ended		For the Nine Months Ended
	September 30, 2014	September 30, 2013	September 30, 2014	September 30, 2013
Income before income taxes	$ 38,894	$ 35,969	$ 50,625	$	77,108
Loss on disposal of aircraft	-	501	14,679		79
Special charge1	90	-	9,567		-
Accrual for legal matters	-	-	469		-
Loss on early extinguishment of debt2	-	4,524	-	5,518
Adjusted pretax income	38,984	40,994	75,340		82,705
Interest (income) expense, net	21,328	17,454	64,320		44,723
Other non-operating expenses (income)	767	(241)	831	1,415
Adjusted operating income	61,079	58,207	140,491		128,843
Depreciation and amortization	29,865	23,661	88,401		61,840
EBITDA, as adjusted3	90,944	81,868	228,892		190,683
Aircraft rent	34,183	40,405	104,419		118,753
EBITDAR, as adjusted4	$125,127	$122,273	$333,311	$	309,436

¹ Included in Special charge in 2014 were GSS employee termination benefits, a loan reserve, professional fees and tax adjustments related to GSS, and an adjustment to lease termination costs for two 747-400BCFs.

² Loss on early extinguishment of debt was related to the financing of 747-8F aircraft.

³ Adjusted EBITDA: Earnings before interest, taxes, depreciation, amortization, loss on disposal of aircraft, special charge, accrual for legal matters, and loss on early extinguishment of debt, as applicable.

⁴ Adjusted EBITDAR: Earnings before interest, taxes, depreciation, amortization, aircraft rent expense, loss on disposal of aircraft, special charge, accrual for legal matters, and loss on early extinguishment of debt, as applicable.

5

Atlas Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results
(Unaudited)

			For the Three Months Ended								For the Nine Months Ended
				September 30,				Increase/			September 30,				Increase/
				2014		2013		(Decrease)			2014		2013		(Decrease)
Block Hours
	ACMI				28,096		28,813		(717	)		83,770		85,274		(1,504	)
	AMC Charter
	Cargo				1,892		1,531		361			3,493		5,296		(1,803	)
	Passenger				3,679		3,029		650			9,378		8,264		1,114
	Commercial Charter				7,111		5,310		1,801			19,484		16,360		3,124
	Nonrevenue				261		220		41			796		655		141
	Total Block Hours				41,039		38,903		2,136			116,921		115,849		1,072
Revenue Per Block Hour
	ACMI			$	6,551	$	6,580	$	(29	)	$	6,792	$	6,482	$	310
	AMC Charter
	Cargo				19,710		21,962		(2,252	)		21,039		22,681		(1,642	)
	Passenger				19,703		20,483		(780	)		20,308		20,296		12
	Commercial Charter				20,120		19,700		420			20,095		19,162		933
Average Utilization (block hours per day)
	ACMI1				9.6		10.1		(0.5	)		9.4		10.4		(1.0	)
	AMC Charter
	Cargo				9.3		5.4		3.9			8.5		6.7		1.8
	Passenger				9.5		8.0		1.5			7.8		7.0		0.8
	Commercial Charter				9.1		6.3		2.8			8.4		7.0		1.4
	All Operating Aircraft1,2				9.5		8.9		0.6			9.1		9.3		(0.2	)
Fuel
	AMC
		Average fuel cost
		per gallon		$	3.36	$	3.62	$	(0.26	)	$	3.35	$	3.63	$	(0.28	)
		Fuel gallons			13,341		11,324		2,017			30,644		33,847		(3,203	)
		consumed (000s)
	Commercial Charter
		Average fuel cost
		per gallon		$	3.06	$	3.09	$	(0.03	)	$	3.12	$	3.13	$	(0.01	)
		Fuel gallons			23,142		16,956		6,186			63,698		53,210		10,488
		consumed (000s)
	1 ACMI and All Operating Aircraft averages in the third quarter and first nine months of 2014 reflect the impact of increases in the number of CMI
	aircraft and amount of CMI flying compared with the same periods of 2013.
	2 Average of All Operating Aircraft excludes Dry Leasing aircraft, which do not contribute to block-hour volumes.

Atlas Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results
(Unaudited)

For the Three Months Ended				For the Nine Months Ended
	September 30,		Increase/		September 30,		Increase/
	2014	2013	(Decrease)		2014	2013	(Decrease)

Segment Operating Fleet (average
aircraft equivalents during the
period)
	ACMI1
	747-8F Cargo	8.4	8.0	0.4		8.5	7.7	0.8
	747-400 Cargo	11.1	12.0	(0.9	)	11.8	12.2	(0.4	)
	747-400 Dreamlifter	3.0	1.6	1.4		3.1	1.6	1.5
	767-300 Cargo	2.0	2.0	—		2.0	1.8	0.2
	767-200 Cargo	5.0	5.0	—		5.0	5.0	—
	747-400 Passenger	1.3	1.4	(0.1	)	1.1	1.1	—
	767-300 Passenger	0.1	—	0.1		—	0.3	(0.3	)
	767-200 Passenger	1.0	1.0	—		1.0	0.3	0.7
	Total	31.9	31.0	0.9		32.5	30.0	2.5
	AMC Charter
	747-400 Cargo	2.2	3.1	(0.9	)	1.5	2.9	(1.4	)
	747-400 Passenger	1.5	1.4	0.1		1.7	1.7	—
	767-300 Passenger	2.7	2.7	—		2.7	2.6	0.1
	Total	6.4	7.2	(0.8	)	5.9	7.2	(1.3	)
	Commercial Charter
	747-8F Cargo	0.5	1.0	(0.5	)	0.5	0.4	0.1
	747-400 Cargo	7.6	7.7	(0.1	)	7.7	7.8	(0.1	)
	747-400 Passenger	0.1	0.2	(0.1	)	0.1	0.2	(0.1	)
	767-300 Passenger	0.3	0.2	0.1		0.2	0.2	—
	Total	8.5	9.1	(0.6	)	8.5	8.6	(0.1	)
	Dry Leasing
	777-200 Cargo	6.0	2.6	3.4		5.9	1.3	4.6
	757-200 Cargo	1.0	1.0	—		1.0	1.0	—
	737-300 Cargo	1.0	1.0	—		1.0	1.0	—
	737-800 Passenger	2.0	2.0	—		2.0	2.0	—
	Total	10.0	6.6	3.4		9.9	5.3	4.6
	Total Operating Aircraft	56.8	53.9	2.9		56.8	51.1	5.7
	Out of Service2	1.0	1.0	—		1.0	0.8	0.2

1	ACMI average fleet excludes spare aircraft provided by CMI customers.
2	Out-of-service aircraft were temporarily parked during the period and are completely unencumbered.

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