Atlas Air Worldwide (AAWW) 8-K Atlas Air Worldwide Reports Fourth-Quarter and Full-Year 2015 Earnings

2000 Westchester Avenue, Purchase, New York 10577 •(914) 701-8000

FOR IMMEDIATE RELEASE
Contacts: Dan Loh (Investors) –(914) 701-8200

Bonnie Rodney (Media) – (914) 701-8580

Atlas Air Worldwide
Reports Fourth-Quarter and Full-Year 2015 Earnings

4Q15 Adjusted Net Income of $39.4 Million, $1.59 per Share
Full-Year Adjusted Net Income of $125.3 Million, $5.01 per Share

4Q15 Reported Net Loss of $37.6 Million, $1.53 per Share
Full-Year Reported Net Income of $7.3 Million, $0.29 per Share
Reported Results Primarily Reflect Previously Disclosed Litigation Settlement

Positioned for Earnings Growth in 2016

PURCHASE, N.Y.,February 18, 2016 –Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced adjusted net income attributable to common stockholders of $39.4 million, or $1.59 per diluted share, for the three months ended December 31, 2015, compared with $38.9 million, or $1.55 per diluted share, for the three months ended December 31, 2014.

For the twelve months ended December 31, 2015, our adjusted net income attributable to common stockholders increased to $125.3 million, or $5.01 per diluted share, from $93.4 million, or $3.72 per diluted share, for the twelve months ended December 31, 2014.

Our free cash flow totaled $95.6 million in the fourth quarter of 2015, compared with $97.2 million in the fourth quarter of 2014. For the full year, our free cash flow improved to $326.8 million from $247.8 million in 2014.

“2015 was a great year. We grew earnings substantially, outperforming the airfreight market and delivering adjusted EPS of $5.01, and we positioned Atlas for earnings growth in 2016,” said William J. Flynn, President and Chief Executive Officer.

“We also took actions to strengthen our fleet. We added a tenth 747-8 freighter, increased our CMI operations by four 767s, returned a 747-400BCF to our growing global Charter business, and expanded our Dry Leasing portfolio to include two 767 aircraft that we will also operate on a CMI basis.

“In addition, we refinanced higher-cost debt on two 747-8s and five 747-400 freighters, enabling us to reduce our cost of debt, increase cash flows, enhance adjusted earnings per share, unencumber these 747-400s, and add flexibility to our fleet.

“We will see a full year of benefits from each of these actions in 2016, which position us to surpass 2015 adjusted earnings that included approximately $0.55 to $0.60 per share in the first half driven by the incremental demand we captured related to port congestion on the U.S. West Coast.

“We also expect to benefit from our acquisition of Southern Air Holdings, a premier provider of intercontinental and domestic CMI services, which we expect to close in the next few months.

“The Southern Air transaction, which will be immediately accretive, is strategically compelling and highly complementary. It provides Atlas immediate entry into 777 and 737 aircraft operating platforms, with potential for developing additional business with existing and new customers of both companies. The result will be a more diversified and profitable company offering access to the widest range of modern, efficient aircraft.”

On a reported basis, fourth-quarter 2015 net loss attributable to common stockholders totaled $37.6 million, or $1.53 per diluted share, compared with net income attributable to common stockholders of $41.6 million, or $1.66 per diluted share, in the fourth quarter of 2014. Reported results in the fourth quarter of 2015 were primarily due to charges associated with a previously disclosed litigation settlement.

On a reported basis, full-year 2015 net income attributable to common stockholders totaled $7.3 million, or $0.29 per diluted share, primarily due to charges associated with a previously disclosed litigation settlement. Reported results in 2015 compared with net income attributable to common stockholders of $106.8 million, or $4.25 per diluted share, in 2014.

Fourth-Quarter Results

Fourth-quarter earnings reflected solid peak-season volumes and yields, supported by continued e-commerce growth. In addition, they were driven by our diverse business mix and the ongoing demand for our market-leading aircraft and aviation operating services. We performed a higher-than-expected amount of conditions-based heavy maintenance activity during the quarter, mainly for engine overhauls on 747-400 aircraft. This positions us to continue to take advantage of business opportunities ahead.

ACMI revenues and block-hour volumes during the quarter benefited from an increase in the number of aircraft compared with the fourth quarter of 2014, including four additional 767s operating for DHL in CMI service. Revenue and volume growth during the quarter was partially offset by a lower blended average rate per block hour reflecting the mix impact of increases in CMI flying. As anticipated, segment contribution reflected the impact of transitional crew-training costs associated with our fleet growth initiatives. These were partially offset by a reduction in heavy maintenance expense and lower aircraft ownership costs following the refinancing in 2015 of higher-cost debt related to several of our 747-8F and 747-400F aircraft.

In Charter, lower revenues were primarily driven by the impact of lower fuel prices. Higher block-hour volumes were primarily due to an increase in passenger flying during the quarter. Segment contribution benefited from an improvement in yields excluding fuel; an increase in passenger flying; a reduction in heavy maintenance expense; and a reduction in aircraft ownership costs following the refinancing of higher-cost debt related to our 747-400F aircraft.

Dry Leasing revenue and segment contribution were comparable with results in the fourth quarter of 2014.

Reported results for the fourth quarter of 2015 included an effective income tax rate benefit of 45.9%, reflecting our continued reinvestment of the net earnings of certain foreign subsidiaries outside of the U.S. as well as changes in state taxes.

Cash and Short-Term Investments

At December 31, 2015, our cash, cash equivalents, short-term investments and restricted cash totaled $444.0 million, compared with $330.7 million at December 31, 2014.

The change in position reflected net cash of $372.9 million provided by operating activities; net cash of $165.0 million used for investing activities; and net cash of $80.5 million used for financing activities, which included $568.9 million of debt payments.

Net cash used for investing activities during 2015 primarily related to the purchase of a 747-8F aircraft, two 767-300 passenger aircraft and related freighter conversion costs, and spare engines.

Net cash used for financing activities primarily reflected payments on debt obligations, as we refinanced higher-cost debt with proceeds from lower-cost debt, and for share repurchases, partially offset by proceeds from debt issuance.

Outlook

We begin 2016 with a favorable view about the demand from our customers for our aircraft and services.

We believe the demand we are currently seeing, as well as the benefits we expect from our 2015 fleet initiatives and debt refinancings, provides a foundation for earnings growth this year. In addition, our acquisition of Southern Air is expected to increase our adjusted earnings to low- to mid-single-digit percentage growth over 2015.

Given the inherent seasonality of airfreight demand, we expect the majority of our earnings in 2016 to be generated in the second half. Unlike 2015, which benefited from increased first-half demand driven by U.S. West Coast port congestion, we anticipate that results in 2016 will be more reflective of historical patterns, with approximately 75% of our adjusted EPS occurring in the second half.

In addition, we expect earnings per share in the first quarter of 2016, which is usually the lowest volume-generating and highest maintenance-expense quarter of the year, to be approximately 25% of our first-quarter 2015 adjusted EPS of $1.03. We estimate that about $0.50 of our first-quarter 2015 adjusted EPS related to the port congestion, with another approximately $0.20 from revenue recognized on the return of aircraft.

For the full year, we expect total block hours including the Southern Air transaction to increase more than 20% compared with 2015, with about 75% in ACMI and the balance in Charter. Total block hours in 2016 are also anticipated to reflect additional flying by our tenth 747-8 freighter, which we will operate in Charter until its placement in ACMI, as well as an increase in CMI activity. CMI will be driven by a full year of flying by four 767 aircraft added to our fleet during 2015 and the addition of two other 767 freighters in early 2016.

Results in our Dry Leasing segment will benefit from the addition of two converted 767 freighters to our portfolio, which we will also operate on a CMI basis as noted above.

Including Southern Air, aircraft maintenance expense in 2016 should total approximately $205 million, and depreciation is expected to total approximately $145 million. In addition, we anticipate an effective book income tax rate of approximately 30%. Core capital expenditures, excluding aircraft and engine purchases, are expected to total $50 to $60 million, mainly for spare parts for our fleet.

Conference Call

Management will host a conference call to discuss Atlas Air Worldwide’s fourth-quarter and full-year 2015 financial and operating results at 11:00 a.m. Eastern Time on Thursday, February 18, 2016.

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 fourth-quarter call) or at the following Web address:

http://edge.media-server.com/m/p/5eo2esjd

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 February 25 by dialing (855) 859-2056 (domestic) and (404) 537-3406 (international) and using Access Code 41301559#.

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 a leading global provider of outsourced aircraft and aviation operating services. It 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 solutions that include ACMI service – in which customers receive an aircraft, crew, maintenance and insurance on a long-term basis; CMI service – in which customers receive crew, maintenance and insurance but not an aircraft; express network and airport-to-airport cargo service; 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: costs associated with the acquisition of Southern Air Holdings; failure to achieve expected synergies, accretion and other anticipated benefits of the transaction or to successfully integrate the Southern Air Holdings business; adverse reactions to the acquisition by employees, key customers, including DHL Express, suppliers or competitors of either Atlas Air Worldwide, Southern Air Holdings, or their subsidiaries; our ability to effectively operate the 777 platform or grow the business of Southern Air Holdings; 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 2016 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 Twelve Months Ended
			December 31, 2015			December 31, 2014			December 31, 2015			December 31, 2014
Operating Revenue
	ACMI		$	216,120		$	209,162		$	791,442		$	778,091
	Charter			228,111			251,214			908,753			906,676
	Dry Leasing			23,983			24,448			107,218			100,059
	Other			3,863			4,041			15,246			14,372
	Total Operating Revenue		$	472,077		$	488,865		$	1,822,659		$	1,799,198
Operating Expenses
	Salaries, wages and benefits			89,303			81,506			351,372			311,143
	Aircraft fuel			71,234			102,987			333,390			404,263
	Maintenance, materials and repairs			60,168			59,051			202,337			203,567
	Aircraft rent			37,148			35,971			145,031			140,390
	Depreciation and amortization			31,987			32,392			128,740			120,793
	Travel			30,557			21,501			102,755			79,199
	Navigation fees, landing fees and other
	rent			27,763			37,770			99,345			131,138
	Passenger and ground handling services			21,365			20,714			83,185			86,820
	Loss on disposal of aircraft			7			-			1,538			14,679
	Special charge			9,783			5,547			17,388			15,114
	Other			136,506			31,230			234,073			116,120
	Total Operating Expenses			515,821			428,669			1,699,154			1,623,226
	Operating Income (Loss)			(43,744	)		60,196			123,505			175,972
Non-operating Expenses (Income)
	Interest income			(1,601	)		(4,446	)		(12,554	)		(18,480	)
	Interest expense			25,065			25,475			96,756			104,252
	Capitalized interest			(268	)		(30	)		(1,027	)		(453	)
	Loss on early extinguishment of debt			2,999			-			69,728			-
	Gain on investments			—			—			(13,439	)		—
	Other expense (income), net			(494	)		273			1,261			1,104
	Total Non-operating Expenses			25,701			21,272			140,725			86,423
	Income (loss) before income taxes			(69,445	)		38,924			(17,220	)		89,549
	Income tax (benefit)			(31,863	)		(2,720	)		(24,506	)		(12,678	)
Net Income (Loss)				(37,582	)		41,644			7,286			102,227
	Less: Net income (loss) attributable
	to noncontrolling interests			-			-			-			(4,530	)
Net Income (Loss) Attributable
		to Common Stockholders	$	(37,582	)	$	41,644		$	7,286		$	106,757
Earnings per share:
	Basic		$	(1.53	)	$	1.68		$	0.29		$	4.26
	Diluted		$	(1.53	)	$	1.66		$	0.29		$	4.25
Weighted average shares:
	Basic			24,633			24,807			24,833			25,031
	Diluted			24,633			25,018			25,018			25,127

2

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

				December 31 ,
				2015			December 31, 2014
Assets
Current Assets
	Cash and cash equivalents			$	425,950		$	298,601
	Short-term investments				5,098			17,802
	Restricted cash				12,981			14,281
	Accounts receivable, net of allowance of $1,247 and $1,658, respectively				164,308			162,092
	Prepaid maintenance				6,052			20,806
	Prepaid expenses and other current assets				37,548			51,599
	Total current assets				651,937			565,181
Property and Equipment
	Flight equipment				3,687,248			3,448,791
	Ground equipment				58,487			51,418
			Less: accumulated depreciation		(450,217	)		(348,036	)
	Purchase deposits for flight equipment				39,678			20,054
	Property and equipment, net				3,335,196			3,172,227
Other Assets
	Long-term investments and accrued interest				37,604			120,478
	Deposits and other assets				81,183			81,981
	Intangible assets, net				58,483			67,410
Total Assets				$	4,164,403		$	4,007,277
Liabilities and Equity
Current Liabilities
	Accounts payable			$	93,278		$	42,864
	Accrued liabilities				293,138			251,594
	Current portion of long-term debt1,2				161,811			181,193
	Total current liabilities				548,227			475,651
Other Liabilities
	Long-term debt1,2				1,739,496			1,736,747
	Deferred taxes				286,928			311,668
	Other liabilities				135,569			65,416
	Total other liabilities				2,161,993			2,113,831
	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; 28,955,445 and
			28,561,160 shares issued, 24,636,651 and 24,807,718 shares outstanding
			(net of treasury stock), as of December 31, 2015 and December 31,
			2014, respectively		290			286
	Additional paid-in-capital				625,244			573,133
	Treasury stock, at cost; 4,318,794 and 3,753,442 shares, respectively				(171,844	)		(145,322	)
	Accumulated other comprehensive loss				(6,063	)		(9,572	)
	Retained earnings				1,006,556			999,270
	Total equity				1,454,183			1,417,795
Total Liabilities and Equity				$	4,164,403		$	4,007,277

¹ Balance sheet debt at December 31, 2015 totaled $1,901.3 million, including the impact of $49.5 million of unamortized discount and debt issuance costs of $57.3 million.

² The face value of our debt at December 31, 2015 totaled $2,008.1 million, compared with $2,009.0 million on December 31, 2014.

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

		For the Twelve Months Ended
		December 31, 2015			December 31, 2014
Operating Activities:
Net Income Attributable to Common Stockholders		$	7,286		$	106,757
Net income (loss) attributable to noncontrolling interests			-			(4,530	)
Net Income			7,286			102,227
Adjustments to reconcile Net Income to net cash provided by operating activities:
	Depreciation and amortization		147,604			138,324
	Accretion of debt securities discount		(4,651	)		(7,947	)
	Provision for allowance for doubtful accounts		171			643
	Special charge, net of cash payments		16,351			12,013
	Loss on early extinguishment of debt		69,728			—
	Loss on disposal of aircraft		1,538			14,679
	Deferred taxes		(25,898	)		(12,714	)
	Stock-based compensation expense		16,181			13,606
Changes in:
	Accounts receivable		2,016			(21,070	)
	Prepaid expenses, current assets and other assets		23,171			23,605
	Accounts payable and accrued liabilities		119,390			9,779
Net cash provided by operating activities			372,887			273,145
Investing Activities:
	Capital expenditures		(45,040	)		(24,920	)
	Purchase deposits and payments for flight equipment		(227,048	)		(519,399	)
	Changes in restricted cash		1,300			(7,790	)
	Proceeds from investments		80,302			3,728
	Proceeds from disposal of aircraft		25,441			—
Net cash used for investing activities			(165,045	)		(548,381	)
Financing Activities:
	Proceeds from debt issuance		568,033			572,552
	Customer maintenance reserves received		16,148			17,555
	Customer maintenance reserves paid		(3,801	)		—
	Proceeds from sale of warrants		36,290			—
	Payment for convertible note hedges		(52,903	)		—
	Proceeds from stock option exercises		1,193			69
	Excess tax benefit from stock-based compensation expense		555			8
	Payment of debt issuance costs		(14,509	)		(17,117	)
	Purchase of treasury stock		(26,522	)		(19,496	)
	Payment of debt extinguishment costs		(36,054	)		—
	Payments of debt		(568,923	)		(301,550	)
Net cash (used for) provided by financing activities			(80,493	)		252,021
Net increase (decrease) in cash and cash equivalents			127,349			(23,215	)
Cash and cash equivalents at the beginning of period			298,601			321,816
Cash and cash equivalents at the end of period		$	425,950		$	298,601
Noncash Investing and Financing Activities:
Acquisition of flight equipment included in Accounts payable and accrued liabilities		$	33,294		$	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 Twelve Months Ended
	December 31, 2015			December 31, 2014			December 31, 2015			December 31, 2014
Operating Revenue:
ACMI	$	216,120		$	209,162		$	791,442		$	778,091
Charter		228,111			251,214			908,753			906,676
Dry Leasing		23,983			24,448			107,218			100,059
Other		3,863			4,041			15,246			14,372
Total Operating Revenue	$	472,077		$	488,865		$	1,822,659		$	1,799,198
Direct Contribution:
ACMI	$	47,564		$	55,382		$	185,615		$	200,489
Charter		39,834			26,939			124,808			47,245
Dry Leasing		7,931			7,594			42,023			33,224
Total Direct Contribution for Reportable Segments	$	95,329		$	89,915		$	352,446		$	280,958
Add back (subtract):
Unallocated income and expenses, net1		(151,985	)		(45,444	)		(294,451	)		(161,616	)
Loss on early extinguishment of debt		(2,999	)		—			(69,728	)		—
Gain on investments		—			—			13,439			—
Special charge		(9,783	)		(5,547	)		(17,388	)		(15,114	)
Loss on disposal of aircraft		(7	)		—			(1,538	)		(14,679	)
Income (loss) before Income Taxes		(69,445	)		38,924			(17,220	)		89,549
Add back (subtract):
Interest income		(1,601	)		(4,446	)		(12,554	)		(18,480	)
Interest expense		25,065			25,475			96,756			104,252
Capitalized interest		(268	)		(30	)		(1,027	)		(453	)
Loss on early extinguishment of debt		2,999			—			69,728			—
Gain on investments		—			—			(13,439	)		—
Other expense (income), net		(494	)		273			1,261			1,104
Operating Income (Loss)	$	(43,744	)	$	60,196		$	123,505		$	175,972

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, Charter, and Dry Leasing. Each segment has different operating and economic characteristics, which are separately reviewed by our chief operating decision maker.

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, nonaircraft depreciation, unallocated interest expense and income, foreign exchange gains and losses, other revenue and other non-operating costs, including unusual items and certain noncash income and expenses.

¹ During the first quarter of 2015, we revised the methodology for allocating certain unallocated expenses to our segments. Prior period information has been adjusted consistently to reflect this change.

3

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

	For the Three Months Ended
	December 31, 2015			December 31, 2014			Percent Change
Net Income (Loss) Attributable to Common Stockholders	$	(37,582	)	$	41,644			(190.2	%)
After-tax impact from:
Noncash expenses and income, net1		1,719			77
ETI tax benefit		—			(10,742	)
Accrual for legal matters and U.S. class action professional fees		65,911			850
Charges associated with refinancing debt		2,750			—
Special charge2		6,635			7,024
Loss on disposal of aircraft		4			—
Adjusted Net Income Attributable to Common Stockholders	$	39,437		$	38,853			1.5	%
Diluted EPS	$	(1.51	)	$	1.66			(191.0	%)
After-tax impact from:
Noncash expenses and income, net1		0.07			—
ETI tax benefit		—			(0.43	)
Accrual for legal matters and U.S. class action professional fees		2.65			0.03
Charges associated with refinancing debt		0.11			—
Special charge2		0.27			0.28
Loss on disposal of aircraft		—			—
Adjusted Diluted EPS	$	1.59		$	1.553			2.6	%
	For the Twelve Months Ended
	December 31, 2015			December 31, 2014			Percent Change
Net Income Attributable to Common Stockholders	$	7,286		$	106,757			(93.2	%)
After-tax impact from:
Noncash expenses and income, net1		4,137			(68	)
ETI tax benefit		(4,008	)		(34,755	)
Gain on investments		(8,613	)		—
Accrual for legal matters and U.S. class action professional fees		66,897			1,150
Charges associated with refinancing debt		47,049			—
Special charge2		11,462			10,930
Loss on disposal of aircraft		1,096			9,389
Adjusted Net Income Attributable to Common Stockholders	$	125,306		$	93,403			34.2	%
Diluted EPS	$	0.29		$	4.25			(93.2	%)
After-tax impact from:
Noncash expenses and income, net1		0.17			—
ETI tax benefit		(0.16	)		(1.38	)
Gain on investments		(0.34	)		—
Accrual for legal matters and U.S. class action professional fees		2.67			0.05
Charges associated with refinancing debt		1.88			—
Special charge2		0.46			0.43
Loss on disposal of aircraft		0.04			0.37
Adjusted Diluted EPS	$	5.01		$	3.72			34.7	%

¹ Noncash expenses and income, net in 2015 primarily related to amortization of debt discount on convertible notes. Noncash expenses and income, net in 2014 primarily related to amortization and accretion of debt, lease and investment discounts.

² Included in Special charge in 2015 were a loss on engines held for sale and costs related to the early termination of high-rate operating leases for two engines. Included in Special charge in 2014 were employee termination benefits, a loan reserve, professional fees and tax adjustments related to a consolidated subsidiary, and a loss on a 737-800 aircraft held for sale.

³ Items may not sum due to rounding.

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

	For the Three Months Ended
		December 31, 2015		December 31, 2014
Net Cash Provided by Operating Activities		$	107,038	$	104,617
Less:
Capital expenditures			11,205		7,411
Capitalized interest			268		30
Free Cash Flow1		$	95,565	$	97,176

	For the Twelve Months Ended
		December 31, 2015		December 31, 2014
Net Cash Provided by Operating Activities		$	372,887	$	273,145
Less:
Capital expenditures			45,040		24,920
Capitalized interest			1,027		453
Free Cash Flow1		$	326,820	$	247,772

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

Base Capital Expenditures excludes purchases of aircraft.

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

	For the Three Months Ended
		—	March 31, 2015
Diluted EPS	$			1.17
After-tax impact from:
ETI tax benefit				(0.16	)
Special charge				(0.02	)
Loss on disposal of aircraft				0.04
Adjusted Diluted EPS	$			1.03

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

	For the Three Months Ended					For the Twelve Months Ended
	December 31, 2015			December 31, 2014		December 31, 2015			December 31, 2014
Income (loss) before income taxes	$	(69,445	)	$	38,924	$	(17,220	)	$	89,549
Noncash expenses and income, net		1,818			120		4,480			(105	)
Special charge1		9,783			5,547		17,388			15,114
Accrual for legal matters and U.S. class action professional fees		102,841			850		104,380			1,319
Gain on investments		—			—		(13,439	)		—
Loss on early extinguishment of debt		2,999			—		69,728			—
Loss on disposal of aircraft		7			—		1,538			14,679
Adjusted pretax income		48,003			45,441		166,855			120,556
Interest expense, net2		21,975			21,474		81,081			87,809
Other non-operating expenses (income)		(494	)		273		1,261			1,104
Adjusted operating income		69,484			67,188		249,197			209,469
Depreciation and amortization		31,987			32,392		128,740			120,793
EBITDA, as adjusted3		101,471			99,580		377,937			330,262
Aircraft rent		36,551			35,376		142,645			138,005
EBITDAR, as adjusted4	$	138,022		$	134,956	$	520,582		$	468,267

¹ Included in Special charge in 2015 were a loss on engines held for sale and costs related to the early termination of high-rate operating leases for two engines. Included in Special charge in 2014 were employee termination benefits, a loan reserve, professional fees and tax adjustments related to a consolidated subsidiary, and a loss on a 737-800 aircraft held for sale.

² Reflects impact of noncash expense and income related to convertible notes, debt and investments.

³ Adjusted EBITDA: Earnings before interest, taxes, depreciation, amortization, noncash expenses and income, net, special charge, accrual for legal matters and U.S. class action professional fees, gain on investments, loss on early extinguishment of debt, and loss (gain) on disposal of aircraft, as applicable.

⁴ Adjusted EBITDAR: Earnings before interest, taxes, depreciation, amortization, aircraft rent expense, noncash expenses and income, net, special charge, accrual for legal matters and U.S. class action professional fees, gain on investments, loss on early extinguishment of debt, and loss (gain) on disposal of aircraft, as applicable.

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

		For the Three Months Ended								For the Twelve Months Ended
			December 31,				Increase/			December 31,				Increase/
			2015		2014		(Decrease)			2015		2014		(Decrease)
Block Hours
	ACMI			33,716		31,272		2,444			126,206		115,042		11,164
	Charter:
	Cargo			9,417		9,467		(50	)		35,463		31,612		3,851
	Passenger			3,529		2,876		653			14,776		13,085		1,691
	Nonrevenue			475		555		(80	)		1,615		1,351		264
	Total Block Hours			47,137		44,170		2,967			178,060		161,090		16,970
Revenue Per Block Hour
	ACMI		$	6,410	$	6,688	$	(278	)	$	6,271	$	6,764	$	(493	)
	Charter:
	Cargo			17,428		20,641		(3,213	)		17,655		20,217		(2,562	)
	Passenger			18,134		19,404		(1,270	)		19,130		20,449		(1,319	)
Average Utilization (block hours per day)
	ACMI1			9.3		10.1		(0.8	)		9.3		9.6		(0.3	)
	Charter:
	Cargo			11.4		11.8		(0.4	)		10.1		9.1		1.0
	Passenger			8.2		6.9		1.3			8.6		7.8		0.8
	All Operating Aircraft1,2			9.6		10.2		(0.6	)		9.5		9.4		0.1
Charter Fuel
	Average fuel cost per gallon		$	1.89	$	2.75	$	(0.86	)	$	2.27	$	3.07	$	(0.80	)
	Fuel gallons consumed (000s)			37,737		37,445		(292	)		147,081		131,787		15,294
	1 ACMI and All Operating Aircraft averages in the fourth quarter and full-year 2015 reflect the impact of increases in the number of CMI aircraft and amount
	of CMI flying compared with the same periods of 2014.
	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 Twelve Months Ended
	December 31,		Increase/		December 31,		Increase/
	2015	2014	(Decrease)		2015	2014	(Decrease)

Segment Operating Fleet (average
aircraft equivalents during the
period)
	ACMI1
	747-8F Cargo	9.0	8.5	0.5		8.9	8.5	0.4
	747-400 Cargo	14.2	13.0	1.2		12.6	12.0	0.6
	747-400 Dreamlifter	2.8	2.9	(0.1	)	3.0	3.1	(0.1	)
	767-300 Cargo	2.2	2.0	0.2		2.1	2.0	0.1
	767-200 Cargo	9.0	5.0	4.0		8.3	5.0	3.3
	747-400 Passenger	1.3	1.4	(0.1	)	1.2	1.2	—
	767-200 Passenger	1.0	1.0	—		1.0	1.0	—
	Total	39.5	33.8	5.7		37.1	32.8	4.3
	Charter
	747-8F Cargo	0.6	0.4	0.2		0.2	0.5	(0.3	)
	747-400 Cargo	8.4	8.3	0.1		9.4	9.0	0.4
	747-400 Passenger	1.7	1.5	0.2		1.8	1.7	0.1
	767-300 Passenger	3.0	3.0	—		2.9	2.9	—
	Total	13.7	13.2	0.5		14.3	14.1	0.2
	Dry Leasing
	777-200 Cargo	6.0	6.0	—		6.0	6.0	—
	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	1.0	2.0	(1.0	)	1.2	2.0	(0.8	)
	Total	9.0	10.0	(1.0	)	9.2	10.0	(0.8	)
	Total Operating Aircraft	62.2	57.0	5.2		60.6	56.9	3.7
	Out of Service2	0.0	1.0	(1.0	)	0.4	1.0	(0.6	)

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.

5