Atlas Air Worldwide (AAWW) 3 May 182018 Q1 Earnings call transcript

Company Profile

Participants

Ed McGarvey	Vice President and Treasurer
William Flynn	President and Chief Executive Officer
Spencer Schwartz	Executive Vice President and Chief Financial Officer
David Ross	Stifel, Nicolaus & Company, Inc.
Peter Lukas	CJS Securities.
Helane Becker	Cowen and Company
Scott Group	Wolfe Research
Jack Atkins	Stephens Inc.
David Campbell	Thompson, Davis & Company
Christopher Stathoulopoulos	Susquehanna Financial Group
Adam Hackel	Imperial Capital
Stephen O'Hara	Sidoti & Company

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the First Quarter 2018 Earnings Call for Atlas Air Worldwide. At this time, all participants have been placed in a listen-only mode and the floor will be open for question following the presentation. [Operator Instructions] It is now pleasure to turn the floor over to Atlas Air, to begin.

Ed McGarvey

Thank you, Laurie, and good morning, everyone. Atlas for Treasurer McGarvey, Air Worldwide. Ed our to first quarter call. conference results XXXX Welcome be Flynn, by Officer, call hosted Today's will Bill Schwartz, Chief and our our Financial Officer. Spencer Executive Chief that complemented a under is in Information Investor the viewed call Today's Presentations slide presentation at can by atlasair.com section. be

of remind Litigation meaning performance risks These indicated some today and XXXX. to would forward-looking on Reform of discussion future our statements expectations we X, that As the the and includes Securities Private about Act Slide within to and relate like you the statements uncertainties. Company's events involve they

Our statements. materially differ actual from forward-looking in any actions results or those may projected

about our filed our information please subsequently factors XX-K business, reports. supplemented our refer XXXX by For SEC to related as risk to Form amended or

to to measures in to slides. insights today's provide As GAAP are attached reconciled and press release meant is references today's meaningful that non-GAAP are in with the appendix and

point, through participants attention we that like During themselves Bill we today, so will as our as the principal question-and-answer can question, to possible. period to to accommodate would gone this many happy any to to and questions call queue, follow-up we've Flynn. one participants as and At permits. draw be additional your turn X to time to Slide limit answer question one the After we ask like I'd over

William Flynn

full-year first you growth join an XXXX We We're outlook. morning Thank you, quarter significant today. and have be this Ed, and increasing We're we us expect are this for exciting to to good morning, to earnings Atlas. our and pleased start we XXXX a everyone. reported off year strong in very

the customer our are have outlook strategic and driven demand. strong and Company on that execution results Our by initiatives transformed

customer fleet. base Our focus our fast-growing has on markets and e-commerce and broadened global express,

We customers. are airfreight dynamics serve positioned global in we our to a environment on well And operating capitalize strong growing economy. and to market are

X. Slide Moving to

in increase in a in adjusted almost first XX% increase quarter and reflected block EBITDA revenue, increase hours, income. Our XX% earnings XX% net triple

substantial segments. in freighter contribution number of Forwarding. expectations achieved for and total announced operating a of and Express. current Amazon in today line placed early to we by Slide our that aircraft Global our the direct early as with addition, future end earlier ACMI all framework an have of freighters announced relationship that's additional in XX placed our XXX DHL respect highlights And for XXXX. strengthen And DHL of XX. In are will growth two increases X, began XXX aircraft We this expand business growth of we raising with acquisition we April with With in the the year. up Amazon we XXX second a for revised for

we raise and our $X.X and the services seeing we aircraft approximately With hours, are adjusted for to expect exceed demand to to around million. XX% to XXX,XXX billion $XXX EBITDA exceed block volumes now revenue

XX% low-to-mid We our a previously expect will this the income now net increase anticipate we than adjusted mid-XX% level year. net to rate grow income our shared. more adjusted that full-year We by

about expense at Looking adjusted quarter net our million income to adjusted we to total $XX.X the income net to $XXX million. EBITDA of XX% $XXX with first XX% quarter now expected million. exceed second compared XXXX to and grow Maintenance is anticipated adjusted in

happy about provide our to and expenditures for additional to purchases fleet. have and to year. we'll Spencer? million results. engine some mainly ask to components aircraft then expected approximately some detail total which core consistent and Spencer comments, are are with million about point, In our parts depreciation addition, and I capital the $XXX for additional I'll expected questions. our $XXX After like prior to outlook this quarter total be At exclude these first $XXX to amounts Spencer, All take million, and for your would amortization is

Spencer Schwartz

and Thank Bill, everyone. hello, you,

highlighted On increase of $XX.X the quarter basis, up X. first which continuing XXXX. strong $XX.X are Our an million, on quarter results over operations, Slide was first of net million adjusted income taxes, totaled from

As robust Bill block and noted, reflected increases our EBITDA. in results hours, revenue, adjusted

also segments. million direct totaled contribution substantially on unrealized in million, our warrants. which outstanding We included net of $X.X generated a all higher basis, $X.X an reported our of On income loss

reported expect framework tax and our any on continue expect tax into income purchased included we've rate be outstanding current to earnings respect we XX.X% to service, now during effective full-year nondeductible Based the will income had With in tax tax we an effective rate and was our our adjusted quarter principally to value income first adjusted pay placed in the quarter, XX%. the federal a due significant changes XXXX, we of that next XX.X%. the warrants. that of income an rate in tax basis, of or Our and decade. On not the U.S. we that aircraft to approximately this

revenues Looking of the hours Charter reflected and by Dry block at for February. block freighter volumes growth in a flying several Leasing, hour. XX% number during In increased primarily increase grew X. the ACMI XXX Slide the from start-up and of of segment XXX-XXX in placement redeployment Higher the segment the of hour quarter by average increase primarily first an Charter XXX-XXX XXX driven an Amazon, higher XXX-XF were revenues the significant aircraft yields. in quarter in in flying the new Block for in driven period, were Increased the and per reflecting a segment higher first customers, segment. aircraft revenues rate

In offset aircraft a segment Segment higher the amortization the increase of flying contribution Charter during hour, due segment. X. to year. in to significant per first of period reflected earnings by partially XX% Dry deferred the placement XXX-X contribution million and the higher in previous maintenance redeployment quarter a in Leasing, ACMI an higher increase utilization maintenance partially in quarter, heavy $XX.X expense during rate reflected primarily by the a totaled improvement aircraft. and additional contribution yields aircraft over of and offset The the primarily primarily was costs. Slide the ACMI increase to block higher Moving

Slide balance XXXX quarter to and short-term our X totaling million. of Turning cash, the ended cash first investments restricted with cash $XXX.X sheet. and equivalents, including We

primarily Our equipment cash at the the kits, related March our for for partially revolving be primarily reflected XXX cash activities obligations. cash offset capital operating payments acquisition offset by the partially on proceeds during by credit XX for position expenditures. aircraft, to cash of modifications, financing by used Net a core our provided Net provided activities during investing reflected converted payments by including quarter from to cash facility XXX to configuration, aircraft upgrade and period flight and investing spare activities. and engines activities, and freighter debt financing used

the As a a that and our fixed of the rate value all secured aircraft is excess debt majority reminder, a by a X.XX%, of in low has at have debt. assets our related almost is average weighted interest vast of rate which

Slide XX, the times first the X.X our to was leverage ratio net quarter. Moving at end of

EBITDAR. our over and is maintaining to improve our remain as begin have few grow. As remained sheet grown place years higher strong the next consistent generate to a we as to substantially XXXX in we since gradually while fairly we net balance fleet. expect committed And We service we the slide ratio more leverage shows, aircraft

would to like to back I turn Now Bill. it

William Flynn

Spencer. you, Thank

outlook. to we Slide earnings we an are increased a We we full-year to exciting first substantially our significant XX, in start this year and quarter expect Atlas. Moving strong earnings to have and off XXXX for be reported growth

strong Our demand. outlook company customer that results and are initiatives the by execution our and on driven strategic have transformed

focus the growing we're e-commerce Our and on positioned With global fast a economy and environment on in well dynamics serve customer question first to broadened operating fleet. capitalize we a growing global our and markets please. that, We're freight Laurie market to and base may our air strong customers. have express, has

Operator

from first line Your of David of [Operator Ross Instructions] Stifel. the comes question

David Ross

gentlemen. good Yes, morning,

William Flynn

Good morning, Dave.

Spencer Schwartz

Dave. Hi,

David Ross

see Bill, cargo talk that quarter, little April? bit air up in can how segments, in business where was do you the specifically and Charter the about strong you off it through market trended trail throughout then ramp a the

William Flynn

Sure. Generally mid-February. Lunar market which week was Year, so first strong exception New of throughout with the charter we the in the had a or quarter around

market Asian see by markets you revenues broad the the can perform and our contribution, market. charter based as beyond overall by So well, to

for very America was We for up coming strong Valentine's markets South that's The market we produce the for overall, our example year. a Day. throughout us. seasonal north flower winter expect participation during great strong charter had and to in a south

second gave we perspective and well. quarter you on outlook quarter some This as

the I'm strong forward a charter year. So to markets looking throughout

Spencer Schwartz

add Spencer, were above back And yields quarter fuel, if XXXX out you David, quarter. throughout the XXXX first I'll just that

David Ross

much as be talk bit Spencer. then might on the It Could revised I be that just as guidance? up What was what missing? and related Excellent a EBITDA doesn't net might we somewhat guidance there? you appear about little going income guess

Spencer Schwartz

those premise agree necessarily looking excess we before margins to first terms be margins with similar It expect about because the that it's and just don't very we're we at in we're quarter we're probably but with that, continue. we last very, So fairly this what just about from approximately and we talked quarter I time said using the saw strong that may the talking Dave. in

David Ross

than is net going there similarly. that, and growth flow is like if income, the EBITDA likely guess to I income take EBITDA XX% the the net then different this from were numbers XX% Okay, more we just but and around would

Spencer Schwartz

should It yes.

David Ross

Thank Okay. you.

Spencer Schwartz

Thank you.

William Flynn

Thank you.

Operator

Your CJS Labick of Securities. next the of comes from question Bob line

Peter Lukas

up Lukas get Good if the to Amazon now that saying correctly. for hi. and heard Bob to went the update XX you morning. know there, planes by XX It's year-end through expect Yes, I to Peter I

where any seven update you other on the stand. Just

William Flynn

about all the first we've the that secured deliver, Pete, need all two Amazon, secured conversion. on the the for conversion to slots XX in the by previously we've done talked of the to target the our year of and to Well we'll remain commitments aircraft on target end time as we from We've we've on And XX. operation providing aircraft. as with companies deliver have we're

Peter Lukas

you through to you a where couple And went then added ex-Amazon, DHL.

we looking out there? of for Just new capacity any other additions timing be should

William Flynn

let a Well are about things. couple talk me

XX the into flying coming aircraft Express. about we to of aircraft in made excited been ACMI second ACMI and capacity have We to for to in and Forwarding will process six a the CEO really we've and ACMMI that them well their for XXXX, Those through CMI their are an We're and aircraft DHL comments dedicated we've So then DHL. on we four of which excited the Global XXXs. that by the operation and DHL we've aircraft the in the balance six that put for are this for five two converted fleet, one operate CMI deliver in in those to the operation aircraft talked year. XXXs about added earlier types of that allow of focus their provide particular then that that solutions about as customers and acquired

fleet and earnings outlook kind as about that adjusted the it all So here it's and EBITDA underpins that's think we that we've see the income. in of net talked we growth and

Peter Lukas

of of Great. terms in And fixed you positive debt you. a mentioned a that Thanks. for Oh! was also lot was so it

the backed long-term asset much given increases fair So say big don't of to see you on short-term financing? a rate impact

William Flynn

X.XX%. We're our We've as in interest in by our said backed with weighted aircraft it is the about that. debt by of that well all good you coupon the I of majority know average vast vast really and secured rate low financing majority fixed position just of our and done a is

So we a on and financing a are interest but a we're average weighted that position, overall good basis rising rates really impact in in could very position. future good yes, really are

Peter Lukas

just for general given one me these last days. rhetoric around the And protectionism

impact for any that in hearing you're feedback what they're from seen changes? of you've if wondering customers terms making from and plans your Just any

William Flynn

long-term and tariffs flows costs. impact point still affect at well. certainly this something with even So it a that talking just we're airfreight asset over maybe I've of twice earlier I Asia as about specific affects customers there. them forwarder a we're exceptions And lot the not and with of April, others. our as shippers, two different if there been steel as trips most in the strong else would we And and not is remain something I same seeing on to watch. month in But - think talking of might customers, freight all regularly the the to directly question Freight is pretty have aluminum continue we've is I closely much same that watching something flows the we'll not answered - guess seen monitor. that's everyone just not we're that's did and have

have they that in ACMI growing place we operations. our and very a a view is customers were into strong with they're their hand asset new and commitments other believe based the assets making that - On so around have they business

Peter Lukas

very you Great. Thank much.

William Flynn

Thank you.

Spencer Schwartz

Thank you, Pete.

Operator

comes of from question next the and of Becker Helane Your Cowen Company. line

Helane Becker

everybody. for Hi, much you so Hi, thanks operator. Thank the time.

couple questions. is used is be about flown. hours minimum relevant that One, to as your it Just minimum a should anymore talk hours by about? we you Is still Spencer, think and customers to used that

Spencer Schwartz

more about smaller and Hi, customers our Helane. It's much. we much so fleet time used have when now our changed it a had fewer much and so customers to grown over and has fleet talk we ACMI grown

quite as continue store nearly But to above their above much. So quarter. X% the customers we don't their minimum fly on minimums, our focus it first in well flew

and higher kind network higher fly customers Some of of hours. our minimum of utilization, which schedule like block more operations higher have therefore newer

hour relevant we've the at to these more growth. attention look block But things to. probably it's paid block are and all hours So that

Helane Becker

helpful. a are there any pilot anything and Is is Bill. any along question this update happening negotiations lines? And That's on then for there maybe is Okay. those

William Flynn

Hi, good Helane. morning,

continue talked in about framework the have regular negotiations the with meeting place. negotiations is pilots, with team the We our with as union we meeting a union fact in and speak We're we've this representatives future with past and representatives in agreement scheduled have in week. as in continue them, pilots date our the negotiating we

Helane Becker

one Atlas to over companies of always last XXX other more the is Air been then XXX-X as let's That's in. little Okay. so been is aircraft to fleet. question decade. of you hear technology come The technology respect to next the XXX-XXX the is good The aircraft actually a those on edge And leading The too. with about the now that's older. your - say was think business the long-term new

to XXXX XXXX its going XXXX, first I like think maybe still think just come come aircraft young I in with or or I is so new about XXXX say as relatively But a were away, wondering you a next long type? consider about you XXXX, generation will about supposed think you a ones for an but timeframe, aircraft that XXXX to thinking Boeing in how replacement? until that? you're along to know the I'm time Have to aircraft next a it's have talked the life. you're

William Flynn

That's great a Helane. Yes. question,

of both quality mean door indeed XXX, the nose and door, great at and XXX-XXX and XXX-X, is nose our looking So utility I value creates the essential the the an customers. those aircraft for

as oldest bills. Our XXX-XXXs XXXX our and XXXX bills are new

runway shippers come. life there a the So by long on assets. to array I the will those of argue some still door I that is something for useful be of time a very believe valued would And wide left nose

so require that don't and some there long other is, four to a huge fact know is issues. for back number pure because going In to something anymore. have idle they've freighters the few I what factory investment it's very parked maybe been like are or come certainly that probably

quite some we these customers - on our of question I'm now. diversify going time winded bit Part it utility fleet going that's create and forward, medium intercontinental We're and so that think a That's in be are terms assets. in single in valued XXX, here range types, to says to the shareholders to the certainly will getting for what well rent we to our of XXX little be something going past our assets believe and what in those particularly used come certainly your to we then work wanted long acquisition of express long though, certainly economic XX I something and for for the value equal and very aircraft type our almost Southern the that e-commerce move number asset us. XXX. the now asset important aircraft that well on provides from what operator the fleet, of type, was haul moving the the an for So

on invest talked range. the to well about continue types I've haul make past aircraft sense the in the medium intercontinental as as we'll So as long AXXX.

there. there's those of flying. Only a converted think freighters are I opportunities few

the growth and that freighter probably freighters. little to But range and in have that's conversation ways away. long I will we have going mid-range intercontinental there's to like, what's So choice next a opportunities think look

Helane Becker

That's Okay. just then promise. follow-up growth one helpful. And

[indiscernible] not two issues you - used customer, had second you but they I that pilots not Emirates part to the question. going part are finding as maybe own to ground it's valuable for customer is think about a fly the they're and pilots having I a And they've I so when them to airlines in that with so of you then retaining for are and to going should with aircraft know bunch international want you So lack issues to obviously other them, any of want finding fly pilots? a but and your question for opportunity your expansion? own a flying an are. their think this, pilots, that's passenger, freight, customer One, and think of do are still Bill. Thank still only know be that that notice attracting they

William Flynn

Helane. Sure,

XXX,XXX that we've range, several later. it's in managed somewhere in may be XXX,XXX my lot in block So a XXXX, last we're couple we last hours really years is years, and growth wrong, but that recollection the block now a of hours flew - the in about just talking I about of

that growth. so had manage And we've to

do is train Some to and Southern core acquisition that. we're large to and pilots business levels managing operations course, our hours need those fly we to hire, and of of our retain and of Southern are in and the but of growth those rate business, out managing go our

been any is fly as could a that's quite number all them. freighter carrier we're of somewhere us certainly example, for opportunities. not in remember. But of opportunities years XXXX any I customer be for they internalized of certainly of terms to something it Emirates if around In Atlas, has foreign for future XXXX, operations, their a other for would other studying carrier,

of Just fleet, XXX-Xs been but a from own - this Cathay it They I'm to sense only point is but made us business good saying a view and of their recently able want internalized pilot a example. them, not not with made a surely well. reason, to to historically have freighter to expand. to for reasons. very it's them large two we're Cathay sense It's number - as put it's

Helane Becker

Perfect.

I much it. very really your thanks Okay, for appreciate help.

William Flynn

Thanks Helane.

Operator

comes of Group Scott Research. the line question next Wolfe from of Your

Scott Group

Hey, thanks. Good morning, guys.

William Flynn

Hi, Scott.

Scott Group

Bill Just thoughts commentary charter you're on IATA from a mentioned much you breakdown South help your those or lack you and sort Can thoughts restocking. wondering, the along what your of in inventory slowing the curious it, non-Asia? versus seeing are of yesterday and sound It in strength doesn't on it Asian is maybe about business America. but lines, maybe like how

William Flynn

our report as what's from of IATA capturing market and about look I e-commerce capturing and bit dedicated moving freight. little So They're they're I if charter unfortunate e-commerce XX% at how not at - think else separate in about Express IATA guess perspective, they international they're air my just extension because view, the and by from a on records looked the the not the only capture did I call they capturing flows. they're really a not everybody it's

they're market, the capturing, the argue only could market. rate I But market. XX% well segments So segments on high of we growth about the would segments of of IATA higher be not of think reporting the that the is

going Post next think is report I DHL, week. DHL Deutsche to

to they long growth. another freight look to their into talking typically carriers in buying because rates say what provide numbers to kind capacity, FedEx want ACMI longer operators typically service growth higher of of the where at - we see we're ACMI certainty buy dedicated are is seeing of about. view whose their - the the we rate [indiscernible] of And are I other exception customers. are Express ours, what UPS and they now customer of at and forwarder forward Let's look freight DGF of like and didn't think

a they're capturing encouraged more but all IATA saying a fulsome not frankly, and fulsome to and where full provide picture and that, not think more we've of is wrong, market better of the view IATA us I'm I So view is. we've about growth think might encouraged

Day, that in you did And for have saw growth XX.X% all which participate all like part market, we and of they Latin in overall. and a Ecuador region Colombia for Coast, a and Now Valentine's about large strong that share as trade West flows the report for are of we for we of cherries counter vegetables certainly America a or think - and in market they rate first very season fish Peru asparagus Ecuador quarter we and me. Chile, and then that for high that, is something huge fruits also flowers the that them us. blueberries and

change we charter us. markets we Asia two market segment a one Charter, very move as forward. locus XX had for strong dominates market. Latin It's year America. and So that a in no will there's That our But week

good reporting You quarter charter we're every numbers. see that

all You'll terms fly reporting and that of and the think missing that of on. I of a bit that's think numbers going see they on the units is the would I'm in IATA little what's that sense of we we in but us do I hours benefit something, longer, getting number why have their going and that a

Scott Group

that's how really call market. the don't charter XX% But it. your know I yourself don't know What if guess do traditional express your instead think you relative to and would you that's business express X% I added about it of ask what charter? you - think think meaning I broader… of the are XX% mean percent is it, right if to the XX% So you way captures like I helpful. I

William Flynn

So Scott. question it's good

historically hours. about of charter measured about time. XX% We're out block XX% we're in over it CMI and we've about what ACMI, and proves lot a numbers by talked So large as

flying year. We're the have. So Amazon DHL XX that the that end when you aircraft of units aircraft by at look flying for we be for XX% will of the number

four something. in aircraft including military So passenger LCF. military out units Boeing for Pull for the the The the LCF out Dreamlifter. in the of the XX XX

higher we fleet so and our now. e-commerce, So company talking when be a percentage the particularly is of are about our the I years company express you first than used way to much and ago by started far

and So upside talked as doesn't talked not performance represent as and I current opportunities think we've about specifically about our it under just both our but I've generally.

We have benefit rates of of think traded and think being And the our is the key understanding are way what and really growth. business, to customers companies are customers saying how us. their I they Atlas performing most about publicly our to about and their - of what that's useful are

Spencer Schwartz

very Spencer, It's of and hand do hand could with versa. minor Scott, military And and because that it trip commercial have be that I'll that in kind that one charter vice business which of a the flying to to goes and add way flying is commercial the flying very, leads charter which share just a large very military we has point been we that strong

we would not that of but see numbers something not see wouldn't wouldn't in of the only that's So you add operating that I you benefit flying the you together. also both see those get military in the

Scott Group

Okay so that makes.

part saying so add sense of is not that add a that the now? flowing just stuff index your you're part us business. about basically XX% the the smaller of I So that Can that over I business That's that the to you you you're do is of talking tell other capturing. that is

William Flynn

Asia. it and the in Two a add for get carriers so I And the planes Cathay. for or I will report from will it so Qantas Well, we're flying poll we're each. add flying

would right. So that be it I imagine I and based would their captured reporting add on

Scott Group

just there's from quarters. expectations you came uplift Spencer one in the same past in some ask sort up or the to XQs second first We than bigger XQ one step percent into a seen obviously like of normal guidance the nice well you you base in for feel the XQ typically some are above so, your that don't Do quickly quarter. Okay. expect we've last XQ XQ. see because pretty And back for the conservatism quarter to

Spencer Schwartz

a it's Yes, thoughtful great question.

very great utilization strong very, was yields. very quarter first saw The We strong. and

it maintenance. between need And so it. of conditions is into impact some quarters also the there maintenance here play which they based heavy movements that heavy will had there's We've as and

and we quarter, about So good as feel outlook the good second the update remainder the great the feel progresses about we we very - to we feel feel about more. then first we continue Scott quarter But we'll as year. the good see about of that year

Scott Group

Okay. Thank you very appreciate time. much for I it. the

William Flynn

Thank you.

Spencer Schwartz

Scott. you, Thank

Operator

Your next Atkins comes line of from Jack the question Stephens. of

Jack Atkins

Hey, the good morning. for guys, time. Thanks

William Flynn

Hi, Jack.

Spencer Schwartz

Hi, Jack.

Jack Atkins

updated currently to several is following following change ago. when plan big for guidance upside relative sort year full versus through strong year a it quarter the it thinking year, about guidance the the the your or to you of the comes about on the you that you update Just very months when start just first your have up my outlook for think second But momentum, the the season obviously in of XQ. half to

Spencer Schwartz

all don't Yes. Jack, changed think it that I much.

seen in so of of historically the first expect Last think. it's couple in earnings at the the we've year, years. half XX% of our We pretty XX-XX, with of That's it year. the think in the about XX% past year pretty least what back about consistent consistent I half I

we As I were position military very said great take in with advantage saw high, volumes, Scott, to in strong that. were the strong utilization, from quarter, first that demand of we and we charter terrific military, business, yields saw a very the very really

year. of do to will the the remainder that continue throughout I we think

William Flynn

XX's, Great XX% of last that. talked, so positioned was advantage to segment, business I and on business, but market across about the ACMI XX% XX%, from Charter, CMI the new our it. it time ACMI well on mid-XX's up, comments, in Jack just Great strength to all in start bit as of course, would I up than the of said we develops do my very we're year. based I customers as and the We've we our Leasing. excited expected, add, take math Dry believe in to our low-to-mid segments, and stronger all the to QX, changes a and

about our company. excited what and we're So means for it XXXX

Jack Atkins

of Okay. moving you morning that That's with be are new we Forwarding you about will from? particular fleet should coming ACMI, or lease that to this The out DHL think announced helpful. is that Global XXX-XXX, how a your that aircraft where Charter asset the segment into the of

Spencer Schwartz

Sure, through four and leases Jack. year. we're and in about added past, we this about Bill talked we the adding XXX year talked two last earlier operating

later added and be So peak. the little will quarter first that one more a in during we adding the three certainly before year

the fungible, been all we've we're our aircraft vice are able Charter customers adding, to ACMI and new between and move that versa. with them So somewhat

all aircraft it's we've really related that customer in the incremental there's demand. great and putting place So been to

Jack Atkins

Okay. That's helpful.

XXX there the A you plane the DHL, incremental On with announced during plus the the that quarter. contract first CMI

I potentially to seeing customers XXXF? for really type any A good outside type you forward DHL that particular interested CMI the incremental that of going it's contract customer for of demand see particular of think on an contract in are are who asset, plus with

William Flynn

customers the before, to sixth a their between there fly. several customer intercontinental best there everything the XXXs aircraft course economic XXX, - an We haul really long the haul for really selection else It network and this and we're rent it. And aircraft have make express long the the there along for the would talking about aircraft one asset customer produces are the most may gets out and goes great that this types that part and talked in network network are or both XXXF about design two which XXXs. to with I for Well design a for believe that and there get this is but the is of DHL point-to-point freighter, intercontinental XXX.

Jack Atkins

Okay.

would freight is XXX is part for XXX So say just out a seeing market there, and tight the you of giving lot global how you air incremental out are leases? demand

William Flynn

There types. Yes. both for is demand asset

Jack Atkins

And Okay. question… then last

Spencer Schwartz

then a Jack, add it's couple we're just and and Southern Spencer. business years ours of what grow acquired platform, goal the doing platform to a that's in we just was XXX exactly the that key acquiring and ago, now. to I'll a point,

Jack Atkins

of type for them leased outside customers DHL now to aircraft? asset, niche when Yes, I be particular that of when just absolutely. it sort I'm until ACMI guess that because seems been to curious, to able we'll of see that

William Flynn

Emirates fleet XXXs mean Well, FedEx operates. if you certainly I fleet express a nice the at the XXXs, look of value that has carriers

Jack Atkins

Sure.

William Flynn

have our XXXs business. on We lease into AeroLogic

which to get in given more it assets assets attractive network. terms design down So for again any of does to really network

Jack Atkins

help I'll for and that to your think assets, given for you're several other but last DHL were associated just able whether carrying way in leverage you Okay, question the of kind be customers. you of contract it's to out with should some cost maybe contracts first to look the XXXX, then those guys turn this there quarter or in the expect you Amazon Can the or carrying those the wrapping Is that a that significant get about costs. that think it seeing us demand be way? for frame year, you over, that that we I as you're kind all on ramps in

William Flynn

ramp Amazon We first related Amazon adding XX Amazon of are it any start-up aircraft talked of mostly them as for all of as crews, There where about costs cost But that costs in case train all XXXX and a in particularly XX XXXs for we absolutely to start-up last up. true new we right. a short very to and without hire we're and year need you then XX. will the be particular crews there's full-year over those in saw to up Yes, flying period you're with it's business the time. ramp Jack and the

agree we efficient forward. more yes, with you So business enjoy and we going more will profitable and

Jack Atkins

way this much those year? no there's costs about sort how are of but to think Gotcha,

William Flynn

divorce with where was it year costs last This around operating next of most but are it we than and it year the business just from opposite the that upside. was continues the now the through start-up to No, a other flying. earnings year be were it's the way where the then costs that all happen, start-up just greater

Jack Atkins

Okay, great. Thank you.

William Flynn

Thank you, Jack.

Spencer Schwartz

you. Thank

Operator

Davis. the question of from comes of next Your Thompson, Campbell line David

David Campbell

raise so estimated I year, had couple to of more your Bill One year operating - this it for did the revenue all but question. my profitability XXX,XXX? for this from And taking a questions. block the hours revenues at assets. you for appears for your outlook be your significantly as far is, thanks Yes, using not still estimated as year,

on savings be have some Do comment must So expenses. any this you on that?

Spencer Schwartz

stay I We're quarter stayed fairly in as yields first prior But it's earlier the greater hour David, we Spencer. stronger first our yields every were Block consistent. than outlook did mentioned yields. and - saw seeing of block Hey, business quarter hours stronger charter in the the year. month

hour in previous prior than is and charter and particular revenue period per block we're So higher are expectations. in the higher than our strong ACMI yields seeing

seeing that bottom we're So and the flows revenue to through increased line.

the steady, but Block that think to piece. weeding yields earnings. that is greater greater I biggest hours So fairly

David Campbell

demand all they're business was and I agree the capture consistent weak Pacific captured I that is and is ago. cargo capture and for that in mean March yields growth I same Europe's slowing the and mostly also wondering, but the three adding all way But months catching know IATA for outlook well. of extent, don't to business, but I with sensations South their Asia and of as is air example the down, business, the the doesn't April down. they some in America is

So higher a to continue to how get this pickup is they're going demand yields. in

William Flynn

So elements think a I David. there of couple

- and back our the fleet release look are we have that have we example. So could this in we just with forward we business ACMI because saying and XX% have go counts if their capacity CMI Amazon their as to about DHL, the the business we Cathay what business in And need press to we who see today what in business out for DGF We now serve. to saying. others for

whom we a this we it have our and basis. on need serve, capacity to we For dedicated customers want

say environment often and elsewhere, them the in about it's charter is in why the nearby, then elsewhere that's a fly outperforming commercial to again not But and we're festival These in network. way empty into Mideast then military our a that fly and quarter back is Hong a fly the at This full theater, quarter and of one multiply shorter our to then market. is about market ways took customers military and then elsewhere. are the which up inherent one position very many Asia we quarter It CENTCOM America. Kong strong and it And not business example, there advantage yield Lunar talked yielder as the have Ming half tees Spencer on the half we America for for only our not strong Asia flying we a South and but yields. asset to the Charter is with before of I in South we of look the fly take military. which as this where in and are For other back. a our ferry this piece charter Year yields, China now a New Ching full that. We're effect that of is on

So of move I advantage assets a in charter to deep the the air theaters, business. it. and beauty it, in our think to it's just times the And it of different take layer that's it's different it's positioned to business we're global,

David Campbell

any thinking in other what indication. whether hear themselves from Amazon And year than to Amazon do be for turn continue if business last - impact wanting about more question logistics the had about? you we seen forwarders of to rather is we they help your thought or needed players. might that to Amazon you'd wondered it I I business or relative old, In

William Flynn

Amazon, XX that. to XX is we really the deliver full position not the to the we're as flying year going over aircraft rest the a comment and the XX in the Yes, balance contract have we're to were on aircraft but to for up complement get of

David Campbell

Thanks Thanks. Spenser. Bill and a lot Okay.

Spencer Schwartz

Sure. Thanks David.

William Flynn

Thanks David.

Operator

the Susquehanna. Chris Your next question Stathoulopoulos comes from of line of

Christopher Stathoulopoulos

taking my for thanks and morning Good question.

How should for the quarter. and versus versus this In terms think trend of what's year the level we XXXX it about headcount for the year? did end the

Spencer Schwartz

we our it only that know XX-K. Chris, that we to so move clearly aircraft those aircraft you we're provide operate information people and adding more But in forward. typically annually as takes

to fill positions. choice to be of an continue continue and We employer and higher

Christopher Stathoulopoulos

think service right. first for All air last And and Okay. third was placement the the XXXs September. for second the Hong put with then the timing I in Kong

William Flynn

of growth and and Yes, timing out. air at see so we're looking are we potential Kong - that Hong we're how now we'll plays

occupied of now customer market. deployed those with charter talking see block fully have their Spencer customers. they was That and our said We and X,XXX the depend the our fully plan will our David, hours and we're themselves evolving. about how range just on aircraft on for the in wide delivering Timing focused

Christopher Stathoulopoulos

customers. in ACMI last purchase the from then terms And Okay. of capacity question charter

you high additional similar peak saw that Is I considering in are periods we Thanks. just forward expect can think aircraft on something last we going something particularly XQ? or bringing demand there?

Spencer Schwartz

Sure.

where even our back that's capacity own our purchase though buy buys back basically ACMI So plane, customers. essentially we Atlas hours from it's

aircraft, needed, ACMI So it's use like and on operating working can cetera. et things the with customers. they're the collaborative nature depends of It where the our of availability the when capacity who rights,

from continue and although then we Charter. in we back space customer, receive buy that ACMI to the the so them, we sell time, revenue And

their To be the P&L. that area have see through an little ACMI is when we demand, us that and increase space ACMI to sell we Yes, your when customer better rights, for and a think that do our you customer So able the upon forth. and rights than continues we're space in route question charter perhaps opportunistic to so has strong new that depending the their charter the schedule norm?

William Flynn

Yes.

I think a opportunity. just great it's

opportunities If lot flexibility drives you we've the well. as high think of ways, it aircraft there, in about drives we've a got it, yields and of developed the utilization here many just and

important of our depend continue an we'll mix. will it's capacity business it flows, but something it's So how part and and on planning to year-by-year do business

Christopher Stathoulopoulos

the for Thanks time. right. All

William Flynn

Chris. Thank you,

Operator

Imperial. line the next of question of Adam from comes Your Hackel

Adam Hackel

Thanks guys. for time taking here. Hey, the

now curious their prime, a of they rolled appetite million success that. on and have mentioned just aircraft sense on growth part signed to obviously agreement have a the can't them evolved given them. with guys conversation Just guys them, Do I for prime how curious the that just you for growing your going think of second, speak sort XXX you Amazon sort with their of any back I'm you you initial members since but obviously guys get of out? of Just

William Flynn

really and speak we Adam. with the other We're beyond go can't either, and XX we really place more the to and contract about excited that Yes. got we've don't have and Amazon seven we customers in much for

Adam Hackel

any that that, go some that obviously is can and us would framework expansion is on in so for one high aircraft current I in that? contract Yes. that, any of just there remind get what of something well? I And understand. additional along potential, as additional one level you of in would or warrants guess you I that guess allow contract, terms trainers some sort your the kind where current on last on that your that with

William Flynn

were the a discussed, the of contract we've had shareholders special we time So as just initial meeting warrants with agreement there Amazon, what as because the raised. you at part of

And of so warrants. tranches are there two

are is to remaining to tied as second a is up tranche to to talking about vast warrants are in linked the tranche aircraft incremental we're the service tranche warrants ratably the additional first There and that in XX the The XX. business. we that aircraft place tied

of of approved terms in tranche shareholders meeting. that backed beyond that other so of our there, the than talked And that second opportunity what warrants in nothing might at be the tranche about warrants, specific we've that there's

Adam Hackel

Appreciate color. quarter. great and the Thanks guys, a Great.

William Flynn

you much. Thank very

Operator

question next the of O'Hara Sidoti. of Stephen comes line Your from

Stephen O'Hara

Hi, good morning.

William Flynn

Good morning, Steve.

Spencer Schwartz

Hi, Steve.

Stephen O'Hara

morning. Good

in expense and based? curious maintenance then the mean timing much is or it I quarter growth expense degradation maybe the you see the XQ, of XQ. you're how of Just are the guess increases kind pulling or kind about I maintenance the the to - maintenance on mostly first of mean you guide relative guiding and that I forward do XQ is

Spencer Schwartz

We stronger occur. got great really engines, and market don't we've they it. on year. based, demand we second quarter on that following coming checks time right, first airframes letter there positioned advantage was capture the anticipated to a and maintenance were of and engine really maintenance, the based a than heavy in and our is, well for great checks And a conditions out view when - quarter based that's I conditions overhauls the forward, mean occur are and pull what they maintenance take

pretty it's very for in we've strong year of quarter second half going to and to much a think the been full-year. evident XX:XX the So past. first the the half be framework upped this I second know is as It's you

Stephen O'Hara

Not a you. point be pretty sizable if kind remember say that's jolt to continuing just will benefit with Okay, but but I M-ATVs maybe in of the that first and of going it's could is that terms quarter? And and the that in full-year, in the sustainable quarter of might long and If be past? benefit so, a necessarily military that did is Thank this, just was decline, expect something the continue how that second that in how forward? it you - to amount the the and is things expectation wondering benefit, in past you I'm the for maybe you quantify then maybe what anything mentioned at some other do helpful. the maybe the that was like

William Flynn

Sure, and what was happened well that M-ATVs indeed jolt XXXX it the Obama a President, in was surged. and were

with period with the our XXXX. like we've we this military had in over to it of And of year fly really a those just haven't vehicle and think expect we and was roads about those additional marines that seen Afghanistan the we anything Afghanistan three the as as in was strong that that was new to those and poor on flew a through with in of M-ATV. to generally the thousand was our the arriving quality sense. surge up earlier and thousand of But on fiscal military, week. recent earnings volumes cargo XXXX based needed troops period were the military a it into - troops cargo the with XXXX I their be upside of military for conversations volumes over early an throughout couple several military the opted XXXX, M-ATVs days the more time up that aircraft XX and Cargoes to a month that have conversations provide of with and the there for and military suitable day XX,XXX a as vehicles, requirements based substantial

a yields have effect a that we're nearby way back military we that if charter then us on way percentage an expect plane to and coming and because there's multiplier if one of allows ferry to continue. Now to in percentage load one that shorter full underlying and the that good flying

Stephen O'Hara

or timing Okay, that that's between but online kind don't of to - I something helpful. being saw, or very is I And that looking going then of Amazon that you're quickly and I kind that grow, know is was something in that, is thought like or XXX-XXX thing. maybe that forward on charter something if a just

William Flynn

thing was of timing use Steve. kind word a It to your

before a an acquired been and that little converted So we a started that it, We have customer we advantage but another operating that it we had so charter. took bit that it, time we for within utilize is of aircraft of we volume.

Stephen O'Hara

very much. Okay, you okay. All thank right,

William Flynn

Thank you.

Spencer Schwartz

you. Thank

Operator

or I you. Thank any turn time, At remarks. this will the to closing Atlas for call Air additional

William Flynn

the there, on details day well Analyst really look you to us upcoming XX Okay, spending And hold the with to want on here I June forward and - City and and and our seeing in will you, in each and Air call, York about of be to your everyone. We're New today also in time interest you future Atlas Investor about remind to want Day. more near we that earnings Laurie. thank we worldwide going thank Spencer you, so for your for thank you communicating much

Operator

first call the Atlas XXXX quarter conclude Worldwide. does earnings for Air That you. Thank

and wonderful now a may disconnect your You day. lines have

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