Atlas Air Worldwide (AAWW) 1 May 192019 Q1 Earnings call transcript

Company Profile

Participants

Ed McGarvey	Treasurer
Bill Flynn	President and CEO
Spencer Schwartz	EVP and CFO
Bob Labick	CJS Securities
Jack Atkins	Stephens
Seldon Clarke	Deutsche Bank
Scott Group	Wolfe Research
David Ross	Stifel
Steve O'Hara	Sidoti
David Campbell	Thompson, Davis and Company
Chris Stathoulopoulos	SIG
Kevin Sterling	Seaport Global Securities

Call transcript

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Operator

Good morning. My name is Natalia and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2019 Earnings Call for Atlas Air Worldwide Conference Call. [Operator Instructions] Thank you. I would now turn the call over to Mr. Chief and President Flynn, Executive Officer. Bill

begin, may sir. You

Bill Flynn

everyone. Thank and morning, you, good Natalia,

after call. I Before two from on airline. Flight days of we Atlas February previous want just acknowledge a get another started, Air to pilots the third three accident The claimed tragic and loss XX, our lives, earnings pilot XXXX

devastated Safety the by and them with providing focus to continues and priority be Our loss. top and this on is support. pilots we our the are families of always care

continue work closely we with accident. teamwork our to We as Their express staff also thank the and to the to as our National uninterrupted continues. it the teams the response supporting together and Air efforts and ensure this for for Atlas officials investigation professionalism probably customers. hard of personally recovery appreciated their serve activated to operations the my emergency of I first and and Board heartfelt been business ground ongoing our dedication to the want crew extraordinary who Transportation responders as thank all them gratitude leads Safety our procedures. to working the came I and opportunity investigation work thank has I I

turn it attention results over Now, for quarter let's Air turn our Worldwide. to to I'll Treasurer and first our Atlas Ed McGarvey,

Ed McGarvey

Bill. Thank you,

involve within Litigation meaning include and discussion Information today by of Schwartz, uncertainties. viewed to in you Bill host These first Reform results section. Investor some a our joining statements events and of about the be We'd that X, forward-looking to the Company's that Financial Securities call presentation can under Chief they remind at our Spencer Slide Officer. expectations presentations performance and is call slide our like future Moving is relate the risks quarter XXXX. Act XXXX atlasairworldwide.com Private today Today's conference complemented the statements to

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

For to supplemented to Form our factors appendix is meant reconciled non-GAAP slides. report. related press meaningful are amended our please attached our are in and insights or risk filed by to XXXX SEC the GAAP and today's business, release as that in measures references provide to information about to subsequently refer today's XX-K with Any

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

Bill Flynn

Ed. Thank you,

Our results first exceeded our expectations. quarter

full of more demand. meet We XXX flying Amazon. flying includes are More and XXXX XXX-XXX for benefiting for year from That aircraft the Asiana flying during Express customer to Cargo, added for flying SF Express. DHL we a more XX Inditex XXX and

Cargo We adding for are XXX-XXX year. three Nippon Airlines also this CMI

thirds of to pleased foundation and with deliver Two that. wide announce freighters in the and build to growth on markets our e-commerce focus Express and on and a expansion growing our We Our to this we fast customers continued are March. e-commerce relationship provides body of were serve business earnings and solid continuing year. Express, Amazon

two CMI to XXX-XXX this basis scheduled for a on including flying starting this five month. are We Amazon begin year

our remain Southern it aircraft the type. of airfreight. opportunity Air. acquired provides May our future And that look We about confident by the adding five and continuing to increase the expansion in This significantly future more a to XX scale up we platform desirable new path forward will in to also of a XXXX. with We XXX

powerful is that the are we the driving economy. is We Airfreight of an profitability in in increased a contributor scale, at is XX our it a and and over double annual economic rate industry It innovation to size airfreight X% is compound business and years. modern access social driving grow provides seasonality, efficient to and chains to markets. and supply growth development. vital leader global a to and global diversity to are Including the in expected cycles next in global

As worldwide and customers we domestic deliver are capitalize on and to for it does, well our our to positioned shareholders. operations value

Moving continued adjusted growth and net block quarter adjusted earnings EBITDA continued in X, reflected and hours and our adjusted income. increases to first our Slide in revenue

As a the impacted maintenance to payments the expected, freighter $XX.X from term return adjusted income the quarter of were a positively in at dry earnings long of XXX scheduled net related lease. that by million end of

We are X highlights either or XXXX. our another reflects aircraft. lease year currently volume Slide growth. working and our for with framework earnings outlook that operate of current for customers It to

and We expect economic to expand e-commerce. a demand to airfreight overall global at modest and by activity faster growth pace in Express supported be

rise to grow a to hours block in EBITDA grow to million around XXXX. $X by adjusted to to Revenue We about billion, increase to to digit upper to single adjusted approximately continue expect income net XXX,XXX volumes mid $XXX to and percentage.

March. however, Our $XXX that Maintenance reflects were XXXX expenses not full the the by expenses fleet driven important impact includes expected expense our total to hours anticipated The of for start-up the growth incorporated the provided. this in our block year. we to million. service agreement growth new line in XXXX increase XXXX note with an outlook, Amazon CMI that in on approximately in maintenance the now current and is of reached from expected increase daily It's in that previously these mainly we year in XXX outlook,

$XXX and also Our $XXX and aircraft to which and purchases $XXX and between parts about fleet. million for anticipates core exclude engine million mainly amortization of capital million for depreciation our outlook expenditures components

anticipate mid year slightly that represent of a digit adjusted our than Looking at the results. percentage income our quarter, net second more we single will full

will incremental million aircraft Earnings and about EBITDA benefit about adjusted We also of to million. $XXX our $XXX quarter XXXXX the expect added XXXX. the block to revenue hours from second we fleet fly during approximately of with in

an related of second We Air. events, in crew XXXX we growth new to our with maintenance expenses be factors adjusted like term perspective. costs record adjusted service ahead came benefit I'd interim XXXX to year. of the years. during a net performance. driving Volume, Startup Southern associated before. the all revenue, this XXX consistent share was the including from as from with refund in We year the And and EBITDA some The the of by as dramatically aircraft blocks prior building to the long additional at paid developed and have into primarily timing CMI were agreement expect our XXXX. pilots business several income are quarter previous improvement well offset earnings quarter rent of XXXX

additional I'll Spencer first forward, a the today take add we our we'll questions, few to future. go we and to is provide and consolidate are quarter gains a building have the This our be ask made and to business happy detail we additional After continue then leveraging into As good to Spencer's looking some about remarks, comments to XXXX results. your grow blocks these Spencer? point

Spencer Schwartz

you, and Thank hello, Bill everyone.

of highlighted loss adjusted million taxes basis, million of quarter, the XXXX. results are results an our outstanding first on net from On $XX.X On which loss of during X. operations because non-cash XX% increase continuing income stock quarter warrants. an $XX.X unrealized a were which Slide quarter over was totaled reported first basis $XX.X million of a included of a our significantly the on net increased Our

rate adjusted XX.X%. income effective the first tax quarter earnings of Our in included an

income tax our adjusted For year, the XX%. rate expect we full be approximately to

revenue mainly was new the XXX-XXX revenue Amazon, at and driven and customers. ACMI first Higher primarily for payments we to maintenance in incremental primarily Looking increase flying block higher segment in start-up of for X, in charter increase Slide in dry during and quarter XXX average was higher leasing revenue rate flying DHL segment due Express related period the the to that an an XXX hour by for flying revenue increase discussed. for per an the flying segment

additional an we expansion an unusually late during Lower Air and customers. year. we interim a commercial without primarily in work resulting amortization increases higher crude earnings partially to the Amazon. well additional dry XXX XXX us by adequate over offset contribution contribution These contribution the heavy our million the non number quarter ACMI market. aircraft Moving X, the passenger cancellations received opportunities wages increase heavy to additional of flying to of of military with military and reflected quarter maintenance segment primarily placement by including $XXX.X payments costs. lower advantage segment Southern and CMI and the was first In increase higher was from and in maintenance which by as by offset charter charter increased Slide leasing, flights the deferred by alternative revenue repairs sports Express repairs maintenance flying time and non for and the to and left of demand teams enhanced due did was in pilots, related by totaled DHL as our XX% take were during rules segment with impact the maintenance of cargo prior This driven costs in agreement in the VIP a period military flying. and

to X. Turning Slide

the that at year we focus which You leverage while net consistent XXXX of lowering reduction our significantly lower end. X.X further fleet on a XXXX quarter in ratio our to ended we half times, second of and the and ratio can move began fairly see remained our increased first from

our throughout leverage to we continue Importantly, gradually net improve ratio expect to XXXX.

cash added we make per EBITDAR As first term have totaling of including continue $XXX.X investments to restricted XXXX to debt million. cash of payments equivalents, the aircraft cash We fleet, million strong $XX approximately ended quarter the with from short we the quarter. benefit flying and generate and

position used by expenditures, core the spare the activities. period by cash primarily activities reflected and for debt Net offset and and XXX partially used aircraft at on cash investing during financing by reflected activities for quarter obligations March was proceeds offset Our engines capital from cash for costs. upgrade conversion provided cash primarily for financing partially cash related and freighter Net issuance. used first investing activities XX debt payments during kits operating

We maintaining are strong balance on focused a sheet.

disciplined our slide fleet to great As have advantage In continued to we opportunities. financing. have we shows, so, grown a of take doing to apply approach the

resulted has average this As before, of the is at we our rate a fixed in all Almost of noted debt. which low for interest X.X% have weighted rate.

secured value related majority a vast is by the which our to continue assets the addition, aircraft in of excess have In debt.

Now, to back it turn I'd to like Bill.

Bill Flynn

Spencer. you, Thank

Moving XX. to Slide

exceeded aircraft XXXX. in of adding for are XXXX, in quarter flying and expectations. our we NCA the We're a for three benefiting aircraft added XX we first from results have full Our customers year the

growth. earnings Our announced a solid in We and growing with provides to focus on the remain relationship our markets of continued Express, e-commerce We deliver Amazon and of and March. confident fast future an expansion about foundation future business airfreight. our

the of We scale, profitability driving in our business. are and growth diversity

that operations are and value is to global question, Natalia, and as to leader in airfreight to our We and capitalize vital have domestic on worldwide please. the an economy may grow, our the a and industry we well-positioned customers we shareholders. first are continues deliver for modern

Operator

question is Securities. of the first from Your line Bob CJS with Labick

Bob Labick

congratulations of relationship expansion last calls. on on and Amazon. we've talked couple of with ACMI. contribution morning direct wanted Good start I about the to of it Maybe with the the

there pretty If guidance the should you the the levers looking ahead, we ACMI has been half strong quarters four in year. but increase last of the obviously, all But direct flat. know be back seemingly look achieve to don't in contribution over from your much

in was scenes I half going of kind so contribution second behind could remind ACMI and increase dollars that the and see what's been what's back of wondering the you so half the the year. going And on in kind the change to if of direct margin just we us

Spencer Schwartz

impact are that There Sure. that. question. Bob. you, Good Thank several things

me the think first. margin, I address the - Let

I think point. an interesting

bit on reimbursed costs smaller customers If to us as in when by talked airport, our this position airline these are about an navigation, you on don't recorded for margins, operating do amounts customers and the they're for in make costs gauge recorded historically of an grown a for process increase ACMI driven sense as are to we include other expenses. in XXX increase or charges ACMI at increase newer an have and if ground an in maintenance little that established charges CMI costs I've in considered this were certain these better and sense for the really revenue operation we've operating that really more have customers. handling past look we're charges but being take taken of the outside there that are as routes And flying, But or business the them ACMI while typical either a that more model. these

exclude If exclude aircraft margin you costs, gauge, been exclude over XXs this XXs the past know smaller gauge you and ACMI reimburse fairly you years. the the , smaller has steady you and several

that its quarter and are incurred the sound. of on if of first you the So point, I that incurring incurred this just face, this costs should really of very flying yes the half full really year was what's necessarily the in first driving heavy We're see be quarter. you at with you forward, can it be gauge CMI regard of ACMI going increase maintenance to sort heavy to very the continues make wanted that just as reimbursed strong in it those non we half. business year of smaller to maintenance look significant core especially non of the mean back then and And in higher Most amount saw costs first the actually the the strong year. in maintenance for happening.

see And, course, year. be the of which - you'll an year the back contribution. which line ACMI lower expect half of should in will the expense in we help throughout should So that improvement maintenance

progresses. expect the long yes, contributions increase year we ACMI as So answer, but to

Bill Flynn

in I and little I 'XX, In Spencer, if broadly, you And we're second a half could we in think incurred maintenance looking lower XXXX than more talk touched at and it. expense we on add, in and of solid We're a release. on expecting and our both a very basis. and for half second in press about bit 'XX strong military very our cargo comments in the year-over-year military passenger growth

ask, maintenance about to that talk at military. you think, ago And just so it's with in recognize expect and strength weeks then the the leadership to second two half we as why we I was expect - a lower Bob important ACMI, I that's senior conference we here, about the incur.

Spencer Schwartz

yes have year. the in of have the - we half So overhauls, fewer engine in in than XXXX several we XXXX back

Bob Labick

CMI, how that's that. thank get Nippon then So one you and I up know planes. us back you the in a queue. Can Cargo guess that. will the my the of of of sense be Or the And off for follow rest give of I'll there of and Amazon balance fleet over year? the should the about changes more size any of for the the the We so - there year, eight quick then just the dropping course than or fleet we CMI, think

Spencer Schwartz

Spencer. Sure it's Bob,

increased for for that And and moment. of summer know may aircraft the the end some we're as the in Dreamliner this said, passenger come aircraft aircraft really toward month. the that that so shipsets what Boeing, flying a is do progresses may And for production then or XX flying year you thing said undergoing four equivalents last on one should added will operate either the we you out Dreamlifter, conversion of operating point XXX-XXX the to you be you So Boeing remainder out then conversion. from for increased that you five them and one the we rate in have leased that that that's aircraft equivalents to then But the question, we five that that of be NCA, to will the see the we at quarter. operating ACMI. seen as And XXX added other of is charter do, and your one in for charter, to in It as shipsets Amazon may the we The XX currently first there still of year, aircraft three add the couple the we added add see ACMI. thinking that that aircraft. other increases will increased. the you

Operator

line question Atkins next the from Your Stephens. Jack is of with

Jack Atkins

down period in to and the months back I'm to a the understanding I sort moment trends make the don't harp going But is mean for quarter, function it. a has why can contribution of Spencer the of to XX I sure revenue on through the LTM the expense just but XX% been there ending months? is ACMI and case contribution ACMI maintenance that higher in sort direct XX first so walk elevated you sort over maintenance last Is want overall of but the X%. up direct just if that's just of us expense the of course the last

Spencer Schwartz

Bob. newer for that But incurring reasons I of thought, for addressed I costs reimbursed that biggest Jack, a with customers. are the we that lot Yes are

so the And incur we costs.

the doesn't It's being impact by customer being for also Traditionally in in bottom business and costs included nature on so those revenue. because margin the negative that it's impact a a the the - them but were on and they're it has cost, taking really impact incurred included having that really now of or So line. the flying we're doesn't and impact. big customer overall the that's

other of is margin The clearly smaller gauge strong flying is perspective. as not from it CMI a part

Bill Flynn

Yes I'll may I Spencer's just bit add point. if Jack, a on little

solve of all they fuel they fuel And not the may perhaps implication taken have of on asked then that if take like have to the necessary to go is to is course making. didn't we reimbursed. point these the who their operation, and perhaps And customers and not aircraft. able that's the it on number because the because news because it's a for out we're we've depth otherwise on have us grow to customers who procure create services margins. is So operations themselves are airlines of and behalf we buy may to way even Spencer a or kind than because pressuring appears who in for actually revenues. The we enablers and can of Yet buy we be so do good have that able procure better airline scale in we're can they

- aircraft our it's or aircraft So otherwise customers really to perspective might full who operations I an a take be able own value not think from added on to build it's new their behalf. on

Jack Atkins

guess certainly it block think when margin But look hours understood. your block and in a definitely Well, that perspective, teens. from I implications high all even that's I you hour at that from understand the that I the up were when

more understand can seeing address we something to that. guess, I'm but of curious contribution flow direct I about we're not just maybe So through segment trying that's was but just I why to offline a just

On the...

Spencer Schwartz

- me on yes let the first it's quarter. Sure, just, let that, me now me let also

And so ACMI of see as the especially I the the half contribution. you'll year, year progresses think back

So little to to think XX%. grow grew ACMI nicely XX% it bit XX% and I see contribution a XX% you'll

Jack Atkins

second Thank you, you. last were to back you expected to one Spencer half fourth your and go February, we for in full earnings. year When you of sort XX% of one the quarter guys the just call be about year saying,

Now take takes, quarter if terms us of to outlook. structure? Did trying what sort it and or through about your second XX% walk is I'm of change terms back your we of the quarter the in XX% puts expense second Could changed half looks understand low sort there. something of like help of sort maybe you of in guidance, your sort XXs. in the just implied

Spencer Schwartz

in made military first remainder were cargo with volumes, some, we of quarter, as for volumes. there that We said to and the the timing that military we year. military will expect pick Sure. cancellations were the There had regard some some the up issue

the first more the back with certainly to that was one non maintenance and in thing, that the of quarter. heavy is the change of year So half then regard incurred

the the for actually as increase before full non was said quarter. in year so And maintenance the in first heavy incurred of I most

then maintenance, year. So the we overhauls that in fewer lower and will back engine be heavy the have, of half

all are now back the impacting So of those half.

Operator

Seldon Your Bank. Deutsche line next question of is from the Clarke with

Seldon Clarke

online, but the second. of have - there? guidance with changed the have you What aircraft what's on you revenue for same has and added Just coming assets What now - that continuing is with changed incremental block your some you new the sort guidance Amazon. your the guidance, business a organic kept organic you've hour

Spencer Schwartz

Well has I It's don't rounded think hour estimate. kind The guidance a anything zeros block changed. of the end. has at

may get it's - don't it's the we the of so to year. rounding. this hours so out a just a block level Jack fund that to point, early probably And in pointing just certainly moment no, grow But ago. Again that I But especially slightly from precision was conservative.

the with with think, I of some have we But fundamentals quite the maintenance. are issues the timing core business well. have the military, doing some timing we issues

Seldon Clarke

just of context incremental not is getting. that the meaningful I'm block it's So aircraft in XXX,XXX guess I hours. the, That the sense

Spencer Schwartz

quarter aircraft adding progresses, full the enjoying in little will added It's see that they've you And be that this certainly the bit. I first masked quarter. you'll the year, think benefit of that year. the see But will are as and the last this yes, Amazon No, the the been year But in we for the second we a just we're for more. that year lot now a XXXs. aircraft

we're enjoying XXXs. accretion know, from now the Amazon You full

you'll so, We're that. now be in that 'XX. The we adding the will enjoying in we aircraft added that aircraft And see 'XX.

Bill Flynn

I'll Yes, I Bill this think, is add. just Flynn,

XXX included new in neither the they expenses we're on a operations point guidance. - necessary were making weren't the But for are prior So fleet CMI the incremental type. as we start-up

guidance consistent here. from while on we've or actually so our expenses prior call, kept framework taking we're And

think As our nuance the crew release, the were fleet make other I we in in And prepared and new a that's hire suggesting bring type. to on we investments press comments.

Seldon Clarke

you way those quarters? just of start-up next think to costs how a about or help quantifies kind progress this should several us over could give the then And

Spencer Schwartz

Seldon, it's Spencer.

us. our I new but now are specific guidance. guidance. type you in not prior a current don't is in is know we you it will for They're that what quantify as customer were those. they And they tell aircraft So very They

XXX-XXXs. are So we XXs. do gauge fly XXs but , These a of different

and training pilots And with aircraft training flying to the taking newer on that a we does are the train that so so And get hours type they before are ensure need. take pilots aircraft forth. who that hiring pilots we and the and other will more it pilots, so bit starts

are different costs aircraft for So a start-up this little type.

Seldon Clarke

right front-end but All more loaded.

Spencer Schwartz

Yes.

Operator

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

Scott Group

of there, the net to we So at third of guidance, wanted majority comfort to we down want quarter sort look implied down up follow I second XX%, going when is and sort second know costs, XX% I the I year-over-year, the income the in that. costs, just and I up start-up quantify it's start-up what that think fourth can't but in just of about obviously from the just get with want to is

Spencer Schwartz

But Sure. second half the you second Scott. No, yes, and quarter that, majority higher of have but the maintenance is second lower focusing we the than that, The not XXXX. it the maintenance lot will a be it's know of in year, quarter of maintenance higher. significantly will maintenance on so, in be then heavy

additional XXX We overhaul, one D engine CF one check. additional C additional have XXX checks, three

XX thrust maintenance as and We heavy have power additional additional have non we seven reversers. higher auxiliary units

So things happen all those in second quarter. the

Our the the crew. increased - crew Southern rates - pay our we that we

and put because the quarter it that agreement in last increase this in place second of place year last interim the have year We quarter second versus second wasn't that's an in of year quarter. we yet so

benefit from and the then accretion the aircraft the offset additional know in start-up Amazon. from for then that in all last addition we those Amazon costs of year. full contribution you to by XXX for put related DHL, the So leases will incremental they're happen contribution And XXX from place incremental XXX any flying course to things flying

Scott Group

timing like Sounds a just year. to we lot just issues we think of had about need the

Spencer Schwartz

right. That's

Bill Flynn

right, That's Scott.

Spencer Schwartz

that. with agree I

Scott Group

one If just other. ask I can

on with just I they update were Maybe about your aircraft DHL their year just and So just DHL. the questions know there yesterday, renewed just there. some there. an entering ATSG of so some an insourcing contract do relationship to maybe update announced starting

Bill Flynn

Sure, Scott. is This Bill.

our of actually space with XX in and now under sorry, in that DHL that March signed we year agreement with the to for you block we - over up flight So grow in XX umbrella October operations of But the operating know XXXX. agreement DHL are and relationship put under we aircraft that's place continues began DHL XXXX.

I on relationship the very DHL. lift believe, are believe strong Obviously, ACMI combined of important an basis. DHL with provider for our largest Company. got CMI ACMI that we a we've on I a to So very

on also a DHL We provide aircraft dry basis. lease to

DHL really in there's that's view footprint we're and positioned have that given well consistent So our serving with I with customers think we Express and opportunities good the do growth we and peaks FedEx added that as Chinese e-commerce through benefit Express, from UPS expect serve the with Amazon. with grow SF holiday and we we're and growth that on operator to express

a company, risk segments different very different a the So very in profile the highest market. growth of

it's a forward look and to strong with we grow with So DHL them. relationship to continuing

Operator

Ross next of from David with is Stifel. line question Your the

David Ross

how to and forward stage getting to an Just an on process you agree if the update two the moving actual negotiation. then on you can pilot where agreement contract with situation, are guess the in, I of

Bill Flynn

This is Bill.

had to Railway RLA, contract. you reach Act, in alluding And as difference under a differences we've to interpretation the under were on Labor contract new move forward how a to ultimately So in did - those arbitrations. have the resolved into bring two, We arbitration. contracts Two that bargaining a - ultimately arbitration Southern into arbitration. and the single joint through collective interpretation contract Atlas binding There's we'll agreement. are under

know The arguments So party of this a at the there's arguments the the were the the quarter soon from arbitrators oral the submit, while are regularly because and of we briefs said, the closing submitted. union and pending the is our union And some still we're time that continue the decisions representatives, year that any those representatives brief sections arbitration representative, the were That to 'XX with contract an on meeting with really still so agreement agreements decisions a protocol negotiate briefs the the - and the were a there's are arbitrators you that sense a from or and dual heard We're the now of to the with in reach and oral negotiate arbitrations to final agreement to an our decision track new heard. had pending the union decision submitted point. agreement should since many we meet be so continue the expecting that's pending. of step agreement. we is continue them toward says elapsed closing fourth were with each arbitration

the and the is, behind us, we that get section, from to of already is first where for we percentage point once take we first specified with decisions back up article, forward won't the will the going path be are contract we the at some us. So

David Ross

arbitrator Is need it possible to arbitrators. that arbitrate the two arbitrators don't an agree to

Bill Flynn

need don't arbitrator the an we arbitrate to, arbitrators. No, to

David Ross

Okay.

Bill Flynn

mean What by with by split if is agreement. a going down will if the that a know which be to if and I call it that is, we to there we Union mean get I well it's, says, what process new a decision, path there that

successive So arbitration. not subsequent arbitration a or

David Ross

make So That split even is a a go. sense.

Bill Flynn

is split a Even a go.

David Ross

has Boeing with been may What recently plane what your Boeing the and be there's been term Airbus you either, are from MAX issues. news thinking seeing? issues or headlines you pilot shop hearing versus are about Airbus? Boeing what lot a are recruiting longer in a over better folks about As the customers a given thoughts

Bill Flynn

reading. type. any as our are to aircraft and think, the the question. - broad two then freighters almost, people I'll that We know the crashes two convert I'm that is I in what a lost have aircraft, passenger well. I pretty you're our the aircraft XXX exists of XXX and commercial aircraft, were The don't answer available Boeing perspective. investigation The lives, reading reading only crashes, system tragedy, converted us freighters We make That's great MAX their it a from that makes ongoing. the MAX. MCAS what to great in

us, the XXX the converted fleet converted gauges two for course the is XXXs, XXX-XXX XXXs, freighter of types, now not pure our be XXX And the it'll X. so aircraft. also We of several and do two Dash aircraft aircraft, XXX-XXX XXs and converts, operate

of So very our a and they perform well customers. wide for aircraft array Boeing

freighter for aircraft high earlier AXXX-XXX Express, body lot the think are level I Now with a XXX-XXX in believe wide in that conversions we're as with utility that said utilization has a at e-commerce planes wide of conversion and from first on growth is and the said of but body there's a particularly be given the operators. Asian the passenger freighter freighter those have performance there's we in of I've think lot that bit that's calls, closely and little mid looking passenger as mid-size the market aways mid on going there that opportunity demand bodied of I to what given or this and

Operator

the of Your with next is from question O'Hara Sidoti. Steve line

Steve O'Hara

second into other the, on guidance, aircraft Just second the factored return kind there guess I half? half is of the any

Spencer Schwartz

not. there's No

that condition return first is maintenance the the in half received in like back not. we something like quarter, of mean the No that there's the You there's year?

Steve O'Hara

that? on the that's - minute doesn't like And picked then military, seem it it quarter sounded wondering better going and the based the cancellations last expecting mean of I'm the if year second there of like late was just some half wondering, you. in military terms in you're be demand second Thank just to I and up in I'm

Bill Flynn

Yes it's Steve. question, a good

hours first strong to cargo and half both XXXX. a think response 'XX certainly stronger military leadership carriers in and with from XXXX I in mentioned half the second came Q&A. a versus second of looking conference XXXX, and the 'XX and a just to question other forward second senior half we're the versus top back I Bob's stronger very half passenger half of I second maybe So a

levels and think - XXXX. in high - you it XXXX of flat in a up activity over So that basis second but was end of I at is on military and cargo XXXX half of see half the XXXX first will year, we'll substantially passenger still very fairly the be know, flying the year-over-year that at

I for of what flying attribute for. event. this timing that's the that in called for the quite a saw level and in have a bit that But would well. there's quarter strong has So the military very, to confidence as we going got will of yields in we're activity I've very - enjoy

Operator

Davis Thompson, is line Your with David Campbell Company. and from question next the of

David Campbell

Thank taking good morning. my you Spencer, for Bill Yes, and questions. etc.

and that XXX the in your million. is block for hours billion of mentioned as it's - forecasts this You've revenues $X - year XXX

Spencer Schwartz

Thousand.

David Campbell

For the year?

Spencer Schwartz

Thousand.

David Campbell

the for with flying. think Amazon XXX the had estimates signed us XXX,XXX the given I And before year, for as basically agreement additional those you are same you right.

estimates? So I'm as they little a those why increase confused didn't to

Spencer Schwartz

XXX,XXX and The has the end three Sure, a David. rounded zeros at so number. it's

now significantly it still under it's before area. but was that rounds maybe and maybe over so generally same just to And

forecast all. change Amazon block rounded. in block number the The flying early hour add it's So will That's that not just chose to that is so the year. approximation at clearly the this We just hours. an but it's point It's year. in

David Campbell

And the hour change you you say Therefore, revenue the you change forecast, didn't block forecasts. same. didn't because your would

Spencer Schwartz

Correct rounded to billions and that's dollars. of

yes. So

Bill Flynn

the it's year, early David. in And

call behind more peak, third we the have add. to and quarter when come obviously we the we quarter second So color more think in the shoulder at as much and than into have a August, the beginning I month of into our us we're

Spencer Schwartz

Yes.

David Campbell

see second as And seasonal And as didn't March in market the outlook haven't how cargo a my Did second about is, say was demand? much the you shape question it does said in the for Bill, industry much quarter XXXX. usual pickup - you ago. good up cargo for and your year

Bill Flynn

Yeah, thank David. you,

it So comments, the - itself. really to are my but I referred prepared in market question first the bit is on a you

very the seen just the for we and XXXX more 'XX, peak might first in in reflected think 'XX. 'XX, was and years didn't stop quarter. I cargo fact of into patterns that in rolling So kept first a historical prior 'XX quarter it demand strong have quarter the first we

year's looks think, typical first prior I years. to more this quarter

to Express with China encouraged prior in with in know and e-commerce and is on predominantly - some the at our different see focused growth up. they're There than discussion and higher growing Index market. both have China fleet PMI about comments an predominant and deployed is the our U.S. Where we the we're you agreement. fleet As - really average meetings, reaching

they're course good intra-Asia say, they're the starting I just got We in seeing in holidays, our flows informs that the call just out yesterday late commentary marketing providing Spencer hearing, out we'll had now, We're were market on in up, with we're organization think, news Day and yields both the I And Lunar Asia talking would Lunar Year and of Times see year of framework. on today Japan and China for meeting, as Tuesday second Year. the to now volume penultimate we Financial but And holiday a New see the China. today May a pick pretty that in meeting, well - now affects the a - in and etc. up. May the pick the and I Emperor providing, we've coming and of new and New current half the balance of this

and strong So first half quarter a think second think, Express even quarter our the come little out more signs we of back as the and you position the balance use we'll broadly I bit long more more Atlas very think about a of of customers. the and that answer into there e-commerce, into a pickup year and as typical with and but I Atlas's about

David Campbell

sound It gloom outlook I like you the are time. reading than all and get mean real that's columnist world, is doesn't that other you and the certainly world. real newspapers from the considerably doom forecasting brighter

Spencer Schwartz

doesn't as usual, always Yes. make Business news. it

Bill Flynn

while can are from business of does their separated our and market. about at about comments international I we publicly that of flows our so think and companies we the flows opportunities. Atlas customers saying are and traded not at in they look majority saying market course. obviously just about and my are what close they the Well said one What that we're the And of operate - as to help their But how business. domestic David,

David Campbell

of you got them. a like lot Sounds

Bill Flynn

Thanks, David.

Operator

of line Stathoulopoulos SIG. with Your next from question is the Chris

Chris Stathoulopoulos

tax us, The lease. maintenance on around payments first the know quarter, freighter Could XXXX do and guidance? was look typical dry you included help $XX of us like this payments you for the after scheduled you return for XXX million when in what the frame gave that

Spencer Schwartz

aircraft This happen questions. lease ends. I the But when what so a is infrequently have highlighted, and going Yes lease part on it know us does because provided start included we the past. revenue it and occurring will kind isn't how - half it the that past, years these that in lease infrequently. with been This large several the you received Sure, the portfolio when we to amount five dry Hopefully, our focused large recognize times as your of that. of a had done in even item we be. dry for so the with because we've on lease consistent and answers of was was with guidance. latter it We

Chris Stathoulopoulos

their to going has to some Amazon day. I changed you're the the utilization start prime ATSG North on first and you about in did was wondering, lot how could one us then additional forward? like network Should on XXXX. And come move points And day give you increasing we thinking looking color I'm American since shipping, guessing to as expect back levels on they to network? TSA move one A

Bill Flynn

significantly in got now with time. - period result not we've XX of announced aircraft that opportunities see XX increased could five aircraft is comment know be their a But Amazon of the for a beyond them around that the really that, you we total they plans additional means entire - announced short operating position that a a ATSG we're But about. prime over that the with supply say to amount total can They XX first or aircraft a plus what having us position read to how and one chain. day across we're about not their in their all discuss and or thinking may relatively on increase have Amazon's day and of have in strategy operation. they're they aircraft that of XX to dedicated Well, to we Chris one really they'll

Spencer Schwartz

incremental would far. add thus with it's Amazon Chris, we warrant that only has is warrants earn beyond that I for flying structure the that that in to to the agreed contracted them incentives what's Spencer, thing for built is

Chris Stathoulopoulos

in you broader trends could indications Charter inquiries some get just we season. color And any early Thank around demand curious or if peak perhaps on can you. supply one if more, give I that. as work into there's been

Bill Flynn

We're really we get as that not away far here. sitting

customers we're CMI our conversations and with beyond shoulder brokers, through. Based our growth charter of for to We're of which hearing but in PMI the New our about the back a folks year. of on runs excited You peak May which were looking come know the for what good starts just out our of peak, our Year looking at that's market kind customers the coming in customers. work. and color throughout then out as freight-forwarder We China beginning for August ACMI we're Lunar

is the that Now call that see have talking we've about suggests peak. by include we holidays the definition here good of very but everything know today has that you May throughout in to half a X second course, what and we Asia a good been

Operator

with line next is Sterling Your of from Kevin Securities. Global Seaport the question

Kevin Sterling

the you're Let take a of you've good the Bill me about the of bit think, year military, longer if Obviously, but and I there. half feeling specific, next getting little years, look military to little without it a the maybe providers But I'll of and like anything couple flying maybe me more some of that How their the outsourced military couple to with bit more. good the I and back into dig to providers that got even outsource at think we seems aging approach, about and visibility got equipment, a the next years Is trend? they've to of others. commercial should ATSG yourself. on they to we continue rely moving toward trend that? for yourself Are continue the like

Bill Flynn

that's question, Kevin. good a Well

they're on Strategy And and to what separate strategy, the implementing actually President our was the if under look surge have are and OIF is and that cargo we Obama, flying. to aircraft to certainly So the in right. articulated with then of I the Mattis National aircraft. what that flying of we crisis or different, those happened. commercial see I of XXXX passenger XX% that's planned that numbers. right and think and back experienced on military a have national Defense move to - sure going XXXX That's troops call the for peak should would passenger about to both we're would OEF new - Secretary that we XX% the move think move And commercial because cargo that more

combat let's horizon. the those it rotational and as at going As reasonable we is different well. the to to And forward over, military a call by need operations be look moves going that brigades different cargo kinds supported planning undertake in theaters, missions of

talked we is we military to overfly going think, that reaffirmed The utilization position operations utilization went was growth a throughout commercial to are of flying ability about. other them, years lift kind still And then and and posture been the current it's plane of that's the of there drive to fleet kind passenger we've of add and year life I of CXXs second of passenger OIF reduce for the CXX. has CXXs XXX-XXX passenger to in why in which where which so taken for use cargo the is training substantial or operations XX and the of And plans have to operations of of That the level OEF, to a can longer beyond long recently is our continue, think necessary take going part that for levels in out in level place winded I additional, that way are opportunity the currency. the they useful a has and the high. that the of that to term acquired the way extend heavy the the cargo and more half our on think are we saying, currently I - see

Spencer Schwartz

just provider And fairly about quarter, our the missions that, about steady all at almost way XX%. to one flew Spencer, it's And to the XX% eastbound. first during we entitlement be Kevin, we the with largest continue add I'll military outsource

Bill Flynn

flying And XX% do job business for do it is. military. as . the good possible is and about And we It's to everything as that the the a still - great of

So we're not.

With great us. the for growth military which is in

a seeing you're opportunities seeing on balance to not an us We military growth our our flying. not also and so overdependence in to relative in commercial have commercial, growth you're -

Kevin Sterling

question. last And

your raised that you in guidance? like without which as may absorb look able Is are occurring looks have to know at you your it I me are costs, to to You QX. assume your essentially, it guidance, CMI costs these safe start-up

Spencer Schwartz

it. kept You've included Kevin. now our guidance but right, same. we That's start-up costs got The are the Yeah.

So have increased essentially, yes, the costs. we then start-up but our guidance added

So correct. same is That got to the place. we

Operator

Chris Your final the question Stathoulopoulos from line with SIG. of is

Chris Stathoulopoulos

there perhaps know, Your the relates the has and PTFs then generations? MAX new if the any it aftermarket groundings on in opportunity what in XXX charter been as seeing with you're to

Bill Flynn

when up MAX that seen. that to groundings. that and result passenger pick would the flying have that's the When service aircraft as don't we Well, returned solved XXX is of Chris remains any to a be fleet,

that question. as to terms availability result that - other That question, Because grounding if that be remains of operate. a to Right? size the conversion. the on mean PAX your aircraft for the think I fleet in a that's does you of but freighter what of the keep XXX-XXX would that possible

Spencer Schwartz

more to space be minuscule a Could create - those good small really not yields but perhaps if cargo amount in so a that airfreight of or of gone it we're little and that be that immaterial. tightness seeing belly demand the freighters a the market conversions delayed, supply would thing overall for would there's don't could happen are have

Chris Stathoulopoulos

for trend last then XQ? above ACMI was minimum hour And block in what one, the

Spencer Schwartz

Sure.

the and year. expect customers five to above somewhere quarter guarantees Typically the minimums. of and seven quarter to for those So with above was that it X.X compares in last well customers year, about X.X we the first fly this be minimum

Operator

no further are There questions.

Bill Flynn

everyone for again to forward announce Spencer appreciated Okay, We joining questions. Thanks, call when want thank today. the in second all and you, Spending look quarter talking August, well. we and to results. with us to your Well time Natalia we I your and you thank our everybody.

Operator

participation, Thank for you now may disconnect. concludes earnings your call. today's This you

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