Atlas Air Worldwide (AAWW) 30 Oct 192019 Q3 Earnings call transcript

Company Profile

Participants

Edward McGarvey	SVP & Treasurer
William Flynn	Chairman & CEO
John Dietrich	President & COO
Spencer Schwartz	EVP & CFO
Seldon Clarke	Deutsche Bank
Kevin Sterling	Seaport Global Securities
David Ross	Stifel, Nicolaus & Company
David Campbell	Thompson, Davis & Company
Scott Group	Wolfe Research
Jack Atkins	Stephens Inc.
Howard Rosencrans	Value Advisory
Helane Becker	Cowen and Company
Robert Labick	CJS Securities

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Third Quarter 2019 Earnings Call for Atlas Air Worldwide. [Operator Instructions]. I would now like to hand the conference over to the host of today's call, Atlas Air. Please go ahead.

Edward McGarvey

Thank you, Shelby and good morning everyone. for Worldwide. Treasurer McGarvey, Ed Atlas Air I'm Welcome Third Quarter Conference Call. XXXX Results to our today Flynn, Chief are Chief call Financial our On Bill John Spencer our our Officer. and Executive our Dietrich, President Officer and Operating Schwartz, Chief Officer; and Chairman

is presentation can Today's at complemented be Information Investor a in Presentations under the by section. viewed slide call that atlasairworldwide.com

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

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

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

After queue, period principal to as today, one participants gone any limit many ask to we'd accommodate so permits. as to time the happy additional we like to as participants possible. question-and-answer follow-up through can and themselves that we'll one question be our question questions you've answer During

over I'd At call X Bill to Slide the this like turn Flynn. point, to draw to your and attention

William Flynn

Ed and you, Thank good everyone. morning

impact macro during uncertain service in quarter labor-related volumes driven third a we addition and Our performance yields the global ongoing had environment, lower that tariff disruptions our was the by trade significant to affected by quarter. and tensions, performance on anticipated,

competitive contributions company. the value that favorable for recognizes efforts our received process to new our our reaching look and supporting their arbitration We we the pilots our a a and to contractual forward pilots. have customers that contract agreement rulings confirm We of recently

is Airfreight industry. long-term growth a

continues do have know to and to company. global class we meet required consumption business. to the vital and airfreight continue built to Over reliably, the middle confront develop materials to and and our our continue we as evolved, the to supply last And is efficiently. and headwinds have to chains supply chains good what increases issues, safely, diversified grow expand to We and and grow XX transporting years, macroeconomic current demand. Despite

of and With are e-commerce faster-growing this, and positioned demand and in the future. to the express, and scale serve operations focus scope markets, our we on airfreight well today the for our

X. one this during expect for for our XXX number We to CMI to current Moving line with in outlined flying basis four. the March the of quarter, additional we And increasing the in before began year. year-end, fifth freighter Slide on we Amazon schedule XXX a Amazon add to

bring four the and an additional XXX to We response also in added XXX a on from the for the NCA military quarter, CMI NCA during In freighter NFL. passenger XXXX. we aircraft and to a Charter, expect fifth in XXX demand quarter fourth the began flying during

service labor-related yields third as our in continued disruptions. as softness As financial noted, a volumes quarter commercial reflect airfreight and results well

quarter in year. hours the while passenger the in addition, cargo In military significantly military was with prior in third of Charter, than line higher relatively were flying XXXX,

our for updated highlights X framework Slide XXXX.

including volumes benefit e-commerce to from peak do yields, expect for flying We customers. season and and the seasonal express we

of levels XXXX. flying quarter the passenger increased anticipates outlook our for maintenance fourth military with expense addition, of compared the In and lower

and approximately expect the Charter. of to a current in fly expectations, in Based aircraft in refund XXX,XXX in we well this balance previous global As the as year with years. hours hours XX% block conditions economic about paid on of our rent ACMI

XXXX billion, $X.XX adjusted be XX% adjusted approximately about XX% million income to net revenue of EBITDA our to $XXX anticipate of about also of We adjusted net and income.

is John take mainly year capital provide expected parts John, which some the we amortization is about maintenance drive detail million. to we'll addition, and to to of be quarter comments are ask happy million, John? business and few is and of expenditures results, million our provide approximately to core the $XXX questions. depreciation actions for will $XXX for fleet. about about our performance. Spencer our taking third about perspectives total good provide point In and components $XXX then additional With further After a I'll expense and our to your a This for

John Dietrich

Thank everyone. and hello Bill you,

to number Turning Slide X.

we serve As are customers demand airfreight. well positioned to Bill noted, for our and the

future. of it assets team our right our for service and employees in the place And platform talented offerings. and begins of with have the portfolio We strong

welcoming largest at years. Atlas is As between to the as of new that day-to-day confirm And Officer Atlas Chief forward Chief X, operations colleague Cargo He lead of currently Southern Worldwide Air will Jim when has has we has success. with venture well transitioned he integration proven been Polar leader become CEO is yesterday, Senior a XX He and Operating look team. into effective at of announced Air. has our Officer XX to customer. role aviation the since roles. role. Jim various outstanding He senior record on Vice Southern in Air played last joint in I an a and key XXXX role Forbes Air track I the the as I a and President Southern. Operating a DHL, to and January with management been leadership Jim has overseeing Jim operating in the am Air experience has also the trusted Atlas our played pleased for over years

and that With our we strong we current customers a play their steps services, of the to navigate key and through In what services. also operating stated, also the as continually those and core assess and to have headwinds. we the adjusting generate assets know adapt a long-term are growth and our demand in opportunities changing to employees that market our are on foundation, for we returns. our focus to the addition aircraft our role Bill as a business to We taking do our capacity market highest networks. And we balance environment customers with best to have with the and we

bargaining focused our particularly are those in We on leaders within be I focused includes during I've softer with aggressively focus very regular control, costs, environment. goal. productivity, on toward collective improving a and contact This market cash. are generating particularly new enhancing reducing completing that been that union managing joint issues will also relentless on agreement. a our profitability

make teams negotiating progress our also been meeting to We have regularly. and continue

will collective impact during CEO. of which expected earnings and ahead, my our Looking as our first include the next earnings provide we actions XXXX expect which call, to our be outlook, will

contribute will our they company. Not only benefit will Spencer financial Atlas of in our to it the near success now long-term the these actions review. to like for to I'd term, also over turn

Spencer Schwartz

and hello John you, everyone. Thank

on earnings quarter X. third summarized are Our Slide

On an outstanding On income $XX.X million basis, a adjusted non-cash, basis, totaled reported net which $X.X warrants. was million included EBITDA $XX.X net operations, from a $XX million. and continuing income unrealized totaled million on of of taxes gain

rate full we of income XXXX the Our a quarter rate maximize an tax planning tax now to benefits, our X.X%. expect effective proactive year income included tax as be adjusted of to for in adjusted third of earnings approximately And income the result tax XX%.

segment similar, third third the factors focus our an segment provides segment on and of contribution. many my are revenues. quarter revenues of quarter Since driving during X Slide contribution the comments, I'll overview

in trade a to $XX.X that decrease contribution reflected labor-related in was Segment service third to totaled impact primarily by flying the and Moving ACMI CMI tensions Slide offset an global related disruptions. of the X. ACMI and in million earnings quarter. tariffs increase flying

was In segment, XXX-X customer approvals. placement to addition, after customer to the obtain the Charter growth heavy by necessary prior their ACMI and subsequent redeployment of short-term for segment ACMI regulatory impacted additional maintenance, costs contribution within startup customer two that initiatives,

In driven was XXX partially Leasing, by placement from lower segment charter due the earlier ACMI, the increased partially from during volumes of yields year, during from and maintenance tensions segment commercial of of and freighter as primarily quarter were lower to contribution labor-related offset the decrease These expense. as aircraft to in cargo Dry contribution by the service related and return schedule Lower disruptions. military aircraft. demand redeployment additional a trade offset was by a this earnings passenger the XXX-X heavy global tariffs well period the

Turning to XX. Slide

quarter firm balance committed ratio. to Our modestly third in our than net of and its as the commitments to result reducing we sheet not months a leverage earnings have and leverage trailing on EBITDA. We strong XX ratio remain aircraft purchase a expected net softer increased impact and do any

we million of by gradual look benefit We levels maintaining per to increased and from we repayments continue as as EBITDA $XX for approximately lower debt quarter. levels a debt improvement

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

William Flynn

Spencer. you, Thank

to to is and long-term have right Moving the serve Slide customers Airfreight industry, future demand. XX. airfreight growth our a we platform

core We a have continually assess our role services. for in capacity a best the aircraft with of balance to strong operating key play customers demand we the long-term their our networks. and and market We

actions success are Atlas changing know the what the to only we company. the We in of market have business environment. And will our not do. they We our contribute will adjusting to near to long-term these benefit term

have we first question, the Shelby, please. may

Operator

[Operator Instructions].

CJS first Bob question Your Securities. comes of Labick from

Robert Labick

to plane it, happen Hi. versus When talk a to in this in is we company's articles past we start happened about the question to saw try is to and for that I mid-contract, regard. hopefully to what and wanted has some hypothetical reassigned that specific stating -- a news has wanted ask can quarter. occur this

generally did can happens Or what talk whatever happen around stopped? has you occur? event So for that it to just

William Flynn

about -- transferring talking actually you the process of if an are Bob, Well, aircraft

Robert Labick

I'm talking about. Yes.

had it to assigned contract was certain and was customer a If a it another you reassigned CMI carrier. and with --

William Flynn

to specification. Carrier go aircraft B's -- onto of come Carrier specifications and aircraft is Well, an -- a operating there has off A's operating's the

conformance there the air there's a be and that where called program to of So performed to operating the at maintenance a on a the certificate. maintenance aircraft transfer other to conforms need carrier's other transfers the also check, activities is before records what's and information, operation certain

Robert Labick

get what A? What change to happen? What that would of I'm could for to trying have just it. to off a Got the cause contract? it at middle in would carrier happened of go

William Flynn

consider look one factors to when Well, move that's to make a a customer decision a asset decision. variety And another. customers at they operator to an of from

on to of the really number it and what's needs. assessment suit And a certainly but going so best on customer's customer meet factors their their of network depends

operate place had to have in come operators to being incident for that years, would we I the specific, moved think -- In that lease the not and that we other in off point times referring can important us that unusual. of. more our I the you're out from So that aircraft lease long that several over on done CMI. That's we've place the specific it's the contracts have term. dry dry off-spec think on to of term remain assets We've

Robert Labick

prior term margins it, And the then guess about talked Thank the on you've XX% changes been Direct Historically, with labor they okay. been tariff range. impacted We've then few to calls, you. kind pass-through in the by have one I about trade and question. have Got Obviously, and disruptions. modestly there ACMI. talked last margins. years has been impact incremental longer expenses contribution low mid which of over some

question once once on for the what's we annual ACMI range tariff, for normalizes, labor all trade get past my So margins and direct the is, contribution basis? and an appropriate the that

Spencer Schwartz

it's Spencer. Bob,

has in XXX reimbursed the increase a that's right. The an that as impact. increase CMI had increase had cost have really hours, and well in gauge smaller big impact. block XXX You flying, The customers, the in to as quite

tariffs back trade and been margin the be would have ACMI and the obviously margin due you reimbursed the the third the labor-related for disruptions. would year higher smaller current prior global then really of the well the expenses tension as the the impact out If service aircraft, and the impact as between difference the -- to much gauge quarter year and

all but as if representative So we to to your to look answer period aircrafts. a good at question, add hope CMI assume prior equal, being can else continue you a then you

of smaller are the on obviously, margins. impact, we then gauge water, that, flying have it flying bigger than larger an based gauge. a across depends And it a plane gauge could So U.S. do in domestically generally make or a aircraft those body whether on big smaller more We the

Robert Labick

it. Got

Thank you. Okay, that's helpful. very

Operator

Your from of Helane next comes question Becker Cowen.

Helane Becker

million the is the I of operator. if if the answer Hi, for the year, time. you everybody. $XX much disruption? Spencer but Thanks can EBITDA don't can Thanks, from the you this, pilot in know say of reduction how start

Spencer Schwartz

call. an really the reluctant we negotiate Helane, we're earnings -- with union to through

we the but labor the that's know tariffs I not have as trade you're us. us so to earnings And the call. don't the far want the by issues during from global that biggest impact do, both But X disruptions as really from do impact much asking too impacted and well what to are that tensions an

and at the tariffs things own trade up full for together you versus impact third and look the had labor at more made -- versus disruptions about the more variance look guidance, the quarter Those I then from the by we If know than asking you third quarter year. on the two variance the more make previous if is expected our tensions. up than what you're the quarter. the it's and its But than

Helane Becker

Okay.

is with how a actually and ago had you you your this mean So there time, company. up difference earned how focused the the call, year between of is is? reach decline as agreement know by what I you as would that's much guys with impacted say way if data I'm to what been you I freight know pilots an is what much e-commerce because you out trying earned have any you said last can able really the you an out figure that weren't on and this and of trade-related to came always

to just any You data company-specific, how don't that? shouldn't be by dispute. the are trade figure going with as but and is trying there forward, much guess. how Is you I'm impacted macro much by is I out China-U.S. IATA I know. way to help yet

William Flynn

position Bill That's Helane, that certainly discussed. -- described we we and the speaking. think I So,

another exceptional I think said something with on with however right market seen IATA is what's haven't trade or going way, XX in we now the data that years.

volume down effect the that I year-over-year the International think to two-thirds due may XX% revenues basis. and that IATA be due yield. of commented to Freight third of that something A Air a industry for on to

a magnitude in think air points a I the percentage you other. higher markets here versus overall, one impact order seeing of couple we in impact the we're where typically So have and of have that than freight. seen just And of

That's more to So I accurately. big not a labor say, get to think are I getting Spencer, your two into a and detail. could going areas. not We're really the do. level Those described line without provide market. probably I much point. as really going them of between We're as

Helane Becker

next follow-up off is you -- late now the that's X up? Can in those on then that you are you X beginning fair. others. a weeks and that the talk November, Okay, question we're hook about how a are terms could say know just now thinking little in lot just is of that can Thank FedEx flying for about let you. I or of shaping October, here one. peak? I'll my the you of doing Maybe say and bit questions. just my you peak the How you're

William Flynn

question. great a That's Thanks.

peak, XXXX experienced certainly but it's the is a XXXX demands characteristics. seeing up yields is what our -- industry hearing know charter there marketing We're and peak organization you In peak in reading made important So And XXXX. as the peak. about to a and move the volumes to we're generally not teams, we're and operations. all into exhibit we're those and discussions peak that with you what -- see we starting an come point for express begin

forward, underscore. components couple going peak think Atlas's of we there as are that important So to about are a

up able there say. the the that ACMI many and hours be Military doing that feel to more guide short units the military flying kind be fourth providing fly Overall basis. hours be we supplemental peak. operators are put on very years going of time glad I value Those this lift we've well. And and been that cargo we'll the negotiated freighters good at for into of dedicated a important that So so will a an of in passenger reflect shall are this period I several during for That's a peak. framework, that the component quarter rates up. of to about express year-over-year are we're during U.S. operation. our or as number commented greater of to

so framework commercial while in a -- reflected call market And the that in little charter is of that updated the remaining view our framework provided we've what's ago. guidance here the

several peak. our components there So are to on outlook

Operator

of Jack Your comes Atkins from next Stephens. question

Jack Atkins

guys, Hey appreciate good morning. taking questions. I my you

industry. So I your Bill, the it is a to about guess your and saw from when XXXX, guidance first income I this new earlier takes congratulations role. results for labor have a we we growth we I and back range, as to -- company the XXXX second your puts going guess in today midpoint is Bill, front. something definitely at congratulations John, that the in on on on imply of stepping reset a your level look on this the would think some I Airfreight similar year. what and comment there is When and retirement are your still that net a know But come

up seems business revenue do and So to income to potential X I'm you there is is trying is it's quite go? like there to pressure or more understand a Pre-tax years. forward. and been going What definitely some can risk it over structure X concern really the flat significantly bit perhaps last cost of is the of this guys under improve because about

John Dietrich

bit we our We're heavy for you engine the lot so and item, headcount. pressure. planning, really, efficiencies Clearly of optimal on spending, scheduling Working can amount more So, are relationships this crew at just so least our we some get of and efficient. Jack, Inventories, at ensure leveraging routes your it's a we vendors the with we're of aircraft spend. our which our whole scheduling, fuel the high-cost tightening overhauls. of a looking for every can is to wherever with John headway checks just cost most Flight fly controlling Further like at we can items that under things we Jack with get on in are business what network the There our we structure. resources quite certainly rely particularly yield comments efficient that the gamut line out environment. and best looking minimizing crew. the like discretionary of that burn aspect looking our for We're and congratulations. thank us aggressively, customers where both every technology make

some that and not not are there or as profitable those to As well routes flying. routes some shedding if as those profitable profitable are elsewhere as more of potentially assets redeploying

So we're go we forward aspect it looking at here. every of as

Jack Atkins

for abate issues full you got color. Okay, some there quarter Are year to? ago. fourth to a your issues of these your it more so really trade Thank forward on of relative that big months those would I like quarter what seems change assuming a than is some think you're fourth to when of the sort I not you, what you guess labor to quarter John. and about fourth guidance, X headwind outlook that carry abate these be guiding because the and implies,

Spencer Schwartz

right That's question, Right. Spencer. the It's you. Thank Jack.

there positives the in that's one quarter, negative. offset by of are fourth big So number a

expect excess previous paid years. are the So we in a of to positives that return that rent we receive

last have versus quarter in lower, year. the maintenance We of the heavy much of quarter fourth this fourth expense year

we we We flying NFL have an year. have and added higher volumes passenger team additional higher because this military

And expect fourth offset for the positives those big than much we then year. all prior charter the to yields, are be lower that the point So is to your quarter. the

based offset with on I that you positives when mentioned, the offset so decline the charter the And they other. each yields

puts fourth after for quarter the outlook similar those our last takes. fourth is so quarter and the all very of year And to

Jack Atkins

we that out question you, you believe if are But anything guess to curious but know I it's just at more that to or some thank starting for global stabilizing you Bill as in as Airfreight there? XXXX? seeing the some green shoots that would maybe I you give things tough Spencer. lead indicators terms for confidence into out leading anything Okay, Last been are are head see a looking John. market, seeing you're you you of or year, will

William Flynn

of a the fairly to for When out, different So recently of holding there the amount disruption activity look here that of is, Jack, just couple markets It's is markets, business. saw reference Ecuador, you as point that uncertainty out we you in is there a in military important Chile know spite us. similar of South us. XX.X% And as across America, We we some in there. today. strong of and times our fair

us does do some and that into really at other carriers and XXXX what get that essential. to uptick told military military Phase next looks kind leading stable absent to on does of into and their as very fiscal we're continuing situation year, them. improvements What the essential the we what really like. is other when our we lead and another year, really year question need us you X leadership we've second -- of is second volumes this into integrated better itself networks. any we all point year we expect -- operate here we of and fiscal in a this as fiscal the for We're do a into move get into sharpen the looking the trailing with year of as is the call, big information half next trailing and do for focus some all of has many on or core We the leadership next to? Yet Airfreight customers we what China operating but with agreement get that of half our

Jack Atkins

Okay, thank for you time. again the

Operator

question next Wolfe from Group Scott of Research. Your comes

Scott Group

good thanks, Hey, guys. morning

refund or in versus lower this just XXXX do And fourth you think quarter? then customer directionally is in the cost higher maintenance much how us -- tell you can Spencer, So XXXX? refund is

Spencer Schwartz

Sure.

fourth in to give tried the regard with the that quantification I to for So question. the response quarter, Jack's to

significant in quarter positives negative. number are offset a fourth have by significant a the of We that

item. quantify particular each we're going So not to

we the do provide maintenance, that. on heavy detail Although

certainly of that in can that be is and you that the our what would deck our slide to you estimate -- prior So year. compare have

the you So XXXX? or And other that then sorry, maintenance XXXX are and your about -- charter question was it Scott, an offset versus items yields. was XXXX versus have XXXX then offset to or

Scott Group

to XXXX. for about had think it I

Spencer Schwartz

earnings said, So talk for XXXX, we as will that call. next John about certainly our during

process that determine in do talked trying be. need really as what now the of a trying exactly about, will to going those are cost We the through we And that and ensure process John to are eliminate appropriate need. of we not we that have we we costs that

Scott Group

Okay.

I -- Any each share. think passenger Shrinking? so should us the in the on military you think business going I've sort think year quarter lot heard can help today, Growing? just then there? military we an we cargo about give fourth of forward? about resets update how but a should And about

John Dietrich

John. Sure. Scott, it's

XXXX. the In about share that business in We'll to through neighborhood between continue somewhere enjoy is of terms entitlement, XX%. there. in of It's our of the XX% to right

well. think the of it terms demand, said Bill I In

cargo We expect with and military and steady it well. consistent as and that's be what the to on both stable passenger from hearing we're

Scott Group

And Okay. I just if last then can. question,

with fleet? our then light likely or And ACMI Where we that is fleet we maybe environment, grow -- it's heavy think out as shrink just an ACMI placement is normal, next standpoint? relative year to customer And more tough year or minimums? from next block this our that contract our flying are So year, where to customers you look do hour Airfreight ACMI you know, are question.

Spencer Schwartz

one. to Three Okay. that parts

guarantees. or minimum part So above flying the is, below first

XX% the customers during quarter just little ACMI third their minimums. flew above over a Our

on So that's hand, one good.

third they hand, last other the quarter On about XX% above of in year. flew the

below for first customers quarter. in first well, not So of the the have year, flying X been sorry, this quarters --

stronger quarter was The year last that first perspective. this quarter of year from first the of than

The second similar. was quarter pretty

quarter third this much, year was of The below. much

or then for it to in question And full that somewhere ACMI? year customers above. XX more next operating below This X% Today year aircraft be expect will X% aircraft we part to have another we but we was, your ACMI. So XXXX do expect above the year of fly have fewer in typically levels.

up time. was, are too try so You due given up we so renewal? are a asked time. that don't contracts We any of how question -- part have space another always them your have We for renewal at of handful coming at out, or many kind to many one any for

out. we And is year, normal. see With regard plays it fairly so have to how all that to next

We John changes returns we can, which out, we pointed focus we CMI we're ensure to our doing. continue and the that as on been that earning looking business, some make but growing are, also have highest to

Operator

from comes Sterling Securities. question Next Seaport of Global Kevin

Kevin Sterling

XXXX? you it's follow some passenger Obviously, what little from about a bit saw into at that quarter. be this a lagged said, heading going to you If little it Is of up question talked or just on strong last we was not Scott's quarter. bit to carryover military. to quarter is mistaken John, kind it the strong like quarter and the when than flying I'm better expected this last

John Dietrich

right, seeing we maybe come. months last mostly bit and is is the stabilizing what you're of it that than and in stronger weeks it carry to we're over, So A but demand little quarter. the expect

Kevin Sterling

maybe Instead here. things, just disruptions can back in was see compressed The XXXX. last looking of if we and forward going labor My you thanks. question peak the time look like mind. don't last on Okay, season we're XXXX was if to

and between is Thanksgiving you got whereas As late know, period compressed. a year. three-week this Christmas, Essentially, Thanksgiving

after Amazon and be overwhelmed Airfreight service -- own obviously to that's UPS So and their and air levels FedEx to network. had when relied that and going In decided is develop weather upon. got we XXXX domestic

obviously this their own And they guys filled UPS you e-commerce growth. up so time FedEx. need around. Amazon with has with is broken

challenging the And those? hard, of and this like they're what past a labor that work some kind are the some forward season, it peak be Does because and labor are are to some people quarters to the disruptions? year, can that I very seems pilots ensure ensure compressed? your on lifeblood you're any make looking couple very, think organization that things they looking the of good and be So to of it forward because the mitigate to peak had maybe that positives the mitigated given of sense kind season it's to smooth What question doing to that we've so you're things of of doing done things lockstep. disruptions is your front they're of going

William Flynn

great and question, Kevin, X that's parts Yes, there's it. to a

mean expectations. about talk meet we just So and market supports ensure what for we're the Thanksgiving late. in me that it There that the will or customers' organization Christmas let the what of is with and year. waits we're that our no the John this flying the talk doing doubt doing -- Express until our within e-commerce about November then whenever doesn't it, is is about to operations XXth but

And in basis on earlier flying returns Eve so flying season Thanksgiving, season exchanges. holiday holiday of into continues of is capacity and after nature of Express earlier that into in of we've more because moving advance January, then year-over-year what and e-commerce, on we've and seen the flying a basis is capacity because express year-over-year even Christmas into and and a what seen moving more

that the even observed And changing from XX overall we of it's nature ago. the market, as into the Christmas Just have compressed that not to Friday is Eve years Black that, well. so market would

we have So, broader window. those mentioned I And express earlier, assets this year for a John? it's as operators. flying more

John Dietrich

to a careers grow with where we the professionals, absolutely to continue organization. continuing here crew can they our are provide forward And right, members the their look of They're to group environment lifeblood a you're great Sure. career Atlas. and of at them

as so the is seen we're a local, a as things leadership. of mentioned new the meeting created group pilot have to number continue direct has own we that the there local are regularly in progress. doing, Union from new have new they you make interest with queue, comments, my I We've local. in the may Atlas our I contact now been their believe with local's genuine on to part A

with cost meet comprehensive is us need to the been things for which there Union, do of however. from continued There important we've the are spirit we waiting at to assess table some We've of economic deal. for proposal a the the the is progress, total that

piece. important an be will that So,

behind lot resolution or the and won't in the that provisions provide agreement of, have merger as both whether collective concluded an now those the deal, both to those, provisions of to to you're our next processes provisions not a done, but orderly bargaining is, Southern where our us it's aware, Atlas of dispute for say successful merger apply process most also which determine we the were arbitrators I We've get of the groups, for completely and apply. that

stayed follow progress. the make concurrently we approach to while trying that meeting to So, further contract, true to and

first By vacation of first things is crew availability do having out have there protect peak take our in much year, to the much as we the during number our more network half they're they doing, our that year, Operationally, the of of half the terms in the time so peak that season. members as design, a can as as in to also customers can in we we're season. training the available of crew and try important

that as we instructors to our ready control we members. do sure the We But on closely bid training well rely for is transportation are responsibility here headquarters, crew The only provide back that then not qualified tackling, and a it's field work crew buffer. are basic example. being blocking are added we there sure release There our the making and the some importantly, shared line with not some the And center with hotels there into members. at for on reservations that schedules. fatiguing for to are Union make do our schedules the in

all for in So, the deliver customers being our positioned quality to best the those go things into peak. best

Kevin Sterling

you, John. Best time you and luck appreciate of Thank Okay, you. your Bill. this to I morning. Thank

Operator

Clarke Deutsche comes Bank. of Your Seldon next from question

Seldon Clarke

any looks Atlas's for you moving the year presentation weakness lumpiness, slide quarterly moving removed It just and airfreight, some impairment your or value of question. that's like in market cap with military business the given between about you relationship the this everything away, any point? situation, the your on have general Hey, Do aircraft labor book might at happened in thanks the that you CMI the and and to ACMI see away. take risk

Spencer Schwartz

Spencer. from to Hi, at our expected with when we look book flows particular That's we compare look we accounting the types cash the that that with happen and take rules triggers it's there then are a that value. Seldon, aircraft at and and something regard

XXX-XXX so quarter we So, during that's training and we happened two third something time look aircrafts, that impaired at the the quarter. all this

And then, perform from impairment any undiscounted compared look step using an if the in has flows first, at however, that at then do would flows cash been then cash When you the book impairment. compare we the look you that those may not flows under as issue. or If, may that basis we discounted first cash there record that are value, happen, is standpoint. other flows, an value, not calculation we our the and when book Thus far, then to future. necessary our on cash accounting and

will the that do far, needed we if continue have do future. look at always we But not as thus is, would that we and to in we So, that. then to there record

Seldon Clarke

with terms a we cash if Is of right for those of how there have long, see there another sense you a mean, how Okay. this, buffer like is you in where breakeven I weakness much are year precedent do now? of flows?

Spencer Schwartz

calculation a look been particular look type. it that on past has see. and we it the it aircraft we time depends issue, the every will we all not and In at It's at

Seldon Clarke

recently, And on changes shakeout considered stock then, Where the do that free happened you expect Okay. I to any appreciate Given it. guys year? flow. what's strategy? just price capital have allocation you with to cash your this

Spencer Schwartz

take applies. that made regard it reason. slide the By flows. point way, last is to the other With but we just because we We out didn't took the that Sure. out for any free we cash quarter, situation still same felt at

be quarter cash this offset be will fourth of all, very lower positives by little were quarter. year free a Again, bit similar think are in the But flows, year talked we reasons we the to quarter the year. in last fourth I expect in fourth the in of cash that fourth yields. some stronger we earnings last We and for versus the they than have have fourth quarter quarter of flows about all the before, stronger that in

the Nothing a Board to on something basis looks has there. With regular at changed regard capital allocation. considers. It's and really

and strategy in we our aircraft in allocation focused We're disciplined a focused maintaining regard. to have on leverage customer pretty sheet, we're and and on balanced. strong investing lower be remains appropriate capital to that balance net focused when continue demand, trying Our it's ratio and

We the bought XX% company of back a few years over ago.

not focus and we not I'm Southern Amazon acquisition on. did We Board something the were our that up we that. because that. do right and the And ramping they to so, It's we been consider has for that really will But that's have sure done have what since, considers. now, continue

Seldon Clarke

of is Okay, got previously, last it. a from new refund that or then guidance your one aircraft development? in me. Was And just rent this

Spencer Schwartz

been No, It's not there. new. it in has

it's expected million, be it we past in So, been last fourth quarter. too, the $XX.X about had the XXXX. that had we serves, there memory if in would and And always we in year,

Seldon Clarke

Okay. appreciate I it, thanks.

Operator

question Your Ross Stifel. comes next of from David

David Ross

gentlemen. Yes, good morning

clock the still provisions proposal, the recently I the when you're process? waiting merged you've seniority but First end? timing. comprehensive is question and I for on labor a know rosters just once are orderly on rosters got does seniority and the the you the started clock got economic is what And assume

John Dietrich

Sure.

that, a on That list say to another is binding to months item that after yet period do we're prompt any is and we would waiting arbitration, clock what starts issues go of that integrated ticking which of I'll bargaining, David, list. not arbitration. receipt seniority on unresolved So, the nine seniority of have the

the arbitration we what seniority the dismiss a the vacate, that, Union awards out. that's in confidence filed laid filed degree the had we to provides. we're meet contract be motion motions that respective to failed lieu have successful which on. to arbitrators in-turn of going of Frankly, the the where list, they In tendering those, So, deadlines a to and

frankly, it's in ordered cases be one compel the that week, last the things, have done. of filed arbitrators of But that production a the on now recent we action seniority to as both that list,

seniority the So, that once months. then nine we contract have requires that list,

we've agreement the what collective joint just made tentative we've bit one I'll reported, many color, TAs of progress bargaining add because already. of lot are additional sections call the agreed, a as of And they of agreements. -

we've that is the things are back and on the once not, reached, those go done. whether to those not on we of that we are with agreed end of will revisit the those done, arbitration TAs One those or are Union this

that nine can opportunity parties the full months, What is, that says if necessarily need is there the for to we accelerate process. not

and we but in next now, that's consider that, business. dispute right tendering willing order the on list to the seniority are are our We still of

David Ross

comprehensive proposal lists submission? or of the economic the same is the from And seniority part separate is that

John Dietrich

tender a describe remaining CBA. separate the have we each as urging open today, consequences. of comprehensive We've achieved it's I it's economic bargaining, and as administrative lot is, of as in matters to up mentioned, non-economic, It sit more I economic of to where a part here sections, proposal the the now Union because a what not point proposal. we the them this we've received We're us a have been at point will

without continue to asked economic repeatedly difficult get have total what you the that that deal it's sections agree because for is, and don't so that, total have ask really if to implications can't we You it. to for the to wait know

David Ross

Any core change you on be And going said CapEx, then, to to for Spencer, $XXX year? it's million that about reason next year. the this

Spencer Schwartz

Dave. Yes,

We recent all as as should no have commitments, that the XXXX general go parts invested XXXX, for in inventory the due that were remaining XXX, aircraft purchase core requirements. added years. leased in a lot parts Since just down fleet CapEx to XXX in in Amazon we've XXXs we and the well have

David Ross

regarding Board approval one for get in on place there just buyback a a to have of or share up the go then, to follow current questions the would last a buyback. authorization to Is one? And you

Spencer Schwartz

million it's Board. above anything the would We $XX and still I about, then need go to think, have remaining that to

Operator

Campbell from Davis question David Co. comes next & Your of

David Campbell

very old much. your retire, you company, but to to something-- thank enough you're doing not from you're Bill, on the going retirement so Yes, be I know congratulations

William Flynn

not, am David. I

David Campbell

be are Right, to you're you doing? going to be doing something, what going

William Flynn

look I believe the generally Board. going know, David. forward that will continue otherwise. as I'm as transition to pretty to Well, of be I thanks, Chairman busy Well, and you

David Campbell

being, as Okay, you're for be involved with on to Atlas the time Board? still going the

William Flynn

Board. Yes, in that's the Yes, role on correct. a

David Campbell

great. hear retiring. that's you're Okay, Glad not to

William Flynn

David. Transitioning, you. Thank

David Campbell

today, they lot was primarily disruptions Well, mentioned disruptions impact or losses disruptions, caused of of it an both made one just Did Or a any the results labor them? that costs, or in revenue increased on the that you expenses? third of expense quarter? combination a those

Spencer Schwartz

various cancel We've and we penalties certain and then, that Yes, when We to and David, canceled things missions, customers, enjoy obviously few, normally and had It's that bonuses costs, it's admissions, combination. really crew pay for generally, had higher certain we and had costs crew costs a we we higher but higher Spencer. crew crew higher impact. to training had an travel But, had things. displacement certain passenger that. like had

So, all on impact yes, they the line. bottom had an

David Campbell

of terms revenue, lost that business some was lost? in you actually Well, it

Spencer Schwartz

back we reliability metrics, payment make that customer, the if payments certain below fall a make agreement The fall we for service we to if of on time contract below customers that we those, to sort -- a revenue. level is

weren't missions, that going be. So, flights canceled reduce awarded to were there a canceled flights revenue or does were and that yes, few that

impacted And revenue well. so, those as

John Dietrich

David, John. it's

it's both cost categories think was Spencer fair as there in as to opportunity there said, say, well. some I

David Campbell

of Well, not quarter? do fourth this you expect, your you any have is quarter the built into fourth will in estimates,

William Flynn

that we're cost. Or, disruption the of or operating cargo that today, the those Our ACMI, disruption business and then, costs pax The market the would quite military we've the the estimates, Charter, we costs, is about, a those charter, as include Commercial talked operated bit operating that and it reflect some that today. of revenue, that see costs. fourth the framework the we've which provided today, several experiencing quarter we level of which components

David Campbell

delivered, signed a get you Right? year, that's that have have won't next next Hopefully, won't and you the disruption contracts headwind year.

William Flynn

is agreement the to dispute resolving and clearly and customers. focused the to on we they the focused progress. his making they our in are make company comments a we what on So said recognizes what our we're joint contribution And that getting that's new to an John bargaining and agreement look essential to with collective that, make earlier, pilots, forward

David Campbell

the Right, gave for needed you correct? saw, given you well, assumptions quarter downturn the yields, previously cargo everything big than certainly you had less problem, the else, that's the fourth but to biggest and nothing that reasonable, problem. have of on us are Yields because it's single are the yields. Is top

William Flynn

some And put analysis Yes. well. on IATA as that out

with quarter, Just but Charter yes, military. That's generally the about you quarter, the and when exposed offset our that about quarter. Airfreight, again the to think express the strongest Commercial certainly we why we're is in the yield is have fourth operations certainty around

David Campbell

Right.

very thank much. Okay, you

Operator

from Haimes Asset Your Barry of next comes question Sage Management.

Barry Haimes

down, issue, that? there XXX year And in Thanks. thanks number One year, this the second bit versus won XXX been go but maybe on Yes, next about labor disruption similar little change then, be there into a is, would that we improvement be you next is for very as that much. for Two the D&A much any number? talked year the has since coming quick arbitration or regarding follow-ups. the you CapEx my question would

John Dietrich

for the as improve piece on working Barry, help that it's I the blocking we've of continue mentioned and, mentioned, pilots. areas John. efficiency. to basic to for our tackling some which I'll a for and of labor operational and environment been start number on can control focused I the them, we

to of place. slowdown, that, work Union when in in for And into we was preliminary call remains illegal the do we've we injunction that entered that that that question, an we in have back remember a had have XXXX place and important behaviors informed it's

court as sure well. very be Union the order want that seriously We does to and take

in some communication to have based that we with on those we factors, improvement continue. seen expect Union So, all the direct and

forward while that our know the crew focused making as here. we their progress, on All it's families said, and I important moving to are members for we're

it So, those are to Union is I expect we well. improve. We're that on to some of the as focused things believe the and continue

Spencer Schwartz

Barry, And then depreciation, comment, amortization. on our the

some maintenance amortization should deferred expense fairly steady, be depreciation amortization. So increase we have as should

big are those there. So two the movers

Operator

of comes question Howard Rosencrans next Your VA. from

Howard Rosencrans

taking the you hi for guys. Thank Yes, question.

is continuity non-successful the that and mean, as investors on years, obvious, making in your venture. has this Following stock. on guess about a a now book to investment? value, of outsiders, regarding foremost conversations you successful the I've place entire on subsisted for making a years, first a you're been I on labor with people a hasn't this are mean the have because taking bringing doing XX-XX really the in is money were tenure for overstate don't perspective, that couple focused longer-term the of the For something reticent been the that and Is not been prior in bill. of transitory this it just questions are I promotions but that I who were XX-XX

of I assess what's you're to that the could is the away what future is and understanding factor in amplifies, and and sort end shareholders millions the us, the making to significantly how going again, meaningful day moving hurt Board, hundreds really So, on to runs of for of reticence the the to of investors Chairman of the its whether better analytical now community in with are take The give north which a moves general, only the improvement? or of management, compensation our at is profitability, things will dollars. say but prospects resonating the a -- the will that there to into of price. develop share not --

William Flynn

just a of a that So Howard, couple let take me points.

substantial So, price what absolutely when company doesn't that am shareholder and don't perform I and of the fairly a what, appreciate, shares means. too I understand

as recent people organization each but here, In is or within team decisions talk from succession, team allow that promoted we're management brought some look I we to that now made, and at of a and when And individual as the technical you look choices here relative time, and to terms choice have management do if about won't in well senior we each of me selection certainly people choices making for outside industry. our we the we've balance. this

network with scale focused operating at From on key countries, XXX services security core tech safety flight over else ops, everything performing We on for are time-definite and operating company. that ops, ops, our goes compliance aircraft customers. complex fly along We an regulatory with operating operation. networks that a global

so new and talent that how with that And of we the business to how promoting when build to in with bringing team, comply folks it's do out expertise management and run the it know a and perspective. balance

brought And person. senior so, than in executives companies GE, retail Pepsi rather each including from naming from we other and

of we think balance very talent we talent good that seek. have within promoted I So new talent, mix and that's the and a

Howard Rosencrans

the an labor issue management of staying labor and/or being to management with So who So senior is of there the resolving team -- is promoted? place is management, team this in Is all imperative to issues? the imperative the the continuity resolving

William Flynn

I company, believe of the solving the is for resolving the part which that just contract management the new labor a the imperative senior that. is of of and continuity -- labor

Howard Rosencrans

the is a to that disagree has barometer and/or labor company the to execution complex done company and GM this even regard, thereof. in well certainly is, worse would the agree success I be barometer I'll much due all agree successfully thereof, of as the labor that challenges, the to because you're would have But expeditiously. to complexities the evidence, I'm that the the to challenges the not as that certainly on has belittling With that respect, more say faces shareholders mean somebody will to that able issues Okay. to to barometer I industry very team say disagree. is been important running and aircraft the not you that labor have resolve only important we very and I and confident in seem

you beg for I there your your I your differ changes courtesy. view, be to positive. and with So just appreciate time, and Thank I the hope will for

William Flynn

will understand I'm of I pretty sure Howard, Well, thank your Yeah. you. point we view, disagree. And

behavior, process realize that's obtain go bargaining illegal we I collective of something preliminary a we to we new to to contract. a think just address simply are that to clearly couple agreement in on unfortunate injunction to the the to terms court the had labor, of following of things working do. It's a had

diversify a shares responded that is, and grow the to the I platform and customers. new move service haven't agreement? array diversify of market headwinds do platform believe through both and but to clear our to a success, to customer relationships, ultimately getting we the exist, the fundamentally in company, if It's asking, question continue because the we labor the do. we have the offer they of the if you're We for challenges

Howard Rosencrans

labor see that I you in -- been a with is would thing I But minimum, you for at going bare -- say, a expectations XXXX guess assuming many, time introduce where many many, we'll the on of duly has order. years. can reset as

not this new So with with. opinion, but curve is we and We ahead the my have of you one, to dealt should been believe macro the looking should have it for environment, been a the shouldn't reset. Thank time to it forward I coincide anyway. have allowed difficult in the horizon.

William Flynn

of their passenger get aviation. there's It's structure would any what to the deal that's arrive point part just well filed take our just years at more ago, I misery of as years to by fact. not the union I of whatever feature RLA whole for say I'm number a regulatory company, perhaps -- several ultimately leadership airlines defending agreements some labor I'm they Yeah, to understand through new at simply beyond it framework agreement. not next a I just means, industrial very saying reasons, and not it's that had the about chose the exists at a a for had argue two -- industry, time loving conversation, new framework contract, instance a large Howard. and agreements. of but the that simply not is, going In over the RLA in that's would taken to I'm have this that. that, it reason, to, That's but specific these under

providing we have year And and XXXX results full will framework has Thank about, our next call. the he when earnings John you. so talked be

Operator

question at Chris Financial Stathoulopoulos final comes from Susquehanna Your Services.

Christopher Stathoulopoulos

in me here. getting for Thanks

sort but heart. same question or of or John at for is So, two-part Bill. question, This the idea here

first for but deal curious was the e-commerce, look what's ago, it Atlas? we is A you Amazon. pivoting stock it at today the here few where about and years below which the did, As towards next was, beyond, XXXX to chapter

So and DHL? e-commerce story we vertical In about a as Atlas are and beyond additional think now there other in sales opportunities cost Amazon should MRO? and

deal, the And to a about, then as potential and say you. we and macro you and EBITDA XXXX the talk around commitments, is focus would that growth? productivity weak it cost look that backdrop labor forward have given Thank the the no business aircraft XX% for you again can reasonable do

John Dietrich

are it's From my perspective, and absolutely So, John. on Chris, focused beyond. we XXXX

these we and expect adapt execute the the and the capitalize key We've team of on think at to XX last growth got assets the growing to markets. diversification that, so. opportunities to you of changing and markets segments, been If of fastest market player do and them. continue right demonstrated other on I to of we've over each together growing and a in look to some and that right years the E-commerce we've and able we've some and Express got we're the

Christopher Stathoulopoulos

Okay.

Spencer Schwartz

Chris challenging the year impact would disruptions were we've been a had, the and add back the seen that of if And impact nice company. the that, I the from just this tensions EBITDA you it's obviously labor-related back for tariffs have to you growth. service Spencer. has out out and trade would

initiatives John are our that about, with where so, focus that's is. behind when the talking those And other things is

William Flynn

growth express, our time-definite we And round for heavy, We more that the freight, that air position on fleet growth. haul domestic, the operate it The is company networks and broadly, capabilities types operational and or different of ultimately industry. intercontinental, diversification e-commerce Bill, just the that to types have, more skills we whether that the capabilities long it's Express e-commerce in out. just believe

And in so, we opportunity believe that that execute and growth we'll it. on

Christopher Stathoulopoulos

that So business if growth? that of to other the this we whole, impact and adjusted the later dry take labor that understand a cycle out, around EBITDA if XX% between can the this saying, I the you're is if and subsidiaries business lease X% as tariffs a do the

Spencer Schwartz

I has We're year this been out pointing the simply quantifying year. a was that not challenging future.

$XXX If EBITDA been you approximately items million. it year. back different we're Even have would very, still those those of items out, a delivering very with

those in and and the for without growth the place our So, overall, future. a and out just John it, that in talked pointing things Airfreight, should see about that with the initiatives we to opportunity lead the that good company in

Christopher Stathoulopoulos

Okay, the thanks time. for

Operator

today's closing That turn to call. concludes the for I over Q&A portion remarks. to any back it management would of like

William Flynn

my appreciated to John, here work you, sharing in privilege Spencer, all Worldwide the engagement Atlas time everyone. Shelby. Board. I the that today, you I Thank talked continued my at on CEO through Well, forward the you, we I've to about been your I from you as Okay. with call over it's the year -- everybody with and your of for say thank want of to just a personally, Worldwide. will tenure continue interest during we on us And Air years. Chairman and your the transitioning and the wanted call look thank am end Atlas to as to today of Air and

Operator

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

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