AAWW - Earnings call transcript Q2 2020 | Atlas Air Worldwide Holdings Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2020 Earnings Call for Atlas Air worldwide. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Atlas Air Worldwide. Thank you. Please go ahead.

Ed McGarvey

good and Rob, you, morning, everyone. Thank McGarvey, Ed Treasurer for Worldwide. Air Atlas I'm to results XXXX second call. Welcome quarter conference our Today's call Financial Officer; and will Chief Spencer our be Schwartz, hosted by our Chief Officer. John Dietrich, Executive a Today's call at under in presentations presentation can Investor section. be atlasairworldwide.com Information slide the is viewed that by complemented

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

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

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

our During principal follow-up we'd one participants ask and question to to question. limit like themselves to one period question-and-answer today,

accommodate At can like draw we answer queue, turn and your John additional possible. to to to Dietrich. participants time be many gone I'd through that So the After we we'll as questions three slide any this happy as point, permits. have as attention to the call

John Dietrich

to a operational our The high-quality service our out I and by customers doing, all employees continue safety jobs. challenges. issues protocols, and up and is presented delivered particularly the government of this provided thank through testing field. they're the including them lives. essential ground Welcome those who operational and mandates working to in I'd bring U.S. their front efforts. short feel the see to patients, to at economy We none and call. hard so the earnings supporting workers and others Atlas The We're by as people grateful many fueling few breaking sense possible quarter effective labs carry hello, supply It's this all responsibility chain. to vaccine we COVID-XX. of treating working Clearly, has second healthcare just role the in lines and so tremendous could are in us the contribute adversely market are impacted the the of the goods global ways our to acknowledge restrictions, crew extraordinary taking has thank many save this in like for other have despite changed ago. soon priority, to the world coronavirus Ed, fight couldn't in so safeguard we're our doctors everyone. we're variety on opportunity ever to all be as pride, an to Thanks, and many all months team to entire and efforts. every and our to created more as of Atlas all for the take proud regulatory industry COVID-XX. including pandemic, our quarantine continue and to stepped Atlas, work all we staff by precaution employees. top the the a challenges our travel be support At a and the scientists purpose They help also will for in also playing literally I'd the and quite to like imagined manage relief

commitment Unity our their protect and and appreciate operations as partnership employees, as vendors' well. only safety our customers to but our we We not also in

positive U.S. earnings the primarily our and and on in demand we quarter South guarantees. to commercial the businesses services, minimum turn military flew Charter America results exceptional expectations. their in capitalizing essential our continue exceed and as driven to our ACMI X. to higher yields were quarter team, results on an business strong also like These I'd our Air worldwide Now and Atlas Slide with above second had well revenue to customers provide the and by continue

As XXX along that of and in fleets networks. we play large of largest a key freighters you the XXX, XXXs many fleet with customers' world's know, of role our operating XXXs operate

strong as agreements programs serve Our our into Global freighters Logistics, XXX XXX-XXX new that and in yields. while three this industry. and shorter-term forwarders service Inc. attractive also entering us This long-term leasing are unmatched to us. freighter Shanker, fleet and offerings enabled wanted to manufacturers operationalized seeing, DHL business. reactivated DB and of dry increased demand, our secure serve the We our we demand such committed HP, we're to from To large numerous converted the quickly the charter profitable freight capacity Apex Flexport our Geodis, with new at long-term like from business include all expanded charter and Forwarding,

for performed environment. in results These from aircraft slot XXX excess second availability lower our five In by higher related take of incremental from XXXs benefits expense refund quarter added the to CMI fleet overhauls two were Nippon XXX-XXX and lower Amazon, and expected rent pricing fuel also CMI Airlines. attractive benefited and quarter engine depreciation, prices DHL XXXs we of incremental aircraft an XXX current maintenance also advantage rent And service earlier benefited addition, discounts with two in LL The including to placed our prior for maintenance year. vendor partially incremental aircraft Cargo in XXXX, to existing other for in the we to we paid an and additional periods. offset and this

production collective by pilots we're pending into COVID-XX. to completion Boeing pilots the our premium as barring its lower lower impacted precautionary Dreamliner XXX the significantly crew higher limit we Dreamlifter costs travel, for provided to our areas AMC experienced measures and slowdown We took joint the to also related flying increase operating agreement effective pay XXX of May that and U.S. have demand of to nonessential due X, been U.S. XX% pay, outside military of providing passenger for our certain the

we top our our priority. second challenging the the During business favorable quarter, opportunities very is with safety a employees environment in on executed operating of

scale of We our capitalize of operations of continue to and the dynamics. model leverage global the to fleet the current flexibility our scope on favorable our world-class business the market

limiting every to regard, business. of including and our in in As of also of disciplined and business, staff we we're the nonessential a uncertain particularly taken the advantage the significantly evolving use grow employee opportunities management, that of the mindful take area of tightening virtually in hiring importance number environment. of In financial spending reducing contractors travel, ground steps, we've

in enhanced that are that in renegotiated With older focused to we've assets best opportunities aircraft. as of increase committed to participation do. and allocated taking we our also agreements returns. Payroll to we've and certain for in also CARES This our And on that Support further liquidity decided We the generate remain announced sale the We're our financial ensuring customer carriers air that Program nonessential exit strengthen we Act mind, certain actions to our resources includes XXX-XXX profitability drive other the June. to position. cargo unprofitable

to to outlook. our more our balance As half the indicated and the expect any full we're subject of year, COVID-XX adjusted just material expectations results XXXX anticipate current we Reflecting year over this first approximately Charter. our We fly of ACMI hours developments, Slide for on revenue and billion year full and block EBITDA XXXX X, the in of XX% the $XXX in with about $X segment XXX,XXX million. year than of reintroducing those remainder and

than the That Our to in income that double outlook year. the also half net second our more occur anticipates would XXXX full of our XX% adjusted in year of approximately XXXX XXXX. adjusted being of net income result

of due the of the the split expense more anticipate the first total half $XX XXXX to the net $XXX of aircraft expenditures, exclude many are the income year, $XXX our totaling strength evenly second vast we've the And is core to fleet. you half, to depreciation and million, earnings of to with our engine mainly year million we and As capital second year. projected and Maintenance full million. which approximately parts be of and amortization the historically expected however, for This know, $XX to total first million our about approximately half for between purchases, and generated components year for majority adjusted in year.

expect XXXX also tax income be effective full XX%. rate adjusted approximately to We our year

of third remain elevated seen still adjusted of but at Commercial net This for XX% very our XXXX. Looking adjusted and income this times quarter, We second the higher we've third Charter the year results. compared more the typical they the quarter, yields years year. time in than with than of will will anticipate moderate third -- our attractive from yields that approximately of $X.X quarter for this million for full quarter net X represent income be

adjusted than revenue hours more nearly quarter fly $XXX of EBITDA of XX,XXX million. about million to $XXX also We the third expect and in with block

ask be provide to of will a for this So results. good review me our Spencer XXXX second quarter to time a

over Spencer, happy And after your which, you. So questions. to be take I'll to

Spencer Schwartz

and John, you, hello, Thank everyone.

strong net $XXX.X totaled X. On EBITDA $XXX income million highlighted an net basis, quarter Our million. with second million. basis, are $XX.X on adjusted reported results On Slide of adjusted income a was

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

freighter of driven Charter quarter of our quarter. first and second aircraft top revenue and to million hour. by Slide nonessential reflected hours ACMI XXX, of the the supply Block redeployment XXX X. totaled John reflected XXX-XXX revenue, available the related lower that long-term the the this XXX a for aircraft freighter during ACMI block and to disruption disposition reduction support noted, the ability revenue demand from the block dry was of in average quarter CMI Charter Operating Moving hour in to flying. the partially during primarily the by per growth in new utilization. rate in offset revenue XXX-XXX global from $XXX.X the capacity cargo by higher numerous XXX-XXX increased of aircraft the driven redeployment increase increase leasing and changes programs primarily primarily aircraft, leases an charter volume flying and year. driven market, by a primarily strong dry to Higher of chains, to of leasing And certain

U.S. take aircraft to Looking of charter, by These for contribution XX% earnings the segment the benefits bottom Charter in redeployment the and quarter. leasing. discounts from of benefited in reduction was also expense. pay were aircraft. ACMI These overhauls charter second contribution by increases dry and additional the from and nonessential commercial and depreciation the advantage primarily higher were the driven XXX-XXX offset demand areas. from costs. million maintenance in and higher and In including dry slide, reflected of lower in demand maintenance costs, aircraft and premium of operating first higher the cargo quarter. for Higher leases aircraft primarily passenger lower heavy and lower military totaled and to $XXX.X contribution depreciation rent was rent in engine including redeployment during CMI the pilot pricing due now of increase yields certain the leasing, by and pilot partially the availability also expense contribution and certain the at in a and increase freighter benefits pay aircraft offset flying the heavy expense changes ACMI to aircraft disposition

Now turning to Slide X.

We approximately and net a ratio our at end $XX from the totaling as the compared shows, times progresses quarter with of expect to cash maintaining year increased cash, of short-term the payments the million at from second investments second the significantly equivalents, ended end strong XXXX. quarter improvement restricted cash the of slide leverage EBITDAR benefit further X.X we the quarter. cash of we quarter. balance quarter, levels, And end million with decreasing $XXX.X X.X million second at during per and including $XXX.X times first as improved the the debt As

through proceeds cash primarily also cash program. balance include debt and activities support primarily of revolving credit Net core engines for and provided certain from reflected activities kits engines. on at by received the capital funds the debt and from reflected partially we operating improved upgrade aircraft to activities spare by facility partially offset XXth investing expenditures June primarily used disposal from issuance related financing provided obligations. and cash Net by by cash our payments strong proceeds the nonessential payroll Our and offset

taking are committed which the weighted the As and average a And liquidity costs, now to allocating a remain strong actions we worsening John continuation sheet. by a resources. any aircraft at well balance of stands assets, pandemic. secured as We the vast or earlier, have is our By impact mitigate to reducing and outlined of strategically enhancing has of majority X%, excess debt. in reminder, low value a which rate, related our coupon the debt

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

John Dietrich

X. Spencer. And moving you, to Thank Slide

Atlas a taking these continue of employees team in mentioned essential global As to of I worldwide, And needs our exceptional world operating transport for of favorable investors. fleet remainder deliver challenging keep precaution balance supply a earlier, an for results Atlas strong to we industry sheet, to are every employees, XXXX. for for continue and chain. the safe and service continue that the times. role the ensure play was outlook will our will strong unmatched With an very customers during have our exceptionally goods, talented safe the that Air we an and and capabilities high-quality and you, in quarter to QX our we're

over our to that, you question. So you. take Thank with operator, turn like first to I'd it

Operator

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

open. line Your is

David Ross

transaction. any then this the of bit longer talk Or to Charter transactional longer-term of knows good of about after little with year-end? first these opportunity kind who after through up than the a mentioned, here that? yield a some to wanted take customers lock these quick business a you strong that Do us And I XXXX? for environment go extend to is to

John Dietrich

answer right you, the current reflects dynamics the yes, they're do And looking advantage taking David. yields much And is they from perspective. the that the gaining The very long-term of is while is of our we're XXXX. them at beyond and extend the Thank like ACMI way market now. characterization market that

XXXX. through well yes, So

Spencer Schwartz

agreements these the half into second these if them some Several Dave, are of of XXXX. just add, several in of late XXXX. go Yes. of agreements, could I

that their charter sort blurring arrangements our happen further they nature. started the in arrangements, much has ACMI these in charter So like longer-term are long-term charter to about of And business. talked ACMI I've more before that. And and between new

charter, this you as or to think of want So if of way. you shorter-term of longer-term it medium that medium think ACMI can sort or

David Ross

mentioned contract, of comments So that's weekend. about lines. that? America long-term America just Or strong you businesses helpful. were driving South It's years. kind the not the And comment in for in charter, business those a Can strength? regional something more Yes. long South long-term what the a was along really little particularly are you a These John, like that bit

John Dietrich

I think combination factors. a number was of of a it

with begin a in that large contributor. course, market We're wide-body Of reduction in we the overall a strong the player aircraft capacity in have was to with. the market

to take So all strong and reliability schedule when us we strong connectivity capacity that the and yields the reduced the along our with demand. have you of network, really those factors for contributed

Spencer Schwartz

of that with And Dave, of, that we Atlas to Miami really And South one and is big the top out and not the mover have forwarders America, the from and that there and so helpful. commitment movers. relationships if the relationship region Airport into is charter all big

David Ross

the sure had on comments seen which or improvement well I'm was And XX% negotiations then increase with And Have you quarter, the effect effect? levels? around the in the -- any or been since the went saw last any increase just question, any the the pay go into you Has they last pilots, into union improvement? pay talks also there service in received.

John Dietrich

bargain. operating. union think We coupled David, a All have provide little the into negotiations flying enter changes with talked in COVID. the premium now that, weighed have did the a over the the the crew continuing into May now of help merger members negotiate to forward the gone weighed last the a months path company increase. MOU, more number leadership this our that continue started make courts of we've and is worked in and with operation to We Yes, arbitrators parties XX% and of with called seen money in, the we've pay a international to about defined a the to of Understanding, have I and some accepted -- a those earlier, of on pilot the and way pay X bargaining. are hotspots Memorandum long in, the an clock union what's the of That year, situation. the closely That's ticking the to for months offer lot and in

a our a the from So progress this now we've of world effort a as the that's crew needs forward tremendous them time pandemic. seen most, and members lot where through as at well

great our and a pilots pay. been and the pay operation, the take enjoy it's So with some and are customers the to our happy, the increase opportunity premium advantage have and of benefits

Operator

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

Your open. line is

Bob Labick

I How of wanted in was Because would the ACMI bit the assume, they there. obviously, between contribution maintenance year a just factor And and And into to quarter? should lower, direct timing think should distribution you so contribution? the Charter wildly heavy to for start, a I maybe maintenance. related ACMI little the swung and this contribution, can wanted that the of about we direct about I quarter, guidance ACMI? back how half just little talk

Spencer Schwartz

Sure, It's higher and Yes. heavy in ACMI, incremental had Yes, other especially maintenance engine Spencer. we overhauls Bob. repairs.

have to some we airlines, with take of advantage have for given happening We of -- passenger the open performing maintenance. opportunities windows what's

availability. there's So slot

In maintenance and offered addition and can being we're on so that take that. are advantage saving discounts bit quite at we're of, lower we a to performing so costs, we that,

or some that accelerated have we've would So into year maintenance especially been next year. perhaps later performed maintenance this

that block we've impact. of hours. an So advantage this. allocate on of costs has We some those take And accelerated that then based to

ACMI. XX% And allocated to of so that gets

on has year. said, that anyway, to this XXXX, going we're those in that I certainly move as into so an impact maintenance And results. There's

Some some second this just quarter, the did in I but year. we later already mentioned,

contribution. that impact will that so And

incremental increase, the in see the and paying, an you the quarter crew out out last pay were that if the maintenance, out the ACMI margin that to to back second than premium back you'd quarter are back to year. higher was XX% of were second you were we If you

So that's to think something about.

normalized If you of think rate. a about sort run

Bob Labick

you've What out for and And really ACMI to discussed half this a particular? partially versus distinguish made more Charter is you contracts. call Have it a they Or going through this And that impacted Charter bit as does more back a decision mentioned? call contract? last little little in it then of obviously, an kind contract quarter XXXX, long-term the the does now? how actually today,

Spencer Schwartz

Yes. Good question.

entering them which as we're than are is number because rate It about, contracts, there talked we at yields. market term, them, generally they higher the capacity that the into great they're are gives looking of the for us So is customer. And for for great a those. high great. It's really typical and current good ACMI a the less longer. than It's

an basis, fuel trip per for So a it's on as To customer a a said, of about all-in per on what's trip difference a blurrier, and and it's your In I kind the includes to and hour win-win in rate, the its basis. but on which block the not the customer company. ACMI, basis, pays between ACMI charter, customer Charter, for generally pays own typically question us for fuel. pays starting get

So are those the the differences ones. getting really primary slight, but are

John Dietrich

Yes.

there a also, think fuel a item be that services ancillary of the that on I in And line other that the on necessarily Spencer side mentioned. in the ACMI are of included touch kind product not a just basis. lot I'll are charter can

for wild agreements should that of happen, are if there fuel, over could to indexed swings included, periods our significant is protections it's fuel for that time. swings account occur in longer While also in and

Bob Labick

one I And for if me, could. last

you're you doing renewals, as Just well. still relates obviously environment, those talk can as about of ACMI some assuming strong to the it

come charter. contracts how you? is it to shifting, directionally? You're up, been some for out obviously, renewal term playing And as has that ACMI long process But

John Dietrich

to in Bob. It's a about And market on cargo those feel Thanks, have be are Yes. very that have they good long-term really a that. right now. we customers basis. do that them I pleased think We good ACMI

higher. the aircraft, who their rates competitive to Generally rates Charter think it's an fix I so speaking, thinking on may little bit I about be more and basis. customers a are a for and attractive think prospective proposition customers existing do them market

a and take it's costs them for advantage So secure to their the market. way of

about So the that and ACMI of excited reason. prospects we're both future the arrangements long-term for the charter

Spencer Schwartz

has Spencer, have of to great add, of earlier, business. that benefits And talked And flexible resiliency Bob, have business about our sort we one I'll is charter. our the ACMI, the the our just or we of shorter-term of John nature company

charter. longer-term have We

We and have all aircraft can of between best each each leasing, move to dry to and take of serve of those customers. advantage marketplaces we those those of

Operator

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

Your open. line is

Helane Becker

have a of questions. I couple just

XXXs this at back, did accelerate depreciation? to write that off And brought year? some you you you that those the you were last have point year On reverse do

Spencer Schwartz

them. Sure. Good temporarily Helane. No, we park question,

very So to tiny we really It easy them performed them continue maintenance. a to them back and of needed quickly just going. back. was depreciate them back amount inexpensive and They We bringing that bring a was decision. got

much not to especially the an them And of second year. of expect to we through use So them well, been using able impact business for quite really on sure. this end least then then And overall. at quarter continue during the we've the

Helane Becker

my in saw other I guess, a is being said, actually guess, and XXX-XXXs getting of southern you're that aircraft that Southern. to in I was XXX China modified, on modification, the referred operated aircraft I as there out them. the John And question by And

is guess with the Is those So the associated assumption those? planes? doing there going a What to southern use parking with Or going the are XXXs? you that XXX-XXX. to be write-off I is you are

John Dietrich

was So you operations the our unprofitable. This prior of all out a and in talked them. recall, about phasing XXX-XXX, that one reviewing those Helane, we call, may earnings of were

They aircraft, so don't they were and did own third-party And those not we southern so aircraft. were CMI.

talking has you're and XXX-XXX few more yes, to forward look coming, we XXX-XXXs, the them a bringing In customer. the about, to back go they'll So Southern online.

Helane Becker

are those Okay. owning those? you CMI Are

John Dietrich

CMI. be will Those

Helane Becker

couple a seeing and Spencer, I of ago, I such lot right are peak. And of is year blah. months the sustainable are talked all But then so the about question one you're this know, mean, you mean, you're about in a just could thinking what you I more about on, you seeing if blah, demand charters, And doing sneak blah, peak you're now. this and How I peak? demand thinking the that I the about long? year?

John Dietrich

feel And think this do. good I year. about it's I really we the sustainable Well, absolutely peak.

and expectations As passenger back to with we're resurgence our it, will call as the continuation sell. the the general That and capacity will dramatically. as think continue to for capacity not the business, many believe certainly industry, belly And have seeing to for strong peak. come to that into the coupled seeing already well have generally, eventually still of we in have lot media the through of plays for but market be already we deals not or and season, PPE as weeks we those that's as COVID, that in do the, back, place we're peak the well And quickly fixed goods both slowed They that, hoped. frankly. happening just secured of manufactured but PPE in I we agreements and the very the months with a yields demand come lot a are of and just come

Spencer Schwartz

little and for that think I'll Helane, we it be will talked that, for just general to be consumer all that products, Spencer. strong shipments like And express for we cargo just John peak e-commerce expect is reasons it's add the sure, that for a bit strong about. will and

another are a good is to the a customers indicator for carriers expect They overall, and talking XXXX, if our from get Another all into customers indicator the our we good pretty But enjoying currently Obviously, ocean way what and we're and time. all. same. at peak, airfreight for that's the we're don't us indicator Based demand. usually standpoint on to out the back what a to they seeing, we're things used really expect. well to be hearing peak capacity certainly expect

Helane Becker

helpful. really That's

Finally, IATA to argument put rest. to you the get

John Dietrich

Helane. Thanks,

Operator

[Operator Scott Group comes from Research. Wolfe next Instructions] question Your from

Scott Group

guys. thanks Hey,

the up short-term charter So want I just to long-term, on stuff. follow

you talk So tell much then And variable? these where is about these of they rates charter new through can are how relative year ago? directionally And year? clarify, just in the a you long-term you can Charter are can rates, rates still directionally just next the to charter? us Or locked just now are long-term Commercial are

John Dietrich

So other that fuel one in. these the and than in, rates But Spencer of And fuel longer the that, of very or locked they're and there piece are say are said, they're the in adjusters the locked if I'll caveat in are as ACMI-like. deals direction time. swings for locked it, other. period heavily

So again, I would of in think of terms ACMI-like. it

of In of business, deals, I are you in total new don't from percentage percentage a remarks, of prepared see a have my if or there the that Spencer, you regard. terms But number. Charter know, new X number X customers

sizable. looking an at least per it's aircraft customer you're So there, so

Spencer Schwartz

about Yes. add of percentage from standpoint, And Scott, ACMI. of a hours fly the I would just sort XX% block that we approximately in are

that other military, half in number of that block fuel. leaves for charters, then charter, half U.S. And we and fixed is the at hours of the allocated more agreements out the block hoc total number a half out X/X of of market. America, over for hours. about our are XX% that flying the commercial About X/X And X% charter. there of and then charters, more leading rates, fixed And forwarders. index are for other for then of And marketplace. the the about and typically, XX% that in another these ad approximately leaves have flying our so have for charter, of other been approximately the hours then we the those commercial toward in is John block there of are that as charters of charter. or Enjoying And that a of very we block sort of with space spot are where have that longer-term said, the X/X rates programmatic rates do total so around is good South very, that years, that

Scott Group

those charter think rates the how rates I directionally, short-term then don't much are about, rates. And how how long-term up. out? Charter rates that just much see about talking the you're can Charter long-term know are to those We

Spencer Schwartz

to want freight they don't talk with about are strong we the that consistent environment and transcontinental But overall an consistent specifics call. market demand is what that we and open we they're customer-specific, operate. certainly on air very with they're Well, very say supply very, demand aircraft international a wide-body like can for customer

rates. So they're attractive

Scott Group

and how this growth why lastly, look some pull when would And that relative the of just thoughts flat year? you, sort third on fourth forward into guidance, in fourth then Spencer, or earnings year-over-year the then at XXXX quarter to second quarter just just I much massive implied maintenance be. will And quarter. it's guidance, for Maybe

Spencer Schwartz

Sure. questions, Scott. Both really good

maintenance. start Let's with

for typically, estimate engine slot to estimate we pricing And XXXX. heavy to some to expected availability this an the to we provide bit so discounts. maintenance we're moving we year and And provide to XXXX. of more advantage the in take airframe for inductions and But about previously XXXX XXXX, into opportunity So vendor be be of around typically very had costs a wouldn't XXXX we've we opportunities we we lower for beginning cost accelerate maintenance we've an of about, expect into of heavy engine overhaul than requirements. heavy provide don't $XX of XXXX the terms as talked want year a check forward, this little in until XXXX million an talked as the

somewhat had may another XXXX/XXXX costs So Scott, maintenance then average. those normal of quarter. actions the should fourth bring run you heavy rate, although question XXXX good be than sort about And to it higher a still closer

of have of volumes year fourth year. costs few year, of fourth to year versus we things The I With incremental it last quarter will see year of those compared point there. be to rent the tremendous have of especially six higher of should as year about. overhauls, had quarter a this than quarter The advantages last yields. we to quarter the excess and fourth couple quarter volumes fourth this fourth when of the a this and out refund kind will last of this year, greater engine a that talked engine maintenance heavy yields, to comes as overhauls, just CF-XXX in amount regard big the So

bit the have offsetting premium military And increase, military crew have that a pay reductions is year, then reductions flying. this company. and we volume the little also, pay We flying crew throughout cost reductions the also of

prior Then quarter. of that out So because factoring you to we're refund last benefit together yields that and the see fourth were you'd this the the year rent, maintenance the really the all from heavy and enjoy to of those of excess year. going if strip higher volumes things

Operator

Your Instructions] Chris comes question next Susquehanna. from line the Stathoulopoulos [Operator from of

Chris Stathoulopoulos

spot response want sure you that block heard Scott's of just Spencer, to is said the your tied X% to Okay. what book to hour to market? in question, I

Spencer Schwartz

rough giving hours of how Yes. out. just We're the block Approximately. break approximations

Chris Stathoulopoulos

Do seeing these So and we're some more with respect players hybrid, what some index. Charter with competitive or Discount pricing. think the of where to that you I'm in Do set rates guessing to in tack the deck you been in main opportunity move to this rates market, enough those an ACMI to Delta let's the there's players players load more this that of concession there's some like to derive natural contracts, the or the are to these that or think of as market factors. getting lost you've marginal market? Alaska backfill been some the here share rates, say, the where have into

Spencer Schwartz

Sure, Chris.

about for as rates, they're long-term talked are we the very arrangements charter rates. attractive these So

Atlas, the entered great as time. number we into. we've driven you a contracts far that certainly contracts They're business of think good As of over being can is to and period see

don't far As talking about to that's talk as place other about really I our think that. carriers,

passenger the were operators, were generate the escalated especially forward, government April May, that's down decision, them them employee to U.S. the not obviously, that passenger when the on. costs, and and a the they that are because the they pilots As really makes more as government of It yields operating helped may planes like those current. really can yields business down have But if going passenger, come their essentially comment in was things. perhaps for business have or is place our helped really make be And And some so government as helping those far isn't much. airlines they may But freighters. keep sense. take there to to as when advantage and U.S. pay and funding as

John Dietrich

offering It's passenger well, and proposition inefficient. charter their loading service passenger not, main total there costs standpoint, in And sense aircraft and using that the and to weigh that contribution, price we've loading would the a it here comparable bring and the I they'll bit for is distribution they But on can between The example, capability as type from value do we and get the them we to to not little for point which makes unloading but freight, from if do like the in product. high-demand a for of laid handling deck and the a them a assets that. a proposition standpoint, for standpoint. schedule there's looking carriers think at that But I'd variable of a a is that. The freight. for it's a value say not They're is from some our capable Yes, customers. of business of long-term Chris. we the total out bring environment, customers cover some

that would I a and the of a taking in, that and, rate as market we're So notified. rate advantage argue, premium Spencer garners

forward market are longer-term for these I So going this and buyers an favorably think, duration, question, cargo reason for contracts which and business. speaking you these the the if sophisticated Helane and earlier of our who are a capacity to contracts. these term, to position air to the to durations that I are -- of for asked look taking And long for committing some think speaks about and

Chris Stathoulopoulos

Okay. And then or my John Spencer. follow-up,

natural with more opportunity this as COVID. players a a But let's a in in for market. cargo this here I is operators event XXX is So certainly the unique say, or, hope year the once

with main guessing, you deck Capacity due So you've to that I'm competed X expanded via years. for e-commerce. with back, have, flying X to say, let's Amazon coming isn't

don't there. IBC. this of any course, put there, have the have but program. outstanding you And CBA the around reduction cost think out that's targets you with I You

together, years. to start next leverage -- you we X to something to hit your XX% growth assume to put So to the see ASMs can't levels Xx What's pre-COVID why work EBITDA X -- for closer X.X for to then all we hopefully for, to say, and down these driving we going Thanks. to passenger XX% and times? X airlines the years, and X are not

John Dietrich

very also the optimism I of view. identified, mean us. speak So you for favorably number but the a future with things again, We're with looking to realistic

the debt potentially. could quickly, immediate just get have advantage about the into that market kind absent longer and a talked you fundamentals that can the should things of now. there continue COVID regulatory we pretty ruled future, out impact we about. about strong performance and talking into of As disrupted taking But haven't that were pretty when coming much mentioned the environment, really ratio, we're you're this, the And

the EBITDA EBITDA plan the future, about grow on growth, and focus we're how So we continuing we excited going forward. to to

Operator

And we line have Research. question Scott the Group a from follow-up from of Wolfe

Your is open. line

Scott Group

military Hey. Thanks fourth down? just then was recovering? that military, guys And down it the something How in on update about we the get much is you So can much an quarter. how business said

the when that's starts. fiscal think new I year

an update next year. on So the expectations maybe the just us for share. And fiscal give

John Dietrich

our the cautionary the families as that's side side. and I There from issued. impacted. continuing give overall go, toward cease, get ease the down, and order a out, was I'll didn't but of but there were slowing. stop permitted. somewhat started So was was the The both into spread they the of then of in on can the a slowing beginning the passenger to that movements troops June, of passenger COVID. at a move scheduled the how stop military order to was view and and DoD an essential result Cargo restrictions steady. protect that started It But to but exceptions and to business, and their particularly specifics of end some move passenger the military expire to spencer the were more played numbers. heavily of and lift more And was were cargo, they of June the

and And So we we've that trend return. continue. expect seen going both forward, cargo to passenger

to normalize to pre levels cargo We a the continue coved were at demand passenger expect what to strong pace. and

you numbers any if share. have So you Spencer, know specific to I want don't

Spencer Schwartz

add, fairly remained covered Scott, just share I'll really steady calls entitlement then XX% think or well. I passenger at what both to our and flying. trends that And for has cargo XX% the military a John the

get back previous this year to expect down was. be we year. the John we to of to it military in was what But said, from overall, expected So flying as previously where it kind

Scott Group

you, then one for Okay. John. And just last my

sheet? going picture not cash. be to anymore. toward of Are to going generating free And all balance be buying is going going Atlas longer be future is planes? any going for What's if bigger to So making lots Or be term? this XXXs the you the then to Boeing

John Dietrich

Sure.

part looking at opportunities And with cash. So of our we're going it. to be aircraft certainly all are

able look part Our opportunities. in those what fortunate And of balance be absolutely sheet is beyond. at We're position to it. all a may to lie a

service production. I posted the Dell 'XX. the And to I that we're you After sure. some to announcement great Boeing's commit got of forward has see and to great continue sad keeping that. cease think, for a in included. They've is production, So regard With is us the toward to queen Atlas XXXX, discontinued on look to Sky the Boeing included to committed those of airplane. delivered, of But XXX aircraft. XXX the the last it's customers And UPS end one to

freighters, standpoint. time, partner. it from directly, for that is So with they'll only continue is them. it's example, They're they're a range. airplane, XXX, the need parts no believe Boeing age, to It The has time to I other a in capability, are they've going that freighter pure told right the that the value done still payload still personally, capabilities over loading no demonstrated as old well. generally not and that they've nose a XX-year time, great engineering the in support and They've XXX-XXXs, great and XXX-XXXs have the the us for over has, to think, I and the but an scarcity loading period. spare of And including the past

standpoint. a and freighter DASH-Xs the market from today life in So the left or the they've got a best capability long in technology

XX XXXs the forward. lesser useful years. way beyond XXX-XXXs, And about a is in aircraft, life recall going which much good lived feel we the you'll So their a

remain optimistic the we bullish particularly. And frankly, our aircraft. all So the and XXX, but on fleets,

Operator

Chris the next follow-up your from line Susquehana. Stathoulopoulos of And comes question from

line is open. Your

Chris Stathoulopoulos

Spencer.

So levels, charter the the benefited you reset in but minimum guessing from pretty know you book stronger quarter? your and the here in significant. I'm free your utilization cash of ACMI flow above yields, quarter second have are much how I

Spencer Schwartz

turnover so that. to But customer expenditures. lower is about year. coming like record free second cash in any we strong of particular earnings, contracts incredibly from core staggered usually enjoy year. don't We flow don't handful we basis, talk try a given ACMI quarter in have And really higher in our lower typically, There's capital any on And many cash to costs, right, we about the have a you're free too due flows. them expect

Chris Stathoulopoulos

on last call And all X on you the where, situation lived? movement, the John, U.S. from stop has the in at being been planes described I utilization that scale around order on the engines. levels Or five DoD we are still think, on firing the

with X, are piece? think X- said we that or a where I you

John Dietrich

are in the of expected and operations to levels. effect. And stop normal more levels order returning is movement The Yes. longer no

right COVID state impact forward. But now, that that's of play. the Now could

Chris Stathoulopoulos

a there any if loan were attached it? to no warrants And question, anything payroll Last grant program has Atlas loan Spencer, I the straight applied attached Or Okay. was could, Cares? for that support? under and with the under

Spencer Schwartz

it's program maximum Atlas. The amount Atlas at small promissory but an loans. well that be advertising cargo Atlas in kind between as are of participated that. a a is shares, amount settle $XXX.X with those to net Up of XXX,XXX on of would associated can Chris. aggregate there grants Atlas the basis. the shares amount non Sure, that choosing note. Act And warrants unsecured It's comprised carriers. southern. received was air CARES of Yes, available to as million and XX-year loans as We

you really And that to never so amount. get

never net either that stock it's issue shares. and So so you'd or cash net really many

So the available cargo carriers. Act certainly in yes, participated to we CARES

Chris Stathoulopoulos

loan Have applied That's the you payroll program, support. for …? for the the separate

Spencer Schwartz

sorry, that question. your was I'm

Okay.

we No, not. Chris. Sorry, did

Operator

turn questions at the closing back call are John over I there no some this Mr. remarks. for Dietrich, And further you time. to

John Dietrich

thank Atlas, we you soon. at hope you you, would We Thank safe, And like behalf of and interest Great. stay I We Great. again today. and very our us time appreciate Air you sharing employees look Rob. you with to your with Worldwide. for Spencer all to you Atlas forward in on Thank your speaking here much.

Operator

you Ladies for call. today's participating. and Thank this concludes conference gentlemen,

may You disconnect. now

Atlas Air Worldwide (AAWW) 8 Aug 202020 Q2 Earnings call transcript