AAWW - Earnings call transcript Q4 2021 | Atlas Air Worldwide Holdings Inc.

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Operator

Good day, ladies and gentlemen, thank you for sending by. And welcome to the Atlas Air Worldwide Holdings, Inc. Fourth Quarter 2021 Results Conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. advised conference be be Please Instructions] that may today's recorded. [Operator to I speakers. conference would Instructions] turn now Air [Operator Atlas like the our over to go Please ahead.

Ed McGarvey

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

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

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

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

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

John Dietrich

been entire excellent financial was earnings forward, for our team hello, environment. hard professionalism joining Atlas, At moving and and our have pleased achieved Atlas company. labor business a keeping their by on and call. pilots for our both the our mind, that have that thanking these achieve with in work, we agreement outstanding able everyone. leveraged quarter in in very and so. Ed, aircraft to we capitalize operating is wouldn't you, like tremendous to do this their greatest another capabilities our their significant very ground, year and strong in contributions especially strong to Thank yields. efforts to air to without with And for fleet start I'd fourth operating demand pandemic With to long-term global utilization strength we're Throughout our our performance. we results. Thanks higher our deliver world-class continue on recognizes XXXX, services the XXXX and and the and increase airfreight aircraft people to

agreements, impressive This these earnings hours, opportunities yielding very block reserved an strategy, the with and long-term FedEx, including of Quite Atlas our list strategic secured diversified new JAS, As relationships press our record we spot in all UPS. HP, Kuehne+Nagel, XXXX. morning, SF we've incoming Consistent record customers, Inditex, We've charter global release not of record contributed reported agreements. Cainiao, deepened high revenue in our Schenker, but capacity four Flexport, enhanced Group allocated only long-term advantage now take DB and also long-term and customer CEVA with XXX-X market. in numerous delivering our freighters We've to our under to Geodis, valued and placed this DHL, Logistics, Icelandair, DSV, also contracts all with base. and

mark block adjusted than and adjusted $X I'd $XXX over fourth EBITDA of quarter our to delivered from billion hours the more $X like full of more milestones first review share we revenue our million results, flew several we XXX,XXX year generated performance, Before record than exceeded net income. billion

And agreement to Southern very performance. with I to as Atlas Air. financial in bargaining We're to now a as career Air's the Southern and now in agreement Atlas pilots we addition even We've connection completed Atlas with joint this and reached merger destination. pleased the pilot with under certificate. with merger mentioned, strong collective have reasons single place. operating choose our new In long-term of effectively more their for we're It the pilots provides operating Atlas brand this

chain environment related and to team and with The With global our safety that a we're XXXX supply Atlas and obstacles. our playing the priority. transporting significant our high of marks in we're I'd challenging supporting remains service around of like the XXth role persistent year strength, delivered as of goods operations world. our milestone in quality a it's resiliency very And essential customers. global we pandemic the business. the business Despite model, proud our note flexibility, operating to top for

in we've industry service the Over of the a perspective marquee From broader diversified array offerings, of these fleet, XX a years, team customers and built an business. leading growth base best a noted, of that I placed all our we're as two Cainiao, for operate contracts. new excited one and under Inditex Kuehne+Nagel. one for four freighters XXX-X incoming for and and We'll we've long-term

expect we of of and these delivery between aircraft this May year. October reminder, a As

for We there strong the customer also deliveries the of and look recently forward four is new to freighters announced demand. XXX which we placements very

first delivered year the three fourth quarter of late of and XXXs this these XXXX. throughout more be expect in to triple We the

Asia ahead. years customers fuel which and our XXXX in America. our with global especially freighters and purchased of at and e-commerce South end these aircraft, we’re of in returns the freighters are investments fast will consistent also we long-term for of dedicated freight capacity, announced, And were markets, for noise These us. six XXX-XXX particularly strategic plan will air with drive lease leases and in of such Atlas efficient on growing growth from previously environmentally burn international long-term our a perspective, modern, their strong our purchasing as another provide year. the to course demand during existing underscores the confidence Acquiring XXX-XXX As that widebody formally other five the freighters this during

outstanding to turning Now Slide on our X. results quarter fourth

Our grew adjusted to earnings revenue new and records.

reflected aircraft and reflected results impact fourth the reactivated operation yields one we numerous during XXXX. extended year fourth Our the the of also that and long-term higher and of new quarter contracts They freighter full of XXX customer utilization. increased

expense. performance by quarter from heavy were higher pilot fourth lower benefited agreement. driven These partially new also Our costs our benefits maintenance offset by pilot

first one, Now moving continues in environment the a Slide while operating seeing quarter. momentum very pandemic on make solid to we're X, the to the challenging

new will customer expect favorable. limited a air continue while industry entering the market bottlenecks to as constrained conditions particularly capacity, exceeding subdued international continues be capacity. of and volumes We are to key are to cargo trade Global demand Capacity driving freight aircraft for efficient pre-pandemic air be there retired. ocean supply less chain and levels. cargo at belly Passenger worldwide remain demand other are and older backlogs ports freighters number on remain lanes

levels. also look low the today freight growth. inventory of pandemic spurred we bodes businesses which the highlighted very speed to also address Air well express As what and chain, and a And change as e-commerce The Cargo global to beyond. provides for see reliability has air and value supply it’s step in sustaining that

to our strong performance in quarter of XXXX. first adjusted expect that similar of we the net of with result, income a EBITDA XXXX the quarter and adjusted As first

long-term along contribution block also This hours. a about contracts, from yields, JCBA. approximately revenue or billion higher the enhanced new outlook of We including from reflects cost numerous customer pilot anticipate $X flying XX,XXX our with higher new from

including environment operational ongoing also well costs, pandemic, by employees. impacted by We and as to into as other the employees all expect expenses for flying pay for working driven continuing provide compliance for safe COVID additional including significantly a locations regulatory

full we expense depreciation the around to we For XXXX and to million. expect expect to similar amortization aircraft $XXX be year, maintenance be and

the exclude for projected approximately to aircraft $XXX to mainly our are purchases and fleet, which for this engine XXX-Xs total parts year. $XXX the for XXX that including expenditures, adding capital million we’re and components million, and For

uncertainty providing the have we purchases aircraft, to also supply to and XXX-X factors, XXX the to and XXX related disruptions payments ongoing this time. commitments not additional related we guidance We our finance. to which including to payments spare of and are pre-delivery all Due engines, at pandemic, related debt and other to delivery expect related order chain aircraft

Spencer share our quarter allocation morning. our I’d call provide fourth and results, like discuss the turn to repurchase capital program on release to the this announced our we I Before more strategy detail to press over in

consistently stated, we capital. allocating and take we’ve a balanced As approach to disciplined

to shareholders. Our continuing capital focus is sheet, on maintaining a grow strong balance returning the and while business to

be will business, Over off significant important growth efficient in including aircraft years, we’ve investments remain Most of for lease. future. our the the acquisitions demand orders high made we’re aircraft further and modern recently, we’ve the and Southern number in investment XXX XXX-X and XXX-XXXs also investments Air. purchase our the and with last buying These of made an

now to Polar mergers to for Titan ways accelerated of always or expect $XXX repurchase Credit. end includes Southern like very that complete quarter. million approach, in repurchases acquisitions a strategic acquisitions which balanced venture the program, through pleased $XXX also million the partnerships, We’re establishment announce we’re of new the of we joint share our and our Consistent share dry by and second Capital leasing with Bain looking with our grow to successful

take and I’ll Our additional and Spencer’s enhancing Spencer? questions. your And value be to call over then now our capital happy delivering allocation pass to I’d shareholders. creating, remarks, the like to to commitment strategy Spencer. we’ll some demonstrates our for comments after have

Spencer Schwartz

you, John everyone. Thank and hello

quarter excellent and Our $XXX.X basis an reported was income on Slide On income On $XXX.X basis $XXX.X EBITDA highlighted a net adjusted million are was net results fourth million. million. X. adjusted was

rate Our tax of adjusted included an earnings income effective XX.X%.

during which per long-term Slide $X.X due average was ongoing capacity top by of partially revenue utilization which Airline disruption quarter. by to increased segment of Revenue chains, the strong as yielding less hour, including customer rate in increase our reduction CMI our flying, the fuel well the to of flying, smaller the proportion Higher market, the an of supply available demand. to higher mainly as the higher driven fleet block Volumes an ability in the impact Moving new reflected global extended profitable Operations gauge and contracts, in meet the current and costs. was X. of reduction to offset to of rose the period primarily was cargo increase billion

Leasing segment benefited volumes of also XXX-XXX operating in reactivated was that relatively our Revenue shared, from Dry the fourth during the unchanged. quarter we XXXX. John As

heavy revenue of the the now slide. relatively Significantly factors million contribution noted, unchanged. bargaining contribution Dry segment well the related segment improvements driven Leasing in agreement. partially in our lower new And was as as maintenance contribution benefit costs by pilot offset fourth positive was was to were by Segment Looking primarily higher airline quarter. higher operations bottom These joint just expense. at I collective $XXX.X the

to X. Slide turning Now

was We cash ended million. cash X.Xx. expenditures, with by Our primarily proceeds financing net leverage cash by as restricted payments at capital primarily use cash, and four primarily including from and reflected debt totalling finished for including cash modifications, issuance. the investing all payments, XXXX The Net by used $XXX and well cash upgrade partially as for and activities. flight lowered equipment ratio Net reflect operating and further for activities, debt engine XXX-X investing increase financing payments, kits. for of for our activities provided the engines used year the core activities equivalents offset pre-delivery freighters, offset for spare cash partially

We continue financing. to approach disciplined a to apply

is assets, debt rate in majority aircraft rate, secured which now at of related a very our is of All average coupon And low a fixed by value excess the our debt. have X.XX%. weighted which is with a the at

and earlier, strengthen As to and us to said to cash balance our business, allows capital strong a shareholders. sheet capital events we return which committed navigate opportunistically to John unexpected remain deploy balance,

Now, like to it I’d turn to John. back

John Dietrich

an on finished remain you, And we to conditions very Spencer. certainly on and was a note. X. Thank strong it excellent XXXX Market year moving Slide strong.

deliver and advantages. leverage to competitive continues our team Our

have and precaution have the is sheet, the operating and supply market strong question, protect very our the of Atlas to the unrivaled the employees air At first aircraft to and a and take evolving freight formidable to of balance a capabilities. up, business point operator, well operation moving our our sum We customers, to the unparalleled To this future. global positioned please? it every customers and today forward. keep all needs we serve And network fleet of may in continue chain we’ll global

Operator

question coming And Labick of line CJS with first Securities. Instructions] our Bob from [Operator the

Your line open. is

Lee Jagoda

morning. this Good actually it’s for Bob Hi, Lee Jagoda morning.

John Dietrich

Good morning.

Spencer Schwartz

Hi, Lee.

Lee Jagoda

your of just of obviously the think the each us then kind fleet four with forward? compared additions, the we impacting model next year. So averages? should profitability relative four XXX-Xs the going and types starting you understand the to those fleet aircraft Can XXXs of announced how you help And that about

Spencer Schwartz

Sure, Lee.

valued these They XXXs, market the are and aircraft is payload. where with so superior the XXX-Xs so capacity are outstanding constrained. the So in

up These seeing what long-term to they in are with have also having we returns, As that a we’ve But announced of say deliver customers. agreements would signed today, the honeymoon. elsewhere aircraft what I our similar maintenance will you’re called we’ve business. benefit

and any wrong the So typically warranty. in the the go with years, aircraft anything by first maintenance potentially could aircraft don’t few covered require that is

So their in very for eight about better They need years. performance is to don’t strong early decheck performance. even the so years six and to

Lee Jagoda

the think the environment. then about going several Got additional the net the a impact Are sounds as And just year next just do any deletions or as expire either over thing XXXs in buying there fleet it. that they should lease that this like follow-up number off forward? this we years right to

John Dietrich

Lee, it’s John.

But anticipating aircraft any some advantages several we’re lease coming about our here deletions. later buying, one not are time. lease, as of is, off of in we are even coming the of fleet off We’re of some talked approach our which

a off than hedge But see nothing we’re changes that’s hoping us, where as we would market in run it those airplanes, to scenario the we describe of remains kind which a of continue allow capacity. as we’re and expect, in going fewer the to capacity our demand If to built a we what if hedge kind built some operate it’s other to have but So strong to But I’ll that. airplanes. expecting manage won’t. on

Lee Jagoda

Great. Thanks queue. will hop much. I in the back very

John Dietrich

you. Thank

Operator

from coming line question, next Chris with Susquehanna. the Our of Stathoulopoulos

open. is line Your

Chris Stathoulopoulos

Good morning, everyone. Thanks for taking my question.

these there is transpacific with mix that’s, seeing typical transatlantic, more wide example, towards levels. of easing are restrictions moving body that back, whether in of you the are travel lanes versus And So passenger and flights mix coming belly terms freighters what where for back capacity?

John Dietrich

capacity tightening an the back, does that particularly back of likelihood gradually. And the when But been before. it’s that substantial belly with which don’t has transpacific we’re transatlantic back capacity less that certainly passenger in volumes what seeing if impact So the for other thanks capacity flying, down typical marketplace. comes point the of wide settled some think guess, which right even I’ll time mentioned point see start my and not remarks, will to than manufactured with flying? countries, I is tremendous us, levels. And e-commerce, China, tightening the expect. that And at I of point it exceeding most air back many Chris, for to further coming the a people for it they’re outlook make your and that what’s levels, I We’ve lanes be into goods further. than come transpacific. when demand are frankly shared we on And even it going has we I Asia going body come volumes still or be and going freight expect question. to exceeding, cargo Yes, come now, slower is Is pre-COVID back of as are frankly, Frankly, in up, quite Omicron pre-COVID to? pre-COVID levels. is to in capacity and And to would where trade

maybe have through theory capacity of of twice dedicated really continued but of the COVID like continued we Security of that So going air marketplace, vulnerability substitute as of shy. I for the belly, variables to takes not that freighter and more once some dedicated bitten more think complete security with coupled in that kind under and value forward. belly the uninterrupted customers passenger passenger see the other that a and freighters capacity, out the freighters

the why passenger are bodies freighters of the number of come is wide to even going think there a So reasons I increase mix when back.

Chris Stathoulopoulos

looked last year. have I’ve And XX-XX was is time in belly last numbers out to half or think there handy, that’s you guess I of you I the number think mix had freighter the around if capacity the or now? back you what is of a seen versus

John Dietrich

percentage Yes. take split Look, a or give few XX-XX pre-pandemic a points. it was basically

as XX% will go that. it as expect forward. favor I air freight a will we But certainly say XX%, we think said, whether can’t than sustain at it I more, I better

Chris Stathoulopoulos

I get here. If more Okay. could one in

that seems think or with I since you’ve was each increasing XXXX, March quarter, become it less spot February payload So sensitive. it of or

So as are So months, And hours if much make six remind get then could spot lying? now. duration, of up? next block how much And does know lease every be about we you what’s month? us, the this you cetera. meaning beyond would think shortest Thanks. block your hours et and ad-hoc term I today what quarter how three, question your then, of But say, that or a

Spencer Schwartz

it’s Chris, Spencer. Sure.

first America is approximately in ad-hoc about in of spot. the block didn’t I overall understand, about your a of the spot U.S. question So I hours. but expirations. then question, of XX% XX% and It that around about give are our and charters, second for And the percentages XX% X% with I’ll ACMI, Military, hasn’t South your are how terms much flying. about is changed completely in you’re in hours leaves think block was long-term X% X% is asking lot, charter whole to

doing passenger does flying trade for that not and the when traditional go also lanes the said go just important most this the majority a in. to in belly additional that John long-term during that more is John fourth we flying. and operates them XXXX. few it’s as And of added charter long-term back quarter, contracts, would XXXX flying charter even we’re now the really of through I that as have important extended pointed out, we The XXXX, but XXXX, increased Our capacity it’s contracts through price, them really it’s if come say of that contracts note

this And traditional that comes so further lot because a airports. away keeps won’t aircraft back, passenger it from probably when moving and further flying impact of freight

Chris Stathoulopoulos

you. Thank Okay.

Operator

Our next question Truist Moore Securities. coming with from the line of Stephanie

line Your open. is

Joe Hafling

Great. to fourth be a and This Congrats record is actually XXXX basically XQ on quarter, Joe record XXXX. for the up on Stephanie. what’s shaping record Hafling

John Dietrich

Thank you, Joe.

Joe Hafling

where that Maybe that seesaw? the contract. just relationship that guys you do that feel giving of a spot quick you the sustainability with you versus think the want profit about of continue by question some How long-term of or not do think air kind spot by visibility going given managing business Do and that follow-up of about rates sort sort Or up of right to is now advantage sort more you you managing taking contract market are? essentially the forward? the freights to where are grow on just

John Dietrich

Yes. Anytime, your of capacity that there’s It’s we to long-term you’re above. little charter spot the number all answer ability My things thanks. Joe, a is on the drawing yes. do. of it’s market. play bit from But the of a dedicating

have can market and charter the we our We we’re opportunity to an one-off flex charter, up to increasing network itself. talk we a able utilization, – when a it the to network we and if allows do about integrated spot from that Asia as presents to time together time piece return

us capacity. we we the fixed new frankly newer a that on well these you do bias capacity, table But in that as trade do continue well. of And that, we’re one-off their charter strong So We that they’re advantage – the even something of an up, as with a customers excluded the within do Sure. we long leave to capacity the we that’s the have do really for their They fixed for and quite manage they Do from our that flexing if right think to for especially market Similarly, the customers mean charter, is fixing spot a that networks, network same. customers our and spot whole and one-off charters. we’re the we But look, they which though market? have us, a necessarily as some business yields. taking take value creating opportunity retain. see trade-offs. towards doesn’t

Joe Hafling

freight supply sort disruptions impact a your on. rates your just be Great. generally in to to ocean then as supply air chain outlook of sort easing trade follow-up normal with ease? question. XXXX lane of question, I of markets longer-term both but maybe might through more that. know would volumes not, of that And of can on and not of the and expertise, thinking take that Thanks that What as kind what and chain back freight And freight necessarily how be get for alternative just going generally? air a the maybe how or to velocity ocean about quickly capacity sort for

John Dietrich

there they we bit, of Sure. It’s Look, disruptions. kind what there are rely certain is air moderating it’s that high the much. seeing from contributing backlog their of can made intelligence production between variables anywhere, in maybe we’re reliability more while offloaded. big rationalize there’s very but ships And artificial that and change may down kind in news customers bit some that port the that be and air it’s cut freight. they variables trade-offs the my air are ships Including think step and of levels to a freight at of in market can goods XX demand inventories. on can to expensive, to and as a other a number data we to air yes, of of for comments waiting some still XXX on an and produce on little have I to be ocean little customers But make are standpoint, hear costs freight, exchange the not days if that be their their utilizing getting speed increase of freight play the

shift, good continues, not of air. In customers that. of to the longer the be speaks there very some make And completely, lessons backlogged shift long more that we’re the are think freight. go it but I seeing air ports number some permanent think a are run, will ocean learned for of as capacity the I permanent for well a to a doing ours And the sophisticated who favorably So that. there are and

over Now things get of freight freight just time. will there labor meantime, a And together? Yes, the In congestion, happens air the when not is improve act the that’s the it’s to I that’s arrives truckers, it’s think ports are great backlogging. all – and I their port But will time. take think the solution. going shortage what shortages,

Joe Hafling

Great. Certainly you good That’s for painted had. continuing for I the so everything XXXX. picture to color. a here pretty Thanks much freight air

John Dietrich

And it’s are Sure. one are I’ll labor coming this aside disruption, unionized highly availability negotiation up highly putting a their year. is, labor point contracts last and make their unionized ports labor – the understand for I

So Operator. there’s you, challenges Thank everywhere.

Operator

question Our Becker line next coming of from Cowen. the Helane with

Your open. is line

Helane Becker

Thanks everybody. very the And thank for much very you time. Hi much operator.

questions. of couple a Just

So an honoring last China big everything crews your given John. the out There’s what’s agreement were there’s the the on pandemic. you And bilateral Can increase capacity and in going Pacific Chinese with of in government there? any like give point, I on to your having us going the Are respect seriously you to passenger you airlines. with getting a issues in year? update isn’t be the delve just having on to

John Dietrich

points other Kong we’re Hong transiting Hong in lay pre-pandemic crews us. the a where Kong there, over. Hong But region and for in to laying No of through testing Kong been one Kong’s requirements adjusted those Korea Hong are over network. previously our our some countries, Helane. key Yes. and rejiggering material and disruptions avoid in working hub to we’ve network where layover certain quarantine through was We’ve There our

been not keep problem able So a we’ve moving. material there, to

on up, as puts great little it availability, team’s the But been doing crew Sometimes flying. because are a a lucrative as job. it’s I prior Pilots efficient not pressure think picking network. overtime the

for issue an been really. not that’s So us

and regulatory trade China. the is the environment, to critical movement international the the all of cargo and economies, in economy watching economy We’re so U.S.

an in haven’t passenger like something keep it’s seen disruptions you on any referenced the eye on. we the But – side. there, we So

Helane Becker

all? Okay. with out And then virus of did you in calling quarter, the sick because – have at crews you early the issues

John Dietrich

Sure.

it. by pushed January immune on that. both crew, abide prevalent not we was prevalent weren’t widespread think our and we employees period, else. I during Omicron pilots, tracing, But are through managed into thanks was we so on that there was from different. contact frankly, And my everyone every flight so and frankly, to particularly everyone were pressure and Omicron our there to contact again, through But us there workforce, that no pressure just industry, mid-December till tracing all that put because so that necessarily rules infections, pretty for but strict we through.

Helane Becker

those Got How are the squish I on you that year? coming you. talked financing PDPs, decided And have to Spencer. you that you for be then already could just how about respect in one – with already aircraft aircraft maybe financing more going are if were this on to Has but financed?

Spencer Schwartz

Helane. Yeah. Thanks,

So we’ve paid all of the PDPs now.

market to a be is LOIs, for we and LTVs The it’s and good attractive really us And these aircrafts. so already financing strong expect we’re working with rates. signed high we’ve lenders, environment

will have So we we delivery. certainly as place take that in

Helane Becker

very Thanks you. much. Thank

Spencer Schwartz

Thank you.

John Dietrich

Thank you, Helane.

Operator

with Scott our line the Group from And coming Wolfe of next question Research.

Your line is open.

Scott Group

guys. Good Thanks. morning,

aircraft half, it? directional can get earnings in. pilot flattish perspective back rates tough, you coming the least Is in was the you year? to comp on flat? like you thinking in the costs year, some are guided quarter. at can you’ve you think on if Directionally, share do wondering lap the How you the I will it grow this So more earnings first about

Spencer Schwartz

provided to So of I’ll thoughts. One utilization. continue we couple Scott that the first a increased for guidance quarter. have is give only But we’ve

It last strong. XX% is extremely up year. utilization Our was

course from into year, so We’ll whole renewed all but not have XXX, of that’s in that the the the have have new We we entered will XXX-Xs We’ve a really at one that. coming contracts and throughout the of be the end year. four the of long-term of course lot those. of coming

big XXXX so are maintenance costs all pilot to question, what we’ll be expect of we’ll then have new the because now. Offsetting like the of full some contracts. right be of agreement. similar. fairly And those of higher we to going that said And – in pilot is things, a the yields that’s year remain enjoy We’ve those course,

to As the to Yields Yields much environment yield is John tremendous about, so the solid that bit for is be a in charter year the demand there’s are of and strong. continue But last year talked first so wildcard. stronger, this quarter the year a compared progresses, yields. elevated. of quarter as first and

without information. some So sort any are line those providing bottom thoughts of

Scott Group

like That’s fair. is hours, it’s ad but guess X% business that saying the sounds big only the follow-up maybe if I mean, it is factor. hoc you’re I of swing the a

does it’s the the talk of So this talking of ad hours, in spot the hours, reset if Does start revenue the about, that be fixed? XX% that be, fixed? that longer-term charter about And that – solutions percentage pricing Is what sort – charter? hoc? how may there to it market if long-term starts of the might fall that you’re on rates is and X% pricing the the then or is maybe you can the is helpful, of

John Dietrich

on fee-for-service Spencer. make to comparable goes there, up these agreements. it agreements agreements or provide would fuel down, adjustments And fuel, the start I’ll there. number if can analogize there’s ACMI-like that adjustments fixed. long-term we we for on is Scott, fixed, the I underlying that is ACMI. pricing But to but fuel the

Spencer Schwartz

offsetting the have going Scott, any I revenue long-term yields that would expense because through to the is there’s With to that regard that to have only those. programs, as we said, no XXXX. are – And Yes. don’t add charter thing I contracts

of ad it happen. swing the to when hoc already spot yields market. So sort comes the factor charter a going flight’s to The

or increase right the in can bottom line. decrease So the to yields go

it can an have outsized effect. So

these in an lot volatility our impact we’ve a have But to certainly to go long-term our So when down, lot place contracts. the and or really put it again, still, potential line. can up we’ve in business, yields a done bottom done on minimize

Scott Group

mean, I I figure rates at what everybody’s some guess trying I to we’re normalize. to out, out is, trying right, figure these point, what think will

to Now a grow and you’ve done the you’re fleet lot. stuff going

how whenever that what if You’ve knows think maybe what like do changed do rates normalized think you normalized – little to you like Who but what earnings bit, about a you mix that? come you down. about the margins, do these start ultimately is, – think

John Dietrich

So let me start, Spencer.

differently, be? what time you’re anytime new it don’t pre-COVID or say yields rates terms any back about going see would say soon. In the of, when going I what’s levels normalizing normal I I slightly yes, talking And soon to to would

significant have mentioned, express e-commerce. you’re creating that’s of and to continuation continue As demand going growth the I That’s to in going to grow.

lessons COVID, learned from have You I as mentioned.

all to have on companies those You going inventories willing back that’s in air dedicated not so come overnight manufacturing freight, dynamics I and to my fill And for view, in roaring new not we’re as play look and base is take see, is a that customer an pricing – is forth. And to whole capacity. power. think,

think in a bit. So what moderate little normal those spot I the factors, and rates, for will Yes, be? the particularly will new all things normalize

the agreements, on But step closely. and there’s long-term that watching We’re ACMI charters change. been a

will So keeping we the to normal look forward posted new you on what be.

Scott Group

right. Thank it. Appreciate All you, guys. Okay.

John Dietrich

Thank you.

Spencer Schwartz

Thank you.

Operator

with Our next question Barry Asset from coming of the line Management. Sage Haimes

open. is line Your

Barry Haimes

much. very thanks Hi,

breakdown you made manufacturing from places Vietnam of passenger to comment China on you to of we’ve move terms at in lot same like follow and Thailand. airports. share proclivity you Thanks. numbers there Asian freight we about any to areas on a up lot seen makes between have passenger it flights. of traditional a look these I some of the where wouldn’t have when delay about moving Just freight can and that Asia, But wanted the then that? sense, And are When think away

Spencer Schwartz

more that sort trade of freight that’s the are think by I Barry, is question true. passenger airlines. lanes your Yes, out And of absolutely traditional moving operated

being built a our typical and chip sort of chip South other airplanes in to of offset business, customers we the America. don’t and than to But those improve probably try airplanes to critically expect until we Inventories scheduled things. And seen demand don’t operate airline there shortages. Atlas’ of are semiconductors, we of business, are our factories high-tech, fly is. shortage and automotive there’s and wherever fly chips You’ve XXXX. XXXX a or low manufacturers, things the and huge that all are But we beauty

we is, of be that. and wherever And go able take so will demand to there that advantage

be a the And fit size which as we’ll trade more and it’s can aircraft, our so if as airport there. traditional more is passenger long becoming operated common, not lane, in

Barry Haimes

freight ask that’s is, trying was pre-pandemic? I way do China now follow-up. how going for to around. just flying or versus get sort it percentage what’s Just to one Maybe rather a of to quick the some Asia feel of moved

Thanks. ahead. go Sorry,

John Dietrich

specific I a we is a part of have don’t China that know to coming Barry. I significant and mean, this. of number to that, put obviously, out Asia that

a to ascribe specific So to I number have that. don’t

Barry Haimes

you. on Congrats quarter. Thank the thanks. Okay,

John Dietrich

you. Thank

Operator

follow-up with a have Chris Susquehanna. Stathoulopoulos we from question And

open. is line Your

Chris Stathoulopoulos

Hi, thanks follow-up. for my taking

back question. So Scott’s go want I to to

one. I it think try to get way certainly, I’m investors, here. it’s going important different I an a but in from And

that charter values. keenly the And spot there with like investors CMI at So ACMI lease ways and there’s data. But few are interest rates long-term rates. focused guess rates, inputs residual we are typically can a look on and and I

there’s we a should start then again, the So think and spot think bottoms-up if And with your haircut revenue longer-term we few a Thanks. give you like? and rates guess we based on a net relationship spot can fleet, could charter assumption, a or which, were what look about between how areas we at rates look might automatically better on rates? help I CMI start should and to that us understand someone build

John Dietrich

that’s very capacity what but of asset, And ACMI for spot time. higher for because long-term block long-term I’ll for So also And a numbers. rates. that spot customer doubt long-lived allocated keenly business. And as our and typically on our a attractive And on want favorable charter rates includes focus response heard there’s downturn heavily for talk strived and the rates, you’re only the not ACMI strike weighted we’re then spot a overly long security dependent suffers. who’s left that’s to rates. and Spencer, willing and And long-term. But no are your balance, I to there the be you spot from focused at on always business you to charter toward start we’ve period commit to on minimum as the the keenly rates, capability focused Chris, should what is and then on hours flex-up investors a a that if a to said level the well

that. of in add there? differential want Spencer, rest of don’t the what’s kind to I to of the you Now your question, know terms any if comments

Spencer Schwartz

Yes.

in Chris, certainly you about modeling, rate question can look block your think, at hour. I the per about thinking

rate hour, got per see per block you’ve can back Now the to and that charter About X% XXXX be can will out to back the the do. flying. you of block growth that impact be hour hoc expect of that in see in hour. fuel you fuel, we’re the block we which per you ex-Asia, enjoying, in can certainly going then rate After you impact is out flying the rate of – spot ad

of is in you as flying. block from to And be rest the that long-term said, these because rates about don’t tremendous, agreements, as John simply rate We the have there. longer-term tremendous all enough for charter provide very, we’ve out so hour. able there demand significant see all demand. they aircraft just that’s is again, very should And it talked per And the have to

Chris Stathoulopoulos

of going and you’ve that Okay. you CEO plans two role before And in been very had the into for John, – sure occurrence so years, I’m been COVID-XX. you’ve the now different

looking you. endemic top what hopefully accomplish? of Thank as what to state three you to move So your, areas guess, we in focus? And are year, this I an are

John Dietrich

we’ve it’s that you, who the model. to I’m expected, powerful of really customers global you transportation things customers. long-term what one, couple continuing were but strong great And able with customers think of business my in talk last the you’re When a deliver we’ve Appreciate been I years. I to shows it. on just And some with players off market, about the our resiliency been really Thank in international of are some Chris. list those of look, mean excited of players. areas, not intentionally leverage I my about freight entirely right, a air focus focus rattled sophisticated some because where presentation

So have to And announced all customers Kuehne+Nagel. simply market, another growth Cainiao develop and as team. are what a the carriers the showing who we’re airfreight in We choices. we our are our and to ours. have with have who compete have relationships, now I’m for their we do think continue goal develop and those like for we of That’s competition. looking we number to -Xs hugely Those need We best want be the e-commerce, announced placement emerged of with that We continue of the favorable business. the of grow cross-border to to the first global choice. to with know operation we continue today they this and at we But important.

pilots couldn’t then a to to leadership pulling all were recognized focus. a overdue, mending a our labor and frankly, have strong important went And that disciplined have tension keeping right the their very all and And think pleased another from would period new not was fences that’s the with improve we through, delighted unless kind continuing standpoint, continue our agreement to these our labor closely and So the was we’re pilot of relations because of with be the I head. approach a direction. I and We point direction, announced as financial which, same the uncommon, they bring protracted capital I’m group. in the sheet. pulling a to and to union wanted to balance allocation, is third to in work without delivered results that be contract

I and strong to are may final us think Spencer’s the and not get his need in of paragraph things pandemic thrown were get invest thrown at because be us. powerful. presentation final comments and prepared future out also we yet, his We sheet, at in for our balance – what

We’re watching prices. fuel

heightened were COVID Japan, and a on ago. few put Korea markets, back were just the not just status, they watching CDC with the whereas We’re days

to So continue challenges thrown our get way, to we shareholders. to endure things provide and and navigate be those to our want prepared value

Chris Stathoulopoulos

you. Thank

Operator

from the Tree Gregg coming Eric from of line question Four last our And Island Advisory.

line open. is Your

Eric Gregg

the great repurchase Nice stock quick Three really questions. news and about program. results

about is one first the guidance. The QX

as XX% airfreight that and has freight has rates air XXXX. indexes a just for rates consistent fact capacity renewing it’s at up little all your over far that that? the Given contracts so profitability plus been year. The higher likelihood that increased the with surprising that all it indicate comments much is in that are as XXXX QX are around you’ve last that Any guidance these much

Spencer Schwartz

you, Eric. Thank Sure.

new So a agreement. we pilot entered into

effect X. and rates collective We those took September have a agreement on joint new bargaining

absolutely you’re So right.

Our year quarter the versus first yields, this last the absolutely impact in higher. the quarter are from year of yields first

rates acquired ACMI are Our higher. XXX-XXXs. We’ve absolutely

ownership are costs so the And to lower that. related

And really so benefits. are those all nice

should be things offsetting those higher cost. pilot a But volume improving. Our is

component missing the that’s think algebra I in – there. that’s your So

Eric Gregg

kind the an two stock that possibility in year? the million around the it $XXX repurchase. are of latter you of part that, guidance? – your that’s annual reload get here there thinking Is is other the through in The is on the Or

John Dietrich

$XXX No, program. – the this million announced we’ve program. That’s we have

taking it, As continue to of part of which take and returning But a making of in our is ratio business approach it. I we’re a debt investing a to of keep we mentioned, line capital a is the part as part disciplined sure shareholders it. in

So we’re about happy program. this

developments. further with then posted we’ll and keep proceed it, to We’re going you on

Eric Gregg

the Amazon their is is then the And relationship in business? more one on how exercises there And Great. have the about warrants. last ownership and progressing? And any been that

John Dietrich

moment is warrants, Amazon They’ve the great market on terms force with aircraft they’ve the but a of a customer. number the put. in turn entered to of I’ll Spencer in

With and I We’re hard I on well know their want given customer warrants. you details the that. delighted on I provide every regard pricing done quite served where to to them have some any the their expectations. transactions, warrants, meet think they’ve if think it as a Spencer, and work them to was to further And day don’t

Spencer Schwartz

warrants, fourth warrant There quarter. call was their shares led we exercised of during in of to the B, some Yes. that XXX,XXX and Amazon warrant the – November, what issuance

Eric Gregg

a results. Thanks tremendous ton,

John Dietrich

you. Thank

Spencer Schwartz

Eric. you, Thank

Operator

over would back further now to any I this to like I’m time. no call John closing the questions remarks. at for Mr. turn Dietrich showing

John Dietrich

for Great. Thank you, thank operator, you great and all questions. your

the was on frankly, future, the I reported. important we’ve the results know pleased really We’re of -Xs constituents. and about with all quite the excited our hugely the placements focus for

on happy those XXXs. forward to the now look placed and all that So taking to are announce

you Atlas safe We operator. time look on employees, of Thank again you, all thank thank and and would your with in and you so be Spencer to interest you I speaking and with hope to soon. So our your to appreciate we you forward all today, the for behalf Air. us stay like of families much, taking and you

Operator

does that you our Thank today. your conclude conference gentlemen, for and participation. for Ladies

You may now disconnect.

Atlas Air Worldwide (AAWW) 17 Feb 222021 Q4 Earnings call transcript