Atlas Air Worldwide Reports Strong Finish For ’06
PURCHASE, N.Y. - Atlas Air Worldwide Holdings, Inc. (AAWW) (Nasdaq: AAWW), a leading provider of global air cargo services, has announced record quarterly earnings from continuing operations, highlighting a year of transition and achievement with the Company repositioned for margin improvement and earnings growth.
For the quarter ended December 31, 2006, AAWW reported record quarterly net income of $45.7 million, or $2.16 per diluted share, on revenues of $416.7 million. Operating income of $81.8 million and pretax income of $74.0 million included a nonrecurring gain of $1.0 million on the disposal of aircraft.
For the full year ended December 31, 2006, AAWW posted net income of $59.8 million, or $2.83 per diluted share, on revenues of $1.476 billion. Operating income totaled $152.3 million, including a nonrecurring gain of $10.0 million on the disposal of aircraft. In addition, pretax income of $93.8 million reflected both the gain on disposal of aircraft and a one-time, non-cash expense of $12.5 million associated with the early retirement of outstanding debt.
“The Company is positioned for an exciting future, with a winning strategy that is designed to meet the growing needs of our customers and to further stockholder value,” said William J. Flynn, President and Chief Executive Officer of AAWW.
“We actively manage our assets, and we have aggressively resized our fleet and cost structure to maximize returns on our asset portfolio. Our proactive focus on the quality of our business achieved improvements in operating earnings and margins in the fourth quarter that offset declines in total revenues and block-hour volumes. In addition, the mid-year prepayment of high-cost debt has reduced interest expense and improved our strategic and operating flexibility through the elimination of restrictive loan covenants.
“We are also delivering on our Continuous Improvement initiatives, which focus on strategic procurement and operational efficiencies to reduce our cost base and enhance performance, reliability, and quality levels across our entire operation.”
Continuous Improvement initiatives accounted for more than $22 million in savings in 2006 relative to AAWW’s 2005 cost base, including nearly $14 million in the second half of 2006. Primary sources of savings have been maintenance, both through improved internal processes and lower pricing through competitive bids on external airframe checks; fuel, where efficiency initiatives have reduced consumption; improved parts management, which is helping to minimize loan/borrow costs; and strategic procurement processes relating to all other outside services.
AAWW anticipates that it will achieve the majority of the $100 million of Continuous Improvement benefits it has targeted during 2007, with the balance in 2008. The Company also continues to identify and expects to achieve additional cost-savings opportunities.
Mr. Flynn added, “Our order for 12 leading-edge, next-generation Boeing 747-8 freighter aircraft, with rights to acquire up to an additional 14, enjoys launch-order pricing status. These aircraft will provide a significant value proposition for our customers. In addition, our landmark, strategic partnership with DHL will significantly enhance the value of our scheduled-service business. We look forward to closing our transaction with DHL as soon as we obtain the remaining necessary regulatory approvals.
“We are also focused on evaluating potential organic and strategic growth opportunities that build on our capability and expertise as a flexible services provider of aircraft and operating solutions to the airfreight industry.
“The market is strong for ACMI, where we are the world’s technology leader and where demand for long-haul, intercontinental, wide-body freighters has outpaced the core increase in demand for air cargo capacity. We see significant growth opportunities across the spectrum of our ACMI services, including new customers in new markets, new fleet types, and subsets of our aircraft and operating solutions.”
Mr. Flynn concluded: “We will continue to be an innovator in the airfreight market, and we will continue to evaluate an array of opportunities to grow earnings. We are a high-quality, flexible-services provider in a growing sector of the global transportation and logistics market. That combination is attractive to strategic partners, such as DHL, and will continue to form a basis for growth opportunities going forward. Our team is focused on executing our strategy and delivering on our plan. AAWW is positioned for an exciting and dynamic future.”
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