AAWW Atlas Air Worldwide Holdings

Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced second-quarter 2019 income from continuing operations, net of taxes, of $86.9 million, or $1.61 per diluted share, compared with a reported loss of $21.1 million, or $0.83 per diluted share, in the second quarter of 2018.

Reported results in the second quarter of 2019 included $59.8 million of tax benefits related to the favorable completion of an Internal Revenue Service examination of the company’s 2015 income tax return and an unrealized gain on outstanding warrants of $42.3 million. Reported results for the second quarter of 2018 included an unrealized loss on outstanding warrants of $50.0 million. 

On an adjusted basis, EBITDA totaled $86.4 million in the second quarter this year compared with $125.5 million in the year-ago second quarter. Adjusted income from continuing operations, net of taxes, in the second quarter of 2019 totaled $4.5 million, or $0.17 per diluted share, compared with $49.7 million, or $1.75 per diluted share, in the year-ago quarter.

“Revenue and earnings in the second quarter were below our expectations, as air cargo volumes and yields were affected in the near term by the widely reported impact of tariffs and trade tensions,” said Chief Executive Officer William J. Flynn. “In addition, our results during the period were impacted by labor-related service disruptions.

“With manufacturers and shippers taking a wait-and-see approach regarding tariffs and trade issues during the course of the quarter, we experienced a softening in anticipated commercial cargo block hours and yields in our Charter segment. On the military side of Charter, our cargo hours were in line with our expectations for the quarter and were up from the first quarter of this year as we anticipated they would be, but passenger demand for the military was less than expected.”    

Mr. Flynn added: “Although these factors are near-term headwinds for our industry, we are well-positioned and managing through them, and are maintaining our focus on our longer-term strategies and growth drivers.

“Our actions include ongoing continuous improvement initiatives designed to increase productivity, enhance efficiency, and grow the business. Additionally, we remain committed to negotiating a competitive collective bargaining agreement for our pilots. Our recent bargaining sessions have made progress, and we look forward to the upcoming scheduled sessions to continue that progress toward an agreement that all parties want.”

He continued: “Based on current conditions, we now anticipate that our full-year adjusted net income will total approximately 80% of our 2018 adjusted net income.* Despite the present trade tensions and the resulting impacts on global airfreight, we have the right building blocks for the future, including our world-class employees; the modern, efficient, diversified aircraft and services that customers want; our focus on express, e-commerce and fast-growing markets; the scale and scope of our enterprise; and our leadership position in global aviation outsourcing.”

Second-Quarter Results

Revenue in the second-quarter of 2019 was relatively in line with revenue in the second quarter of 2018. Higher volumes during the period reflected an increase in ACMI flying that was partially offset by a decrease in Charter flying.  

Higher ACMI segment revenue during the period reflected an increase in 767 and 737 flying, the start-up of 747-400 flying for new customers, and incremental 777 flying, partially offset by a decrease in the average rate per block hour primarily related to the growth in smaller-gauge 767 and 737 CMI flying.

ACMI segment contribution decreased during the quarter as increased levels of flying were more than offset by higher crew costs, including enhanced wages and work rules resulting from our interim agreement with pilots at Southern Air; additional heavy maintenance expense; and increased amortization of deferred maintenance costs. In addition, segment contribution was impacted by start-up costs for customer-growth initiatives as well as labor-related service disruptions.

Lower Charter segment revenue during the period was primarily driven by lower levels of flying and a decrease in average rate per block hour. Block-hour volumes primarily reflected a year-over-year decline in cargo and passenger demand from the military, and lower cargo demand from commercial customers reflecting the impact of tariffs and global trade tensions. The decrease in average rate primarily reflected lower commercial cargo yields (excluding fuel), partially offset by an increase in rates for the military.

Lower Charter segment contribution was driven by the decrease in commercial cargo yields and volumes related to the impact of tariffs and global trade tensions; a decrease in military cargo and passenger flying; and additional heavy maintenance expense. Results were also affected by labor-related service disruptions.

In Dry Leasing, higher segment revenue during the quarter primarily reflected the placement of additional 767-300 converted freighter aircraft throughout 2018, as well as the placement of one 777-200 freighter in July 2018, partially offset by the scheduled return of a 777-200 freighter in March 2019 that is awaiting placement with a customer. Lower segment contribution was primarily due to the scheduled return of that 777-200 freighter in March 2019, partially offset by the placement of additional aircraft.

Higher unallocated income and expenses, net, during the quarter primarily reflected the recognition in the second quarter of 2018 of a refund of aircraft rent paid in previous years; fleet growth initiatives; and increased amortization of a customer incentive asset.

Reported earnings in the second quarter of 2019 also included an income tax benefit due mainly to the favorable completion of an IRS examination of our 2015 income tax return and, to a lesser extent, nontaxable changes in the fair value of outstanding warrants. On an adjusted basis, our results reflected an income tax benefit primarily related to the favorable completion of the IRS examination.

Cash and Short-Term Investments

At June 30, 2019, our cash and cash equivalents, short-term investments and restricted cash totaled $127.9 million, compared with $248.4 million at December 31, 2018.

The change in position resulted from cash used for investing and financing activities, partially offset by cash provided by operating activities.

Net cash used for investing activities during the first half of 2019 primarily related to capital expenditures and payments for flight equipment and modifications, including 767-300 aircraft and related freighter conversion costs, spare engines and GEnx engine performance upgrade kits.

Net cash used for financing activities during the period primarily reflected payments on debt obligations.

Half-Year Results

Reported results for the six months ended June 30, 2019 reflected income from continuing operations, net of taxes, of $57.2 million, or $2.21 per diluted share, which included $59.8 million of tax benefits related to the favorable completion of an IRS examination of our 2015 income tax return. Results for the first half compared with a loss from continuing operations, net of taxes, of $11.5 million, or $0.45 per diluted share, for the six months ended June 30, 2018 that was primarily due to an unrealized loss on financial instruments of $57.8 million.

On an adjusted basis, EBITDA totaled $204.0 million in the first half of 2019 compared with $219.3 million in the first half of 2018. First-half 2019 adjusted income from continuing operations, net of taxes, totaled $31.8 million, or $1.16 per diluted share, compared with $73.5 million, or $2.62 per diluted share, in the first half of 2018.

Updating Our 2019 Outlook*

Reflecting our first-half results and our current market expectations for the balance of the year, we expect to fly approximately 330,000 block hours in 2019, with about 75% of the hours in ACMI and the balance in Charter.

We also anticipate revenue of approximately $2.9 billion, adjusted EBITDA of approximately $520 million, and adjusted net income of approximately 80% of our 2018 adjusted net income of $204.3 million.

Aircraft maintenance expense in 2019 is expected to total about $395 million, with depreciation and amortization totaling about $260 million. Core capital expenditures, which exclude aircraft and engine purchases, are projected to total approximately $135 to $145 million, mainly for parts and components for our fleet.

Due to the favorable completion of our IRS tax examination for 2015, we estimate our full-year 2019 adjusted effective income tax rate will be approximately 16%. 

For the third quarter of 2019, we expect to fly approximately 85,000 block hours (about 75% in ACMI), with revenue of more than $700 million and adjusted EBITDA of about $125 million. We also expect that our third-quarter adjusted net income will represent a mid- to upper-teen percentage of our full-year adjusted net income.  

We provide guidance on an adjusted basis because we are unable to predict, with reasonable certainty, the effects of outstanding warrants and other items that could be material to our reported results.*

Conference Call

Management will host a conference call to discuss Atlas Air Worldwide’s second-quarter 2019 financial and operating results at 11:00 a.m. Eastern Time on Thursday, August 1, 2019.

Interested parties may listen to the call live over the Internet at www.atlasairworldwide.com (click on “Investors,” click on “Presentations” and on the link to the second-quarter call) or at the following Web address:

https://edge.media-server.com/mmc/p/6doge49v

For those unable to listen to the live call, a replay will be archived on the above websites following the call. A replay will also be available through August 9 by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.) and using Access Code 6458834#.

About Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with U.S. GAAP, we present certain non-GAAP financial measures to assist in the evaluation of our business performance. These non-GAAP measures include Adjusted EBITDA; Adjusted income from continuing operations, net of taxes; Adjusted Diluted EPS from continuing operations, net of taxes; Adjusted effective tax rate; and Free Cash Flow, which exclude certain noncash income and expenses, and items impacting year-over-year comparisons of our results. These non-GAAP measures may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for Income (loss) from continuing operations, net of taxes; Diluted EPS from continuing operations, net of taxes; Effective tax rate; and Net Cash Provided by Operating Activities, which are the most directly comparable measures of performance prepared in accordance with U.S. GAAP.

Our management uses these non-GAAP financial measures in assessing the performance of the company’s ongoing operations and in planning and forecasting future periods. We believe that these adjusted measures, when considered together with the corresponding U.S. GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance. For example:

• Adjusted EBITDA; Adjusted income from continuing operations, net of taxes; and Adjusted Diluted EPS from continuing operations, net of taxes, provide a more comparable basis to analyze operating results and earnings and are measures commonly used by shareholders to measure our performance. In addition, management’s incentive compensation is determined, in part, by using Adjusted EBITDA and Adjusted income from continuing operations, net of taxes. 
• Adjusted effective tax rate provides improved insight into the tax effects of our ongoing business operations. 
• Free Cash Flow helps investors assess our ability, over the long term, to create value for our shareholders as it represents cash available to execute our capital allocation strategy.

*We provide guidance on an adjusted basis and are unable to provide forward-looking guidance on a U.S. GAAP basis or a reconciliation to the most directly comparable U.S. GAAP measures because we are unable to predict with reasonable certainty the ultimate outcome of certain significant items. The principal item is the impact on our results of our outstanding warrants, which are highly dependent on the change in our stock price during the period reported. These items are uncertain, depend on various factors, and could have a material impact on our U.S. GAAP results.

About Atlas Air Worldwide:

Atlas Air Worldwide is a leading global provider of outsourced aircraft and aviation operating services. It is the parent company of Atlas Air, Inc., Southern Air Holdings, Inc. and Titan Aviation Holdings, Inc., and is the majority shareholder of Polar Air Cargo Worldwide, Inc. Our companies operate the world’s largest fleet of 747 freighter aircraft and provide customers the broadest array of Boeing 747, 777, 767, 757 and 737 aircraft for domestic, regional and international cargo and passenger operations.

Atlas Air Worldwide’s press releases, SEC filings and other information may be accessed through the company’s home page, www.atlasairworldwide.com.

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect Atlas Air Worldwide’s current views with respect to certain current and future events and financial performance. Those statements are based on management’s beliefs, plans, expectations and assumptions, and on information currently available to management. Generally, the words “will,” “may,” “should,” “expect,” “anticipate,” “intend,” “plan,” “continue,” “believe,” “seek,” “project,” “estimate,” and similar expressions used in this release that do not relate to historical facts are intended to identify forward-looking statements.

Such forward-looking statements speak only as of the date of this release. They are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of Atlas Air Worldwide and its subsidiaries (collectively, the “companies”) that may cause the actual results of the companies to be materially different from any future results, express or implied, in such forward-looking statements. 

Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: our ability to effectively operate the network service contemplated by our agreements with Amazon; our ability to coordinate with Amazon to accept newly converted aircraft; the risk that the anticipated benefits of our agreements with Amazon will not be realized when expected, or at all; the possibility that Amazon may terminate its agreements with the companies; the ability of the companies to operate pursuant to the terms of their financing facilities; the ability of the companies to obtain and maintain normal terms with vendors and service providers; the companies’ ability to maintain contracts that are critical to their operations; the ability of the companies to fund and execute their business plan; the ability of the companies to attract, motivate and/or retain key executives, pilots and associates; the ability of the companies to attract and retain customers; the continued availability of our wide-body aircraft; demand for cargo services in the markets in which the companies operate; changes in U.S. and foreign government trade policies; economic conditions; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; significant data breach or disruption of our information technology systems; labor costs and relations, work stoppages and service slowdowns; the outcome of pending negotiations with our pilots’ union; financing costs; the cost and availability of war risk insurance; aviation fuel costs; security-related costs; competitive pressures on pricing (especially from lower-cost competitors); volatility in the international currency markets; weather conditions; government legislation and regulation; additional regulatory guidance or changes in interpretations and assumptions with respect to the impact of the U.S. Tax Cuts and Jobs Act of 2017; consumer perceptions of the companies’ products and services; anticipated and future litigation; and other risks and uncertainties set forth from time to time in Atlas Air Worldwide’s reports to the United States Securities and Exchange Commission.

For additional information, we refer you to the risk factors set forth under the heading “Risk Factors” in the most recent Annual Report on Form 10-K and subsequent reports on Form 10-Q filed by Atlas Air Worldwide with the Securities and Exchange Commission. Other factors and assumptions not identified above may also affect the forward-looking statements, and these other factors and assumptions may also cause actual results to differ materially from those discussed.

Except as stated in this release, Atlas Air Worldwide is not providing guidance or estimates regarding its anticipated business and financial performance for 2019 or thereafter. 

Atlas Air Worldwide assumes no obligation to update such statements contained in this release to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law and expressly disclaims any obligation to revise or update publically any forward-looking statement to reflect future events or circumstances.

Atlas Air Worldwide Holdings, Inc. Consolidated Statements of Operations (in thousands, except per share data) (Unaudited)
		For the Three Months Ended								For the Six MonthsEnded
		June 30, 2019				June 30, 2018				June 30, 2019				June 30, 2018
Operating Revenue		$	663,918			$	666,145			$	1,343,601			$	1,256,159
Operating Expenses
Salaries, wages and benefits			141,450				129,176				286,924				254,258
Aircraft fuel			122,158				129,706				228,479				226,009
Maintenance, materials and repairs			113,471				88,236				217,091				173,115
Depreciation and amortization			63,689				50,834				128,170				100,464
Travel			46,374				42,358				91,403				82,205
Aircraft rent			40,335				40,281				82,223				79,805
Navigation fees, landing fees and other rent			37,982				37,698				78,198				73,295
Passenger and ground handling services			30,525				30,202				62,685				58,264
Special charge			3,269				9,374				3,269				9,374
Transaction-related expenses			734				240				3,261				510
Other			54,961				47,094				106,054				97,345
Total Operating Expenses			654,948				605,199				1,287,757				1,154,644
Operating Income			8,970				60,946				55,844				101,515
Non-operating Expenses (Income)
Interest income			(1,278	)			(1,388	)			(3,322	)			(3,112	)
Interest expense			30,045				29,182				60,398				56,524
Capitalized interest			(627	)			(1,465	)			(1,090	)			(3,215	)
Loss on early extinguishment of debt			-				-				245				-
Unrealized (gain) loss on financial instruments			(42,300	)			50,031				4,275				57,771
Other (income) expense, net			945				(7,277	)			(2,030	)			(11,752	)
Total Non-operating Expenses (Income)			(13,215	)			69,083				58,476				96,216
Income (loss) from continuing operations before income taxes			22,185				(8,137	)			(2,632	)			5,299
Income tax (benefit) expense			(64,683	)			12,986				(59,790	)			16,794
Income (loss) from continuing operations, net of taxes			86,868				(21,123	)			57,158				(11,495	)
Loss from discontinued operations, net of taxes			-				(27	)			-				(43	)
Net Income (Loss)		$	86,868			$	(21,150	)		$	57,158			$	(11,538	)
Earnings (loss) per share from continuing operations:
Basic		$	3.36			$	(0.83	)		$	2.22			$	(0.45	)
Diluted		$	1.61			$	(0.83	)		$	2.21			$	(0.45	)
Loss per share from discontinued operations:
Basic		$	-			$	(0.00	)		$	-			$	(0.00	)
Diluted		$	-			$	(0.00	)		$	-			$	(0.00	)
Earnings (loss) per share:
Basic		$	3.36			$	(0.83	)		$	2.22			$	(0.45	)
Diluted		$	1.61			$	(0.83	)		$	2.21			$	(0.45	)
Weighted average shares:
Basic			25,851				25,565				25,794				25,501
Diluted			26,953				25,565				25,921				25,501

Atlas Air Worldwide Holdings, Inc. Consolidated Balance Sheets (in thousands, except share data)(Unaudited)
		June 30, 2019				December 31, 2018
Assets
Current Assets
Cash and cash equivalents		$	110,665			$	221,501
Short-term investments			7,153				15,624
Restricted cash			10,093				11,240
Accounts receivable, net of allowance of $1,633 and $1,563, respectively			265,489				269,320
Prepaid expenses and other current assets			81,900				112,146
Total current assets			475,300				629,831
Property and Equipment
Flight equipment			5,252,971				5,213,734
Ground equipment			83,250				75,939
Less:  accumulated depreciation			(954,100	)			(860,354	)
Flight equipment modifications in progress			128,166				32,916
Property and equipment, net			4,510,287				4,462,235
Other Assets
Operating lease right-of-use assets			538,631				-
Deferred costs and other assets			377,962				345,037
Intangible assets, net and goodwill			83,162				97,689
Total Assets		$	5,985,342			$	5,534,792
Liabilities and Equity
Current Liabilities
Accounts payable		$	66,441			$	87,229
Accrued liabilities			485,436				465,669
Current portion of long-term debt and finance lease			268,686				264,835
Current portion of long-term operating leases			146,091				-
Total current liabilities			966,654				817,733
Other Liabilities
Long-term debt and finance lease			2,125,228				2,205,005
Long-term operating leases			445,821				-
Deferred taxes			195,608				256,970
Financial instruments and other liabilities			124,922				187,120
Total other liabilities			2,891,579				2,649,095
Commitments and contingencies
Equity
Stockholders’ Equity
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued			-				-
Common stock, $0.01 par value; 100,000,000 shares authorized;  31,026,500 and 30,582,571 shares issued, 25,854,140 and 25,590,293  shares outstanding (net of treasury stock), as of June 30, 2019  and December 31, 2018, respectively			310				306
Additional paid-in-capital			746,725				736,035
Treasury stock, at cost; 5,172,360 and 4,992,278 shares, respectively			(213,728	)			(204,501	)
Accumulated other comprehensive loss			(3,312	)			(3,832	)
Retained earnings			1,597,114				1,539,956
Total stockholders’ equity			2,127,109				2,067,964
Total Liabilities and Equity		$	5,985,342			$	5,534,792

1  Balance sheet debt at June 30, 2019 totaled $2,393.9 million, including the impact of $77.1 million of unamortized discount and debt issuance costs of $40.3 million, compared with $2,469.8 million, including the impact of $85.5 million of unamortized discount and debt issuance costs of $46.0 million at December 31, 2018. 2  The face value of our debt at June 30, 2019 totaled $2,511.3 million, compared with $2,601.3 million on December 31, 2018.

Atlas Air Worldwide Holdings, Inc. Consolidated Statements of Cash Flows (in thousands) (Unaudited)
		For the Six Months Ended
		June 30, 2019				June 30, 2018
Operating Activities:
Income (loss) from continuing operations, net of taxes		$	57,158			$	(11,495	)
Less: Loss from discontinued operations, net of taxes			-				(43	)
Net Income (Loss)			57,158				(11,538	)
Adjustments to reconcile Net Income (Loss) to net cash provided by operating activities:
Depreciation and amortization			157,820				121,606
Accretion of debt securities discount			208				(512	)
Provision for allowance for doubtful accounts			4				1,179
Loss on early extinguishment of debt			245				-
Special charge, net of cash payments			3,269				9,374
Unrealized loss on financial instruments			4,275				57,771
Deferred taxes			(60,122	)			16,561
Stock-based compensation			10,025				10,627
Changes in:
Accounts receivable			26				(27,699	)
Prepaid expenses, current assets and other assets			(23,835	)			(10,815	)
Accounts payable and accrued liabilities			(40,076	)			9,357
Net cash provided by operating activities			108,997				175,911
Investing Activities:
Capital expenditures			(76,754	)			(54,791	)
Payments for flight equipment and modifications			(99,161	)			(448,388	)
Proceeds from insurance			38,133				-
Proceeds from investments			9,313				5,399
Net cash used for investing activities			(128,469	)			(497,780	)
Financing Activities:
Proceeds from debt issuance			19,723				305,059
Payment of debt issuance costs			(955	)			(4,781	)
Payments of debt and finance lease obligations			(160,091	)			(115,194	)
Proceeds from revolving credit facility			50,000				135,000
Payment of revolving credit facility			-				(60,000	)
Customer maintenance reserves and deposits received			8,039				8,169
Purchase of treasury stock			(9,227	)			(10,319	)
Net cash provided by (used for) financing activities			(92,511	)			257,934
Net decrease in cash, cash equivalents and restricted cash			(111,983	)			(63,935	)
Cash, cash equivalents and restricted cash at the beginning of period			232,741				291,864
Cash, cash equivalents and restricted cash at the end of period		$	120,758			$	227,929
Noncash Investing and Financing Activities:
Acquisition of flight equipment included in Accounts payable and accrued liabilities		$	51,996			$	66,944

Atlas Air Worldwide Holdings, Inc. Direct Contribution (in thousands) (Unaudited)
		For the Three Months Ended								For the Six Months Ended
		June 30, 2019				June 30, 2018				June 30, 2019				June 30, 2018
Operating Revenue:
ACMI		$	307,278			$	277,795			$	613,845			$	544,175
Charter			315,679				346,778				620,793				631,975
Dry Leasing			43,535				39,958				113,481				76,350
Customer incentive asset amortization			(6,936	)			(3,290	)			(13,222	)			(5,886	)
Other			4,362				4,904				8,704				9,545
Total Operating Revenue		$	663,918			$	666,145			$	1,343,601			$	1,256,159
Direct Contribution:
ACMI		$	40,640			$	52,707			$	80,647			$	93,579
Charter			14,084				51,090				43,217				85,368
Dry Leasing			11,091				12,191				46,618				23,550
Total Direct Contribution for Reportable Segments			65,815				115,988				170,482				202,497
Unallocated income and expenses, net			(81,927	)			(64,480	)			(162,064	)			(129,543	)
Loss on early extinguishment of debt			-					-			(245	)			-
Unrealized gain (loss) on financial instruments			42,300				(50,031	)			(4,275	)			(57,771	)
Special charge			(3,269	)			(9,374	)			(3,269	)			(9,374	)
Transaction-related expenses			(734	)			(240	)			(3,261	)			(510	)
Income (loss) from continuing operations before income taxes			22,185				(8,137	)			(2,632	)			5,299
Add back (subtract):
Interest income			(1,278	)			(1,388	)			(3,322	)			(3,112	)
Interest expense			30,045				29,182				60,398				56,524
Capitalized interest			(627	)			(1,465	)			(1,090	)			(3,215	)
Loss on early extinguishment of debt			-				-				245				-
Unrealized (gain) loss on financial instruments			(42,300	)			50,031				4,275				57,771
Other expense (income), net			945				(7,277	)			(2,030	)			(11,752	)
Operating Income		$	8,970			$	60,946			$	55,844			$	101,515

Atlas Air Worldwide uses an economic performance metric, Direct Contribution, to show the profitability of each of its segments after allocation of direct operating and ownership costs. Atlas Air Worldwide currently has the following reportable segments: ACMI, Charter, and Dry Leasing. Each segment has different commercial and economic characteristics, which are separately reviewed by our chief operating decision maker.

Direct Contribution consists of income (loss) from continuing operations before income taxes, excluding loss on early extinguishment of debt, unrealized gain (loss) on financial instruments, special charge, transaction-related expenses, and unallocated income and expenses, net.

Direct operating and ownership costs include crew costs, maintenance, fuel, ground operations, sales costs, aircraft rent, interest expense on the portion of debt used for financing aircraft, interest income on debt securities, and aircraft depreciation.

Unallocated income and expenses, net include corporate overhead, nonaircraft depreciation, noncash expenses and income, interest expense on the portion of debt used for general corporate purposes, interest income on nondebt securities, capitalized interest, foreign exchange gains and losses, other revenue and other nonoperating costs.

Atlas Air Worldwide Holdings, Inc. Reconciliation to Non-GAAP Measures (in thousands, except per share data) (Unaudited)
		For the Three Months Ended
		June 30, 2019				June 30, 2018				PercentChange
Income (loss) from continuing operations, net of taxes		$	86,868			$	(21,123	)			NM
Impact from:
Special charge			3,269				9,374
Costs associated with transactions1			734				240
Leadership transition costs			541				-
Certain contract start-up costs2			1,694				-
Accrual for legal matters and professional fees			121				345
Noncash expenses and income, net3			11,515				7,455
Unrealized (gain) loss on financial instruments			(42,300	)			50,031
Income tax effect of reconciling items			(3,652	)			3,403
Special tax item4			(54,272	)			-
Adjusted income from continuing operations, net of taxes		$	4,518			$	49,725				(90.9	)%
Weighted average diluted shares outstanding			26,953				25,565
Add: dilutive warrant5			-				2,264
dilutive convertible notes			-				450
effect of convertible note hedges6			-				(450	)
dilutive restricted stock			-				572
Adjusted weighted average diluted shares outstanding			26,953				28,401
Adjusted Diluted EPS from continuing operations, net of taxes		$	0.17			$	1.75				(90.3	)%
		For the Six Months Ended
		June 30, 2019				June 30, 2018				PercentChange
Income (loss) from continuing operations, net of taxes		$	57,158			$	(11,495	)			NM
Impact from:
Special charge			3,269				9,374
Costs associated with transactions1			3,261				510
Leadership transition costs			541				-
Certain contract start-up costs2			2,063				-
Accrual for legal matters and professional fees			162				563
Noncash expenses and income, net3			22,269				14,130
Loss on early extinguishment of debt			245				-
Unrealized loss on financial instruments			4,275				57,771
Net insurance recovery			(3,449	)			-
Income tax effect of reconciling items			(3,681	)			2,656
Special tax item4			(54,272	)			-
Adjusted income from continuing operations, net of taxes		$	31,841			$	73,509				(56.7	)%
Weighted average diluted shares outstanding			25,921				25,501
Add: dilutive warrant5			1,516				1,958
dilutive convertible notes			-				225
effect of convertible note hedges6			-				(225	)
dilutive restricted stock			-				547
Adjusted weighted average diluted shares outstanding			27,437				28,006
Adjusted Diluted EPS from continuing operations, net of taxes		$	1.16			$	2.62				(55.7	)%

1   Costs associated with transactions in 2019 primarily related to a customer transaction with warrants and other costs associated with our acquisition of Southern Air. Costs associated with transactions in 2018 primarily related to costs associated with our acquisition of Southern Air.2  Certain contract start-up costs represent unique training-aircraft costs required for a new customer contract.3   Noncash expenses and income, net in 2019 and 2018 primarily related to amortization of debt discount on the convertible notes and amortization of the customer incentive asset related to the outstanding warrants.4   Special tax item represents income tax benefits from the completion of a 2015 IRS examination that are not related to ongoing operations.5   Dilutive warrants represent potentially dilutive common shares related to the outstanding warrants. These shares were excluded from Diluted EPS from continuing operations, net of taxes prepared in accordance with GAAP when they would have been antidilutive.6   Economic benefit from the convertible notes hedges in offsetting dilution from the convertible notes.

Atlas Air Worldwide Holdings, Inc. Reconciliation to Non-GAAP Measures (in thousands, except per share data) (Unaudited)
		For the Three Months Ended
		June 30, 2019				June 30, 2018
Net Cash Provided by Operating Activities		$	55,228			$	106,786
Less:
Capital expenditures			46,170				28,700
Capitalized interest			627				1,465
Free Cash Flow1		$	8,431			$	76,621
		For the Six Months Ended
		June 30, 2019				June 30, 2018
Net Cash Provided by Operating Activities		$	108,997			$	175,911
Less:
Capital expenditures			76,754				54,791
Capitalized interest			1,090				3,215
Free Cash Flow1		$	31,153			$	117,905

1 Free Cash Flow = Net Cash Provided by Operating Activities minus Base Capital Expenditures and Capitalized Interest.

Base Capital Expenditures excludes purchases of aircraft.

Atlas Air Worldwide Holdings, Inc. Reconciliation to Non-GAAP Measures (in thousands) (Unaudited)
		For the Three Months Ended								For the Six Months Ended
		June 30, 2019				June 30, 2018				June 30, 2019				June 30, 2018
Income (loss) from continuing operations, net of taxes		$	86,868			$	(21,123	)		$	57,158			$	(11,495	)
Income tax (benefit) expense			(64,683	)			12,986				(59,790	)			16,794
Income (loss) from continuing operations before income taxes			22,185				(8,137	)			(2,632	)			5,299
Special charge			3,269				9,374				3,269				9,374
Costs associated with transactions1			734				240				3,261				510
Leadership transition costs			541				-				541				-
Certain contract start-up costs2			1,694				-				2,063				-
Accrual for legal matters and professional fees			121				345				162				563
Noncash expenses and income, net3			11,515				7,455				22,269				14,130
Loss on early extinguishment of debt			-				-				245				-
Net insurance recovery			-				-				(3,449	)			-
Unrealized (gain) loss on financial instruments			(42,300	)			50,031				4,275				57,771
Adjusted pretax income			(2,241	)			59,308				30,004				87,647
Interest expense, net4			24,034				22,637				47,885				42,899
Other non-operating expenses (income)			945				(7,277	)			(2,030	)			(11,752	)
Adjusted operating income			22,738				74,668				75,859				118,794
Depreciation and amortization			63,689				50,834				128,170				100,464
Adjusted EBITDA5		$	86,427			$	125,502			$	204,029			$	219,258
Income tax expense (benefit)		$	(64,683	)		$	12,986			$	(59,790	)		$	16,794
Income tax effect of reconciling items6			(3,652	)			3,403				(3,681	)			2,656
Special tax item7			(54,272	)			-				(54,272	)			-
Adjusted income tax expense (benefit)			(6,759	)			9,583				(1,837	)			14,138
Adjusted pretax income		$	(2,241	)		$	59,308			$	30,004			$	87,647
Adjusted effective tax expense (benefit) rate			(301.6	)%			16.2	%			(6.1	)%			16.1	%

1  Costs associated with transactions in 2019 primarily related to a customer transaction with warrants and other costs associated with our acquisition of Southern Air. Costs associated with transactions in 2018 primarily related to costs associated with our acquisition of Southern Air.2   Certain contract start-up costs represent unique training-aircraft costs required for a new customer contract.3  Noncash expenses and income, net, in 2019 and 2018 primarily related to amortization of debt discount on convertible notes and amortization of the customer incentive asset related to outstanding warrants.4   Reflects impact of noncash expenses and income related to convertible notes, debt and investments.5   Adjusted EBITDA: Earnings before interest, taxes, depreciation, amortization, special charge, costs associated with transactions, leadership transition costs, certain contract start-up costs, accrual for legal matters and professional fees, noncash expenses and income, net, loss on early extinguishment of debt, net insurance recovery, and unrealized (gain) loss on financial instruments, as applicable.6   See Non-GAAP reconciliation of Adjusted income from continuing operations, net of taxes.7   Special tax item represents income tax benefits from the completion of a 2015 IRS examination that are not related to ongoing operations.

Atlas Air Worldwide Holdings, Inc. Operating Statistics and Traffic Results (Unaudited)
		For the Three Months Ended								Increase/				For the Six Months Ended								Increase/
		June 30, 2019				June 30, 2018				(Decrease)				June 30, 2019				June 30, 2018				(Decrease)
Block Hours
ACMI			61,942				53,230				8,712				121,722				103,092				18,630
Charter			17,661				18,981				(1,320	)			34,321				35,041				(720	)
Cargo			12,888				13,887				(999	)			24,367				25,278				(911	)
Passenger			4,773				5,094				(321	)			9,954				9,763				191
Other			679				449				230				1,299				1,022				277
Total Block Hours			80,282				72,660				7,622				157,342				139,155				18,187
Revenue Per Block Hour
ACMI		$	4,961			$	5,219			$	(258	)		$	5,043			$	5,279			$	(236	)
Charter		$	17,874			$	18,270			$	(396	)		$	18,088			$	18,035			$	53
Cargo		$	17,473			$	18,436			$	(963	)		$	17,710			$	18,262			$	(552	)
Passenger		$	18,957			$	17,815			$	1,142			$	19,012			$	17,448			$	1,564
Average Utilization (block hours per day)
ACMI1			8.7				8.7				-				8.7				8.5				0.2
Charter
Cargo			8.4				10.8				(2.4	)			8.2				10.3				(2.1	)
Passenger			5.9				9.3				(3.4	)			6.2				9.0				(2.8	)
All Operating Aircraft1,2			8.5				9.1				(0.6	)			8.4				8.9				(0.5	)
Fuel
Charter
Average fuel cost per gallon		$	2.37			$	2.42			$	(0.05	)		$	2.30			$	2.30			$	-
Fuel gallons consumed (000s)			51,596				53,508				(1,912	)			99,468				98,458				1,010

1 ACMI and All Operating Aircraft averages in the second quarter and first six months of 2019 reflect the impact of increases in the number of CMI aircraft and amount of CMI flying compared with the same periods of 2018.2 Average of All Operating Aircraft excludes Dry Leasing aircraft, which do not contribute to block-hour volumes.

Atlas Air Worldwide Holdings, Inc. Operating Statistics and Traffic Results (Unaudited)
		For the Three Months Ended								Increase/				For the Six Months Ended								Increase/
		June 30, 2019				June 30, 2018				(Decrease)				June 30, 2019				June 30, 2018				(Decrease)
Segment Operating Fleet (average aircraft equivalents during the period)
ACMI1
747-8F Cargo			8.2				9.0				(0.8	)			8.6				9.0				(0.4	)
747-400 Cargo			18.4				16.2				2.2				18.0				16.0				2.0
747-400 Dreamlifter			3.6				3.1				0.5				3.6				3.1				0.5
777-200 Cargo			6.4				5.0				1.4				6.2				5.0				1.2
767-300 Cargo			25.0				19.3				5.7				25.3				18.3				7.0
767-200 Cargo			9.0				9.0				-				9.0				9.0				-
737-800 Cargo			1.8				-				1.8				0.9				-				0.9
737-400 Cargo			5.0				5.0				-				5.0				5.0				-
747-400 Passenger			-				-				-				-				0.5				(0.5	)
767-200 Passenger			1.0				1.0				-				1.0				1.0				-
Total			78.4				67.6				10.8				77.6				66.9				10.7
Charter
747-8F Cargo			1.6				1.0				0.6				1.3				1.0				0.3
747-400 Cargo			15.2				12.6				2.6				15.1				12.2				2.9
767-300 Cargo			-				0.5				(0.5	)			-				0.4				(0.4	)
747-400 Passenger			4.0				2.0				2.0				4.0				2.0				2.0
767-300 Passenger			4.9				4.0				0.9				4.9				4.0				0.9
Total			25.7				20.1				5.6				25.3				19.6				5.7
Dry Leasing1
777-200 Cargo			7.0				7.0				-				7.5				6.7				0.8
767-300 Cargo			21.0				15.6				5.4				21.3				14.8				6.5
757-200 Cargo			1.0				1.0				-				1.0				1.0				-
737-300 Cargo			1.0				1.0				-				1.0				1.0				-
737-800 Passenger			1.0				1.0				-				1.0				1.0				-
Total			31.0				25.6				5.4				31.8				24.5				7.3
Less: Aircraft Dry Leased to CMI Customers			(23.0	)			(16.6	)			(6.4	)			(23.3	)			(15.5	)			(7.8	)
Total Operating Average Aircraft Equivalents			112.1				96.7				15.4				111.4				95.5				15.9

1  ACMI average fleet excludes spare aircraft provided by CMI customers and Dry Leasing average fleet excludes aircraft awaiting placement.

Contacts:

Dan Loh (Investors) – (914) 701-8200 Debbie Coffey (Media) –  (914) 701-8951