Atlas Air Worldwide Holdings, Inc. (AAWW), through its subsidiaries, operates as a global provider of outsourced aircraft and aviation operating services and the largest outsourced airfreight provider in the world.
The company has a 51% economic interest and 75% voting interest in Polar Air Cargo Worldwide, Inc. (Polar). In addition, AAWW is the parent company of several wholly owned subsidiaries related to its dry leasing services (collectively referred to as Titan).
The company operates the...
Atlas Air Worldwide Holdings, Inc. (AAWW), through its subsidiaries, operates as a global provider of outsourced aircraft and aviation operating services and the largest outsourced airfreight provider in the world.
The company has a 51% economic interest and 75% voting interest in Polar Air Cargo Worldwide, Inc. (Polar). In addition, AAWW is the parent company of several wholly owned subsidiaries related to its dry leasing services (collectively referred to as Titan).
The company operates the world’s largest fleet of 747 freighters and provides customers a broad array of 747, 777, 767 and 737 aircraft for domestic, regional and international cargo and passenger operations. The company provides unique value to its customers by giving them access to highly reliable modern production freighters.
The company’s customers include express delivery providers, e-commerce retailers, the U.S. Military Air Mobility Command (AMC), charter brokers, freight forwarders, direct shippers, airlines, manufacturers, sports teams and fans, and private charter customers. As of December 31, 2022, the company’s fleet included 112 aircraft, including seven aircraft that are dry leased to other operators. The company has extensive operations across the world in Africa, Asia, Australia, Europe, the Middle East, North America and South America.
Segments
The company operates through two segments, Airline Operations and Dry Leasing.
Airline Operations
This segment provides cargo aircraft outsourcing services to customers on an ACMI (crew, maintenance and insurance), CMI (crew, maintenance and insurance, but not the aircraft) and Charter (cargo and passenger charter services) basis. Most arrangements provide the company with guaranteed minimum revenues at predetermined rates, levels of operation and defined periods of time. ACMI, CMI and long-term Charter contracts generally provide a predictable annual revenue and cost base by minimizing the risk of fluctuations, such as price, fuel and demand risk in the air cargo business. ACMI and CMI flying is typically based on guaranteed minimum Block Hours operated for a customer, while long-term Charter flying is for specific flight rotations between locations based on a guaranteed number of weekly or monthly flights.
All of the company’s contracts provide that the aircraft remain under its exclusive operating control, possession and direction at all times. These contracts further provide that the routes to be operated may be subject to prior and periodic approvals of the U.S. or foreign governments. The original length of ACMI and CMI contracts generally ranges from two to seven years. The original length of long-term Charter program contracts generally ranges from two to five years. The company also provides certain of these services on a short-term basis. In addition, Atlas Air, Inc. (Atlas) provides limited airport-to-airport cargo Charter services to select markets, including several cities in Asia and South America, and occasionally earns revenue on subcontracted Charter flights.
Dry Leasing
This segment provides aircraft and engines to customers, including some CMI customers, for compensation that is typically based on a fixed monthly amount. This business is operated by Titan, which is principally a cargo aircraft dry lessor, but also owns and manages aviation assets, such as engines and related equipment. In addition, Titan markets its expertise in passenger-to-freighter conversions and other aviation-related technical services. The company’s Dry Leasing (dry leasing aircraft and engines) portfolio diversifies its business mix and enhances its predictable, long-term revenue and earnings streams.
Other Revenue
Other revenue includes administrative and management support services and flight simulator training.
The company’s fleet of 767-300 and 737-800 freighter aircraft are well suited for regional and domestic operations.
In December 2021, the company signed an agreement with The Boeing Company (Boeing) for the purchase of four new 777-200LRF aircraft. The first of the four new 777-200LRFs was delivered in November of 2022, with the other three expected to be delivered throughout 2023. In January 2021, the company signed an agreement with Boeing for the purchase of four new 747-8F aircraft. The first three of these aircraft were delivered in May, October and November of 2022 and the last aircraft was delivered in January of 2023. All eight of these aircraft have been placed with customers under long-term contracts.
Dry Leasing Joint Venture
Titan Aircraft Investments Ltd (TAI) is a long-term joint venture the company entered into with investment funds managed by Bain Capital Credit, LP (collectively Bain Capital) to develop a diversified freighter aircraft Dry Leasing portfolio that aims to capitalize on demand for cargo aircraft, underpinned by robust e-commerce and express market growth.
Titan provides management services to the joint venture, including aircraft acquisitions, lease-management, passenger-to-freighter aircraft conversion oversight, technical expertise and disposal of aircraft. Titan’s expertise includes a wide range of freighters, as well as passenger aircraft that could be converted to freighters.
DHL Investment and Polar
DHL Network Operations (USA), Inc. (DHL) holds a 49% equity interest and a 25% voting interest in Polar. AAWW owns the remaining 51% equity interest and 75% voting interest. Under a 20-year blocked space agreement that expires in 2028 (the BSA), Polar provides air cargo capacity to DHL. Atlas and Polar also have a flight services agreement, whereby Atlas is compensated by Polar on a per Block Hour (the time interval between when an aircraft departs the terminal until it arrives at the destination terminal) basis, subject to a monthly minimum Block Hour guarantee, at a predetermined rate with the opportunity for performance premiums that escalate annually. Under the flight services agreement, Atlas provides Polar with crew, maintenance and insurance for the aircraft. Under separate agreements, Atlas and Polar supply administrative, sales and ground support services to one another. AAWW has agreed to indemnify DHL for and against various obligations of Polar and its affiliates. Collectively, these agreements are referred to in this Report as the ‘DHL Agreements’. The DHL Agreements provide the company with a minimum guaranteed annual revenue stream from aircraft that have been placed in service with Polar for DHL and other customers’ freight over the life of the agreements. DHL provides financial support and also assumes the risks and rewards of the operations of Polar.
Combined with Polar, the company provides ACMI, CMI, Charter and Dry Leasing services to support DHL’s transpacific-express, North American, intra-Asian, and global networks. In addition, the company flies between the Asia Pacific region, the Middle East and Europe on behalf of DHL and other customers. Atlas also provides incremental charter capacity to Polar and DHL from time to time.
Amazon
In May 2016, the company entered into certain agreements with Amazon.com, Inc. and its subsidiary, Amazon Fulfillment Services, Inc., (collectively, ‘Amazon’), which involve, among other things, CMI operation of Boeing 767-300 freighter aircraft for Amazon by Atlas, as well as Dry Leasing by Titan. The Dry Leases have a term of ten years from the commencement of each agreement, while the CMI operations are for seven years from the commencement of each agreement (with an option for Amazon to extend the term to ten years).
In March 2019, the company amended the agreements entered into in 2016 with Amazon, pursuant to which it provides CMI services using Boeing 737-800 freighter aircraft provided by Amazon. The 737-800 CMI operations have a term of seven years from the commencement of each agreement (with an option for Amazon to extend the term to ten years). In conjunction with these agreements, the company granted Amazon warrants providing the right to acquire shares of its common stock.
Sales and Marketing
The company has regional sales offices in various locations around the world that cover the Americas, the Asia Pacific, Europe, Africa, and the Middle East regions. These offices market the company’s ACMI, CMI, Charter and Dry Leasing services to express delivery providers, e-commerce retailers, the U.S. military, charter brokers, freight forwarders, direct shippers, airlines, manufacturers, sports teams and fans, and private charter customers.
Aircraft Maintenance
Primary maintenance activities include scheduled and unscheduled work on airframes and engines. Scheduled maintenance activities encompass those activities specified in the company’s maintenance program approved by the FAA.
Insurance
The company maintains insurance of the types and in amounts deemed adequate and consistent with industry standards. Principal coverage includes liability for injury to members of the public, including passengers; injury to crewmembers and ground staff; damage to its property and that of others; and loss of, or damage to, flight equipment, whether on the ground or in flight; and cyber business interruption.
The company participates in an insurance pooling arrangement with DHL and its partners. This allows it to obtain aviation hull and liability, war-risk hull and cargo loss, crew, third-party liability insurance and hull deductible coverage at reduced rates from the commercial insurance providers.
Competition
The company’s primary competitors providing ACMI and Charter services for 777, 747, 767 and 737 freighter aircraft include 21Air, LLC; Air Atlanta Icelandic; Air Transport Services Group, Inc.; Cargolux; Kalitta Air; National Air Cargo; Western Global Airlines; and other freighter operators.
The company’s primary competitors are operators that include Aerologic, Air Transport Services Group, Inc.; Cargolux; Kalitta Air; Mesa Airlines; National Air Cargo; Sun Country Airlines; and other airlines providing similar services.
The company’s primary competitors in the aircraft leasing market include AerCap Holdings N.V.; Aero Capital Solutions; Altavair Air Finance; Air Transport Services Group, Inc.; Avia AM; BBAM Aircraft; and Leasing Management and Dubai Aerospace.
Governmental Regulation
Atlas and Polar (collectively, the ‘Airlines’) are subject to regulation by the U.S. Department of Transportation (the DOT) and the U.S. Federal Aviation Administration (FAA), among other U.S. and foreign government agencies.
Atlas and Polar operate pursuant to a TSA-approved risk-based security program that adequately maintains the security of all aircraft in the fleet. The company utilizes the U.S. Transportation Security Administration (TSA), the intelligence community and the private sector as resources for its aggressive global threat-based risk-management program.
The company is working closely with the Department of Homeland Security and other government agencies to ensure that a risk-based management approach is utilized to target specific ‘at-risk’ cargo. The company has successfully implemented all European Commission security programs allowing it unimpeded access to European markets.
The company is also subject to the regulations in the U.S., by the U.S. Environmental Protection Agency (the EPA), and the international jurisdictions in which it operates regarding air quality. All aircraft in the company’s fleet materially comply with DOT, FAA and international noise standards.
Air carriers are also subject to certain provisions of the Communications Act of 1934 because of their extensive use of radio and other communication facilities and are required to obtain an aeronautical radio license from the Federal Communications Commission. Additionally, the company is subject to the U.S. and foreign antitrust requirements and international trade restrictions imposed by the U.S. presidential determination and the U.S. government agency regulation, including the Office of Foreign Assets Control of the U.S. Department of the Treasury (the U.S. Treasury).
As part of the company’s Charter business, Atlas and Polar both participate in the U.S. Civil Reserve Air Fleet (CRAF) Program, which permits the U.S. Department of Defense to utilize participants’ aircraft during national emergencies when the need for military airlift exceeds the capability of military aircraft. The company provided three 747-400 passenger aircraft to support the CRAF activation, which ended in mid-September, and also provided additional 767 passenger aircraft in the support of these evacuations for the AMC.
History
Atlas Air Worldwide Holdings, Inc. was founded in 1992. The company was incorporated in Delaware in 2000.
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