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AAWW - Atlas Air Worldwide Holdings Inc News Story

$73.3 -0.7  -1.0%

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Sector
Industrials
Size
Mid Cap
Market Cap £1.54bn
Enterprise Value £2.59bn
Revenue £2.30bn
Position in Universe 2170th / 6855

Atlas Air Worldwide Reports Third-Quarter 2020 Results

Thu 5th November, 2020 1:00pm
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* Business Growth Driven by Strong Airfreight Demand 
* Reported Net Income of $74.1 Million
* Adjusted EBITDA of $196.3 Million and Adjusted Net Income of $82.7 Million
* Raising Outlook
PURCHASE, N.Y., Nov. 05, 2020 (GLOBE NEWSWIRE) -- Atlas Air Worldwide
Holdings, Inc. (Nasdaq: AAWW) today announced third-quarter 2020 net income of
$74.1 million, or $2.78 per diluted share, compared with net income of $60.0
million, or $2.32 per diluted share, in the third quarter of 2019.

On an adjusted basis, EBITDA totaled $196.3 million in the third quarter this
year compared with $95.6 million in the third quarter of 2019. Adjusted net
income in the third quarter of 2020 totaled $82.7 million, or $2.84 per
diluted share, compared with $9.5 million, or $0.37 per diluted share, in the
third quarter of 2019.

“The positive momentum of our business continued in the third quarter,
despite a more complex, costly and challenging operating environment caused by
the COVID-19 pandemic,” said Chief Executive Officer John W. Dietrich.
“Our performance is the result of our entire team pulling together to
increase utilization of our aircraft and execute on strong market demand and
higher yields.

“We continue to broaden our customer base and grow with existing customers
to maximize market opportunities. We further increased our roster of long-term
charter customers, including the addition of Cainiao, the logistics arm of
Alibaba, as well as expanding with HP Inc. and several large global freight
forwarders.

“We also expanded operations for Amazon, where we began CMI flying three
additional 737 freighters since September. We are now operating eight 737s for
Amazon, complementing the large fleet of 767s that we have with them.

“Importantly, these long-term customer agreements provide secure and
attractive earnings streams and deepen our strategic position in the
fast-growing e-commerce sector, as well as in important global markets like
China and South America.

“We are seeing substantial demand for our long-haul widebody services, both
near- and long-term, at attractive yields. We are leveraging the agility of
our business model and the scale of our fleet and global operations to serve
this increased customer demand.

“We are also excited to announce that Titan Aircraft Investments, the joint
venture between our Titan subsidiary and Bain Capital Credit, has arranged
$500 million in financing facilities. The funds are available for the
acquisition of freighter aircraft on lease and passenger aircraft for
conversion to freighters. This important step will enable the joint venture to
serve the strong market demand for leasing freighters.

“I am proud of the important role Atlas is playing in responding to this
pandemic globally, and thank our crew and ground staff for their dedication in
delivering safe and reliable service. We are taking wide-ranging precautions
to safeguard our employees, while navigating through this complex operating
backdrop.

“Air cargo has always been a vital component in the global supply chain as
it provides speed, security and reliability that are unmatched by other modes
of transportation. We remain committed to moving goods the world needs most,
including medical equipment, pharmaceuticals, personal protective equipment,
e-commerce, and other manufacturing and consumer products. We are also
actively preparing for our expected role in the timely distribution of
vaccines.”

Mr. Dietrich continued: “Looking to the fourth quarter, and subject to any
material COVID-19 developments, we anticipate solid volumes and yields driven
by continued e-commerce growth and end-of-the-year airfreight demand, coupled
with the reduction of available cargo capacity in the market. To meet customer
demand, we are reactivating our fourth 747 freighter that had been previously
parked. This will add to the three 747 freighters and the 777 we placed back
into service during the second quarter of 2020.

“As a result, we anticipate fourth-quarter revenue of about $850 million and
adjusted EBITDA of approximately $215 million.*

“We also expect fourth-quarter 2020 adjusted net income to grow
approximately 25% compared with adjusted net income of $82.7 million in the
third quarter of this year.

“On a full-year basis, we now anticipate revenue of approximately $3.1
billion and adjusted EBITDA of about $780 million in 2020.”

He concluded: “Atlas is continuing to adapt and navigate through the
challenges of 2020. With our talented team, world-class fleet, strong balance
sheet and agile business model, we will continue to serve the demand for
airfreight and deliver high-quality service for our customers – in these
uncertain times and beyond.”

Third-Quarter Results

Volumes in the third quarter of 2020 increased to 90,528 block hours compared
with 79,310 in the third quarter of 2019, with revenue rising to $809.9
million compared with $648.5 million in the prior-year quarter.

Higher ACMI segment revenue during the period primarily reflected an increase
in the average revenue per block hour and increased flying, partially offset
by the redeployment of 747-400 aircraft to the Charter segment. ACMI segment
contribution during the quarter was primarily driven by increased aircraft
utilization, reflecting strong demand from our customers, and a reduction in
aircraft rent and depreciation. Partially offsetting these improvements were
higher pilot costs related to premium pay for pilots operating in certain
areas significantly impacted by COVID-19 and increased pay rates resulting
from our recent interim agreement with our pilots. In addition, ACMI segment
contribution reflected higher heavy maintenance, including additional engine
overhauls to take advantage of slot availability and opportunities for vendor
pricing discounts, and the redeployment of 747-400 aircraft to the Charter
segment to support long-term charter programs.

Higher Charter segment revenue during the quarter was primarily due to an
increase in flying, partially offset by a decrease in the average revenue per
block hour due to lower fuel costs. Charter segment contribution was primarily
driven by the increase in commercial cargo yields (excluding fuel) and demand
for freighter aircraft, reflecting a reduction of available capacity in the
market, the disruption of global supply chains due to the pandemic and our
ability to increase utilization. In addition, segment contribution benefited
from a reduction in aircraft rent and depreciation, and the redeployment of
747-400 aircraft from ACMI and the operation of a 777-200 freighter from Dry
Leasing. These improvements were partially offset by: higher heavy maintenance
expense, including additional engine overhauls to take advantage of slot
availability and opportunities for vendor pricing discounts; higher pilot
costs related to premium pay for pilots operating in certain areas
significantly impacted by COVID-19; and increased pay rates resulting from our
recent interim agreement with our pilots.

In Dry Leasing, lower segment revenue and contribution in the third quarter of
2020 primarily related to changes in leases and the disposition of certain
nonessential Dry Leased aircraft during the first quarter of 2020.

Lower unallocated income and expenses, net, during the quarter primarily
reflected CARES Act grant income of $64.2 million.

Reported earnings in the third quarter of 2020 included an unrealized loss on
outstanding warrants of $43.6 million, compared with an unrealized gain on
outstanding warrants of $83.2 million in the year-ago period.

Reported earnings in the third quarter of 2020 also included an effective
income tax rate of 32.8%, due mainly to nondeductible changes in the value of
outstanding warrants. On an adjusted basis, our results reflected an effective
income tax rate of 22.8%.

Nine-Month Results

Reported results for the nine months ended September 30, 2020 reflected net
income of $176.3 million, or $6.72 per diluted share, which included a $73.4
million unrealized loss on financial instruments. Results compared with net
income of $117.1 million, or $1.34 per diluted share, which included an
unrealized gain on financial instruments of $78.9 million, for the nine months
ended September 30, 2019.

On an adjusted basis, EBITDA totaled $564.5 million in the first nine months
of 2020 compared with $300.1 million in the first nine months of 2019. For the
nine months ended September 30, 2020, adjusted net income totaled $235.8
million, or $8.71 per diluted share, compared with $41.4 million, or $1.54 per
diluted share, in the first nine months of 2019.

Cash

At September 30, 2020, our cash and cash equivalents, restricted cash and
short-term investments totaled $729.3 million, compared with $114.3 million at
December 31, 2019.

Our improved cash balance primarily reflected cash provided by operating
activities, and also included the funds we received through the Payroll
Support Program available to air cargo carriers under the CARES Act, partially
offset by cash used for investing and financing activities.

Net cash used for investing activities during the first nine months of 2020
primarily related to capital expenditures and payments for flight equipment
and modifications, including spare engines and GEnx engine performance upgrade
kits, partially offset by proceeds from the disposal of aircraft.

Net cash used for financing activities during the first nine months of 2020
primarily related to payments on debt obligations, including our revolving
credit facility, partially offset by debt issuances.

To mitigate the impact of any continuation or worsening of the pandemic, we
have implemented a number of cost-reduction initiatives, including a
significant reduction in nonessential employee travel and the use of
contractors. We have also taken actions to increase liquidity and strengthen
our financial position, such as the sale of certain nonessential assets and
our participation in the Payroll Support Program under the CARES Act.

Amazon Warrants

On October 9, 2020, Amazon elected a cashless exercise with respect to
3,607,477 shares vested under a Warrant issued in 2016. As a result, Amazon
acquired 1,375,421 shares of AAWW common stock, representing approximately
4.99% (after the exercise) of our outstanding common shares.

2020 Outlook*

Looking to the fourth quarter, and subject to any material COVID-19
developments, we anticipate solid volumes and yields driven by continued
e-commerce growth and end-of-the-year airfreight demand, coupled with the
reduction of available cargo capacity in the market.

To meet customer demand, we are reactivating our fourth 747 freighter that had
been previously parked. This will add to the three 747 freighters and the 777
we placed back into service during the second quarter of 2020.

As a result, we expect to fly approximately 95,000 block hours in the fourth
quarter of 2020, with about 65% of the hours in ACMI and the remainder in
Charter.

We also anticipate revenue of about $850 million and adjusted EBITDA of
approximately $215 million. In addition, we expect fourth-quarter 2020
adjusted net income to grow approximately 25% compared with adjusted net
income of $82.7 million in the third quarter of this year.*

Aircraft maintenance expense in the fourth quarter of 2020 is expected to
total about $116 million, with depreciation and amortization totaling around
$65 million. Core capital expenditures, which exclude aircraft and engine
purchases, are projected to total approximately $25 to $35 million, mainly for
parts and components for our fleet.

We also now anticipate full-year 2020 revenue of approximately $3.1 billion
and adjusted EBITDA of about $780 million.

We estimate our full-year 2020 adjusted effective income tax rate will be
approximately 23%.

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
third-quarter 2020 financial and operating results at 11:00 a.m. Eastern Time
on Thursday, November 5, 2020.

Interested parties may listen to the call live at Atlas Air Worldwide’s
Investor
(https://www.globenewswire.com/Tracker?data=kfNfEdRKfARLRt4zCR6Q3ol8JxOKLzyg3JU_3XKpPCmwBJ-E1WFXkY1zvybNa6sM0C6e0bXdulyakA1EBp3HqF9rvXiK2t2KYkAZTqx5mgP1ZEOPURB1QoEaM1eFuCii)
site or at https://edge.media-server.com/mmc/p/ps7u7bvv.

For those unable to listen to the live call, a replay will be archived on the
Investor
(https://www.globenewswire.com/Tracker?data=kfNfEdRKfARLRt4zCR6Q3rwJCDVU9z1T_CN9mSPWSNdsFHBBeA70-zh4IjBBrBqlZ36loAh34xErkU0GxUC-fk17cDfLiXDC2M1zEVk90frsMwKSyM5HZIzpvqVolOHI)
site following the call. A replay will also be available through November 12
by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the
U.S.) and using Access Code 1347526#.

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 net income; Adjusted Diluted EPS; 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 Net income
(loss); Diluted EPS; 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 net income; and Adjusted Diluted EPS 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 net income.


* 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 warrant
liability, which is 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 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 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 impact of geographical
events or health epidemics such as the COVID-19 pandemic; our compliance with
the requirements and restrictions under the Payroll Support Program; 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;
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 2020 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 Nine Months Ended                                        
                                                    September 30, 2020               September 30, 2019           September 30, 2020                  September 30, 2019           
                                                                                                                                                                                   
 Operating Revenue                                  $        809,886                 $        648,539             $        2,278,641                  $        1,992,140           
                                                                                                                                                                                   
 Operating Expenses                                                                                                                                                                
 Salaries, wages and benefits                                194,265                          145,987                      534,600                             432,911             
 Maintenance, materials and repairs                          116,634                          88,240                       379,086                             305,331             
 Aircraft fuel                                               118,113                          123,132                      309,673                             351,611             
 Depreciation and amortization                               65,595                           62,499                       189,005                             190,669             
 Travel                                                      37,731                           49,110                       114,749                             140,513             
 Navigation fees, landing fees and other rent                42,870                           32,270                       109,909                             110,468             
 Passenger and ground handling services                      36,266                           34,453                       98,355                              97,138              
 Aircraft rent                                               24,239                           40,048                       72,522                              122,271             
 Gain on disposal of aircraft                                (163     )                                                    (6,878     )                        -                   
 Special charge                                              547                              18,861                       16,481                              22,130              
 Transaction-related expenses                                490                              324                          2,286                               3,585               
 Other                                                       54,107                           54,494                       157,929                             160,548             
 Total Operating Expenses                                    690,694                          649,418                      1,977,717                           1,937,175           
                                                                                                                                                                                   
 Operating Income (Loss)                                     119,192                          (879     )                   300,924                             54,965              
                                                                                                                                                                                   
 Non-operating Expenses (Income)                                                                                                                                                   
 Interest income                                             (225     )                       (653     )                   (929       )                        (3,975     )        
 Interest expense                                            28,524                           30,117                       86,749                              90,515              
 Capitalized interest                                        (203     )                       (853     )                   (528       )                        (1,943     )        
 Loss on early extinguishment of debt                        7                                559                          81                                  804                 
 Unrealized loss (gain) on financial instruments             43,604                           (83,175  )                   73,351                              (78,900    )        
 Other (income) expense, net                                 (62,689  )                       1,434                        (112,081   )                        (596       )        
 Total Non-operating Expenses (Income)                       9,018                            (52,571  )                   46,643                              5,905               
 Income before income taxes                                  110,174                          51,692                       254,281                             49,060              
 Income tax expense (benefit)                                36,120                           (8,282   )                   77,962                              (68,072    )        
                                                                                                                                                                                   
 Net Income                                         $        74,054                  $        59,974              $        176,319                    $        117,132             
                                                                                                                                                                                   
 Earnings per share:                                                                                                                                                               
 Basic                                              $        2.83                    $        2.32                $        6.76                       $        4.54                
 Diluted                                            $        2.78                    $        2.32                $        6.72                       $        1.34                
                                                                                                                                                                                   
 Weighted average shares:                                                                                                                                                          
 Basic                                                       26,135                           25,854                       26,077                              25,814              
 Diluted                                                     26,619                           25,854                       26,256                              26,909              

Atlas Air Worldwide Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)

                                                                                                                                                                                                                                              September 30 , 20 20           December 3 1 , 201 9         
 Assets                                                                                                                                                                                                                                                                                                   
 Current Assets                                                                                                                                                                                                                                                                                           
 Cash and cash equivalents                                                                                                                                                                                                                    $            717,867           $            103,029         
 Restricted cash                                                                                                                                                                                                                                           11,466                         10,401          
 Short-term investments                                                                                                                                                                                                                                    -                              879             
 Accounts receivable, net of allowance of $776 and $1,822, respectively                                                                                                                                                                                    268,376                        290,119         
 Prepaid expenses, assets held for sale and other current assets                                                                                                                                                                                           171,780                        228,103         
 Total current assets                                                                                                                                                                                                                                      1,169,489                      632,531         
 Property and Equipment                                                                                                                                                                                                                                                                                   
 Flight equipment                                                                                                                                                                                                                                          5,001,481                      4,880,424       
 Ground equipment                                                                                                                                                                                                                                          88,327                         83,584          
 Less: accumulated depreciation                                                                                                                                                                                                                            (1,113,964   )                 (977,883     )  
 Flight equipment modifications in progress                                                                                                                                                                                                                49,246                         67,101          
 Property and equipment, net                                                                                                                                                                                                                               4,025,090                      4,053,226       
 Other Assets                                                                                                                                                                                                                                                                                             
 Operating lease right-of-use assets                                                                                                                                                                                                                       182,657                        231,133         
 Deferred costs and other assets                                                                                                                                                                                                                           373,074                        391,895         
 Intangible assets, net and goodwill                                                                                                                                                                                                                       72,334                         76,856          
 Total Assets                                                                                                                                                                                                                                 $            5,822,644         $            5,385,641       
                                                                                                                                                                                                                                                                                                          
 Liabilities and Equity                                                                                                                                                                                                                                                                                   
 Current Liabilities                                                                                                                                                                                                                                                                                      
 Accounts payable                                                                                                                                                                                                                             $            92,805            $            79,683          
 Accrued liabilities                                                                                                                                                                                                                                       645,094                        481,725         
 Current portion of long-term debt and finance leases                                                                                                                                                                                                      296,112                        395,781         
 Current portion of long-term operating leases                                                                                                                                                                                                             139,152                        141,973         
 Total current liabilities                                                                                                                                                                                                                                 1,173,163                      1,099,162       
 Other Liabilities                                                                                                                                                                                                                                                                                        
 Long-term debt and finance leases                                                                                                                                                                                                                         2,073,855                      1,984,902       
 Long-term operating leases                                                                                                                                                                                                                                281,394                        392,832         
 Deferred taxes                                                                                                                                                                                                                                            145,952                        74,040          
 Financial instruments and other liabilities                                                                                                                                                                                                               130,857                        42,526          
 Total other liabilities                                                                                                                                                                                                                                   2,632,058                      2,494,300       
 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; 31,497,228 and 31,048,842 shares issued, 26,138,539 and 25,870,876 shares outstanding (net of treasury stock), as of September 30, 2020 and December 31, 2019, respectively                 315                            310             
 Additional paid-in-capital                                                                                                                                                                                                                                813,858                        761,715         
 Treasury stock, at cost; 5,358,689 and 5,177,966 shares, respectively                                                                                                                                                                                     (217,786     )                 (213,871     )  
 Accumulated other comprehensive loss                                                                                                                                                                                                                      (2,126       )                 (2,818       )  
 Retained earnings                                                                                                                                                                                                                                         1,423,162                      1,246,843       
 Total stockholders’ equity                                                                                                                                                                                                                                2,017,423                      1,792,179       
 Total Liabilities and Equity                                                                                                                                                                                                                 $            5,822,644         $            5,385,641       

(1)   Balance sheet debt at September 30, 2020 totaled $2,370.0 million,
including the impact of $55.2 million of unamortized discount and debt
issuance costs of $31.3 million, compared with $2,380.7 million, including the
impact of $68.6 million of unamortized discount and debt issuance costs of
$35.1 million at December 31, 2019. 
(2)   The face value of our debt at September 30, 2020 totaled $2,456.5
million, compared with $2,484.4 million on December 31, 2019.

Atlas Air Worldwide Holdings, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

                                                                                               For the Nine Months Ended                                         
                                                                                               September 30, 20 20                 September 30, 201 9           
                                                                                                                                                                 
 Operating Activities:                                                                                                                                           
 Net Income                                                                                    $           176,319                 $        117,132              
                                                                                                                                                                 
 Adjustments to reconcile Net Income to net cash provided by operating activities:                                                                               
 Depreciation and amortization                                                                             240,826                          241,284              
 Accretion of debt securities discount                                                                     (2          )                    (237      )          
 Provision for (reversal of) expected credit losses                                                        76                               (83       )          
 Loss on early extinguishment of debt                                                                      81                               804                  
 Special charge, net of cash payments                                                                      16,481                           22,130               
 Unrealized loss (gain) on financial instruments                                                           73,351                           (78,900   )          
 Gain on disposal of aircraft                                                                              (6,878      )                    -                    
 Deferred taxes                                                                                            75,331                           (68,552   )          
 Stock-based compensation                                                                                  15,816                           16,553               
 Changes in:                                                                                                                                                     
 Accounts receivable                                                                                       23,072                           1,397                
 Prepaid expenses, current assets and other assets                                                         (39,823     )                    (69,254   )          
 Accounts payable, accrued liabilities and other liabilities                                               208,058                          11,016               
 Net cash provided by operating activities                                                                 782,708                          193,290              
 Investing Activities:                                                                                                                                           
 Capital expenditures                                                                                      (45,134     )                    (107,594  )          
 Payments for flight equipment and modifications                                                           (102,777    )                    (153,706  )          
 Proceeds from insurance                                                                                   -                                38,133               
 Proceeds from investments                                                                                 881                              14,367               
 Proceeds from disposal of aircraft                                                                        45,660                           -                    
 Net cash used for investing activities                                                                    (101,370    )                    (208,800  )          
 Financing Activities:                                                                                                                                           
 Proceeds from debt issuance                                                                               401,419                          93,723               
 Payment of debt issuance costs                                                                            (5,172      )                    (1,316    )          
 Payments of debt and finance lease obligations                                                            (353,795    )                    (273,142  )          
 Proceeds from revolving credit facility                                                                   75,000                           50,000               
 Payment of revolving credit facility                                                                      (175,000    )                    -                    
 Customer maintenance reserves and deposits received                                                       10,465                           11,717               
 Customer maintenance reserves paid                                                                        (14,437     )                    (8,174    )          
 Treasury shares withheld for payment of taxes                                                             (3,915      )                    (9,336    )          
 Net cash used for financing activities                                                                    (65,435     )                    (136,528  )          
 Net increase (decrease) in cash, cash equivalents and restricted cash                                     615,903                          (152,038  )          
 Cash, cash equivalents and restricted cash at the beginning of period                                     113,430                          232,741              
 Cash, cash equivalents and restricted cash at the end of period                               $           729,333                 $        80,703               
                                                                                                                                                                 
 Noncash Investing and Financing Activities:                                                                                                                     
                                                                                                                                                                 
 Acquisition of property and equipment included in Accounts payable and accrued liabilities    $           11,357                  $        55,610               
 Acquisition of property and equipment acquired under finance and operating leases             $           19,521                  $        32,794               
 Customer maintenance reserves settled with sale of aircraft                                   $           6,497                   $        -                    

Atlas Air Worldwide Holdings, Inc.
Direct Contribution
(in thousands)
(Unaudited)

                                                      For the Three Months Ended                                             For the Nine Months Ended                                            
                                                      September 3 0 , 20 20                   September 3 0 , 201 9          September 3 0 , 20 20                   September 30 , 201 9         
 Operating Revenue:                                                                                                                                                                               
 ACMI                                                 $            302,756                    $            289,024           $            873,451                    $            902,869         
 Charter                                                           470,835                                 324,046                        1,296,011                               944,839         
 Dry Leasing                                                       40,740                                  43,847                         123,572                                 157,328         
 Customer incentive asset amortization                             (9,858       )                          (12,796      )                 (28,414      )                          (26,018      )  
 Other                                                             5,413                                   4,418                          14,021                                  13,122          
 Total Operating Revenue                              $            809,886                    $            648,539           $            2,278,641                  $            1,992,140       
                                                                                                                                                                                                  
 Direct Contribution:                                                                                                                                                                             
 ACMI                                                 $            42,822                     $            33,401            $            109,624                    $            114,048         
 Charter                                                           136,619                                 36,339                         373,371                                 79,554          
 Dry Leasing                                                       9,627                                   12,028                         30,046                                  58,646          
 Total Direct Contribution for Reportable Segments                 189,068                                 81,768                         513,041                                 252,248         
                                                                                                                                                                                                  
 Unallocated expenses and (income), net                            (34,409      )                          (93,507      )                 (173,439     )                          (255,569     )  
 Loss on early extinguishment of debt                              (7           )                          (559         )                 (81          )                          (804         )  
 Unrealized gain (loss) on financial instruments                   (43,604      )                          83,175                         (73,351      )                          78,900          
 Special charge                                                    (547         )                          (18,861      )                 (16,481      )                          (22,130      )  
 Transaction-related expenses                                      (490         )                          (324         )                 (2,286       )                          (3,585       )  
 Gain on disposal of aircraft                                      163                                     -                              6,878                                   -               
 Income before income taxes                                        110,174                                 51,692                         254,281                                 49,060          
                                                                                                                                                                                                  
 Add back (subtract):                                                                                                                                                                             
 Interest income                                                   (225         )                          (653         )                 (929         )                          (3,975       )  
 Interest expense                                                  28,524                                  30,117                         86,749                                  90,515          
 Capitalized interest                                              (203         )                          (853         )                 (528         )                          (1,943       )  
 Loss on early extinguishment of debt                              7                                       559                            81                                      804             
 Unrealized (gain) loss on financial instruments                   43,604                                  (83,175      )                 73,351                                  (78,900      )  
 Other (income) expense, net                                       (62,689      )                          1,434                          (112,081     )                          (596         )  
 Operating Income ( L oss)                            $            119,192                    $            (879         )    $            300,924                    $            54,965          

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 before taxes, excluding loss on early
extinguishment of debt, unrealized gain (loss) on financial instruments,
special charge, transaction-related expenses, gain (loss) on disposal of
aircraft, nonrecurring items, and unallocated expenses and (income), 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, other nonoperating costs and CARES Act grant income.

Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)

                                                           For the Three Months Ended                                                                      
                                                           September 30, 20 20                    September 30, 201 9               Percent Change         
                                                                                                                                                           
 Net Income                                                $           74,054                     $           59,974                          23.5      %  
 Impact from:                                                                                                                                              
 CARES Act grant income (1)                                            (64,211     )                          -                                            
 Customer incentive asset amortization                                 9,858                                  12,796                                       
 Special charge                                                        547                                    18,861                                       
 Leadership transition costs                                           2,176                                  2,852                                        
 Noncash expenses and income, net (2)                                  4,527                                  4,696                                        
 Unrealized loss (gain) on financial instruments                       43,604                                 (83,175     )                                
 Other, net (3)                                                        462                                    2,371                                        
 Income tax effect of reconciling items                                11,731                                 (8,859      )                                
 Adjusted Net Income                                       $           82,748                     $           9,516                           NM           
                                                                                                                                                           
 Weighted average diluted shares outstanding                           26,619                                 25,854                                       
 Add: dilutive warrant (4)                                             2,478                                  -                                            
 Adjusted weighted average diluted shares outstanding                  29,097                                 25,854                                       
                                                                                                                                                           
 Adjusted Diluted EPS                                      $           2.84                       $           0.37                            NM           
                                                                                                                                                           
                                                           For the Nine Months Ended                                                                       
                                                           September 30, 20 20                    September 30, 201 9               Percent Change         
                                                                                                                                                           
 Net Income                                                $           176,319                    $           117,132                         50.5      %  
 Impact from:                                                                                                                                              
 CARES Act grant income (1)                                            (84,378     )                          -                                            
 Customer incentive asset amortization                                 28,414                                 26,018                                       
 Special charge                                                        16,481                                 22,130                                       
 Leadership transition costs                                           5,933                                  3,393                                        
 Noncash expenses and income, net (2)                                  13,372                                 13,743                                       
 Unrealized loss (gain) on financial instruments                       73,351                                 (78,900     )                                
 Other, net (3)                                                        (3,845      )                          4,653                                        
 Income tax effect of reconciling items                                10,170                                 (12,540     )                                
 Special tax item (5)                                                  -                                      (54,272     )                                
 Adjusted Net Income                                       $           235,817                    $           41,357                          NM           
                                                                                                                                                           
 Weighted average diluted shares outstanding                           26,256                                 26,909                                       
 Add: dilutive warrant (4)                                             826                                    -                                            
 Adjusted weighted average diluted shares outstanding                  27,082                                 26,909                                       
                                                                                                                                                           
 Adjusted Diluted EPS                                      $           8.71                       $           1.54                            NM           

Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)

                                                      For the Three Months Ended                                                                     
                                                      September 30, 2020                     September 30, 2019                Percent Change        
                                                                                                                                                     
 Income before taxes                                  $           110,174                    $           51,692                          NM          
 Impact from:                                                                                                                                        
 CARES Act grant income (1)                                       (64,211     )                          -                                           
 Customer incentive asset amortization                            9,858                                  12,796                                      
 Special charge                                                   547                                    18,861                                      
 Leadership transition costs                                      2,176                                  2,852                                       
 Noncash expenses and income, net (2)                             4,527                                  4,696                                       
 Unrealized loss (gain) on financial instruments                  43,604                                 (83,175     )                               
 Other, net (3)                                                   462                                    2,371                                       
 Adjusted income before income taxes                              107,137                                10,093                          NM          
 Interest expense, net                                            23,568                                 24,388                                      
 Other (income) expense, net                                      (62,689     )                          1,640                                       
 Adjusted operating income                            $           68,016                     $           36,121                          NM          
                                                                                                                                                     
 Income tax expense (benefit)                         $           36,120                     $           (8,282      )                               
 Income tax effect of reconciling items                           11,731                                 (8,859      )                               
 Adjusted income tax expense (benefit)                            24,389                                 577                                         
 Adjusted income before income taxes                  $           107,137                    $           10,093                                      
 Effective tax expense (benefit) rate                             32.8        %                          (16.0       )%                              
 Adjusted effective tax expense rate                              22.8        %                          5.7         %                               
                                                                                                                                                     
                                                      For the Nine Months Ended                                                                      
                                                      September 30, 2020                     September 30, 2019                Percent Change        
                                                                                                                                                     
 Income before taxes                                  $           254,281                    $           49,060                          NM          
 Impact from:                                                                                                                                        
 CARES Act grant income (1)                                       (84,378     )                          -                                           
 Customer incentive asset amortization                            28,414                                 26,018                                      
 Special charge                                                   16,481                                 22,130                                      
 Leadership transition costs                                      5,933                                  3,393                                       
 Noncash expenses and income, net (2)                             13,372                                 13,743                                      
 Unrealized loss (gain) on financial instruments                  73,351                                 (78,900     )                               
 Other, net (3)                                                   (3,845      )                          4,653                                       
 Adjusted income before income taxes                              303,609                                40,097                          NM          
 Interest expense, net                                            71,922                                 72,273                                      
 Other (income) expense, net                                      (112,081    )                          3,059                                       
 Adjusted operating income                            $           263,450                    $           115,429                         NM          
                                                                                                                                                     
 Income tax expense (benefit)                         $           77,962                     $           (68,072     )                               
 Income tax effect of reconciling items                           10,170                                 (12,540     )                               
 Special tax item (5)                                             -                                      (54,272     )                               
 Adjusted income tax expense (benefit)                            67,792                                 (1,260      )                               
 Adjusted income before income taxes                  $           303,609                    $           40,097                                      
 Effective tax expense (benefit) rate                             30.7        %                          (138.8      )%                              
 Adjusted effective tax expense (benefit) rate                    22.3        %                          (3.1        )%                              
                                                                                                                                                     

Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)

                                                      For the Three Months Ended                                                                      
                                                      September 30, 2020                     September 30, 2019                Percent Change         
                                                                                                                                                      
 Net Income                                           $           74,054                     $           59,974                          23.5      %  
 Interest expense, net                                            28,096                                 28,611                                       
 Depreciation and amortization                                    65,595                                 62,499                                       
 Income tax expense (benefit)                                     36,120                                 (8,282      )                                
 EBITDA                                                           203,865                                142,802                                      
 CARES Act grant income (1)                                       (64,211     )                          -                                            
 Customer incentive asset amortization                            9,858                                  12,796                                       
 Special charge                                                   547                                    18,861                                       
 Leadership transition costs                                      2,176                                  2,852                                        
 Unrealized loss (gain) on financial instruments                  43,604                                 (83,175     )                                
 Other, net (3)                                                   462                                    1,474                                        
 Adjusted EBITDA                                      $           196,301                    $           95,610                          105.3     %  
                                                                                                                                                      
                                                                                                                                                      
                                                      For the Nine Months Ended                                                                       
                                                      September 30, 2020                     September 30, 2019                Percent Change         
                                                                                                                                                      
 Net Income                                           $           176,319                    $           117,132                         50.5      %  
 Interest expense, net                                            85,292                                 84,597                                       
 Depreciation and amortization                                    189,005                                190,669                                      
 Income tax expense (benefit)                                     77,962                                 (68,072     )                                
 EBITDA                                                           528,578                                324,326                                      
 CARES Act grant income (1)                                       (84,378     )                          -                                            
 Customer incentive asset amortization                            28,414                                 26,018                                       
 Special charge                                                   16,481                                 22,130                                       
 Leadership transition costs                                      5,933                                  3,393                                        
 Unrealized loss (gain) on financial instruments                  73,351                                 (78,900     )                                
 Other, net (3)                                                   (3,845      )                          3,156                                        
 Adjusted EBITDA                                      $           564,534                    $           300,123                         88.1      %  
                                                                                                                                                      

(1) CARES Act grant income in 2020 is related to income associated with the
Payroll Support Program.

(2) Noncash expenses and income, net in 2020 and 2019 is primarily related to
amortization of debt discount on the convertible notes.

(3) Other, net in 2020 is primarily related to a $6.9 million net gain on the
sale of aircraft, costs associated with the Payroll Support Program, costs
associated with the refinancing of debt, costs associated with our acquisition
of Southern Air and accrual for legal matters and professional fees. Other,
net in 2019 is primarily related to a net insurance recovery, loss on early
extinguishment of debt, unique training aircraft costs required for a customer
contract and costs associated with a customer transaction with warrants, costs
associated with our acquisition of Southern Air and accrual for legal matters
and professional fees.

(4) Dilutive warrants in 2020 represented potentially dilutive common shares
related to vested warrants issued to a customer. These warrants are excluded
from Diluted EPS prepared in accordance with GAAP when they would have been
antidilutive.

(5) Special tax item in 2019 represented income tax benefits from the
completion of the 2015 IRS examination that are not related to ongoing
operations.

Atlas Air Worldwide Holdings, Inc.
Reconciliation to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)

                                              For the Three Months Ended                                      
                                              September 30, 20 20                   September 30, 20 19       
                                                                                                              
 Net Cash Provided by Operating Activities    $           222,318                   $           84,293        
 Less:                                                                                                        
 Capital expenditures                                     20,039                                30,840        
 Capitalized interest                                     203                                   853           
 Free Cash Flow (1)                           $           202,076                   $           52,600        
                                                                                                              
                                                                                                              
                                                                                                              
                                              For the Nine Months Ended                                       
                                              September 30, 20 20                   September 30, 201 9       
                                                                                                              
 Net Cash Provided by Operating Activities    $           782,708                   $           193,290       
 Less:                                                                                                        
 Capital expenditures                                     45,134                                107,594       
 Capitalized interest                                     528                                   1,943         
 Free Cash Flow (1)                           $           737,046                   $           83,753        

(1) Free Cash Flow = Net Cash from Operations minus Base Capital Expenditures
and Capitalized Interest.

Base Capital Expenditures excludes purchases of aircraft.

Atlas Air Worldwide Holdings, Inc.
Operating Statistics and Traffic Results
(Unaudited)

                                              For the Three Months Ended                                        Increase/               For the Nine Months Ended                                         Increase/          
                                              September 30, 20 20                   September 30, 20 19         (Decrease)              September 30, 20 20                   September 30, 201 9         (Decrease)         
                                                                                                                                                                                                                             
 Block Hours                                                                                                                                                                                                                 
 ACMI                                                     61,154                                60,337                817                           175,064                               182,060                 (6,996  )  
 Charter                                                  27,819                                18,142                9,677                         70,069                                52,463                  17,606     
 Cargo                                                    23,333                                12,717                10,616                        57,749                                37,084                  20,665     
 Passenger                                                4,486                                 5,425                 (939    )                     12,320                                15,379                  (3,059  )  
 Other                                                    1,555                                 831                   724                           3,609                                 2,128                   1,481      
 Total Block Hours                                        90,528                                79,310                11,218                        248,742                               236,651                 12,091     
                                                                                                                                                                                                                             
 Revenue Per Block Hour                                                                                                                                                                                                      
 ACMI                                         $           4,951                     $           4,790           $     161               $           4,989                     $           4,959           $       30         
 Charter                                      $           16,925                    $           17,862          $     (937    )         $           18,496                    $           18,010          $       486        
 Cargo                                        $           16,758                    $           16,745          $     13                $           18,560                    $           17,379          $       1,181      
 Passenger                                    $           17,792                    $           20,480          $     (2,688  )         $           18,199                    $           19,530          $       (1,331  )  
                                                                                                                                                                                                                             
 Average Utilization (block hours per day)                                                                                                                                                                                   
 ACMI (1)                                                 9.3                                   8.1                   1.2                           8.6                                   8.5                     0.1        
 Charter                                                                                                                                                                                                                     
 Cargo                                                    10.7                                  7.7                   3.0                           9.8                                   8.0                     1.8        
 Passenger                                                5.0                                   6.6                   (1.6    )                     4.6                                   6.3                     (1.7    )  
 All Operating Aircraft (1,2)                             9.4                                   8.0                   1.4                           8.6                                   8.3                     0.3        
                                                                                                                                                                                                                             
 Fuel                                                                                                                                                                                                                        
 Charter                                                                                                                                                                                                                     
 Average fuel cost per gallon                 $           1.35                      $           2.27            $     (0.92   )         $           1.42                      $           2.29            $       (0.87   )  
 Fuel gallons consumed (000s)                             87,460                                54,296                33,164                        217,507                               153,764                 63,743     

(1) ACMI and All Operating Aircraft averages in the third quarter and first
nine months of 2020 reflect the impact of increases in the number of CMI
aircraft and amount of CMI flying compared with the same periods of 2019.

(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 Nine Months Ended                                          Increase/          
                                                                             September 30, 20 20                   September 30, 201 9          (Decrease)           September 30, 20 20                   September 30, 201 9          (Decrease)         
                                                                                                                                                                                                                                                           
 Segment Operating Fleet (average aircraft equivalents during the period)                                                                                                                                                                                  
 ACMI (1)                                                                                                                                                                                                                                                  
 747-8F Cargo                                                                            8.1                                   7.7                      0.4                      8.6                                   8.3                      0.3        
 747-400 Cargo                                                                           13.0                                  18.3                     (5.3    )                13.0                                  18.1                     (5.1    )  
 747-400 Dreamlifter                                                                     2.7                                   3.5                      (0.8    )                2.7                                   3.6                      (0.9    )  
 777-200 Cargo                                                                           8.0                                   8.0                      -                        8.0                                   6.8                      1.2        
 767-300 Cargo                                                                           23.0                                  25.0                     (2.0    )                23.6                                  25.2                     (1.6    )  
 767-200 Cargo                                                                           9.0                                   9.0                      -                        9.0                                   9.0                      -          
 767-200 Passenger                                                                       1.0                                   1.0                      -                        1.0                                   1.0                      -          
 737-800 Cargo                                                                           5.5                                   3.7                      1.8                      5.2                                   1.8                      3.4        
 737-400 Cargo                                                                           0.8                                   5.0                      (4.2    )                3.5                                   5.0                      (1.5    )  
 Total                                                                                   71.1                                  81.2                     (10.1   )                74.6                                  78.8                     (4.2    )  
 Charter                                                                                                                                                                                                                                                   
 747-8F Cargo                                                                            1.9                                   2.2                      (0.3    )                1.3                                   1.6                      (0.3    )  
 747-400 Cargo                                                                           19.9                                  15.7                     4.2                      19.2                                  15.3                     3.9        
 747-400 Passenger                                                                       5.0                                   4.1                      0.9                      5.0                                   4.0                      1.0        
 777-200 Cargo                                                                           1.0                                   -                        1.0                      0.5                                   -                        0.5        
 767-300 Cargo                                                                           1.0                                   -                        1.0                      0.4                                   -                        0.4        
 767-300 Passenger                                                                       4.8                                   4.8                      -                        4.8                                   4.9                      (0.1    )  
 Total                                                                                   33.6                                  26.8                     6.8                      31.2                                  25.8                     5.4        
 Dry Leasing                                                                                                                                                                                                                                               
 777-200 Cargo                                                                           7.0                                   7.0                      -                        7.0                                   7.3                      (0.3    )  
 767-300 Cargo                                                                           21.0                                  21.0                     -                        21.0                                  21.2                     (0.2    )  
 757-200 Cargo                                                                           -                                     1.0                      (1.0    )                0.2                                   1.0                      (0.8    )  
 737-300 Cargo                                                                           1.0                                   1.0                      -                        1.0                                   1.0                      -          
 737-800 Passenger                                                                       -                                     1.0                      (1.0    )                0.2                                   1.0                      (0.8    )  
 Total                                                                                   29.0                                  31.0                     (2.0    )                29.4                                  31.5                     (2.1    )  
 Less: Aircraft Dry Leased to CMI customers                                              (21.0       )                         (22.7       )            (1.7    )                (21.0       )                         (23.1       )            (2.1    )  
 Total Operating Average Aircraft Equivalents                                            112.7                                 116.3                    (3.6    )                114.2                                 113.0                    1.2        
                                                                                                                                                                                                                                                           
 Out-of-Service (2)                                                                      1.0                                   1.0                      -                        2.7                                   0.7                      2.0        

(1) ACMI average fleet excludes spare aircraft provided by CMI customers.
                
(2) Out-of-service includes aircraft that are either temporarily parked or
held for sale.

Contacts:   Investors – InvestorRelations@atlasair.com 
Media – CorpCommunications@atlasair.com

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