Full-Year 2022 Results

• Reported Net Income of $355.9 Million
• Adjusted Net Income of $418.0 Million
• Adjusted EBITDA of $899.2 Million

Fourth-Quarter 2022 Results

• Reported Net Income of $126.0 Million
• Adjusted Net Income of $153.1 Million
• Adjusted EBITDA of $286.8 Million

Atlas Air Worldwide Holdings, Inc. has announced full-year 2022 results, including net income of $355.9 million, or $10.53 per diluted share, compared with net income of $493.3 million, or $16.16 per diluted share, in 2021.

On an adjusted basis, EBITDA totaled $899.2 million in 2022 compared with $1.1 billion in 2021. Adjusted net income in 2022 totaled $418.0 million, or $14.23 per diluted share, compared with $551.0 million, or $18.51 per diluted share, in 2021.

“2022 was one of the best years in Atlas’ history, and we are pleased that we placed all eight of our new and incoming aircraft under long-term contracts. All four new 747-8Fs and the first of four 777Fs have been delivered and are operating for strategic customers under attractive long-term agreements,” said Atlas Air Worldwide President and Chief Executive Officer John W. Dietrich.

Mr. Dietrich added: “In January, we took delivery of the final 747 ever to be produced by Boeing during an historic ceremony. Although the celebration marked the end of the 54-year production run for the ‘Queen of the Skies,’ it is only the beginning for this aircraft, which will serve the airfreight market for decades to come.

“Atlas began over 30 years ago with a single 747-200 freighter and since then, we became, and still are, the world’s largest operator of 747 freighters. Our company’s history and success are directly linked to the 747 platform, and it is fitting that we took delivery of the final four of these iconic aircraft.”

He concluded: “I also want to thank the Atlas team for their continued efforts to deliver safe and reliable service to our customers throughout 2022.”

Transaction Update

As previously announced, on August 4, 2022, Atlas Air Worldwide entered into a definitive agreement to be acquired by an investor group led by funds managed by affiliates of Apollo Global Management, Inc., together with investment affiliates of J.F. Lehman & Company, LLC and Hill City Capital LP. In light of this pending acquisition, Atlas Air Worldwide will not hold an earnings conference call or provide forward-looking guidance.

The Company is working to complete the transaction in the first quarter of 2023, and continues to make progress toward obtaining necessary approvals. At this time, we are awaiting final approval from the U.S. Department of Transportation and have received all other required shareholder and regulatory approvals.

Fourth-Quarter Results

Revenue grew to $1.21 billion in the fourth quarter of 2022 compared with $1.16 billion in the prior-year quarter. Volumes in the fourth quarter of 2022 totaled 84,916 block hours compared with 91,985 in the fourth quarter of 2021.

For the three months ended December 31, 2022, our reported net income totaled $126.0 million, or $3.70 per diluted share, compared with $176.7 million, or $5.55 per diluted share, in the fourth quarter of 2021.

On an adjusted basis, EBITDA was $286.8 million in the fourth quarter of 2022 compared with $361.8 million in the fourth quarter of 2021. Adjusted net income in the fourth quarter of 2022 totaled $153.1 million, or $5.17 per diluted share, compared with $211.6 million, or $7.05 per diluted share, in the prior-year period.

Reported earnings in the fourth quarter of 2022 also included an effective income tax rate of 22.6%. On an adjusted basis, our results reflected an effective income tax rate of 21.1%.

Higher Airline Operations revenue primarily reflected an increase in the average rate per block hour, partially offset by a reduction in block hours flown. The higher average rate per block hour was primarily due to higher fuel prices and yields (net of fuel), including the impact of new and extended long-term contracts and increased cargo flying for the AMC. Block hours decreased primarily due to the impact of severe winter storms and a reduction in less profitable smaller gauge CMI flying. The abnormal increase in severe weather events also adversely impacted our crew availability and our ability to position them due to the widespread and well-publicized cancellations of commercial passenger flights.

Airline Operations segment contribution decreased during the quarter primarily due to increased pilot costs related to higher overtime pay driven by operational disruptions, including an abnormal increase in severe weather events, as well as higher crew travel costs related to higher commercial passenger airfare rates. Segment contribution was also adversely impacted by lower aircraft utilization and yields (net of fuel), primarily driven by lower market demand, the severe weather events noted above, and decreased passenger flying for the AMC. These items were partially offset by the contribution from our new 747-8F and 777-200LRF aircraft delivered in 2022, as well as lower heavy maintenance expense.

In Dry Leasing, segment revenue in the fourth quarter of 2022 was relatively unchanged compared with the prior-year period. Higher segment contribution was primarily due to lower interest expense related to the scheduled repayment of debt.

Unallocated income and expenses, net, decreased during the quarter primarily due to a $14.1 million adjustment to paid time-off benefits recorded in 2021 related to our new CBA, lower interest expense related to our adoption of the amended accounting guidance for convertible notes and higher interest income.

Full-Year Results

Revenue increased to $4.5 billion in 2022 from $4.0 billion in 2021. Volumes in 2022 totaled 330,738 block hours compared with 364,061 in 2021.

For the twelve months ended December 31, 2022, our reported net income was $355.9 million, or $10.53 per diluted share, compared with $493.3 million, or $16.16 per diluted share, in 2021.

On an adjusted basis, EBITDA was $899.2 million in 2022 compared with $1.1 billion in 2021. For the twelve months ended December 31, 2022, adjusted net income was $418.0 million, or $14.23 per diluted share, compared with $551.0 million, or $18.51 per diluted share, in 2021.

Reported results in 2022 included an effective income tax rate of 22.9%. On an adjusted basis, our results reflected an effective income tax rate of 22.0%.

Fleet

All four new 747-8Fs have been delivered, including the final 747 in January 2023. All four of these aircraft are placed with strategic customers under long-term agreements.

All four of our new and incoming 777-200LRFs have been placed under a long-term ACMI contract with MSC Mediterranean Shipping Company SA. The first aircraft was delivered in late November 2022, with three more expected to be delivered throughout 2023.

As previously disclosed, we purchased five of our existing 747-400Fs at the end of their leases during 2022, all of which were acquired between March and December. In November 2022, we reached an agreement with one of our lessors to purchase a 747-400F at the end of its existing lease term. We expect to complete the acquisition of the aircraft by April 2023.

Cash

At December 31, 2022, our cash, including cash equivalents and restricted cash, totaled $773.9 million compared with $921.0 million at December 31, 2021.

The change in position resulted from cash used for investing and financing activities, including $185.6 million for pre-delivery payments for our new aircraft, $216.6 million related to the settlement of our 2015 Convertible Notes and $100.0 million for our accelerated share repurchase program (which we have suspended in connection with the proposed merger), partially offset by cash provided by operating activities.

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; 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, respectively.

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 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.

How Atlas Air rose to the occasion for Valentine’s Day:

Chances are, if you sent or received a bouquet for Valentine’s Day, those flowers were flown in from Colombia and Ecuador and likely on an Atlas Air Boeing 747 freighter. In advance of the holiday, Atlas Air imported 5,370,146 kilos of fresh cut flowers to Miami International Airport (MIA) on 74 flights – 40 flights from El Dorado International Airport (BOG) in Colombia and 34 flights from Mariscal Sucre de Quito International Airport (UIO) in Ecuador between January 20 and February 8. All on the B747F.

Since MIA ranks first among U.S. ports of entry for shipments of fresh cut flowers, Atlas expanded the cooler facility there by an additional 20,000 square feet for a total of 76,000 square feet of cooler capacity to meet the demand. With this expansion, Atlas Air can now simultaneously handle up to four B747F flights of flowers. The cooler in MIA now has a total of 26 doors to deliver flowers to our customers, and a total of 6 AOA (Ramp doors) to bring Unit Loading Devices (ULDs) with flowers directly to the cooler from the airplane.

Lucas Vargas, MIA Station Manager, notes how the expansion has benefitted Atlas’ operation, and the tremendous team effort that made it possible.

Pallets of fresh flowers are loaded onto an Atlas B747F at MIA.

“In previous years, our main constraint was space, but this expansion has enabled us to handle the high volume of flowers that we move,” said Lucas. “This means a better experience for our customers and upholds our commitment to exceptional customer service.

He continued, “It was really a huge team effort across Ground Ops, Flight Ops and Tech Ops, and our vendor, Worldwide Flight Services (WFS). Once we launched the expansion, everyone came together to brainstorm how we can handle the freight better, how we can improve the process flow and/or mitigate any issues. It’s already a strong season, but for me, it’s been successful because everyone came together to find the best solutions for our customers.”