3
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ x ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission File Number
0-25732
ATLAS AIR, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1207329
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
538 Commons Drive, Golden, Colorado 80401
(Address of principal executive offices) (Zip Code)
(303) 526-5050
(Registrant's telephone number, including area code)
Indicated by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[ x ] Yes [ ] No
As of August 3, 1998 the Registrant had 22,442,941 shares of $.01
par value Common Stock outstanding.
ATLAS AIR, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets-
June 30, 1998 and December 31, 1997
Consolidated Statements of Operations-
Six Months Ended June 30, 1998 and 1997
Consolidated Statements of Cash Flows-
Six Months Ended June 30, 1998 and 1997
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
Signatures
ATLAS AIR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, December 31,
1998 1997
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 173,500 $ 41,334
Short-term investments 33,333 111,635
Accounts receivable and other, net 47,215 55,702
Total current assets 254,048 208,671
Property and equipment:
Flight equipment 1,429,651 1,154,562
Other 8,374 7,607
1,438,025 1,162,169
Less accumulated depreciation (113,916) (98,959)
Net property and equipment 1,324,109 1,063,210
Other assets:
Debt issuance costs, net of
accumulated amortization 24,675 21,705
Deferred lease costs 22,324 --
Deposits and other 3,526 3,829
50,525 25,534
Total assets $1,628,682 $1,297,415
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 54,373 $ 40,049
Accounts payable and accrued
expenses 83,701 88,105
Income tax payable 8,143 154
Total current liabilities 146,217 128,308
Long-term debt, net of current portion 901,642 736,026
Deferred aircraft obligations 295,923 163,167
Deferred income tax payable 31,841 31,085
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $1 par value;
10,000,000 shares authorized;
no shares issued -- --
Common Stock, $0.01 par value;
50,000,000 shares authorized;
22,511,659 and 22,450,229 shares
issued, respectively 225 225
Additional paid-in capital 177,288 176,253
Retained earnings 78,187 62,803
Treasury Stock, at cost; 75,336
and 19,073 shares, respectively (2,641) (452)
Total stockholders' equity 253,059 238,829
Total liabilities and
stockholders' equity $1,628,682 $1,297,415
The accompanying notes are an integral part of these consolidated
financial statements.
ATLAS AIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues:
Contract services $ 85,567 $ 86,978 $ 163,178 $ 163,795
Scheduled services 11 3,428 196 6,680
Charters and other 2,372 3,496 4,210 5,476
Total operatin revenues 87,950 93,902 167,584 175,951
Operating expenses:
Flight crew salaries and
benefits 7,692 7,129 14,449 13,947
Other flight-related
expenses 5,458 7,355 11,977 13,722
Maintenance 20,995 31,684 41,516 55,011
Aircraft and engine
rentals 945 7,709 2,186 15,485
Fuel and ground handling 1,745 3,949 3,747 7,128
Depreciation and
amortization 13,007 9,696 25,237 19,174
Other 6,590 9,934 15,411 17,896
Write-off of capital
investment and other - 27,100 -- 27,100
Total operating
expenses 56,432 104,556 114,523 169,463
Operating income (loss) 31,518 (10,654) 53,061 6,488
Other income (expense):
Interest income 2,931 1,582 4,592 3,491
Interest expense (18,410) (12,490) (33,185) (23,647)
(15,479) (10,908) (28,593) (20,156)
Income (loss) before income
taxes 16,039 (21,562) 24,468 (13,668)
(Provision for) benefit from
income taxes (5,934) 7,870 (9,053) 4,989
Income (loss) before
extraordinary item 10,105 (13,692) 15,415 (8,679)
Extraordinary item:
Gain from extinguishment
of debt, net of
applicable taxes of $9,622 -- 16,740 -- 16,740
Net income $ 10,105 $ 3,048 $ 15,415 $ 8,061
Basic earnings per share:
Income (loss) before
extraordinary item $ 0.45 $ (0.61) $ 0.69 $ (0.39)
Extraordinary item -- 0.75 -- 0.75
Net income $ 0.45 $ 0.14 $ 0.69 $ 0.36
Weighted average common
shares outstanding 22,471 22,450 22,474 22,450
Diluted earnings per share:
Income (loss) before
extraordinary item $ 0.45 $ (0.61) $ 0.68 $ (0.39)
Extraordinary item -- 0.75 -- 0.75
Net income $ 0.45 $ 0.14 $ 0.68 $ 0.36
Weighted average common shares
outstanding 22,597 22,542 22,577 22,542
The accompanying notes are an integral part of these consolidated
financial statements.
ATLAS AIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
1998 1997
Operating activities:
Net income $ 15,415 $ 8,061
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 25,411 19,861
Amortization of debt issuance
costs 2,606 1,530
Gain on sale of property and
equipment -- (1,366)
Write-off of capital investment
and other -- 27,100
Change in deferred income tax
payable 756 2,141
Extraordinary gain -- (26,362)
Changes in operating assets and
liabilities:
Accounts receivable and other 8,487 (9,335)
Deposits and other 303 1,484
Accounts payable and accrued
expenses (4,404) 7,022
Income tax payable 7,989 (5,431)
Net cash provided by
operating activities 56,563 24,705
Investment activities:
Purchase of property and
equipment (153,554) (193,244)
Sale of property and equipment -- 3,750
Purchase of short-term
investments (44,594) (81,008)
Maturity of short-term
investments 122,896 115,523
Net cash used in
investing activities (75,252) (154,979)
Financing activities:
Issuance of Common Stock 1,035 --
Purchase of Treasury Stock (2,632) (368)
Issuance of Treasury Stock 412 327
Borrowings on notes payable 195,408 372,483
Principal payments on notes
payable (15,468) (237,031)
Debt issuance costs (5,576) (5,362)
Deferred lease costs (22,324) --
Net cash provided by
financing activities 150,855 130,049
Net increase (decrease) in cash 132,166 (225)
Cash and cash equivalents at
beginning of period 41,334 9,793
Cash and cash equivalents at end
of period $ 173,500 $ 9,568
The accompanying notes are an integral part of these
consolidated financial statements.
ATLAS AIR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Unaudited Consolidated Financial Statements
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting only of normal recurring items) necessary to present
fairly the financial position of Atlas Air, Inc. and its wholly-
owned subsidiaries (collectively, the "Company") as of June 30,
1998 and the results of operations and cash flows for the periods
presented. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to the Securities and Exchange Commission's
rules and regulations. The results of operations for the periods
presented are not necessarily indicative of the results to be
expected for the full year. Management believes the disclosures
made are adequate to ensure that the information is not
misleading, and suggests that these financial statements be read
in conjunction with the Company's December 31, 1997 audited
financial statements included in its Annual Report on Form 10-K.
2. Reclassifications
Certain prior year amounts have been reclassified to conform
to current year presentation.
3. Recently Issued Accounting Standards
In March 1998, the Accounting Standards Executive Committee
("AcSEC") of the American Institute of Certified Public
Accountants ("AICPA") issued Statement of Position ("SOP") 98-1
"Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." SOP 98-1 provides guidance on
accounting for the costs of computer software developed or
obtained for internal use. Once the capitalization criteria of
SOP 98-1 have been met, certain internal and external direct
costs of materials, services and interest should be capitalized.
SOP 98-1 is effective for financial statements for fiscal years
beginning after December 15, 1998. The Company believes that the
application of SOP 98-1 will not have a material impact on its
financial statements.
In April 1998, the AcSEC issued SOP 98-5 "Reporting on the
Costs of Start-up Activities." SOP 98-5 provides guidance on the
financial reporting of start-up costs and organization costs and
requires such costs to be expensed as incurred. Generally,
initial application of SOP 98-5 should be reported as the
cumulative effect of a change in accounting principle. SOP 98-5
is effective for financial statements for fiscal years beginning
after December 15, 1998. Presently, the Company is deferring
certain start-up costs related to the introduction of new Boeing
747-400 freighter aircraft into the Company's fleet. The Company
expects that the net of tax effect of the application of SOP 98-5
in the first quarter of 1999 to be in the range of $2 million to
$3 million.
In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 133 "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 requires that
changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in
the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions
that receive hedge accounting. SFAS No. 133 is effective for
years beginning after June 15, 1999 and may be implemented as of
the beginning of any fiscal quarter after June 15, 1998. The
Company has not yet quantified the impact of adopting SFAS No.
133 on its financial statements and has not determined the timing
of or method of its adoption of SFAS No. 133. However, SFAS
No.133 could increase volatility in earnings and other
comprehensive income.
4. Short-Term Investments
Proceeds from the secondary public offering of the Company's
Common Stock in May 1996, plus additional funds, were invested in
various held-to-maturity securities, as defined in SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities," which requires investments in debt securities to be
classified as held-to-maturity and measured at amortized cost in
the statement of financial position only if the reporting
enterprise has the positive intent and ability to hold those
securities to maturity. The following table sets forth the
aggregate fair value, gross unrealized holding gains, gross
unrealized holding losses, and amortized/accreted cost basis by
major security type as of June 30, 1998 (in thousands):
Gross Gross (Amortizat
Aggregate Unrealized Unrealized ion)
Security Type Fair Holding Holding Accretion
Value Gains Losses
Medium Term Notes $ 4,997 $ -- $ 2 $ 1
U.S. Government 7,098 1 1 91
Agencies
Corporate Notes 5,713 -- (4)
Market Auction 15,100 -- -- --
Preferreds
Totals $ 32,908 $ 1 $ 3 $ 88
In addition, there was approximately $423,000 of accrued interest
on Short-Term Investments at June 30, 1998. Interest earned on
these investments and maturities of these investments are
reinvested in similar securities and cash equivalents. In April
1998, the Company invested approximately $169.5 million of
proceeds from the sale of its 9 1/4% Senior Notes in similar
securities (see Note 5).
5. Commitments and Contingencies
In June 1997, the Company entered into an agreement with The
Boeing Company ("Boeing") to purchase 10 new 747-400 freighter
aircraft to be powered by engines acquired from General Electric
("GE"), with options to purchase up to 10 additional 747-400
aircraft (the "Boeing Purchase Agreement"). The Company has
arranged leveraged lease financing for the first three of the 747-
400 freighter aircraft to be delivered (see EETCs discussed
below). The Boeing Purchase Agreement requires that the Company
pay pre-delivery deposits to Boeing prior to the delivery date of
each 747-400 freighter aircraft in order to secure delivery of
the 747-400 freighter aircraft and to defray a portion of the
manufacturing costs. Based on the current expected firm aircraft
delivery schedule, the Company expects the maximum total amount
of pre-delivery deposits at any time outstanding will be
approximately $162.3 million, which was paid as of June 30, 1998.
Upon each delivery, Boeing will refund to the Company the pre-
delivery deposits associated with the delivered 747-400 freighter
aircraft. For the remainder of 1998 and for the year 1999, the
Company expects to pay $39.9 million and $11.8 million,
respectively, in pre-delivery deposits in accordance with the
firm order pre-delivery deposits schedule. In addition, the
Boeing Purchase Agreement provides for a deferral of a portion of
the pre-delivery deposits (deferred aircraft obligations) for
which the Company accrues and pays interest quarterly at 6-month
LIBOR, plus 2.0%. As of June 30, 1998, there was $288.9 million
of deferred aircraft obligations outstanding, which is the
expected maximum total amount of deferred aircraft obligations at
any time, based on the current expected firm aircraft delivery
schedule, and the combined interest rate was approximately 7.8%.
In January and February 1998, pursuant to an early lease
termination agreement negotiated in November 1997 with Philippine
Airlines ("PAL"), the Company delivered to Boeing for
modification to cargo configuration the aircraft acquired from
Marine Midland Bank in December 1996 and the aircraft acquired
from Citicorp Investor Lease, Inc. in May 1997. The first
aircraft was re-delivered to the Company at the end of April 1998
and the second aircraft was re-delivered to the Company in July
1998. The financing for the modification to cargo configuration
was provided under the Aircraft Acquisition Credit Facility (as
defined in the Company's Form 10-K for 1997), under which the
Company borrowed a total of $3.3 million during the first quarter
of 1998 with respect to these aircraft. In April 1998 and July
1998, the Company borrowed an additional $13.8 million and $17.2
million, respectively, to pay for the final costs of conversion
for these two aircraft.
In February 1998, the Company completed an offering of
$538.9 million of Pass Through Certificates, also known as
enhanced equipment trust certificates (the "EETCs"). The EETCs
are not direct obligations of, or guaranteed by, the Company and
therefore are not included in the Company's consolidated
financial statements. In November and December 1997, the Company
entered into three Treasury Note hedges, approximating $300
million of principal, for the purpose of minimizing the risk
associated with the fluctuations in interest rates, which are the
basis for the pricing of the EETCs which were priced in January
1998. The effect of the hedge resulted in a deferred cost of
$6.3 million, which will be amortized over the expected twenty-
year life associated with this financing. The cash proceeds from
the EETCs were deposited with an escrow agent and will be used to
finance (through either leveraged leases or secured debt
financings) the acquisition of the first five of the 10 new 747-
400 freighter aircraft from Boeing scheduled to be delivered to
the Company during the period July 1998 through December 1998.
There can be no assurance that the Company will be able to obtain
sufficient financing to fund the purchase of the remaining five
747-400 freighter aircraft, or if such financing is available,
that it will be available on a commercially reasonable basis. If
it is unable to do so, the Company could be required to modify
its expansion plans or to incur higher than anticipated financing
costs, which could have a material adverse effect on the Company.
In connection with the EETCs, the Company intends to seek certain
owner participants who will commit lease equity financing to be
used in leveraged leases of such aircraft. The Company has
arranged for equity participation for the first three 747-400
freighter aircraft deliveries, of which one occurred at the end
of July 1998, one occurred in August 1998 and one is scheduled to
occur in October 1998.
In March 1998, the Company entered into two 10-year agreements
with GE to provide all repair and overhaul work on the engines
related to both the 10 firm and 10 option 747-400 freighter aircraft.
These agreements are based on a fixed cost per flight hour, similar
to the Company's engine agreement with GE for its 747-200 fleet.
In April 1998, the Company consummated the offering of $175
million of unsecured 9 1/4% Senior Notes at 99.867% due 2008
(the "9 1/4% Senior Notes"). The proceeds of the offering will
be used to repay $80 million of the Aircraft Acquisition Credit
Facility and for general corporate purposes, which may include
the partial funding of the redemption of the Company's
outstanding 12 1/4% Pass Through Certificates due 2002 (the
"Equipment Notes"), which are subject to redemption at the option
of the Company on or after December 1, 1998. Interest on the 9
1/4% Senior Notes is payable semi-annually on April 15 and
October 15 of each year, commencing October 15, 1998. The 9 1/4%
Senior Notes are redeemable at the option of the Company, in
whole or in part, at any time on or after April 15, 2003,
pursuant to a defined schedule. The 9 1/4% Senior Notes are
senior indebtedness of the Company, ranking pari passu in right
of payment with all existing and future senior indebtedness of
the Company and senior in right of payment to all subordinated
indebtedness of the Company. The 9 1/4% Senior Notes are
effectively subordinated, however, to all secured indebtedness of
the Company and all existing and future liabilities of the
Company's subsidiaries.
In April 1998, the Company entered into a sublease and ramp
use agreement with American Airlines, Inc. for 145,000 square
feet of hangar, office and parking space at Miami International
Airport in support of the Company's increased operations. The
lease is for a period in excess of four years and commences July
1, 1998, at a monthly rate of approximately $105,000, subject to
an annual escalation factor. Additionally, effective August 1,
1998 the Company leased an additional 5,000 square feet at its
existing facility located at John F. Kennedy International
Airport ("JFK") with a monthly rate increase to approximately
$70,000.
In May 1998, the Company agreed to purchase a Boeing
Business Jet ("BBJ") from Boeing for approximately $30 million.
As of June 30, 1998, the Company had paid approximately $9.0
million in pre-delivery deposits and there was approximately $7.0
million of deferred aircraft obligations outstanding for which
the interest rate was approximately 7.8%.
In June 1998, the Company entered into an agreement with
Lufthansa Technik Aktiengesellschaft ("Lufthansa Technik") by
which Lufthansa Technik will provide all required maintenance for
the Company's initial order of 10 747-400 freighter aircraft,
plus any additional 747-400 freighter aircraft the Company
purchases pursuant to its option in the Boeing Purchase
Agreement, on a "power by the hour" basis for 10 years, with a
provision for the Company to terminate the agreement as of June
2003.
Under the FAA's Directives issued under its "Aging Aircraft"
program, the Company is subject to extensive aircraft
examinations and may be required to undertake structural
modifications to its fleet to address the problem of corrosion
and structural fatigue. In November 1994, Boeing issued Nacelle
Strut Modification Service Bulletins which have been converted
into Directives by the FAA. Six of the Company's Boeing 747-200
aircraft will have to be brought into compliance with such
Directives by March 2000 at an estimated total cost of
approximately $3.0 million. As part of the FAA's overall aging
aircraft program, it has issued Directives requiring certain
additional aircraft modifications to be accomplished. The Company
estimates that the modification costs per aircraft will range
between $2 million and $3 million. Twelve aircraft in the
Company's fleet have already undergone the major portion of such
modifications. The remaining seven aircraft in service will
require modification prior to the year 2009. Other Directives
have been issued that require inspections and minor modifications
to Boeing 747-200 aircraft. It is possible that additional
Directives applicable to the types of aircraft or engines
included in the Company's fleet could be issued in the future,
the cost of which could be substantial.
On February 24, 1997, the Company filed a complaint for
declaratory judgment in the Colorado District Court, Jefferson
County against Israel Aircraft Industries Ltd. ("IAI") for
mechanical problems the Company experienced with respect to an
aircraft the Company sub-leased from IAI. The Company is seeking
approximately $4 million in damages against IAI to be offset by
the amount, if any, the Company owes IAI pursuant to the sub-
lease. IAI had the case removed to the U.S. District Court,
District of Colorado on April 21, 1997 and has filed
counterclaims alleging damages of approximately $9 million based
on claims arising from the sub-lease. The Company intends to
vigorously defend against all of IAI's claims.
In March 1997, Air Support International, Inc. ("ASI") filed
a complaint against the Company in the U.S. District Court,
Eastern District of New York alleging actual and punitive damages
of approximately $13.5 million arising from the Company's refusal
to pay commissions which ASI claims it is owed for allegedly
arranging certain contracts between the Company and its
customers. The Company intends to vigorously defend against all
of ASI's claims.
6. Subsequent Events
In July 1998, the Company secured permanent financing in the
amount of $38.9 million from Banc One Leasing Corporation for one
of the aircraft originally financed under the Aircraft
Acquisition Credit Facility. The new financing carries a term of
10 years at an annual interest rate of approximately 7.5% with
quarterly debt service payments.
In July 1998, the Company purchased a 747-200 freighter
aircraft from Air France Partnairs Leasing N.V. for which the
Company financed approximately $31.3 million through the Aircraft
Acquisition Credit Facility. This aircraft is currently being
leased to a third-party with a scheduled lease termination at the
end of January 1999.
At the end of July 1998 and in August 1998, the Company took
delivery of the first and second of 10 747-400 freighter aircraft
it has contracted to acquire under the Boeing Purchase Agreement.
Financing for these aircraft was provided through leveraged
leases, utilizing a portion of the funding provided by proceeds
from the EETCs discussed above. The Company has entered into
long-term contracts with British Airways World Cargo ("British
Airways') and Cargolux Airlines International, S.A. ("Cargolux")
for the operation of the first and second 747-400 freighter
aircraft, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company provides airport-to-airport cargo transportation
services throughout the world to major international air carriers
generally under three- to five-year fixed-rate contracts which
typically require that the Company supply aircraft, crew,
maintenance and insurance (the "ACMI Contracts"). The cargo
operations of the Company's airline customers are seasonal in
nature, with peak activity occurring traditionally in the second
half of the year, and with a significant decline occurring in the
first quarter. This decline in cargo activity is largely due to
the decrease in shipping that occurs following the December and
first quarter holiday seasons associated with the celebration of
Christmas and the Chinese New Year. Certain of the Company's
customers have, in the past, elected to use that period of the
year to exercise their contractual options to cancel a limited
number (generally not more than 5% per year) of guaranteed hours
with the Company, and are expected to continue to do so in the
future. As a result, the Company's revenues typically decline in
the first quarter of the year as its contractual aircraft
utilization level temporarily decreases. The Company seeks to
schedule, to the extent possible, its major aircraft maintenance
activities during this period to take advantage of any unutilized
aircraft time.
The aircraft acquisitions, lease arrangements and
modification schedule are described in Note 6 of the Company's
December 31, 1997 consolidated financial statements. The timing
of when an aircraft enters the Company's fleet can affect not
only annual performance, but can make quarterly results vary,
thereby affecting the comparability of operations from period to
period.
The table below sets forth selected financial and operating
data for the first and second quarters of 1998 and 1997 (dollars
in thousands).
1998 1997
Cumu- 2nd 1st Cumu- 2nd 1st
lative Quarter Quarter lative Quarter Quarter
Total
operating
revenues $167,584 $87,950 $79,634 $175,951 $93,902 $82,049
Operating
expenses 114,523 56,432 58,091 169,463 104,556 64,907
Operating
income (loss) 53,061 31,518 21,543 6,488 (10,654) 17,142
Other income
(expense) (28,593) (15,479) (13,114) (20,156) (10,908) (9,248)
Net income 15,415 10,105 5,310 8,061 3,048 5,013
Block hours 32,216 16,828 15,388 32,984 17,541 15,443
Average
aircraft
operated 17.3 17.7 17.0 18.4 19.5 17.2
Operating
margin
(deficit) 31.7% 35.8% 27.1% 3.7% (11.4)% 20.9%
Operating Revenues and Results of Operations
Total operating revenues for the quarter ended June 30, 1998
decreased to $88.0 million from $93.9 million for the same period
in 1997, or approximately 6%. This reflected the decline in the
average number of aircraft in the Company's fleet during the
second quarter of 1998, to 17.7 aircraft compared to 19.5 during
the same period in 1997, or a decrease of approximately 9%.
Total block hours for the second quarter of 1998 were 16,828
compared to 17,541 for the same period in 1997, a decrease of
approximately 4%, principally reflecting higher utilization per
average aircraft period over period. Revenue per block hour
decreased by approximately 2% to $5,226 for the second quarter of
1998 compared to $5,353 for the second quarter of 1997. This was
substantially due to the decrease in the volume of scheduled
service operations period over period, for which the rate per
block hour is higher due to additional operating costs borne by
the Company under such arrangements. Scheduled service
operations are performed on an ad hoc basis and are dependent
upon excess availability of the Company's aircraft and customer
demand.
The Company's operating results improved from a $10.7
million operating loss for the second quarter of 1997 to an
operating profit of $31.5 million for the second quarter of 1998.
Results of operations were favorably impacted by lower
maintenance costs due to the return upon lease termination at the
beginning of 1998 of the five aircraft which the Company had
leased from Federal Express Corporation (the "FedEx Aircraft").
The FedEx Aircraft experienced significantly higher maintenance
costs and were less reliable compared to the other aircraft in
the Company's fleet. In addition, operating results improved due
to the increase in the percentage of owned aircraft compared to
leased aircraft in the Company's fleet period over period. Net
income of $3.0 million for the second quarter of 1997 increased
by 232% to a net income of $10.1 million for the second quarter
of 1998.
Total operating revenues for the six months ended June 30,
1998 decreased to $167.6 million from $176.0 million for the same
period in 1997, or approximately 5%. This reflected the decline
in the average number of aircraft in the Company's fleet during
the first half of 1998, to 17.3 aircraft compared to 18.4 during
the same period in 1997, a decrease of approximately 6%. Total
block hours for the first half of 1998 were 32,216 compared to
32,984 for the same period in 1997, a decrease of approximately
2%, principally reflecting higher utilization per average
aircraft period over period. Revenue per block hour decreased by
approximately 3% to $5,202 for the first six months of 1998
compared to $5,334 for the same period in 1997. This was
substantially due to the decrease in the volume of scheduled
service operations period over period, as discussed above.
The Company's operating results improved by approximately
718% from a $6.5 million operating profit for the first six
months of 1997 to an operating profit of $53.1 million for the
first six months of 1998. Results of operations were favorably
impacted by lower maintenance costs due to the return of the
FedEx Aircraft upon lease termination at the beginning of 1998,
as discussed above. In addition, operating results improved due
to the increase in the percentage of owned aircraft compared to
leased aircraft in the Company's fleet period over period. Net
income of $8.1 million for the first half of 1997 increased by
91% to a net income of $15.4 million for the first half of 1998.
Operating Expenses
The Company's principal operating expenses include flight
crew salaries and benefits; other flight-related expenses;
maintenance; aircraft and engine rentals; fuel costs and ground
handling; depreciation and amortization; and other expenses.
Flight crew salaries and benefits include all such expenses
for the Company's pilot work force. Flight crew salaries and
benefits increased to $7.7 million in the second quarter of 1998
compared to $7.1 million in the same period of 1997, or
approximately 8%, due to certain increased staffing associated
with overall operational requirements and with the planned
introduction of the 747-400 freighter aircraft into the Company's
fleet in the second half of 1998, which were partially offset by
the lower block hours period over period. On a block hour basis,
this expense increased by approximately 13% to $457 per hour for
the second quarter of 1998 from $406 per hour for the same period
in 1997. For the first six months of 1998, actual expense
increased by approximately 4%, from $13.9 million to $14.4
million. On a block hour basis, this expense increased to $449
per hour from $423 per hour for the same period in 1997, or
approximately 6%.
Other flight-related expenses include hull and liability
insurance on the Company's fleet of Boeing 747 aircraft, crew
travel and meal expenses, initial and recurring crew training
costs and other expenses necessary to conduct its flight
operations.
Other flight-related expenses decreased to $5.5 million in
the second quarter of 1998 compared to $7.4 million for the same
period of 1997, and to $12.0 million in the six months ended June
30, 1998 compared to $13.7 in the six months ended June 30, 1997,
or approximately 26% and 13%, respectively. These decreases were
primarily due to lower insurance costs and a decrease in block
hours period over period. On a block hour basis, other flight-
related expenses declined by approximately 23% to $324 per hour
for the second quarter of 1998 compared to $419 per hour for the
same period in 1997, and by approximately 11% to $372 per hour
for the six months ended June 30, 1998 compared to $416 per hour
for the same period in 1997.
Maintenance expenses include all expenses related to the
upkeep of the aircraft, including maintenance, labor, parts,
supplies and maintenance reserves. The costs of C Checks, D
checks and engine overhauls not otherwise covered by maintenance
reserves are capitalized as they are incurred and amortized over
the life of the maintenance event. In addition, in January 1995
the Company contracted with KLM for a significant part of its
regular maintenance operations and support on a fixed cost per
flight hour basis. Effective October 1996, certain additional
aircraft engines were accepted into the GE engine maintenance
program, also on a fixed cost per flight hour basis, pursuant to
a 10 year maintenance agreement.
Maintenance expense decreased to $21.0 million in the second
quarter of 1998 from $31.7 million in the same period of 1997,
and to $41.5 million in the six months ended June 30, 1998 from
$55.0 million in the six months ended June 30, 1997, or
approximately 34% and 25%, respectively. These decreases were
primarily due to the return of the FedEx Aircraft upon lease
termination at the beginning of the first quarter of 1998. On a
block hour basis, maintenance expense decreased by approximately
31% and 23%, respectively, primarily due to higher maintenance
costs associated with the FedEx Aircraft in the 1997 periods
compared to the other aircraft in the Company's fleet.
Aircraft and engine rentals include the cost of leasing
aircraft and spare engines, as well as the cost of short-term
engine leases required to replace engines removed from the
Company's aircraft for either scheduled or unscheduled
maintenance and any related short-term replacement aircraft lease
costs.
Aircraft and engine rentals were $.9 million in the second
quarter of 1998 compared to $7.7 million in the same period of
1997, and were $2.2 million in the first half of 1998 compared to
$15.5 million in the first half of 1997, or a decrease of
approximately 88% and 86%, respectively. During the second
quarter of 1998 and for the first half of 1998, the Company
leased one aircraft as compared to the second quarter of 1997 and
the first half of 1997 in which the Company leased six aircraft
and five aircraft, respectively. The cost of engine rentals in
the 1998 and 1997 periods was insignificant, due to additional
spare engines purchased by the Company in prior periods.
Because of the nature of the Company's ACMI Contracts with
its airline customers, under which the Company is responsible
only for the ownership cost and maintenance of the aircraft and
for supplying aircraft crews and insurance, the Company's airline
customers bear all other operating expenses, including fuel and
fuel servicing; marketing costs associated with obtaining cargo;
airport cargo handling; landing fees; ground handling; aircraft
push-back and de-icing services; and specific cargo and mail
insurance. As a result, the Company incurs fuel and ground
handling expenses only when it operates on its own behalf, either
in scheduled services, for ad hoc charters or for ferry flights.
Fuel expenses for the Company's non-ACMI contract services
include both the direct cost of aircraft fuel as well as the cost
of delivering fuel into the aircraft. Ground handling expenses
for non-ACMI contract service include the costs associated with
servicing the Company's aircraft at the various airports to which
it operates as well as other direct flight related costs.
Fuel and ground handling costs decreased by approximately
56% to $1.7 million for the second quarter of 1998 from $3.9
million for the second quarter of 1997, and decreased by
approximately 47% to $3.7 million for the first half of 1998 from
$7.1 million for the first half of 1997. These decreases were
primarily due to an approximate 64% decrease in scheduled
service, charter and other non-ACMI block hours in the second
quarter of 1998 compared to the second quarter of 1997, and an
approximate 51% decrease in such non-ACMI block hours in the
first half of 1998 compared to the first half of 1997.
Depreciation and amortization expense includes depreciation
on aircraft, spare parts and ground equipment, and the
amortization of capitalized major aircraft maintenance and engine
overhauls.
Depreciation and amortization expense increased to $13.0
million in the second quarter of 1998 from $9.7 million in the
same period of 1997, and to $25.2 million in the first half of
1998 from $19.2 million in the year-earlier period, or
approximately 34% and 32%, respectively. These increases reflect
the increase in owned aircraft, engines and spare parts for the
second quarter of 1998 and the first half of 1998 over the same
periods in 1997. In addition, Other Revenues include $0.2
million of depreciation for the first quarter of 1998 associated
with the net lease of two aircraft, which were in passenger
configuration during 1997 and the beginning of 1998, compared to
$0.4 million and $0.7 million of depreciation for the second
quarter of 1997 and the first half of 1997, respectively.
Other operating expenses include salaries, wages and
benefits for all employees other than pilots; accounting and
legal expenses; supplies; travel and meal expenses, excluding
those of the aircraft crews; commissions; and other miscellaneous
operating costs.
Other operating expenses decreased to $6.6 million in the
second quarter of 1998 from $9.9 million in the same period of
1997, and to $15.4 million for the first half of 1998 from $17.9
million for the same period of 1997, or approximately 34% and
14%, respectively. On a block hour basis, these expenses
decreased to $392 per hour in the second quarter of 1998 from
$566 per hour in the same period of 1997, and to $478 per hour
for the first half of 1998 from $543 per hour in the same period
of 1997, or approximately 31% and 12%, respectively. These
decreases in cost from the prior year periods were due primarily
to the capitalization of certain start-up costs in the second
quarter of 1998 associated with the planned introduction of the
747-400 aircraft and certain manufacturer credits, partially
offset by increased staffing and other resources associated with
the expansion of the Company's operations.
Other Income (Expense)
Other income (expense) consists of interest income and
interest expense. Interest income increased to $2.9 million in
the second quarter of 1998 from $1.6 million in the same period
of 1997, and to $4.6 million for the first six months of 1998
from $3.5 million for the first six months of 1997, primarily due
to the investment of proceeds from the Company's issuance of the
9 1/4% Senior Notes (as defined) in April 1998. Interest expense
increased to $18.4 million in the second quarter of 1998 from
$12.5 million in the same period of 1997, and to $33.2 million in
the first half of 1998 from $23.6 million in the year-earlier
period, or approximately 47% and 40%, respectively. These
increases resulted from the financing associated with the
acquisition of additional aircraft and the costs of conversion to
freighter configuration between these periods and the issuance of
the 9 1/4 % Senior Notes in April 1998.
Income Taxes
Pursuant to the provisions of SFAS No. 109 "Accounting for
Income Taxes," the Company has recorded a tax provision based on
tax rates in effect during the period. Accordingly, the Company
accrued taxes at the rate of 37.0% during the second quarter and
first half of 1998 and 36.5% during the second quarter and first
half of 1997. Due to significant capital costs, which are
depreciated at an accelerated rate for tax purposes, a
significant portion of the Company's tax provision for the 1998
and 1997 periods is deferred.
Liquidity and Capital Resources
At June 30, 1998, the Company had cash and cash equivalents
of approximately $173.5 million, short-term investments of
approximately $33.3 million and working capital of approximately
$107.8 million. During the first half of 1998, cash and cash
equivalents increased approximately $132.2 million, principally
reflecting cash provided from operations of $56.6 million,
proceeds from debt issuance and equipment financings of $195.4
million, net proceeds from the maturity and purchase of short-
term investments of $78.3 million and proceeds from the exercise
of stock options of $1.0 million, partially offset by investments
in flight and other equipment of $153.6 million, principal
reductions of indebtedness of $15.5 million, debt issuance costs
of $5.5 million, net treasury stock purchases of $2.2 million and
deferred lease costs associated with the financing of the 747-400
freighter aircraft of $22.3 million. The Company's overall
borrowing level increased to $956.0 million at June 30, 1998 from
$776.1 million at December 31, 1997.
In June 1997, the Company entered into an agreement with The
Boeing Company ("Boeing") to purchase 10 new 747-400 freighter
aircraft to be powered by engines acquired from General Electric
("GE"), with options to purchase up to 10 additional 747-400
aircraft (the "Boeing Purchase Agreement"). The Company has
arranged leveraged lease financing for the first three of the 747-
400 freighter aircraft to be delivered (see EETCs discussed
below). The Boeing Purchase Agreement requires that the Company
pay pre-delivery deposits to Boeing prior to the delivery date of
each 747-400 freighter aircraft in order to secure delivery of
the 747-400 freighter aircraft and to defray a portion of the
manufacturing costs. Based on the current expected firm aircraft
delivery schedule, the Company expects the maximum total amount
of pre-delivery deposits at any time outstanding will be
approximately $162.3 million, which was paid as of June 30, 1998.
Upon each delivery, Boeing will refund to the Company the pre-
delivery deposits associated with the delivered 747-400 freighter
aircraft. For the remainder of 1998 and for the year 1999, the
Company expects to pay $39.9 million and $11.8 million,
respectively, in pre-delivery deposits in accordance with the
firm order pre-delivery deposits schedule. In addition, the
Boeing Purchase Agreement provides for a deferral of a portion of
the pre-delivery deposits (deferred aircraft obligations) for
which the Company accrues and pays interest quarterly at 6-month
LIBOR, plus 2.0%. As of June 30, 1998, there was $288.9 million
of deferred aircraft obligations outstanding, which is the
expected maximum total amount of deferred aircraft obligations at
any time, based on the current expected firm aircraft delivery
schedule, and the combined interest rate was approximately 7.8%.
At the end of July 1998 and in August 1998, the Company took
delivery of the first and second of five 747-400 freighter to be
delivered in 1998. The Company has entered into long-term
contracts with British Airways World Cargo ("British Airways')
and Cargolux Airlines International, S.A. ("Cargolux") for the
operation of the first and second 747-400 freighter aircraft,
respectively.
In January and February 1998, pursuant to an early lease
termination agreement negotiated in November 1997 with Philippine
Airlines ("PAL"), the Company delivered to Boeing for
modification to cargo configuration the aircraft acquired from
Marine Midland Bank in December 1996 and the aircraft acquired
from Citicorp Investor Lease, Inc. in May 1997. The first
aircraft was re-delivered to the Company at the end of April 1998
and the second aircraft was re-delivered to the Company in July
1998. The financing for the modification to cargo configuration
was provided under the Aircraft Acquisition Credit Facility (as
defined in the Company's Form 10-K for 1997), under which the
Company borrowed a total of $3.3 million during the first quarter
of 1998 with respect to these aircraft. In April 1998 and July
1998, the Company borrowed an additional $13.8 million and $17.2
million, respectively, to pay for the final costs of conversion
for these two aircraft.
In February 1998, the Company completed an offering of
$538.9 million of Pass Through Certificates, also known as
enhanced equipment trust certificates (the "EETCs"). The EETCs
are not direct obligations of, or guaranteed by, the Company and
therefore are not included in the Company's consolidated
financial statements. In November and December 1997, the Company
entered into three Treasury Note hedges, approximating $300
million of principal, for the purpose of minimizing the risk
associated with the fluctuations in interest rates, which are the
basis for the pricing of the EETCs which were priced in January
1998. The effect of the hedge resulted in a deferred cost of
$6.3 million, which will be amortized over the expected twenty-
year life associated with this financing. The cash proceeds from
the EETCs were deposited with an escrow agent and will be used to
finance (through either leveraged leases or secured debt
financings) the acquisition of the first five of the 10 new 747-
400 freighter aircraft from Boeing scheduled to be delivered to
the Company during the period July 1998 through December 1998.
There can be no assurance that the Company will be able to obtain
sufficient financing to fund the purchase of the remaining five
747-400 freighter aircraft, or if such financing is available,
that it will be available on a commercially reasonable basis. If
it is unable to do so, the Company could be required to modify
its expansion plans or to incur higher than anticipated financing
costs, which could have a material adverse effect on the Company.
In connection with the EETCs, the Company intends to seek certain
owner participants who will commit lease equity financing to be
used in leveraged leases of such aircraft. The Company has
arranged for equity participation for the first three 747-400
freighter aircraft deliveries, of which one occurred at the end
of July 1998, one occurred in August 1998 and one is scheduled to
occur in October 1998.
In March 1998, the Company entered into two 10-year agreements
with GE to provide all repair and overhaul work on the engines
related to both the 10 firm and 10 option 747-400 freighter aircraft.
These agreements are based on a fixed cost per flight hour, similar
to the Company's engine agreement with GE for its 747-200 fleet.
In April 1998, the Company consummated the offering of $175
million of unsecured 9 1/4% Senior Notes at 99.867% due 2008
(the "9 1/4% Senior Notes"). The proceeds of the offering will
be used to repay $80 million of the Aircraft Acquisition Credit
Facility and for general corporate purposes, which may include
the partial funding of the redemption of the Company's
outstanding 12 1/4% Pass Through Certificates due 2002 (the
"Equipment Notes"), which are subject to redemption at the option
of the Company on or after December 1, 1998. Interest on the 9
1/4% Senior Notes is payable semi-annually on April 15 and
October 15 of each year, commencing October 15, 1998. The 9 1/4%
Senior Notes are redeemable at the option of the Company, in
whole or in part, at any time on or after April 15, 2003,
pursuant to a defined schedule. The 9 1/4% Senior Notes are
senior indebtedness of the Company, ranking pari passu in right
of payment with all existing and future senior indebtedness of
the Company and senior in right of payment to all subordinated
indebtedness of the Company. The 9 1/4% Senior Notes are
effectively subordinated, however, to all secured indebtedness of
the Company and all existing and future liabilities of the
Company's subsidiaries.
In April 1998, the Company entered into a sublease and ramp
use agreement with American Airlines, Inc. for 145,000 square
feet of hangar, office and parking space at Miami International
Airport in support of the Company's increased operations. The
lease is for a period in excess of four years and commences July
1, 1998, at a monthly rate of approximately $105,000, subject to
an annual escalation factor. Additionally, effective August 1,
1998 the Company leased an additional 5,000 square feet at its
existing facility located at John F. Kennedy International
Airport ("JFK") with a monthly rate increase to approximately
$70,000.
In May 1998, the Company agreed to purchase a Boeing
Business Jet ("BBJ") from Boeing for approximately $30 million.
As of June 30, 1998, the Company had paid approximately $9.0
million in pre-delivery deposits and there was approximately $7.0
million of deferred aircraft obligations outstanding for which
the interest rate was approximately 7.8%.
In June 1998, the Company entered into an agreement with
Lufthansa Technik Aktiengesellschaft ("Lufthansa Technik") by
which Lufthansa Technik will provide all required maintenance for
the Company's initial order of 10 747-400 freighter aircraft,
plus any additional 747-400 freighter aircraft the Company
purchases pursuant to its option in the Boeing Purchase
Agreement, on a "power by the hour" basis for 10 years, with a
provision for the Company to terminate the agreement as of June
2003.
In July 1998, the Company secured permanent financing in the
amount of $38.9 million from Banc One Leasing Corporation for one
of the aircraft originally financed under the Aircraft
Acquisition Credit Facility. The new financing carries a term of
10 years at an annual interest rate of approximately 7.5% with
quarterly debt service payments.
In July 1998, the Company purchased a 747-200 freighter
aircraft from Air France Partnairs Leasing N.V. for which the
Company financed approximately $31.3 million through the Aircraft
Acquisition Credit Facility. This aircraft is currently being
leased to a third-party with a scheduled lease termination at the
end of January 1999.
Due to the contractual nature of the Company's business, the
Company's management does not consider its operations to be
highly working capital-intensive in nature. Because most of the
non-ACMI costs normally associated with operations are borne by
and directly paid for by the Company's customers, the Company
does not incur significant costs in advance of the receipt of
corresponding revenues. Moreover, ACMI costs, which are the
responsibility of the Company, are generally incurred on a
regular, periodic basis ranging from flight hours to months.
These costs are largely matched by revenue receipts, as the
Company's contracts require regular payments from its customers,
based upon current flight activity, generally every two to four
weeks. As a result, the Company has not in the past had a
requirement for a working capital facility.
Under the FAA's Directives issued under its "Aging Aircraft"
program, the Company is subject to extensive aircraft
examinations and may be required to undertake structural
modifications to its fleet to address the problem of corrosion
and structural fatigue. In November 1994, Boeing issued Nacelle
Strut Modification Service Bulletins which have been converted
into Directives by the FAA. Six of the Company's Boeing 747-200
aircraft will have to be brought into compliance with such
Directives by March 2000 at an estimated total cost of
approximately $3.0 million. As part of the FAA's overall aging
aircraft program, it has issued Directives requiring certain
additional aircraft modifications to be accomplished. The Company
estimates that the modification costs per aircraft will range
between $2 million and $3 million. Twelve aircraft in the
Company's fleet have already undergone the major portion of such
modifications. The remaining seven aircraft in service will
require modification prior to the year 2009. Other Directives
have been issued that require inspections and minor modifications
to Boeing 747-200 aircraft. It is possible that additional
Directives applicable to the types of aircraft or engines
included in the Company's fleet could be issued in the future,
the cost of which could be substantial.
The Company has performed a review of its internal
information systems for Year 2000 ("Y2K") automation problems
through a company-wide effort, assisted by Y2K experienced
consultants, to address internal Y2K system issues and, jointly
with industry trade groups, issues related to key business
partners which are common to other air carriers. As a result,
the Company does not anticipate that Y2K compliance will have a
material financial impact. The Company has completed the first
phase of this project, which included an inventory of its
computer network environment and an assessment of the effort
involved to bring its internal computer system environment to
full Y2K compliance. Due to the Company's relatively young
systems, its advanced client server, development and data base
architecture, and its partial reliance on vendor representations
regarding Y2K compliant third-party systems, related remediation
efforts are minimal and achievable. Third-party hardware and
software used by the Company are, for the most part, Y2K
compliant; those that are not compliant have broad customer bases
and available software upgrades. A limited number of systems
remain to be reviewed for compliance, but are not of material
significance. Initial review of the Company's 747-200 and 747-
400 aircraft computer systems indicate that most all of the
systems are compliant, and those not compliant are being
addressed by Boeing sub-contractors. A limited number of systems
need further analysis.
The Company has begun an ongoing program to review the
status of key supplier/business partner Y2K compliance efforts.
While the Company believes it is taking all appropriate steps to
assure its Y2K compliance, it is dependent on key business
partner compliance to some extent. The Company plans to have all
company-controllable systems Y2K tested and compliant by the end
of 1998. The Company anticipates that third-party and
supplier/business partner systems will be fully addressed by mid-
1999 in the form of compliance remediation, plans for timely
remediation, or contingency plans. The Y2K problem is pervasive
and complex, as virtually every global computer operation will be
affected in some way. Consequently, no assurance can be given
that all company-used third-party systems and suppliers/business
partners can achieve Y2K compliance.
From time to time the Company engages in discussions with
third parties regarding possible acquisitions of aircraft that
could expand the Company's operations. The Company is currently
in discussions with third-parties for the possible acquisition of
additional aircraft for delivery in 1998 and beyond.
The Company believes that cash on hand, the cash flow
generated from its operations and the proceeds from the May 1996
public offering of its Common Stock, the August 1997 placement of
the Company's 10 3/4 % Senior Notes and the April 1998 placement
of the 9 1/4 % Senior Notes, combined with availability under the
Aircraft Acquisition Credit Facility and the proceeds of the
EETCs, will be sufficient to meet its normal ongoing liquidity
needs for the next twelve months.
Forward-looking Information
To the extent that any of the statements contained herein
relating to the Company's expectations, assumptions and other
Company matters are forward-looking, they are made in reliance
upon the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are based on
current expectations that involve a number of uncertainties and
risks that could cause actual results to differ materially from
those projected in the forward-looking statements, including, but
not limited to, risks associated with: worldwide business and
economic conditions; product demand and the rate of growth in the
air cargo industry; the impact of competitors and competitive
aircraft and aircraft financing availability; the ability to
attract and retain new and existing customers; normalized
aircraft operating costs and reliability; management of growth;
the continued productivity of its workforce; dependence on key
personnel; and regulatory matters. For additional information
regarding these and other risk factors, reference is made to the
Company's Annual Report on Form 10-K for the year ended December
31, 1997.
ATLAS AIR, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit 27 - Financial Data Schedule
b. Reports filed on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ATLAS AIR, INC.
(Registrant)
Date: August 13, 1998 By: /s/ Stephen C. Nevin
Stephen C. Nevin
Vice President and
Chief Financial Officer
Principal Accounting Officer
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