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 March 31, 2000
[ ] 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)
Indicate 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 May 5, 2000 the Registrant had 34,472,207 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-
March 31, 2000 and December 31, 1999
Consolidated Statements of Operations-
Three Months Ended March 31, 2000 and 1999
Consolidated Statements of Cash Flows-
Three Months Ended March 31, 2000 and 1999
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
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)
<TABLE>
March 31, December 31,
2000 1999
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 252,911 $ 331,605
Short-term investments 137,264 141,555
Accounts receivable and other, net 100,249 92,979
Total current assets 490,424 566,139
Property and equipment:
Flight equipment 1,829,039 1,732,543
Other 23,670 19,172
1,852,709 1,751,715
Less accumulated depreciation (221,896) (208,465)
Net property and equipment 1,630,813 1,543,250
Other assets:
Debt issuance costs, net of
accumulated amortization
of $15,922 and $14,281 27,978 27,201
Deposits and other 31,118 5,780
Total assets $2,180,333 $2,142,370
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion
of long-term debt $ 112,541 $ 95,929
Accounts payable and
accrued liabilities 119,051 139,929
Income tax payable -- --
Total current liabilities 231,592 235,858
Long-term debt, net of current portion 1,314,605 1,253,084
Other liabilities 188,212 228,075
Deferred income taxes 74,837 67,653
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;
34,542,407 and 34,480,946
shares issued 345 345
Additional paid-in capital 198,956 198,002
Retained earnings 174,239 162,194
Deferred compensation -
Restricted Stock (842) (404)
Treasury Stock, at cost;
78,244 and 115,906 shares (1,611) (2,437)
Total stockholders' equity 371,087 357,700
Total liabilities and
stockholders' equity $2,180,333 $2,142,370
</TABLE>
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 amounts)
(Unaudited)
<TABLE>
Three Months
Ended March 31,
<S> <C> <C>
2000 1999
Revenues:
Contract services $163,576 $135,378
Charters, scheduled services and
other 2,836 2,461
Total operating revenues 166,412 137,839
Operating expenses:
Flight crew salaries and benefits 14,182 11,361
Other flight-related expenses 13,985 10,829
Maintenance 33,645 30,271
Aircraft and engine rentals 16,956 11,505
Fuel and ground handling 5,247 3,075
Depreciation and amortization 22,738 19,167
Other 16,483 14,924
Total operating expenses 123,236 101,132
Operating income 43,176 36,707
Other income (expense):
Interest income 6,208 4,574
Interest expense (29,987) (24,888)
(23,779) (20,314)
Income before income taxes,
extraordinary item and cumulative
effect of a change in accounting
principle 19,397 16,393
Provision for income taxes (7,378) (6,147)
Income before extraordinary item and
cumulative effect of a change in
accounting principle 12,019 10,246
Extraordinary item:
Loss from extinguishment of debt,
net of applicable tax benefit
of $3,872 -- (6,593)
Cumulative effect of a change in
accounting principle, net of
applicable tax benefit of $850 -- (1,416)
Net income $ 12,019 $ 2,237
Basic earnings per share:
Income before extraordinary item and
cumulative effect of a change in
accounting principle $0.35 $0.30
Extraordinary item -- (0.19)
Cumulative effect of a change in
accounting principle -- (0.04)
Net income $0.35 $0.07
Weighted average common shares 34,418 33,950
Diluted earnings per share:
Income before extraordinary item and
cumulative effect of a change in
accounting principle $0.35 $0.30
Extraordinary item -- (0.19)
Cumulative effect of a change in
accounting principle -- (0.04)
Net income $0.35 $0.07
Weighted average common shares 34,608 34,327
</TABLE>
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)
<TABLE>
Three Months Ended
March 31,
<S> <C> <C>
2000 1999
Operating activities:
Net income $ 12,019 $ 2,237
Adjustments to reconcile net income to
net cash provided
by operating activities:
Depreciation and amortization 22,738 19,167
Amortization of debt issuance
costs and lease financing costs 310 612
Extraordinary loss -- 10,465
Write-off of start-up costs -- 2,266
Deferred income taxes 7,184 813
Changes in operating assets and
liabilities:
Accounts receivable and other (7,270) 14,696
Deposits and other (337) 2,409
Accounts payable and accrued
expenses (27,568) (10,849)
Income tax payable -- (7,855)
Net cash provided by
operating activities 7,076 33,961
Investing activities:
Purchase of property and equipment (103,611) (85,808)
Purchase of short-term investments (13,273) (4,882)
Maturity of short-term investments 17,564 5,000
Net cash used in investing
activities (99,320) (85,690)
Financing activities:
Issuance of Common Stock 954 14,458
Purchase of Treasury Stock -- (107)
Issuance of Treasury Stock 248 230
Net proceeds from debt issuance and
lease financing 73,133 36,474
Principal payments on notes payable (31,803) (122,497)
Cash restricted for letter of credit (25,001) --
Debt issuance costs and deferred lease
costs (3,981) (529)
Net cash provided by
(used in) financing
activities 13,550 (71,971)
Net decrease in cash (78,694) (123,700)
Cash and cash equivalents at beginning
of period 331,605 449,627
Cash and cash equivalents at end
of period $ 252,911 $ 325,927
</TABLE>
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" or "Atlas") as of
March 31, 2000 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, 1999
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 June 1998, the Financial Accounting Standards Board
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 on 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, as amended by SFAS
No. 137, is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000 and earlier application is
encouraged. The Company has not yet quantified the impact, if
any, of adopting SFAS No. 133 on its financial statements and has
not determined the timing of or method of adoption of SFAS No.
133. However, SFAS No. 133 could increase volatility in earnings
and other comprehensive income.
In December 1999, the Securities and Exchange Commission
(the "SEC") issued Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements." SAB No. 101
summarizes the SEC's views on the application of GAAP to revenue
recognition. The Company has reviewed SAB No. 101 and believes
that it is in compliance with the SEC's interpretation of revenue
recognition.
4. Short-Term Investments
The Company invests excess cash in part 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 only if the reporting
enterprise has the positive intent and ability to hold those
securities to maturity. The following tables set forth the
aggregate fair value, gross unrealized holding gains, gross
unrealized holding losses, and amortized/accreted cost basis by
major security type as of March 31, 2000 and December 31, 1999
(in thousands):
<TABLE>
Gross Gross (Amorti-
Unrealized Unrealized zation)
Security Type Aggregate Holding Holding
<S> <C> <C> <C> <C>
Fair Value Gains Losses Accretion
March 31, 2000:
Included in cash
and cash
equivalents:
Market Auction
Preferreds $ 95,400 $ -- $ -- $ --
Corporate
Bonds 56,400 -- 18 (9)
Commercial
Paper 44,783 -- 1 9
Other 12,527 -- 17 (7)
Totals $ 209,110 $ -- $ 36 $ (7)
Included in
short-term
investments:
U.S.
Government
Agencies $ 37,929 $ -- $ 58 $ --
Corporate
Notes 34,413 -- 267 --
Corporate
Bonds 25,306 -- 224 --
Market Auction
Preferreds 17,000 -- -- --
Euro Bonds 13,582 -- 78 --
Other 5,429 -- 13 --
Totals $ 133,659 $ -- $ 640 $ --
December 31, 1999:
Included in
cash and cash
equivalents:
CDs and
equivalents $ 20,002 $ 1 $ -- $ --
Commercial
Paper 57,296 2 -- 62
Corporate
Bonds 42,998 -- 11 51
Market Auction
Preferreds 98,900 -- 3 --
Other 1,751 -- 3 --
Totals $ 220,947 $ 3 $ 17 $ 113
Included
in short-term
investments:
Corporate
Bonds $ 29,041 $ -- $ 199 $ (15)
Corporate
Notes 40,306 -- 255 (20)
Euro Dollar
Bonds 15,034 -- 92 (8)
Market Auction
Preferreds 17,000 -- -- --
U.S.Government
Agencies 31,953 -- 36 1
Other 5,362 -- 21 22
Totals $ 138,696 $ -- $ 603 $ (20)
</TABLE>
In addition, accrued interest on cash equivalents and short-term
investments at March 31, 2000 was approximately $0.3 million and
$3.0 million, respectively. Accrued interest on cash and
equivalents and short-term investments at December 31, 1999 was
approximately $1.4 million and $2.3 million, respectively.
Interest earned on these investments and related maturities are
reinvested in similar securities. Securities included in short-
term investments have maturity dates of less than one year.
5. Commitments and Contingencies
In June 1997, the Company entered into a purchase agreement
with the Boeing Company (the "Boeing Purchase Agreement") to
purchase 10 new 747-400 freighter aircraft to be powered by
engines acquired from the General Electric Company ("GE"), with
options to purchase up to 10 additional 747-400 aircraft. In
February 1999, the Company exercised options for two additional
747-400 freighter aircraft, which are scheduled for delivery in
2000 (see Note 6). The Company arranged leveraged lease
financing for five 747-400 freighter aircraft and secured debt
financing for four 747-400 freighter aircraft which were
delivered in 1998 and 1999. In the third quarter of 1999, the
Company entered into a sale-leaseback transaction for one of its
747-400 aircraft. The Company arranged secured debt financing
for the one 747-400 freighter aircraft that was delivered in the
first quarter of 2000. In January 2000, the Company arranged
financing (to be obtained through leveraged leases or secured
debt financings) for the remaining two aircraft. (See
discussions of the 1998 EETCs, the 1999 EETCs and the 2000 EETCs
below.) The Boeing Purchase Agreement requires the Company to
pay pre-delivery deposits in order to secure delivery of the 747-
400 freighter aircraft and to defray a portion of the
manufacturing costs. 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 March
31, 2000, there was $74.1 million of Deferred Aircraft
Obligations included in other liabilities, and the combined
interest rate was approximately 8.0%.
In February 1998, the Company completed an offering of
$538.9 million of Enhanced Equipment Trust Certificates (the
"1998 EETCs"). The 1998 EETCs are not direct obligations of, or
guaranteed by, the Company and therefore are not included in its
consolidated financial statements until such time that it draws
upon the proceeds to take delivery and ownership of an aircraft.
The Company entered into leveraged lease transactions with
respect to four of the five 747-400 aircraft delivered in 1998.
The Company took ownership of one such aircraft and issued the
corresponding equipment notes, which are direct obligations of
the Company.
In April 1999, the Company completed an offering of $543.6
million of Enhanced Equipment Trust Certificates (the "1999
EETCs"). The 1999 EETCs are not direct obligations of, or
guaranteed by, the Company and therefore are not included in its
consolidated financial statements until such time that it draws
upon the proceeds to take delivery and ownership of an aircraft.
The cash proceeds from the 1999 EETCs transaction were deposited
with an escrow agent and a portion of the proceeds was used in
the second and third quarters of 1999 to finance, through secured
debt financings, the debt portion of the acquisition cost of
three new 747-400 freighter aircraft from Boeing. In the third
quarter of 1999, a portion of the proceeds was used to finance,
through a leveraged lease, an additional new 747-400 freighter
aircraft which was delivered to the Company by Boeing. The
remaining proceeds from the 1999 EETCs, except for $90,000, were
used in the first quarter of 2000 to finance, through secured
debt financing, the debt portion of the acquisition cost of one
new 747-400 freighter aircraft from Boeing. The $90,000 was
subsequently returned to the holders of the 1999 EETCs. In
connection with this secured debt financing, the Company executed
equipment notes in the aggregate amount of $109.9 million, with a
weighted average interest rate of 7.6%.
In January 2000, the Company completed an offering of $217.3
million Enhanced Equipment Trust Certificates (the "2000 EETCs").
The 2000 EETCs are not direct obligations of, or guaranteed by,
the Company and therefore are not included in its consolidated
financial statements until such time that it draws upon the
proceeds to take delivery and ownership of an aircraft. The cash
proceeds from the 2000 EETCs transaction were deposited with an
escrow agent and will be used to finance (either through
leveraged leases or secured debt financings) the debt portion of
the acquisition cost of the remaining two firm new 747-400
freighter aircraft from Boeing scheduled to be delivered in 2000
(see Note 6).
In March 2000, the Company had a letter of credit issued for
approximately $25.0 million, which is secured by restricted cash
invested in liquid, highly rated securities. These funds are
carried at cost, which approximates market, in other assets.
Under the Federal Aviation Administration's (the "FAA")
Directives issued under its "Aging Aircraft" program, the Company
is subject to extensive aircraft examinations and will 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.
All of the Company's Boeing 747-200 aircraft have been brought
into compliance with such Directives. 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 747-200 aircraft will range between $2 million and $3
million. Fourteen aircraft in the Company's 747-200 fleet have
already undergone the major portion of such modifications. The
remaining eight 747-200 aircraft will require modification prior
to the year 2009. Other Directives have been issued that require
inspections and minor modifications to Boeing 747-200 aircraft.
The newly manufactured 747-400 freighter aircraft were delivered
to the Company in compliance with all existing FAA Directives at
their respective delivery dates. 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 is subject to various international bilateral
air services agreements between the United States and the
countries to which it provides service. The Company also
operates on behalf of foreign flag carriers between various
foreign points without serving the United States. These services
are subject to the bilateral agreements of the respective
governments. Furthermore, these services require FAA approval
but not Department of Transportation ("DOT") approval. The
Company must generally obtain permission from the applicable
foreign governments to provide service to foreign points.
Moreover, in some instances, ACMI Contracts (Aircraft, Crew,
Maintenance and Insurance) are subject to prior and/or periodic
approvals of foreign governments, whose decisions may be affected
by ongoing negotiations and relations with the United States.
For example, a recent ruling by an aviation agency of the British
government concluded that one of the Company's two long-term wet-
leases of 747-400 freighter aircraft to British Airways no longer
meets the "exceptional circumstances" exception necessary for
their operating approval, due to changed market conditions in the
United Kingdom. Should other countries adopt similar rules
and/or begin enforcement of similar rules for political purposes,
the Company's business could be adversely effected.
In April 1999, the Company received notification from the
National Mediation Board ("NMB") that Atlas' crew members voted
for representation by the Air Line Pilots Association ("ALPA").
The Company expects its labor costs to decline initially since
its profit sharing plan ("Profit Sharing Plan") excludes from the
category of eligible employees, those employees who have been
certified by the NMB for representation. In response to ALPA's
claims that such an exclusion violates the Railway Labor Act, on
May 6, 1999, the Company filed an action in the United States
District Court for the District of Columbia (the "District
Court") seeking a declaratory judgment confirming, inter alia,
the enforceability of the Profit Sharing Plan's exclusion. On
May 10, 1999, ALPA filed a counterclaim in that action, alleging
that the exclusion of its members from the Profit Sharing Plan
violates the Railway Labor Act, and seeking restoration of profit
sharing pay. In October 1999, the District Court entered a
summary judgment in the Company's favor ruling that the Company
did not violate the Railway Labor Act when it eliminated crew
members' participation in the Profit Sharing Plan following
ALPA's certification as the crew members' collective bargaining
agent. In addition, the District Court dismissed all other
claims in the case. ALPA has subsequently filed an appeal of the
District Court's decision.
The Company has received an order from the Government of
India ("India") seeking approximately $1.1 million in taxes (plus
interest of approximately $1.1 million and possible penalties)
for the tax year 1996 to 1997. India has also requested
additional information for subsequent tax years. The Company
believes that it is exempt from India taxes under a United
States/India treaty and intends to contest the assessment
vigorously.
6. Subsequent Events
In April 2000, Boeing delivered to the Company two new 747-
400 freighter aircraft, pursuant to the Boeing Purchase
Agreement. The cash proceeds from the 2000 EETCs transaction
were used to finance, through secured debt financing, the debt
portion of the acquisition cost of these aircraft. In connection
with these secured debt financings, the Company executed
equipment notes in the aggregate amount of $217.3 million, with a
weighted average interest rate of 9.0%.
In April 2000, the Company formed a wholly-owned subsidiary,
Atlas Freighter Leasing III, Inc. for the purpose of entering
into a $300 million term loan facility (the "AFL III Term Loan
Facility") to refinance all of the aircraft and spare engines
previously financed under the AFL Term Loan Facility and the AFL
II Term Loan Facility, plus one aircraft previously financed
under the Aircraft Credit Facility and three 747-400 spare
engines owned by the Company. As a result of this refinancing,
the Company will experience lower interest rates and extended
terms as compared to the previous financings. The AFL III Term
Loan Facility consists of Term Loan A in the amount of $165
million and Term Loan B in the amount of $135 million, for which
interest is based on the Eurodollar rate, plus 1.75% and plus
2.00%, respectively. The interest rate on borrowings outstanding
under the AFL III Term Loan Facility was 7.90% and 8.15%,
respectively, at April 30, 2000. Quarterly scheduled principal
payments of $5.0 million and $1.7 million, respectively, commence
in July 2000 and increase over time to $9.9 million and $6.8
million, such that Term Loan A is to be fully paid in April 2005
and Term Loan B is to be fully paid in April 2006, with a final
payment of $40.5 million.
In April 2000, the Company amended its Aircraft Credit
Facility to provide for a $175 million revolving credit facility
with a three-year revolving period and a subsequent two-year term
loan period, commencing at the time an aircraft has been financed
by revolving proceeds for three years. With respect to the
aircraft currently financed under the Aircraft Credit Facility,
the term loan period will be from March 31, 2003 to March 30,
2005 in the event that permanent financing has not been obtained
for such flight equipment financed under the facility. At the
time of each borrowing, the Company must select either a Base
Rate Loan (prime rate, plus 0.75%) or a Eurodollar Rate Loan
(Eurodollar rate, plus 1.75%). As of April 30, 2000, the Company
had approximately $87.9 million outstanding under the Aircraft
Credit Facility and the weighted average interest rate was 9.75%,
which represents a Base Rate Loan as required for the initial two-
week period of the amended Aircraft Credit Facility. The Company
selected the Eurodollar Rate Loan commencing in May 2000, for
which the interest rate is 7.88%.
In May 2000, the Company refinanced one of its 747-200
freighter aircraft with a group of European banks for a term of
five years, at a Eurodollar rate, plus 1.50%, for a rate of 8.22%
at commencement of the loan. This aircraft was previously
financed under the Aircraft Credit Facility.
In May 2000, the Company announced that it entered into a
purchase contract to acquire two Boeing 747-300 combi aircraft
from VARIG, S.A. (the "VARIG Aircraft"). Each VARIG Aircraft
will be converted from combi to full freighter configuration by
Boeing prior to their placement into service, which is
anticipated to occur during the fourth quarter of 2000. After
their conversion, these aircraft will be operationally equivalent
to the Boeing 747-200 aircraft in the Company's fleet. A combi
conversion requires fewer modifications than a normal passenger-
to-cargo aircraft conversion as a result of the existence of a
rear cargo door and partial cargo handling system, thus reducing
both the cost and time associated with the modification.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
We provide 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 we supply aircraft, crew, maintenance and
insurance (the "ACMI Contracts"). The cargo operations of our
airline customers are seasonal in nature, with peak activity
typically occurring 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 January holiday seasons
associated with the celebration of Christmas and the Chinese New
Year. Certain 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 us, and are expected to continue to do so
in the future. As a result, our revenues typically decline in
the first quarter of the year as our contractual aircraft
utilization level temporarily decreases. We seek to schedule, to
the extent possible, our major aircraft maintenance activities
during this period to take advantage of any unutilized aircraft
time.
The aircraft acquisitions and lease arrangements are
described in Note 6 of our December 31, 1999 consolidated
financial statements. The timing of when an aircraft enters our
fleet can affect not only annual performance, but can make
quarterly results vary, thereby affecting the comparability of
operations from period to period. In addition, the number of
aircraft utilized from period to period as spare or maintenance
back-up aircraft may also cause quarterly results to vary.
The table below sets forth selected financial and operating
data for the first quarter of 2000 and 1999 (dollars in
thousands).
<TABLE>
2000 1999
1st 1st
Quarter Quarter
<S> <C> <C>
Total operating revenues $166,412 $137,839
Operating expenses 123,236 101,132
Operating income 43,176 36,707
Other income (expense) (23,779) (20,314)
Net income (1) 12,019 2,237
Block hours 29,193 23,931
Average aircraft operated 30.5 27.0
Operating margin 25.9% 26.6%
</TABLE>
(1) Net income is after extraordinary item and
cumulative effect of a change in accounting
principle for the 1999 1st Quarter column.
Operating Revenues and Results of Operations
Total operating revenues for the quarter ended March 31,
2000 increased to $166.4 million from $137.8 million for the same
period in 1999, or approximately 21%. The average number of
aircraft in our fleet during the first quarter of 2000 was 30.5
compared to 27.0 during the same period in 1999. Total block
hours for the first quarter of 2000 were 29,193 compared to
23,931 for the same period in 1999, an increase of approximately
22%, principally reflecting the increase in the size of our fleet
period over period. Revenue per block hour decreased by
approximately 1% to $5,700 for the first quarter of 2000 compared
to $5,760 for the first quarter of 1999. This was substantially
due to additional revenue in the first quarter of 1999 compared
to the first quarter of 2000 associated with minimum guarantees
provided for in ACMI Contracts, coupled with a lower percentage
of non-ACMI flying.
Our operating results improved by approximately 18% from a
$36.7 million operating profit for the first quarter of 1999 to
an operating profit of $43.2 million for the first quarter of
2000. Results of operations were favorably impacted by the
substantial increase in the size of our fleet and the newer 747-
400 freighter aircraft, slightly offset by higher flight crew
salaries and benefits, and other flight related expenses period
over period. In the first quarter of 1999, we recorded an
approximate $6.6 million extraordinary loss net of applicable tax
benefit of approximately $3.9 million, from the extinguishment of
the $100 million 12 1/4% Equipment Notes due 2002 and a one-time
charge of approximately $1.4 million, net of applicable tax
benefit of approximately $.9 million, associated with the write-
off of start-up costs related to the introduction of new Boeing
747-400 freighter aircraft into our fleet, as required upon
adoption of Statement of Position 98-5, "Reporting on the Costs
of Start-up Activities." Net income of $10.2 million for the
first quarter of 1999, excluding the extraordinary loss and the
one-time charge, increased to a net income of $12.0 million for
the first quarter of 2000, or approximately 17%.
Operating Expenses
Our 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 our pilot work force. Flight crew salaries and benefits
increased to $14.2 million in the first quarter of 2000 compared
to $11.4 million in 1999, primarily due to the increase in the
number of aircraft in our fleet and aircraft block hours. While
actual expense increased by approximately 25% quarter over
quarter, on a block hour basis this expense increased by
approximately 2% to $486 per hour for the first quarter of 2000
from $475 per hour for the same period in 1999.
Other flight-related expenses include hull and liability
insurance on our aircraft, crew travel and meal expenses, initial
and recurrent crew training costs and other expenses necessary to
conduct our flight operations.
Other flight-related expenses increased to $14.0 million in
the first quarter of 2000 from $10.8 million in the first quarter
of 1999, or approximately 29%. On a block hour basis, other
flight-related expenses increased approximately 6% to $479 per
block hour for the first quarter of 2000 from $453 per block hour
for the same period in 1999. This increase was primarily due to
the impact of added training and travel costs associated with the
introduction of four additional new 747-400 freighter aircraft
into our fleet in the second and third quarters of 1999 and
preparation for the three additional new 747-400 freighter
aircraft delivered in 2000.
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
we contracted with KLM for a significant part of our regular
maintenance operations and support on a fixed cost per flight
hour basis. In December 1999, we completed negotiations with KLM
to terminate the engine portion of this maintenance agreement.
Concurrently, we entered into a ten-year maintenance agreement
with MTU Maintenance Hanover, a subsidiary of Daimler Chrysler
Aerospace, to provide regular maintenance at a fixed rate per
flight hour for engines which were previously serviced under the
KLM agreement, plus additional engines. 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 ten-year maintenance agreement. During
1998, we entered into separate long-term contracts with Lufthansa
Technik for the airframe maintenance and with GE for the engine
maintenance of the 747-400 freighter aircraft, effective with the
introduction of the 747-400 freighter aircraft into our fleet in
the second half of 1998.
Maintenance expense increased to $33.6 million in the first
quarter of 2000 from $30.3 million in the same period of 1999, or
approximately 11%, primarily due to the increased size of our
fleet. On a block hour basis, maintenance expense decreased by
approximately 9% in the first quarter of 2000 compared to the
first quarter of 1999, primarily reflecting the lower maintenance
costs associated with the new 747-400 aircraft.
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 our
aircraft for either scheduled or unscheduled maintenance and any
related short-term replacement aircraft lease costs.
Aircraft and engine rentals were $17.0 million in the first
quarter of 2000 compared to $11.5 million in the same period of
1999, or an increase of approximately 47%. During the first
quarter of 2000, we leased two additional 747-400 freighter
aircraft compared to the year earlier period.
Because of the nature of our ACMI Contracts (Aircraft, Crew,
Maintenance and Insurance), our airline customers bear all other
operating expenses. As a result, we do not incur fuel and ground
handling expenses except when we operate on our own behalf either
in scheduled services, for ad hoc charters or for ferry flights.
Fuel expenses for our non-ACMI Contract services include both the
direct costs 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 our
aircraft at the various airports to which we operate.
Fuel and ground handling costs increased by approximately
71% to $5.2 million for the first quarter of 2000 from $3.1
million for the first quarter of 1999. This was primarily due to
increased charter activity and slightly higher fuel prices
quarter over quarter.
Depreciation and amortization expense includes depreciation
on aircraft, spare parts and ground equipment, and the
amortization of capitalized major aircraft maintenance and engine
overhauls. Owned aircraft are depreciated over their estimated
useful lives of 20 to 30 years, using the straight-line method
and estimated salvage values of 10% of cost.
Depreciation and amortization expense increased to $22.7
million in the first quarter of 2000 from $19.2 million in the
same period of 1999, or approximately 19%. This increase
primarily reflected an increase of approximately 17% in owned
aircraft for the first quarter of 2000 over the same period in
1999.
Other operating expenses include salaries, wages, benefits,
travel and meal expenses for non-crew members and other
miscellaneous operating costs.
Other operating expenses increased to $16.5 million in the
first quarter of 2000 from $14.9 million in the same period of
1999, or approximately 10%, due to additional personnel and other
resources required for the expansion of our fleet and operations.
On a block hour basis, these expenses decreased to $565 per hour
in the first quarter of 2000 from $624 per hour in the same
period of 1999, or approximately 9%, primarily due to the 22%
increase in block hours quarter over quarter.
Other Income (Expense)
Other income (expense) consists of interest income and
interest expense. Interest income for the first quarter of 2000
was $6.2 million compared to $4.6 million for the same period of
1999, primarily due to increases in the amount of funds available
for investing as well as an overall increase in the rates of
return on investments. Interest expense increased to $30.0
million for the first quarter of 2000 from $24.9 million for the
first quarter of 1999, or approximately 20%. This increase
reflects the financing costs associated with the purchase of two
additional aircraft in 1999 and the purchase of one additional
aircraft in the first quarter of 2000.
Income Taxes
Pursuant to the provisions of SFAS No. 109, "Accounting for
Income Taxes," we have recorded a tax provision based on tax
rates in effect during the period. Accordingly, we accrued for
taxes at the rate of 38.0% during the first quarter of 2000 and
37.5% during the first quarter of 1999. Due to significant
capital costs, which are depreciated at an accelerated rate for
tax purposes, a significant portion of our tax provision in these
periods is deferred.
Liquidity and Capital Resources
At March 31, 2000, we had cash and cash equivalents of
approximately $252.9 million, short-term investments of
approximately $137.3 million and working capital of approximately
$258.8 million. During the first quarter of 2000, cash and cash
equivalents decreased approximately $78.7 million, primarily
reflecting the purchase of flight and other equipment of $103.6
million, principal reductions of indebtedness of $31.8 million,
cash restricted for letter of credit of $25.0 million and debt
issuance costs of $4.0 million; partially offset by cash provided
by operations of $7.1 million, proceeds from equipment financings
of $73.1 million, net proceeds from the maturity and purchase of
short-term investments of $4.3 million, net proceeds from the
issuance of common stock of $1.0 million and net proceeds from
the issuance of treasury stock of $0.2 million. Our overall
borrowing level increased to $1.4 billion at March 31, 2000 from
$1.3 billion at December 31, 1999.
In June 1997, we entered into a purchase agreement with the
Boeing Company (the "Boeing Purchase Agreement") to purchase 10
new 747-400 freighter aircraft to be powered by engines acquired
from the General Electric Company ("GE"), with options to
purchase up to 10 additional 747-400 aircraft. In February 1999,
we exercised options for two additional 747-400 freighter
aircraft for delivery in 2000. We arranged leveraged lease
financing for five 747-400 freighter aircraft and secured debt
financing for four 747-400 freighter aircraft which were
delivered in 1998 and 1999. In the third quarter of 1999, we
entered into a sale-leaseback transaction for one of our 747-400
freighter aircraft. We arranged secured debt financing for three
747-400 freighter aircraft which were delivered in the first and
second quarter of 2000. (See discussions of the 1998 EETCs, 1999
EETCs and the 2000 EETCs below.) The Boeing Purchase Agreement
requires us to pay pre-delivery deposits in order to secure
delivery of the 747-400 freighter aircraft and to defray a
portion of the manufacturing costs. In addition, the Boeing
Purchase Agreement provides for a deferral of a portion of the
pre-delivery deposits (Deferred Aircraft Obligations) for which
we accrue and pay interest quarterly at 6-month LIBOR, plus 2.0%.
As of March 31, 2000, there was $74.1 million of Deferred
Aircraft Obligations included in other liabilities, and the
combined interest rate was approximately 8.0%.
In February 1998, we completed an offering of $538.9 million
of Enhanced Equipment Trust Certificates (the "1998 EETCs"). The
1998 EETCs are not direct obligations of, or guaranteed by, us
and therefore are not included in our consolidated financial
statements until such time that we draw upon the proceeds to take
delivery and ownership of an aircraft. We entered into leveraged
lease transactions with respect to four of the five 747-400
aircraft delivered in 1998. We took ownership of one such
aircraft and issued the corresponding equipment notes, which are
direct obligations of the Company.
In April 1999, we completed an offering of $543.6 million of
Enhanced Equipment Trust Certificates (the "1999 EETCs"). The
1999 EETCs are not direct obligations of, or guaranteed by, us
and therefore are not included in our consolidated financial
statements until such time that we draw upon the proceeds to take
delivery and ownership of an aircraft. The cash proceeds from
the 1999 EETCs transaction were deposited with an escrow agent
and a portion of the proceeds was used in the second and third
quarters of 1999 to finance, through secured debt financings, the
debt portion of the acquisition cost of three new 747-400
freighter aircraft from Boeing. In the third quarter of 1999, a
portion of the proceeds was used to finance, through a leveraged
lease, an additional new 747-400 freighter aircraft which was
delivered to us by Boeing. The remaining proceeds from the 1999
EETCs, except for $90,000, were used in the first quarter of 2000
to finance, through secured debt financing, the debt portion of
the acquisition cost of one new 747-400 freighter aircraft from
Boeing. The $90,000 was subsequently returned to the holders of
the 1999 EETCs. In connection with this secured debt financing,
we executed equipment notes in the aggregate amount of $109.9
million, with a weighted average interest rate of 7.6%.
In January 2000, we completed an offering of $217.3 million
Enhanced Equipment Trust Certificates (the "2000 EETCs"). The
2000 EETCs are not direct obligations of, or guaranteed by, us
and therefore are not included in our consolidated financial
statements until such time that we draw upon the proceeds to take
delivery and ownership of an aircraft. In April 2000, the cash
proceeds from the 2000 EETCs transaction were used to finance,
through secured debt financing, the debt portion of the
acquisition cost of two new 747-400 freighter aircraft, pursuant
to the Boeing Purchase Agreement. In connection with these
secured debt financings, we executed equipment notes in the
aggregate amount of $217.3 million, with a weighted average
interest rate of 9.0%.
In March 2000, we had a letter of credit issued for
approximately $25.0 million, which is secured by restricted cash
invested in liquid, highly rated securities. These funds are
carried at cost, which approximates market, in other assets.
In April 2000, we formed a wholly-owned subsidiary, Atlas
Freighter Leasing III, Inc. for the purpose of entering into a
$300 million term loan facility (the "AFL III Term Loan
Facility") to refinance all of the aircraft and spare engines
previously financed under the AFL Term Loan Facility and the AFL
II Term Loan Facility, plus one aircraft previously financed
under the Aircraft Credit Facility and three 747-400 spare
engines owned by us. As a result of this refinancing, we will
experience lower interest rates and extended terms as compared to
the previous financings. The AFL III Term Loan Facility consists
of Term Loan A in the amount of $165 million and Term Loan B in
the amount of $135 million, for which interest is based on the
Eurodollar rate, plus 1.75% and plus 2.00%, respectively. The
interest rate on borrowings outstanding under the AFL III Term
Loan Facility was 7.90% and 8.15%, respectively, at April 30,
2000. Quarterly scheduled principal payments of $5.0 million and
$1.7 million, respectively, commence in July 2000 and increase
over time to $9.9 million and $6.8 million, such that Term Loan A
is to be fully paid in April 2005 and Term Loan B is to be fully
paid in April 2006, with a final payment of $40.5 million.
In April 2000, we amended our Aircraft Credit Facility to
provide for a $175 million revolving credit facility with a three-
year revolving period and a subsequent two-year term loan period,
commencing at the time an aircraft has been financed by revolving
proceeds for three years. With respect to the aircraft currently
financed under the Aircraft Credit Facility, the term loan period
will be from March 31, 2003 to March 30, 2005 in the event that
permanent financing has not been obtained for such flight
equipment financed under the facility. At the time of each
borrowing, we must select either a Base Rate Loan (prime rate,
plus 0.75%) or a Eurodollar Rate Loan (Eurodollar rate, plus
1.75%). As of April 30, 2000, we had approximately $87.9 million
outstanding under the Aircraft Credit Facility and the weighted
average interest rate was 9.75%, which represents a Base Rate
Loan as required for the initial two-week period of the amended
Aircraft Credit Facility. We selected the Eurodollar Rate Loan
commencing in May 2000, for which the interest rate is 7.88%.
In May 2000, we refinanced one of our 747-200 freighter
aircraft with a group of European banks for a term of five years,
at a Eurodollar rate, plus 1.50%, for a rate of 8.22% at
commencement of the loan. This aircraft was previously financed
under the Aircraft Credit Facility.
In May 2000, we announced that we entered into a purchase
contract to acquire two Boeing 747-300 combi aircraft from VARIG,
S.A. (the "VARIG Aircraft"). Each VARIG Aircraft will be
converted from combi to full freighter configuration by Boeing
prior to their placement into service, which is anticipated to
occur during the fourth quarter of 2000. After their conversion,
these aircraft will be operationally equivalent to the Boeing 747-
200 aircraft in our fleet. A combi conversion requires fewer
modifications than a normal passenger-to-cargo aircraft
conversion as a result of the existence of a rear cargo door and
partial cargo handling system, thus reducing both the cost and
time associated with the modification.
Due to the contractual nature of our business, management
does not consider our 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
our customers, we do not incur significant costs in advance of
the receipt of corresponding revenues. Moreover, ACMI costs,
which are our responsibility, are generally incurred on a
regular, periodic basis on either a flight hour or calendar month
basis. These costs are largely matched by revenue receipts, as
our contracts require regular payments from our customers based
upon current flight activity, generally every two to four weeks.
As a result, we have not had a requirement for a working capital
facility.
Under the Federal Aviation Administration's (the "FAA")
Directives issued under its "Aging Aircraft" program, we are
subject to extensive aircraft examinations and will be required
to undertake structural modifications to our 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. All of our
Boeing 747-200 aircraft have been brought into compliance with
such Directives. As part of the FAA's overall Aging Aircraft
program, it has issued Directives requiring certain additional
aircraft modifications to be accomplished. We estimate that the
modification costs per 747-200 aircraft will range between $2
million and $3 million. Fourteen aircraft in our 747-200 fleet
have already undergone the major portion of such modifications.
The remaining eight 747-200 aircraft will require modification
prior to the year 2009. Other Directives have been issued that
require inspections and minor modifications to Boeing 747-200
aircraft. The newly manufactured 747-400 freighter aircraft were
delivered to us in compliance with all existing FAA Directives at
their respective delivery dates. It is possible that additional
Directives applicable to the types of aircraft or engines
included in our fleet could be issued in the future, the cost of
which could be substantial.
We are subject to various international bilateral air
services agreements between the United States and the countries
to which we provide service. We also operate on behalf of
foreign flag carriers between various foreign points without
serving the United States. These services are subject to the
bilateral agreements of the respective governments. Furthermore,
these services require FAA approval but not Department of
Transportation ("DOT") approval. We must generally obtain
permission from the applicable foreign governments to provide
service to foreign points. Moreover, in some instances, ACMI
Contracts are subject to prior and/or periodic approvals of
foreign governments, whose decisions may be affected by ongoing
negotiations and relations with the United States. For example,
a recent ruling by an aviation agency of the British government
concluded that one of our long-term wet-leases of 747-400 to
British Airways no longer meets the "exceptional circumstances"
exception necessary for their operating approval, due to changed
market conditions in the United Kingdom. Should other countries
adopt similar rules and/or begin enforcement of similar rules for
political purposes, our business could be adversely effected.
From time to time we engage in discussions with third
parties regarding possible acquisition or sale of aircraft in our
fleet. We are currently in discussions with third-parties for
the possible acquisition and sale of additional aircraft for 2000
and beyond.
We believe that cash on hand and the cash flow generated
from our operations will be sufficient to meet our normal ongoing
liquidity needs for the next twelve months.
Year 2000
We previously performed a review of our 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 were
common to other air carriers. We have not encountered any
material Y2K compliance problems with respect to our internal
systems and with respect to the systems of our key business
partners. Costs incurred to become Y2K compliant did not exceed
$300,000.
Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board
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 on 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, as amended by SFAS
No. 137, is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000 and earlier application is
encouraged. We have not yet quantified the impact, if any, of
adopting SFAS No. 133 on our financial statements and have not
determined the timing of or method of adoption of SFAS No. 133.
However, SFAS No. 133 could increase volatility in earnings and
other comprehensive income.
In December 1999, the Securities and Exchange Commission
(the "SEC") issued Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements." SAB No. 101
summarizes the SEC's views on the application of GAAP to revenue
recognition. We have reviewed SAB No. 101 and believe that we
are in compliance with the SEC's interpretation of revenue
recognition.
Forward-looking Information
Certain statements included or incorporated by reference in
this Form 10-Q constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act") and Section 2lE of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"). Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual
results, levels of activity, performance or achievements or
industry results, to be materially different from any future
results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. In
addition, forward-looking statements generally can be identified
by the use of forward-looking terminology such as "may", "will",
"expect", "intend", "estimate", "anticipate", "believe", or
"continue" or the negative thereof or variations thereon or
similar terminology. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, we
can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results
to differ materially from our expectations are disclosed under
"Risk Factors" and elsewhere in our Form 10-K for December 31,
1999.
To the extent that any of the statements contained herein
relating to our 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 and complying with FAA policies;
- - the continued productivity of our workforce;
- - dependence on key personnel; and
- - other regulatory requirements.
As a result of the foregoing and other factors, no assurance
can be given as to our future results and achievements. Neither
we nor any other person assumes responsibility for the accuracy
and completeness of these statements.
ATLAS AIR, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In April 1999, we received notification from the National
Mediation Board ("NMB") that our crew members voted for
representation by the Air Line Pilots Association ("ALPA"). We
expect our labor costs to decline initially since our profit
sharing plan (the "Profit Sharing Plan") excludes from the
category of eligible employees, those employees who have been
certified by the NMB for representation. In response to ALPA's
claims that such an exclusion violates the Railway Labor Act, on
May 6, 1999, we filed an action in the United States District
Court for the District of Columbia (the "District Court") seeking
a declaratory judgment confirming, inter alia, the enforceability
of the Profit Sharing Plan's exclusion. On May 10, 1999, ALPA
filed a counterclaim in that action, alleging that the exclusion
of its members from the Profit Sharing Plan violates the Railway
Labor Act, and seeking restoration of profit sharing pay. In
October 1999, the District Court entered a summary judgment in
our favor, ruling that we did not violate the Railway Labor Act
when we eliminated crew members' participation in the Profit
Sharing Plan following ALPA's certification as the crew members'
collective bargaining agent. In addition, the District Court
dismissed all other claims in the case. ALPA has subsequently
filed an appeal of the District Court's decision.
We have received an order from the Government of India
("India") seeking approximately $1.1 million in taxes (plus
interest of approximately $1.1 million and possible penalties)
for the tax year 1996 to 1997. India has also requested
additional information for subsequent tax years. We believe that
we are exempt from India taxes under a United States/India treaty
and intend to contest the assessment vigorously.
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: May 15, 2000 By: /s/ Stanley J. Gadek
Stanley J. Gadek
Acting Chief Financial Officer,
Vice President - Controller
Principal Accounting Officer
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