UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-16545

 

Atlas Air Worldwide Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-4146982
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)
2000 Westchester Avenue, Purchase, New York	10577
(Address of principal executive offices)	(Zip Code)

(914) 701-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	AAWW	The NASDAQ Global Select Market

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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 28, 2022 there were 28,364,198 shares of the registrant’s Common Stock outstanding.

TABLE OF CONTENTS

		Page
Part I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (unaudited)	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)	6
	Consolidated Statements of Stockholders’ Equity as of and for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II. OTHER INFORMATION		34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 6.	Exhibits	35
	Exhibit Index	36
	Signatures	37

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Atlas Air Worldwide Holdings, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

(Unaudited)

	September 30, 2022			December 31, 2021
Assets
Current Assets
Cash and cash equivalents	$	465,499		$	910,965
Restricted cash		10,473			10,052
Accounts receivable, net of allowance of $2,039 and $4,003, respectively		259,663			305,905
Prepaid expenses, assets held for sale and other current assets		96,265			99,100
Total current assets		831,900			1,326,022
Property and Equipment
Flight equipment		5,803,732			5,449,100
Ground equipment		110,034			101,824
Less: accumulated depreciation		(1,466,810	)		(1,319,636	)
Flight equipment purchase deposits and modifications in progress		483,086			352,422
Property and equipment, net		4,930,042			4,583,710
Other Assets
Operating lease right-of-use assets		114,999			138,744
Deferred costs and other assets		305,516			329,971
Intangible assets, net and goodwill		60,274			64,796
Total Assets	$	6,242,731		$	6,443,243
Liabilities and Equity
Current Liabilities
Accounts payable	$	93,959		$	82,885
Accrued liabilities		611,591			641,978
Current portion of long-term debt and finance leases		397,875			639,811
Current portion of long-term operating leases		53,988			55,383
Total current liabilities		1,157,413			1,420,057
Other Liabilities
Long-term debt and finance leases		1,578,888			1,655,075
Long-term operating leases		125,251			166,022
Deferred taxes		415,683			354,798
Financial instruments and other liabilities		32,752			37,954
Total other liabilities		2,152,574			2,213,849
Commitments and contingencies
Equity
Stockholders’ Equity
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued		-			-
Common stock, $0.01 par value; 100,000,000 shares authorized;     35,271,413 and 34,707,860 shares issued, 28,364,198 and 29,215,702     shares outstanding (net of treasury stock), as of September 30, 2022     and December 31, 2021, respectively		352			347
Additional paid-in capital		871,099			934,516
Treasury stock, at cost; 6,907,215 and 5,492,158 shares, respectively		(337,626	)		(225,461	)
Accumulated other comprehensive income (loss)		59			(511	)
Retained earnings		2,398,860			2,100,446
Total stockholders’ equity		2,932,744			2,809,337
Total Liabilities and Equity	$	6,242,731		$	6,443,243

See accompanying Notes to Unaudited Consolidated Financial Statements

3

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Operating Revenue	$	1,124,554		$	1,016,100		$	3,341,681		$	2,867,832
Operating Expenses
Aircraft fuel		352,289			216,638			982,508			594,458
Salaries, wages and benefits		264,685			231,437			848,610			642,417
Maintenance, materials and repairs		116,622			102,819			343,576			356,499
Depreciation and amortization		78,431			73,468			224,991			207,918
Travel		57,237			42,966			152,724			120,585
Navigation fees, landing fees and other rent		41,319			46,622			119,764			138,918
Passenger and ground handling services		33,138			40,268			102,821			121,837
Aircraft rent		13,603			15,485			39,211			53,928
Gain on disposal of flight equipment		-			(810	)		(6,221	)		(794	)
Special charge		6,299			-			8,932			-
Transaction-related expenses		6,889			168			6,889			486
Other		62,284			63,106			172,576			183,366
Total Operating Expenses		1,032,796			832,167			2,996,381			2,419,618
Operating Income		91,758			183,933			345,300			448,214
Non-operating Expenses (Income)
Interest income		(2,426	)		(159	)		(3,539	)		(559	)
Interest expense		19,177			27,173			59,524			81,345
Capitalized interest		(3,080	)		(2,335	)		(10,183	)		(5,456	)
Loss on early extinguishment of debt		-			-			689			-
Unrealized loss on financial instruments		-			-			-			113
Other (income) expense, net		(138	)		3,136			81			(41,174	)
Total Non-operating Expenses (Income)		13,533			27,815			46,572			34,269
Income before income taxes		78,225			156,118			298,728			413,945
Income tax expense		18,125			36,583			68,859			97,367
Net Income	$	60,100		$	119,535		$	229,869		$	316,578
Earnings per share:
Basic	$	2.12		$	4.12		$	8.07		$	10.98
Diluted	$	1.79		$	3.91		$	6.82		$	10.52
Weighted average shares:
Basic		28,326			29,023			28,472			28,844
Diluted		34,066			30,547			34,143			30,117

See accompanying Notes to Unaudited Consolidated Financial Statements

4

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net Income	$	60,100		$	119,535		$	229,869		$	316,578
Other comprehensive income:
Interest rate derivatives:
Reclassification to loss on early extinguishment of debt		-			-			639			-
Reclassification to interest expense		(16	)		250			106			774
Income tax benefit		-			(60	)		(175	)		(184	)
Other comprehensive income (loss)		(16	)		190			570			590
Comprehensive Income	$	60,084		$	119,725		$	230,439		$	317,168

See accompanying Notes to Unaudited Consolidated Financial Statements

5

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	For the Nine Months Ended
	September 30, 2022			September 30, 2021
Operating Activities:
Net Income	$	229,869		$	316,578
Adjustments to reconcile Net Income to net cash provided by operating activities:
Depreciation and amortization		262,881			265,231
Reversal of expected credit losses		(538	)		(377	)
Loss on early extinguishment of debt		689			-
Special charge		8,932			-
Unrealized loss on financial instruments		-			113
Gain on disposal of flight equipment		(6,221	)		(794	)
Deferred taxes		67,848			96,053
Stock-based compensation		9,438			10,653
Changes in:
Accounts receivable		49,129			(15,785	)
Prepaid expenses, current assets and other assets		(17,008	)		(43,297	)
Accounts payable, accrued liabilities and other liabilities		(29,444	)		(19,442	)
Net cash provided by operating activities		575,575			608,933
Investing Activities:
Capital expenditures		(79,230	)		(64,132	)
Purchase deposits and payments for flight equipment and modifications		(493,826	)		(346,028	)
Investment in joint ventures		(9,341	)		(2,424	)
Proceeds from disposal of flight equipment		13,500			9,470
Net cash used for investing activities		(568,897	)		(403,114	)
Financing Activities:
Proceeds from debt issuance		230,000			23,948
Payment of debt issuance costs		(2,176	)		(1,274	)
Payments of debt and finance lease obligations		(580,402	)		(271,078	)
Purchase of treasury stock		(100,000	)		-
Customer maintenance reserves and deposits received		12,911			13,491
Customer maintenance reserves paid		-			(35,608	)
Treasury shares withheld for payment of taxes		(12,056	)		(7,438	)
Net cash used for financing activities		(451,723	)		(277,959	)
Net decrease in cash, cash equivalents and restricted cash		(445,045	)		(72,140	)
Cash, cash equivalents and restricted cash at the beginning of period		921,017			856,281