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Atlas Air Worldwide: Who Needs Passenger Aircraft?

The Stock Dudar profile picture
The Stock Dudar


  • Reduced shipping capacity of passenger aircraft lead to higher air cargo rates.
  • AAWW is a pure play air freight company well positioned to fill the COVID-19 induced gap in shipping supply.
  • Industry tailwinds combined with experienced management look like a recipe for a higher stock price.

Atlas Air Worldwide Holdings Inc. Overview

Founded in 1992, Atlas Air Worldwide (NASDAQ:AAWW) is a holding company that through its subsidiaries, Atlas Air, majority ownership of Polar, Southern Air, and Titan, operates in three segments, ACMI, charter flights, and dry leasing. They count DHL, Amazon (AMZN), and the US military among their customers, and while they do provide some passenger transport, AAWW is overwhelmingly an air cargo transport company. Mr. John Dietrich was named CEO in January of 2020, after five years as COO of the Atlas Air subsidiary, and 20 years with AAWW, the majority of the company's existence.

Business Dynamics and Financials

Q1 is typically the slowest quarter, and while January and February were hampered by decreased shipping due to the shutdown in China, March saw a dramatic shift in industry dynamics. Let's take a glance at the financial results, which I'll analyze by segment below.

ACMI Charter Dry Lease
Q1 '20 Revenue $279M $328M $41.9M
Y/Y Rev Change -9.1% 7.4% -40%
Q1 '20 EBITDA $52.3M $50.8M $10.7M
Y/Y EBITDA Change 30% 43% -70%

Source: AAWW 1Q20 Earnings Slides

ACMI - AAWW's Aircraft Crew Maintenance Insurance segment is the largest in the world with shipping giant DHL as their biggest customer. The partnership between Atlas and DHL is strong as represented by DHL's minority interest 49% in the Polar subsidiary. The ACMI segment typically engages with customers on long-term contracts to supply ACMI/CMI. With many customers locked into long-term contracts, AAWW was shielded from immediate panic in the aftermath of the COVID-19 outbreak, but they don't benefit as much from the spike in shipping rates in the near term. As leases expire, and customers seek to lock in new rates, odds are high that more expensive contracts will be signed given the sudden drop in supply across the industry, to the benefit of AAWW. We saw reduced

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The Stock Dudar profile picture
I spent 14 years as an aerospace engineer before changing careers to a field where I could still be analytical while interacting more directly with people. I have been writing about stocks and actively investing since 2014. I enjoy reading Seeking Alpha articles as much as I enjoy writing them, and I am always looking for ways to broaden my knowledge of markets, particularly stocks.The following important disclaimer language applies to all posted content. Content consists of articles, blog posts, comments, direct messages, and any other writing on Seeking Alpha:The Stock Dudar's Seeking Alpha page has “followers” a term designated by Seeking Alpha. These followers have not been solicited by JRW Advisory Services (JRW) or its representatives, and the presence of these followers should not be considered testimonials or advertisements for JRW, its representatives, products or services. Positive comments or likes should not be construed as an endorsement of JRW, its representatives, products or services. Furthermore, negative comments are not restricted by the author or JRW in any way. JRW Advisory Services is the doing business as name for JRW Enterprises, LLC.Content (articles, blog posts, comments, direct messages, and any other writing on Seeking Alpha) is not a solicitation of business or an advertisement of JRW or any of its services or products. It is not an offer, solicitation or recommendation to purchase or sell any security.Content is subject to change at any time without notice based upon market or other conditions and is as current as the time posted. Content presented is believed to be factual and up to date, but accuracy is not guaranteed, has not been independently verified, nor should it be regarded as a complete analysis of the subjects discussed. Information regarding a company or security may be obsolete by the time it is published on Seeking Alpha and investors must therefore independently verify updated information regarding a company or investment. You are responsible for setting the cache settings on your browser to ensure you are receiving the most recent data.All investments carry some level of risk, including the potential loss of principal invested. Past performance is not an indicator of future performance. Content, including forward-looking statements, is not a guarantee or suggestion of any results, implied or otherwise. Investing involves risks, uncertainties and assumptions, and it is possible that actual results will differ materially from expectations derived from posted content. The reader should be aware that investing in securities involves, but is not limited to, the following risks: business, political, regulatory, liquidity, and inflation risks. Investing in foreign securities presents additional risks related to currency risk and changes to foreign policies and taxes.JRW and its representatives express no opinion as to whether any content is appropriate for a reader’s investment portfolio, strategy, financial situation, or investment objectives. Readers do not receive investment advisory, investment supervisory or investment management services, nor the initial or ongoing review or monitoring of the reader’s individual investment portfolio or individual needs. Therefore, no reader should assume that content published on Seeking Alpha is a substitute for individual personalized advice from an investment professional of the reader’s choosing. Factors that affect suitability include, but are not limited to individual risk tolerance, time-horizon, tax circumstances, estate planning, insurance requirements, and general financial situation. It remains the reader’s exclusive responsibility to review, evaluate and determine whether to accept or reject the content. Content is of a general nature and is intended for illustrative or educational purposes only. It does not constitute a recommendation of any investment strategy or product for a particular investor and is not intended to be used as the sole basis of any investment decisions, nor is it an opinion regarding the appropriateness of any investment. To the extent that any of the content may be deemed to be investment advice or a recommendation in connection with a particular security, such information is impersonal and not tailored to the investment needs of any specific person.Content is not intended to constitute legal or tax advice. The content’s general information should not be acted upon without obtaining specific legal and tax advice from a licensed professional of your own choosing.

Analyst’s Disclosure: I am/we are long AAWW. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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