GlobeNewswire Inc | Feb 18, 2021 08:00AM EST

February 18, 2021

Fourth-Quarter 2020 Results

-- Reported Net Income Increased to $184.0 Million -- Adjusted Net Income Grew to $143.2 Million -- Adjusted EBITDA Totaled $279.7 Million

Full-Year 2020 Results

-- Reported Net Income Improved to $360.3 Million -- Adjusted Net Income Rose to $379.0 Million -- Adjusted EBITDA Totaled $844.2 Million

PURCHASE, N.Y., Feb. 18, 2021 (GLOBE NEWSWIRE) -- Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced strong increases in volumes, revenue and earnings for the fourth quarter and full year of 2020. These results were driven by ongoing demand for our assets and services and our operational execution. The company also provided an outlook for first-quarter 2021 earnings growth.

On a reported basis, net income totaled $184.0 million, or $6.15 per diluted share, for the three months ended December 31, 2020. Results compare with a reported loss of $410.2 million, or $15.86 per diluted share, for the three months ended December 31, 2019, which was primarily due to a noncash special charge of $616.2 million ($485.2 million after tax).

On an adjusted basis, EBITDA rose to $279.7 million in the fourth quarter of 2020 compared with $204.7 million in the prior-year period. Adjusted net income increased to $143.2 million, or $4.83 per diluted share, in the fourth quarter of 2020 compared with $98.2 million, or $3.80 per diluted share, in the prior-year period.

We finished this unprecedented year on a strong note, with financial and operating results that exceeded our expectations. Id like to thank everyone at Atlas for stepping up to deliver an extraordinary peak season and full year for our business and our customers, said President and Chief Executive Officer John Dietrich.

In the face of unrelenting operational complexities driven by the COVID-19 pandemic, we added widebody capacity, increased aircraft utilization and grew block hours to carry historic volumes, including essential goods that businesses, communities and individuals require as well as holiday e-commerce packages.

We are leveraging our unrivaled portfolio of assets and the scale of our global network. We are also continuing to diversify our customer base and have entered into numerous long-term charter agreements with strategic customers, such as Cainiao, Flexport and HP Inc. These agreements will provide reliable and attractive revenue streams for the years ahead.

Providing our customers with modern, fuel-efficient aircraft has been a longstanding priority at Atlas, and we were excited to announce that we ordered four new 747-8Fs from Boeing. This acquisition underscores that commitment and also demonstrates our focus on environmental stewardship through the reduction of aircraft noise, emissions and fuel consumption. The 747-8F provides 20% higher payload capacity and 16% lower fuel consumption than the very capable 747-400F, and has 25% higher capacity than the new-technology 777-200LRF. In addition, the advanced engines on the 747-8F reduce noise by approximately 30% compared to the previous generation of aircraft.

As the worlds largest 747 freighter operator, the -8F is core to our business, and complements our diverse fleet of 747-400s, 777s, 767s and 737s. We are expecting delivery of these new aircraft from May through October 2022, and they will play a key role in advancing Atlas strategic growth plans for decades to come.

He concluded: The strong demand for our aircraft and services has continued into this quarter. We expect to fly approximately 85,000 block hours in the first quarter of 2021, with revenue of approximately $820 million, and adjusted EBITDA of about $150 million. In addition, we expect first-quarter 2021 adjusted net income to grow approximately 60% to 65% compared with adjusted net income of $29.9 million in the first quarter of 2020.*

Due to ongoing uncertainty related to the pandemic and associated market dynamics, including ever-changing border restrictions, new variants of COVID-19 and surges in cases globally, we are not providing a full-year 2021 earnings outlook at this time.

Fourth-Quarter Results

Volumes in the fourth quarter of 2020 increased to 96,079 block hours compared with 84,488 in the fourth quarter of 2019, with revenue growing to $932.5 million versus $747.0 million in 2019.

ACMI segment revenue during the period primarily reflected lower levels of flying driven by the redeployment of 747-400 aircraft to the Charter segment to support long-term charter programs with customers seeking to secure committed cargo capacity. This was partially offset by an increase in aircraft utilization and higher CMI flying.

ACMI segment contribution included higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19 and increased pay rates we provided to our pilots in May 2020. In addition, ACMI segment contribution reflected higher heavy maintenance expense, including additional engine overhauls performed to take advantage of slot availability and vendor pricing discounts, and the redeployment of 747-400 aircraft to the Charter segment. These items were partially offset by increased aircraft utilization and an increase in CMI flying.

Higher Charter segment revenue during the quarter was primarily due to an increase in flying, partially offset by a slight decrease in the average revenue per block hour due to lower fuel costs.

Charter segment contribution was primarily driven by an increase in commercial cargo yields (excluding fuel) and demand for our services, reflecting a reduction of available cargo capacity in the market, the disruption of global supply chains due to the pandemic and our ability to increase aircraft utilization. In addition, segment contribution benefited from a reduction in aircraft rent and depreciation, the redeployment of 747-400 aircraft from the ACMI segment and the operation of a 777-200 freighter previously in our Dry Leasing business. These improvements were partially offset by: higher heavy maintenance expense, including additional engine overhauls performed to take advantage of slot availability and vendor pricing discounts; fewer charters for sports teams and fans as sports leagues cancelled games; higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19; and increased pay rates we provided to our pilots in May 2020.

In Dry Leasing, lower segment revenue and contribution in the fourth quarter of 2020 primarily related to changes in leases and the disposition of certain nonessential Dry Leased aircraft during the first quarter of 2020.

Lower unallocated income and expenses, net, during the quarter primarily reflected CARES Act grant income of $67.2 million.

Reported results in the fourth quarter of 2020 included an effective income tax rate of 24.1%. On an adjusted basis, our results reflected an effective income tax rate of 23.9%.

Full-Year Results

Volumes in 2020 grew to 344,821 block hours compared with 321,140 in 2019, with revenue increasing to $3.21 billion in 2020 from $2.74 billion in 2019.

For the twelve months ended December 31, 2020, our reported net income totaled $360.3 million, or $13.50 per diluted share, which included a $71.1 million unrealized loss on financial instruments. Reported results for the twelve months ended December 31, 2019, reflected a net loss of $293.1 million, or $11.35 per diluted share, which included a noncash special charge of $638.4 million ($503.1 million after tax), partially offset by an unrealized gain on financial instruments of $75.1 million.

On an adjusted basis, EBITDA grew to $844.2 million in 2020 compared with $504.8 million in 2019. For the twelve months ended December 31, 2020, adjusted net income increased to $379.0 million, or $13.67 per diluted share, compared with $139.6 million, or $5.24 per diluted share, in 2019.

Reported results in 2020 included an effective income tax rate of 27.5%. On an adjusted basis, our results reflected an effective income tax rate of 22.9%.

Cash

At December 31, 2020, our cash and cash equivalents, short-term investments and restricted cash totaled $856.3 million, compared with $114.3 million at December 31, 2019.

Our improved cash balance primarily reflected cash provided by operating activities, and also included the funds we received through the Payroll Support Program available to air cargo carriers under the CARES Act, partially offset by cash used for investing and financing activities.

Net cash used for investing activities during 2020 primarily related to capital expenditures and payments for flight equipment and modifications, including spare engines and GEnx engine performance upgrade kits, partially offset by proceeds from the disposal of nonessential aircraft. Net cash used for financing activities during the year primarily related to payments on debt obligations, including our revolving credit facility, partially offset by debt issuances.

Amazon Warrants

On October 9, 2020, Amazon elected a cashless exercise with respect to 3,607,477 shares vested under a Warrant issued in 2016. As a result, Amazon acquired 1,375,421 shares of AAWW common stock.

On January 27, 2021, Amazon elected a cashless exercise with respect to 4,150,529 shares vested under Warrants issued in 2016. As a result, Amazon acquired 1,280,450 shares of AAWW common stock.

Labor

Our work continues to complete a new joint collective bargaining agreement with our pilots in connection with the merger between Atlas Air and Southern Air. Formal negotiations with the pilots union have recently concluded, and we are moving on to binding interest arbitration on the remaining open issues. This arbitration is scheduled to begin in mid-March 2021.

Outlook*

We expect to fly approximately 85,000 block hours in the first quarter of 2021, with revenue of approximately $820 million, and adjusted EBITDA of about $150 million. In addition, we expect first-quarter 2021 adjusted net income to grow approximately 60% to 65% compared with adjusted net income of $29.9 million in the first quarter of 2020.*

We anticipate first-quarter results to continue to be impacted by ongoing pandemic-related expenses, including pilot premium pay and operational costs for providing a safe working environment for our employees. We also expect higher pilot costs related to increased pay rates we provided to our pilots in May 2020 and higher scheduled heavy maintenance expense.

For the full year in 2021, we expect aircraft maintenance expense to be lower than 2020, and depreciation and amortization to total about $270 million. In addition, core capital expenditures, which exclude aircraft and engine purchases, are projected to total approximately $110 to $120 million, mainly for parts and components for our fleet.

Committed expenditures to acquire aircraft and spare engines are expected to be $264.7 million in 2021. These expenditures include 747-400 passenger aircraft (to be used for replacement of older passenger aircraft as well as engines and spare parts), spare engines, and our January 2021 agreement to purchase four 747-8F aircraft from Boeing that are expected to be delivered from May 2022 through October 2022.

Due to ongoing uncertainty related to the pandemic and associated market dynamics, including ever-changing border restrictions, new variants of COVID-19 and surges in cases globally, we are not providing a full-year 2021 earnings outlook at this time. We will provide updates as the year progresses.

We provide guidance on an adjusted basis because we are unable to predict, with reasonable certainty, the effects of future gains and losses on asset sales, special charges and other unanticipated items that could be material to our reported results.*

Conference Call

Management will host a conference call to discuss Atlas Air Worldwides fourth-quarter and full-year 2020 financial and operating results at 11:00 a.m. Eastern Time on Thursday, February 18, 2021.

Interested parties may listen to the call live at Atlas Air Worldwides Investor site or at https://edge.media-server.com/mmc/p/kdnn77fd.

For those unable to listen to the live call, a replay will be archived on the Investor site following the call. A replay will also be available through February 25 by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.) and using Access Code 2969689#.

About Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with U.S. GAAP, we present certain non-GAAP financial measures to assist in the evaluation of our business performance. These non-GAAP measures include Adjusted EBITDA; Adjusted net income; Adjusted Diluted EPS; Adjusted effective tax expense (benefit) rate; and Free Cash Flow, which exclude certain noncash income and expenses, and items impacting year-over-year comparisons of our results. These non-GAAP measures may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for Net income (loss); Diluted EPS; Effective tax rate; and Net Cash Provided by Operating Activities, which are the most directly comparable measures of performance prepared in accordance with U.S. GAAP.

Our management uses these non-GAAP financial measures in assessing the performance of the companys ongoing operations and in planning and forecasting future periods. We believe that these adjusted measures, when considered together with the corresponding U.S. GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance. For example:

-- Adjusted EBITDA; Adjusted net income; and Adjusted Diluted EPS provide a more comparable basis to analyze operating results and earnings and are measures commonly used by shareholders to measure our performance. In addition, managements incentive compensation is determined, in part, by using Adjusted EBITDA and Adjusted net income. -- Adjusted effective tax rate provides improved insight into the tax effects of our ongoing business operations. -- Free Cash Flow helps investors assess our ability, over the long term, to create value for our shareholders as it represents cash available to execute our capital allocation strategy.

*We provide guidance on an adjusted basis and are unable to provide forward-looking guidance on a U.S. GAAP basis or a reconciliation to the most directly comparable U.S. GAAP measures because we are unable to predict with reasonable certainty the ultimate outcome of certain significant items, including future gains and losses on asset sales, special charges and other unanticipated items. These items are uncertain, depend on various factors, and could have a material impact on our U.S. GAAP results.

About Atlas Air Worldwide:

Atlas Air Worldwide is a leading global provider of outsourced aircraft and aviation operating services. It is the parent company of Atlas Air, Inc., Southern Air Holdings, Inc. and Titan Aviation Holdings, Inc., and is the majority shareholder of Polar Air Cargo Worldwide, Inc. Our companies operate the worlds largest fleet of 747 freighter aircraft and provide customers the broadest array of Boeing 747, 777, 767 and 737 aircraft for domestic, regional and international cargo and passenger operations.

Atlas Air Worldwides press releases, SEC filings and other information may be accessed through the companys home page, www.atlasairworldwide.com.

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect Atlas Air Worldwides current views with respect to certain current and future events and financial performance. Those statements are based on managements beliefs, plans, expectations and assumptions, and on information currently available to management. Generally, the words will, may, should, expect, anticipate, intend, plan, continue, believe, seek, project, estimate, and similar expressions used in this release that do not relate to historical facts are intended to identify forward-looking statements.

Such forward-looking statements speak only as of the date of this release. They are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of Atlas Air Worldwide and its subsidiaries (collectively, the companies) that may cause the actual results of the companies to be materially different from any future results, express or implied, in such forward-looking statements.

Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: our ability to effectively operate the network service contemplated by our agreements with Amazon; our ability to coordinate with Amazon to accept newly converted aircraft; the possibility that Amazon may terminate its agreements with the companies; the ability of the companies to operate pursuant to the terms of their financing facilities; the ability of the companies to obtain and maintain normal terms with vendors and service providers; the companies ability to maintain contracts that are critical to their operations; the ability of the companies to fund and execute their business plan; the ability of the companies to attract, motivate and/or retain key executives, pilots and associates; the ability of the companies to attract and retain customers; the continued availability of our wide-body aircraft; demand for cargo services in the markets in which the companies operate; changes in U.S. and foreign government trade policies; economic conditions; the impact of geographical events or health epidemics such as the COVID-19 pandemic; our compliance with the requirements and restrictions under the Payroll Support Program; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; significant data breach or disruption of our information technology systems; labor costs and relations, work stoppages and service slowdowns; the outcome of pending negotiations and arbitration with our pilots union; financing costs; the cost and availability of war risk insurance; aviation fuel costs; security-related costs; competitive pressures on pricing (especially from lower-cost competitors); volatility in the international currency markets; weather conditions; government legislation and regulation; consumer perceptions of the companies products and services; anticipated and future litigation; and other risks and uncertainties set forth from time to time in Atlas Air Worldwides reports to the United States Securities and Exchange Commission.

For additional information, we refer you to the risk factors set forth under the heading Risk Factors in the most recent Annual Report on Form 10-K and subsequent reports on Form 10-Q filed by Atlas Air Worldwide with the Securities and Exchange Commission. Other factors and assumptions not identified above may also affect the forward-looking statements, and these other factors and assumptions may also cause actual results to differ materially from those discussed.

Except as stated in this release, Atlas Air Worldwide is not providing guidance or estimates regarding its anticipated business and financial performance for 2021 or thereafter.

Atlas Air Worldwide assumes no obligation to update such statements contained in this release to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law and expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.

Contacts: Investors ??InvestorRelations@atlasair.com Media ? CorpCommunications@atlasair.com

Atlas Air Worldwide Holdings, Inc.Consolidated Statements of Operations(in thousands, except per share data)(Unaudited)

For the Three Months Ended For the Twelve Months Ended December31, December31, December31, December31, 2020 2019 2020 2019 Operating Revenue $ 932,475 $ 747,049 $ 3,211,116 $ 2,739,189 Operating Expenses Salaries, wages and 203,363 166,900 737,963 599,811 benefitsMaintenance,materials and 127,211 76,370 506,297 381,701 repairsAircraft fuel 130,976 132,216 440,649 483,827 Depreciation and 68,667 60,428 257,672 251,097 amortizationNavigation fees,landing fees and 45,198 34,341 155,107 144,809 other rentTravel 40,043 48,698 154,792 189,211 Passenger andground handling 40,467 33,560 138,822 130,698 servicesAircraft rent 24,343 33,368 96,865 155,639 Loss (gain) ondisposal of (370 ) 5,309 (7,248 ) 5,309 aircraftSpecial charge, net (216 ) 616,243 16,265 638,373 Transaction-related 494 579 2,780 4,164 expensesOther 58,455 54,973 216,384 215,521 Total Operating 738,631 1,262,985 2,716,348 3,200,160 Expenses Operating Income 193,844 (515,936 ) 494,768 (460,971 )(Loss) Non-operating Expenses (Income)Interest income (147 ) (321 ) (1,076 ) (4,296 )Interest expense 27,886 29,815 114,635 120,330 Capitalized (397 ) (331 ) (925 ) (2,274 )interestLoss on earlyextinguishment of - - 81 804 debtUnrealized (gain)loss on financial (2,298 ) 3,791 71,053 (75,109 )instrumentsOther income, net (73,661 ) (27,072 ) (185,742 ) (27,668 )Total Non-operating (48,617 ) 5,882 (1,974 ) 11,787 Expenses (Income) Income (loss) 242,461 (521,818 ) 496,742 (472,758 )before income taxesIncome tax expense 58,494 (111,573 ) 136,456 (179,645 )(benefit) Net Income (Loss) $ 183,967 $ (410,245 ) $ 360,286 $ (293,113 ) Earnings (Loss) per share:Basic $ 6.72 $ (15.86 ) $ 13.64 $ (11.35 )Diluted $ 6.15 $ (15.86 ) $ 13.50 $ (11.35 ) Weighted average shares:Basic 27,395 25,869 26,408 25,828 Diluted 29,666 25,869 26,690 25,828

Atlas Air Worldwide Holdings, Inc.Consolidated Balance Sheets(in thousands, except share data)(Unaudited)

December31, December31, 2020 2019Assets Current Assets Cash and cash equivalents $ 845,589 $ 103,029 Restricted cash 10,692 10,401 Short-term investments - 879 Accounts receivable, net of allowance of $1,233 265,521 290,119 and $1,822, respectivelyPrepaid expenses, assets held for sale and 95,919 228,103 other current assetsTotal current assets 1,217,721 632,531 Property and Equipment Flight equipment 5,061,387 4,880,424 Ground equipment 86,670 83,584 Less: accumulated depreciation (1,147,613 ) (977,883 )Flight equipment modifications in progress 110,150 67,101 Property and equipment, net 4,110,594 4,053,226 Other Assets Operating lease right-of-use assets 255,805 231,133 Deferred costs and other assets 374,242 391,895 Intangible assets, net and goodwill 70,826 76,856 Total Assets $ 6,029,188 $ 5,385,641 Liabilities and Equity Current Liabilities Accounts payable $ 107,604 $ 79,683 Accrued liabilities 583,160 481,725 Current portion of long-term debt and finance 298,690 395,781 leasesCurrent portion of long-term operating leases 157,732 141,973 Total current liabilities 1,147,186 1,099,162 Other Liabilities Long-term debt and finance leases 2,020,451 1,984,902 Long-term operating leases 318,850 392,832 Deferred taxes 203,586 74,040 Financial instruments and other liabilities 77,576 42,526 Total other liabilities 2,620,463 2,494,300 Commitments and contingencies Equity Stockholders? Equity Preferred stock, $1 par value; 10,000,000 - - shares authorized; no shares issuedCommon stock, $0.01 par value; 100,000,000shares authorized; 32,877,533 and 31,048,842 shares issued,27,517,297 and 25,870,876 329 310 shares outstanding (net of treasury stock),as of December31, 2020 and December31, 2019, respectivelyAdditional paid-in-capital 873,874 761,715 Treasury stock, at cost; 5,360,236 and (217,889 ) (213,871 )5,177,966 shares, respectivelyAccumulated other comprehensive loss (1,904 ) (2,818 )Retained earnings 1,607,129 1,246,843 Total stockholders? equity 2,261,539 1,792,179 Total Liabilities and Equity $ 6,029,188 $ 5,385,641

Balance sheet debt at December31, 2020 totaled $2,319.1 million, including^ the impact of $50.6 million of unamortized discount and debt issuance costs1 of $29.3 million, compared with $2,380.7 million, including the impact of $68.6 million of unamortized discount and debt issuance costs of $35.1 million at December 31, 2019.^ The face value of our debt and finance leases at December31, 2020 totaled2 $2,399.0 million, compared with $2,484.4 million on December 31, 2019.

Atlas Air Worldwide Holdings, Inc.Consolidated Statements of Cash Flows(in thousands)(Unaudited)

For the Twelve Months Ended December31, December31, 2020 2019Operating Activities: Net Income (Loss) $ 360,286 $ (293,113 ) Adjustments to reconcile Net Income (Loss)to net cash provided by operating activities:Depreciation and amortization 328,101 316,821 Accretion of debt securities discount (2 ) (244 )Provision for expected credit losses 463 41 Loss on early extinguishment of debt 81 804 Special charge, net of cash payments 16,265 638,373 Unrealized loss (gain) on financial 71,053 (75,109 )instrumentsLoss (gain) on disposal of aircraft (7,248 ) 5,309 Deferred taxes 133,598 (180,553 )Stock-based compensation 21,997 25,189 Changes in: Accounts receivable 26,132 (22,524 )Prepaid expenses, current assets and other (56,716 ) (66,843 )assetsAccounts payable, accrued liabilities and 115,532 (47,807 )other liabilitiesNet cash provided by operating activities 1,009,542 300,344 Investing Activities: Capital expenditures (78,933 ) (133,554 )Payments for flight equipment and (184,273 ) (214,236 )modificationsInvestment in joint ventures (9,298 ) (2,028 )Proceeds from insurance - 38,133 Proceeds from investments 881 15,624 Proceeds from disposal of aircraft 126,335 10,300 Net cash used for investing activities (145,288 ) (285,761 )Financing Activities: Proceeds from debt issuance 417,733 115,992 Payment of debt issuance costs (6,100 ) (2,404 )Payments of debt and finance lease (429,749 ) (344,674 )obligationsProceeds from revolving credit facility 75,000 100,000 Payment of revolving credit facility (175,000 ) - Customer maintenance reserves and deposits 15,168 14,736 receivedCustomer maintenance reserves paid (14,437 ) (8,174 )Treasury shares withheld for payment of (4,018 ) (9,370 )taxesNet cash used for financing activities (121,403 ) (133,894 )Net increase (decrease) in cash, cash 742,851 (119,311 )equivalents and restricted cashCash, cash equivalents and restricted cash 113,430 232,741 at the beginning of periodCash, cash equivalents and restricted cash $ 856,281 $ 113,430 at the end of period Noncash Investing and Financing Activities:Acquisition of property and equipmentincluded in Accounts payable and accrued $ 36,619 $ 37,390 liabilitiesAcquisition of property and equipment $ 91,538 $ 28,827 acquired under operating leasesAcquisition of flight equipment under $ 18,476 $ 10,825 finance leaseCustomer maintenance reserves settled with $ 6,497 $ - sale of aircraftIssuance of shares related to settlement $ 49,545 $ - of warrant liability

Atlas Air Worldwide Holdings, Inc.Direct Contribution(in thousands)(Unaudited)

For the Three Months Ended For the Twelve Months Ended December31, December31, December31, December31, 2020 2019 2020 2019Operating Revenue: ACMI $ 337,718 $ 344,901 $ 1,211,169 $ 1,247,770 Charter 559,218 361,021 1,855,230 1,305,860 Dry Leasing 41,609 43,453 165,181 200,781 Customer incentive (10,676 ) (7,117 ) (39,090 ) (33,135 )asset amortizationOther 4,606 4,791 18,626 17,913 Total Operating $ 932,475 $ 747,049 $ 3,211,116 $ 2,739,189 Revenue Direct Contribution:ACMI $ 70,321 $ 104,412 $ 179,946 $ 218,459 Charter 186,303 69,817 559,673 149,372 Dry Leasing 11,023 11,740 41,070 70,386 Total DirectContribution for 267,647 185,969 780,689 438,217 Reportable Segments Unallocatedexpenses and (27,576 ) (81,865 ) (201,016 ) (337,434 )(income), netLoss on earlyextinguishment of - - (81 ) (804 )debtUnrealized gain(loss) on financial 2,298 (3,791 ) (71,053 ) 75,109 instrumentsSpecial charge, net 216 (616,243 ) (16,265 ) (638,373 )Transaction-related (494 ) (579 ) (2,780 ) (4,164 )expensesGain (loss) ondisposal of 370 (5,309 ) 7,248 (5,309 )aircraftIncome (loss) 242,461 (521,818 ) 496,742 (472,758 )before income taxes Add back (subtract):Interest income (147 ) (321 ) (1,076 ) (4,296 )Interest expense 27,886 29,815 114,635 120,330 Capitalized (397 ) (331 ) (925 ) (2,274 )interestLoss on earlyextinguishment of - - 81 804 debtUnrealized (gain)loss on financial (2,298 ) 3,791 71,053 (75,109 )instrumentsOther income, net (73,661 ) (27,072 ) (185,742 ) (27,668 )Operating Income $ 193,844 $ (515,936 ) $ 494,768 $ (460,971 )(Loss)

Atlas Air Worldwide uses an economic performance metric, Direct Contribution, to show the profitability of each of its segments after allocation of direct operating and ownership costs. Atlas Air Worldwide currently has the following reportable segments: ACMI, Charter, and Dry Leasing.

Direct Contribution consists of net income (loss) before income taxes, excluding loss on early extinguishment of debt, unrealized (loss) gain on financial instruments, special charge, net, transaction-related expenses, gain (loss) on disposal of aircraft, and unallocated income and expenses, net.

Direct operating and ownership costs include crew costs, maintenance, fuel, ground operations, sales costs, aircraft rent, interest expense on the portion of debt used for financing aircraft, interest income on debt securities, and aircraft depreciation.

Unallocated income and expenses, net include corporate overhead, nonaircraft depreciation, noncash expenses and income, interest expense on the portion of debt used for general corporate purposes, interest income on nondebt securities, capitalized interest, foreign exchange gains and losses, other revenue, other nonoperating costs and CARES Act grant income.

Atlas Air Worldwide Holdings, Inc.Reconciliation to Non-GAAP Measures(in thousands, except per share data)(Unaudited)

For the Three Months Ended December December Percent 31, 31, Change 2020 2019 Net Income (Loss) $ 183,967 $ (410,245 ) 144.8 %Impact from: CARES Act grant income^1 (67,212 ) - Customer incentive asset 10,676 7,117 amortizationSpecial charge, net (216 ) 616,243 Leadership transition costs 128 3,343 Noncash expenses and income, 4,599 4,524 net^2Unrealized (gain) loss on (2,298 ) 3,791 financial instrumentsOther, net^3 166 6,177 Income tax effect of 13,410 (132,754 ) reconciling itemsSpecial tax item^4 - (3 ) Adjusted Net Income $ 143,220 $ 98,193 45.9 % Adjusted weighted average 29,666 25,869 diluted shares outstanding Adjusted Diluted EPS $ 4.83 $ 3.80 27.1 % For the Twelve Months Ended December December Percent 31, 31, Change 2020 2019 Net Income (Loss) $ 360,286 $ (293,113 ) 222.9 %Impact from: CARES Act grant income^1 (151,590 ) - Customer incentive asset 39,090 33,135 amortizationSpecial charge 16,265 638,373 Leadership transition costs 6,061 6,736 Noncash expenses and income, 17,971 18,267 net^2Unrealized loss (gain) on 71,053 (75,109 ) financial instrumentsOther, net^3 (3,679 ) 10,830 Income tax effect of 23,580 (145,295 ) reconciling itemsSpecial tax item^4 - (54,272 ) Adjusted Net Income $ 379,037 $ 139,552 171.6 % Weighted average diluted 26,690 25,828 shares outstandingAdd: dilutive warrant^5 1,040 758 dilutive restricted - 64 stockAdjusted weighted average 27,730 26,650 diluted shares outstanding Adjusted Diluted EPS $ 13.67 $ 5.24 160.9 %

Atlas Air Worldwide Holdings, Inc.Reconciliation to Non-GAAP Measures(in thousands, except per share data)(Unaudited)

For the Three Months Ended December December Percent 31, 31, Change 2020 2019 Income (loss) before taxes $ 242,461 $ (521,818 ) 146.5 %Impact from: CARES Act grant income^1 (67,212 ) - Customer incentive asset 10,676 7,117 amortizationSpecial charge, net (216 ) 616,243 Leadership transition costs 128 3,343 Noncash expenses and income, 4,599 4,524 net^2Unrealized (gain) loss on (2,298 ) 3,791 financial instrumentsOther, net^3 166 6,177 Adjusted income before income 188,304 119,377 57.7 %taxes Interest expense, net 22,743 24,849 Other income, net (6,449 ) (27,072 ) Adjusted operating income $ 204,598 $ 117,154 74.6 % Income tax expense (benefit) $ 58,494 $ (111,573 ) Income tax effect of 13,410 (132,754 ) reconciling itemsSpecial tax^4 - (3 ) Adjusted income tax expense 45,084 21,184 (benefit)Adjusted income before income $ 188,304 $ 119,377 taxesEffective tax expense 24.1 % (21.4 )% (benefit) rateAdjusted effective tax expense 23.9 % 17.7 % rate For the Twelve Months Ended December December Percent 31, 31, Change 2020 2019 Income (loss) before taxes $ 496,742 $ (472,758 ) 205.1 %Impact from: CARES Act grant income^1 (151,590 ) - Customer incentive asset 39,090 33,135 amortizationSpecial charge 16,265 638,373 Leadership transition costs 6,061 6,736 Noncash expenses and income, 17,971 18,267 net^2Unrealized loss (gain) on 71,053 (75,109 ) financial instrumentsOther, net^3 (3,679 ) 10,830 Adjusted income before income 491,913 159,474 208.5 %taxes Interest expense, net 94,663 97,122 Other income, net (34,071 ) (24,013 ) Adjusted operating income $ 552,505 $ 232,583 137.6 % Income tax expense (benefit) $ 136,456 $ (179,645 ) Income tax effect of 23,580 (145,295 ) reconciling itemsSpecial tax^4 - (54,272 ) Adjusted income tax expense 112,876 19,922 Adjusted income before income $ 491,913 $ 159,474 taxesEffective tax expense 27.5 % (38.0 )% (benefit) rateAdjusted effective tax expense 22.9 % 12.5 % rate

Atlas Air Worldwide Holdings, Inc.Reconciliation to Non-GAAP Measures(in thousands)(Unaudited)

For the Three Months Ended December December Percent 31, 31, Change 2020 2019 Net Income (Loss) $ 183,967 $ (410,245 ) 144.8 %Interest expense, net 27,342 29,163 Depreciation and amortization 68,667 60,428 Income tax expense (benefit) 58,494 (111,573 ) EBITDA 338,470 (432,227 ) CARES Act grant income^1 (67,212 ) - Customer incentive asset 10,676 7,117 amortizationSpecial charge, net (216 ) 616,243 Leadership transition costs 128 3,343 Unrealized (gain) loss on (2,298 ) 3,791 financial instrumentsOther, net^3 166 6,387 Adjusted EBITDA $ 279,714 $ 204,654 36.7 % For the Twelve Months Ended December December Percent 31, 31, Change 2020 2019 Net Income (Loss) $ 360,286 $ (293,113 ) 222.9 %Interest expense, net 112,634 113,760 Depreciation and amortization 257,672 251,097 Income tax expense (benefit) 136,456 (179,645 ) EBITDA 867,048 (107,901 ) CARES Act grant income^1 (151,590 ) - Customer incentive asset 39,090 33,135 amortizationSpecial charge 16,265 638,373 Leadership transition costs 6,061 6,736 Unrealized loss (gain) on 71,053 (75,109 ) financial instrumentsOther, net^3 (3,679 ) 9,542 Adjusted EBITDA $ 844,248 $ 504,776 67.3 %

^ CARES Act grant income in 2020 related to income associated with the Payroll1 Support Program.

^ Noncash expenses and income, net in 2020 and 2019 primarily related to2 amortization of debt discount on the convertible notes.

Other, net in 2020 primarily related to a $7.2 million net gain on the sale of aircraft, costs associated with the Payroll Support Program, costs associated with the refinancing of debt, costs associated with our acquisition of Southern Air and accrual for legal matters and professional^ fees. Other, net in 2019 primarily related to a loss on the sale of a GEnx3 engine, a net insurance recovery, loss on early extinguishment of debt, unique training aircraft costs required for a customer contract and costs associated with a customer transaction with warrants, costs associated with our acquisition of Southern Air and accrual for legal matters and professional fees.

Special tax item in 2019 represents the income tax benefit from the^ completion of the 2015 IRS examination that is not related to ongoing4 operations.

Dilutive warrants represent potentially dilutive common shares related to^ warrants issued to a customer. These warrants are excluded from Diluted EPS,5 net of taxes prepared in accordance with GAAP when they would have been antidilutive.

Atlas Air Worldwide Holdings, Inc.Reconciliation to Non-GAAP Measures(in thousands, except per share data)(Unaudited)

For the Three Months Ended December 31, December 31, 2020 2019 Net Cash Provided by Operating $ 226,834 $ 107,054 ActivitiesLess: Capital expenditures 33,799 25,960 Capitalized interest $ 397 $ 331 Free Cash Flow^1 $ 192,638 $ 80,763 For the Twelve Months Ended December 31, December 31, 2020 2019 Net Cash Provided by Operating $ 1,009,542 $ 300,344 ActivitiesLess: Capital expenditures 78,933 133,554 Capitalized interest $ 925 $ 2,274 Free Cash Flow^1 $ 929,684 $ 164,516

Free Cash Flow = Cash Flows from Operations minus Core Capital Expenditures^1 and Capitalized Interest.

Core Capital Expenditures excludes purchases of aircraft.

Atlas Air Worldwide Holdings, Inc.Operating Statistics and Traffic Results(Unaudited)

For the Three Months Ended Increase/ For the Twelve Months Ended Increase/ December31, December31, (Decrease) December31, December31, (Decrease) 2020 2019 2020 2019 Block Hours ACMI 63,992 63,647 345 239,056 245,706 (6,650 )Charter 31,169 20,084 11,085 101,238 72,547 28,691 Cargo 26,712 14,898 11,814 84,461 51,982 32,479 Passenger 4,457 5,186 (729 ) 16,777 20,565 (3,788 )Other 918 757 161 4,527 2,887 1,640 Total Block 96,079 84,488 11,591 344,821 321,140 23,681 Hours Revenue Per Block HourACMI $ 5,278 $ 5,419 $ (141 ) $ 5,066 $ 5,078 $ (12 )Charter $ 17,941 $ 17,976 $ (35 ) $ 18,325 $ 18,000 $ 325 Cargo $ 17,747 $ 16,630 $ 1,117 $ 18,303 $ 17,164 $ 1,139 Passenger $ 19,109 $ 21,841 $ (2,732 ) $ 18,440 $ 20,113 $ (1,673 ) AverageUtilization(block hours perday)ACMI^1 9.6 8.6 1.0 8.9 8.5 0.4 Charter Cargo 12.6 8.5 4.1 10.5 8.1 2.4 Passenger 4.9 5.7 (0.8 ) 4.7 6.1 (1.4 )AllOperating 9.9 8.4 1.5 8.9 8.3 0.6 Aircraft^1,2 Fuel Charter Averagefuel cost $ 1.37 $ 2.22 $ (0.85 ) $ 1.41 $ 2.27 $ (0.86 )per gallonFuelgallons 95,921 59,487 36,434 313,428 213,253 100,175 consumed(000s)

ACMI and All Operating Aircraft averages in the fourth quarter and 12^1 months of 2020 reflect the impact of increases in the number of CMI aircraft and amount of CMI flying compared with the same periods of 2019.

^ Average of All Operating Aircraft excludes Dry Leasing aircraft, which do2 not contribute to block-hour volumes.

Atlas Air Worldwide Holdings, Inc.Operating Statistics and Traffic Results(Unaudited)

For the Three Months Ended Increase/ For the Twelve Months Ended Increase/ December31, December31, (Decrease) December31, December31, (Decrease) 2020 2019 2020 2019 Segment OperatingFleet(average aircraft equivalentsduringthe period)ACMI^1 747-8F Cargo 7.9 8.9 (1.0 ) 8.5 8.5 - 747-400 Cargo 14.8 17.2 (2.4 ) 13.4 17.9 (4.5 )747-400 Dreamlifter 1.7 3.4 (1.7 ) 2.4 3.5 (1.1 )777-200 Cargo 8.0 8.0 - 8.0 7.1 0.9 767-300 Cargo 23.0 24.0 (1.0 ) 23.4 24.9 (1.5 )767-200 Cargo 7.9 9.0 (1.1 ) 8.7 9.0 (0.3 )767-200 Passenger 1.0 1.0 - 1.0 1.0 - 737-800 Cargo 7.8 4.2 3.6 5.8 2.4 3.4 737-400 Cargo - 5.0 (5.0 ) 2.6 5.0 (2.4 )Total 72.1 80.7 (8.6 ) 73.8 79.3 (5.5 )Charter 747-8F Cargo 2.0 1.0 1.0 1.5 1.5 - 747-400 Cargo 19.1 18.0 1.1 19.2 16.0 3.2 747-400 Passenger 5.0 5.0 - 5.0 4.3 0.7 777-200 Cargo 1.0 - 1.0 0.7 - 0.7 767-300 Cargo 1.0 - 1.0 0.6 - 0.6 767-300 Passenger 4.8 4.9 (0.1 ) 4.8 4.9 (0.1 )Total 32.9 28.9 4.0 31.8 26.7 5.1 Dry Leasing 777-200 Cargo 7.0 7.0 - 7.0 7.3 (0.3 )767-300 Cargo 21.0 21.0 - 21.0 21.1 (0.1 )757-200 Cargo - 1.0 (1.0 ) 0.1 1.0 (0.9 )737-300 Cargo 1.0 1.0 - 1.0 1.0 - 737-800 Passenger - 1.0 (1.0 ) 0.2 1.0 (0.8 )Total 29.0 31.0 (2.0 ) 29.3 31.4 (2.1 )Less: Aircraft DryLeased to CMI (21.0 ) ) - (21.0 ) ) (1.6 )customers (21.0 (22.6Total OperatingAverage Aircraft 113.0 119.6 (6.6 ) 113.9 114.8 (0.9 )Equivalents Out-of-Service^2 0.7 1.0 (0.3 ) 2.2 0.8 1.4

1 ACMI average fleet excludes spare aircraft provided by CMI customers.

2 Out-of-service includes aircraft that are either temporarily parked or held for sale.