GlobeNewswire Inc | May 5, 2021 08:00AM EDT

May 05, 2021

-- Reported Net Income Increased to $89.9 Million -- Adjusted Net Income Grew to $72.2 Million -- Adjusted EBITDA Rose to $181.3 Million -- Strong 2Q21 Outlook

PURCHASE, N.Y., May 05, 2021 (GLOBE NEWSWIRE) -- Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) today announced first-quarter 2021 net income of $89.9 million, or $3.05 per diluted share, compared with $23.4 million, or $0.90 per diluted share, in the first quarter of 2020.

On an adjusted basis, EBITDA rose to $181.3 million in the first quarter of 2021 compared with $121.2 million in the prior-year period. Adjusted net income grew to $72.2 million, or $2.45 per diluted share, in the first quarter of 2021 compared with $29.9 million, or $1.15 per diluted share, in the prior-year period.

Our performance was driven by the strength and flexibility of our global business model and our team continuing to capitalize on the current airfreight environment, with demand and yields that are well above typical seasonal levels, said Atlas Air Worldwide President and Chief Executive Officer John W. Dietrich.

Our results also benefited from flying four 747 freighters and one 777 freighter that we reintroduced to our fleet throughout 2020 to serve customer demand.

I would like to thank our team for continuing to deliver safe, high-quality service for our customers in this very challenging operating environment. We flexed our global network and increased aircraft utilization to match airfreight demand. We also positioned ourselves for the future by entering into and extending numerous long-term charter agreements with strategic customers.

Mr. Dietrich added: We are off to a very good start in 2021 and are seeing continued business momentum in the second quarter. We are closely monitoring the market and leveraging the diversity of our business model. This includes being prepared to capitalize on global market conditions as well as being able to successfully adjust to any changes.

With the strong global demand for airfreight outpacing air cargo supply, we anticipate airfreight demand and yields to remain strong, with capacity on long-haul trade lanes remaining tight. International passenger flying on widebody aircraft has been slow to recover, and will likely be last to return as countries continue to struggle with COVID-19 and many borders remain closed. Recent passenger air traffic has largely been driven by pent-up demand for domestic and regional leisure travel with smaller-gauge aircraft, which is less impactful to international airfreight.

In the second quarter of 2021, we expect to fly approximately 90,000 block hours, with revenue of approximately $950 million, and adjusted EBITDA of about $210 million. In addition, we anticipate adjusted net income to grow approximately 30% compared with adjusted net income of $72.2 million in the first quarter of 2021.*

Given ongoing economic and market-related uncertainties, including COVID-19, new variants of the virus, surges in cases globally, travel restrictions, low international passenger travel and other factors, we are providing a second-quarter outlook, but not issuing a full-year 2021 earnings outlook at this time.

Segment Reporting Change

Beginning with our first-quarter 2021 results, we have changed our operating and reportable segments to reflect the evolution of our business. As the ACMI and Charter services have become more similar, we view and manage them as one segment.

We now have two operating and reportable segments: Airline Operations and Dry Leasing. Previously, our operating and reportable segments were ACMI, Charter and Dry Leasing. Our Airline Operations segment provides outsourced aircraft operating services to customers on an ACMI, CMI and Charter basis. No changes have been made to our Dry Leasing segment.

First-Quarter Results

Volumes in the first quarter of 2021 increased to 88,523 block hours compared with 73,247 in the first quarter of 2020, with revenue growing to $861.3 million versus $643.5 million in the prior-year period.

Higher Airline Operations revenue primarily reflected a significant increase in flying and a higher average rate per block hour. Block-hour growth during the period was driven by increased demand for our commercial cargo Charter and CMI services, reflecting higher airfreight volumes and 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 revenue benefited from the operation of four 747-400 freighters we reactivated throughout 2020 and a 777-200 freighter that was previously in our Dry Leasing business. Partially offsetting these improvements was lower AMC passenger Charter flying as the U.S. military has taken precautionary measures to limit the movement of military personnel. The increase in the average rate per block hour was primarily due to an increase in higher-yielding commercial cargo Charter flying, partially offset by lower fuel costs and an increase in CMI flying.

Higher Airline Operations segment contribution in the first quarter of 2021 was primarily driven by the positive factors benefiting segment revenue mentioned above. These improvements were partially offset by: higher pilot costs related to premium pay for pilots operating in certain areas significantly impacted by COVID-19; increased pay rates we provided to our pilots in May 2020; and higher heavy maintenance.

In Dry Leasing, segment revenue and contribution in the first quarter of 2021 was relatively unchanged compared with the prior-year period.

Lower unallocated income and expenses, net, during the quarter primarily reflected CARES Act grant income of $40.9 million, which has been excluded from our adjusted results.

Reported earnings in the first quarter of 2021 also included an effective income tax rate of 23.7%. On an adjusted basis, our results reflected an effective income tax rate of 21.9%.

Cash

At March 31, 2021, our cash, including cash equivalents and restricted cash, totaled $714.0 million compared with $856.3 million at December 31, 2020.

The change in position resulted from cash used for investing and financing activities, partially offset by cash provided by operating activities.

Net cash used for investing activities during the first quarter of 2021 primarily related to capital expenditures and payments for flight equipment and modifications, including pre-delivery payments for 747-8F aircraft, spare engines, GEnx engine overhauls and performance upgrade kits.

Net cash used for financing activities during the period primarily related to payments on debt obligations, partially offset by proceeds from debt issuance.

Labor

We remain committed to reaching a new Joint Collective Bargaining Agreement (JCBA) with our Atlas Air and Southern Air pilots, and have moved closer to completion. Scheduled arbitration hearings concluded on April 1, 2021, and the union has now provided the company with the integrated seniority list, which is a critical item for implementing the new JCBA. The next step is for both parties to submit post-hearing briefs. The arbitrator will then consider all of the information presented and render a binding decision, which we expect in the second half of this year.

Outlook*

We expect to fly approximately 90,000 block hours in the second quarter of 2021, with revenue of approximately $950 million, and adjusted EBITDA of about $210 million. In addition, we expect second-quarter 2021 adjusted net income to grow approximately 30% compared with adjusted net income of $72.2 million in the first quarter of 2021.*

Our outlook anticipates commercial cargo charter yields in the second quarter of 2021 to remain above typical seasonal levels, but below the historically high yields experienced during the second quarter of 2020.

We expect second-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.

For the full year in 2021, we continue to 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.

Given ongoing economic and market-related uncertainties, including COVID-19, new variants of the virus, surges in cases globally, travel restrictions, low international passenger travel and other factors, we are providing a second-quarter outlook, but not issuing a full-year 2021 earnings outlook at this time.

Other than with regard to revenue, we provide guidance only on an adjusted basis because we are unable to predict, with reasonable certainty and without unreasonable effort, 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

As previously announced, management will host a conference call to discuss Atlas Air Worldwides first-quarter 2021 financial and operating results at 11:00 a.m. Eastern Time on Wednesday, May 5, 2021.

Interested parties may listen to the call live at Atlas Air Worldwides Investor site or at https://edge.media-server.com/mmc/p/4p2gxgty.

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 May 12 by dialing (855) 859-2056 (U.S. Toll Free) or (404) 537-3406 (from outside the U.S.) and using Access Code 8943268#.

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 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.

*Other than with regard to revenue, we provide guidance only 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 and without unreasonable effort, 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; border restrictions; 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.

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

For the Three Months Ended March31, March31, 2021 2020 Operating Revenue $ 861,300 $ 643,502 Operating Expenses Salaries, wages and benefits 202,614 147,744 Aircraft fuel 163,551 108,318 Maintenance, materials and repairs 121,133 94,152 Depreciation and amortization 67,789 57,584 Navigation fees, landing fees and other 44,887 31,401 rentPassenger and ground handling services 40,065 31,959 Travel 37,672 42,391 Aircraft rent 20,756 23,967 Loss (gain) on disposal of aircraft 16 (6,717 )Transaction-related expenses 201 521 Other 58,412 51,112 Total Operating Expenses 757,096 582,432 Operating Income 104,204 61,070 Non-operating Expenses (Income) Interest income (211 ) (480 )Interest expense 27,180 29,275 Capitalized interest (1,271 ) (193 )Unrealized loss (gain) on financial 113 (924 )instrumentsOther (income) expense, net (39,456 ) 1,206 Total Non-operating Expenses (Income) (13,645 ) 28,884 Income before income taxes 117,849 32,186 Income tax expense 27,916 8,833 Net Income $ 89,933 $ 23,353 Earnings per share: Basic $ 3.16 $ 0.90 Diluted $ 3.05 $ 0.90 Weighted average shares: Basic 28,491 25,966 Diluted 29,478 25,966

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

March31, December31, 2021 2020Assets Current Assets Cash and cash equivalents $ 703,777 $ 845,589 Restricted cash 10,247 10,692 Accounts receivable, net of allowance of 289,337 265,521 $1,010 and $1,233, respectivelyPrepaid expenses, assets held for sale and 102,665 95,919 other current assetsTotal current assets 1,106,026 1,217,721 Property and Equipment Flight equipment 5,115,540 5,061,387 Ground equipment 93,690 86,670 Less: accumulated depreciation (1,192,724 ) (1,147,613 )Flight equipment purchase deposits and 209,730 110,150 modifications in progressProperty and equipment, net 4,226,236 4,110,594 Other Assets Operating lease right-of-use assets 238,155 255,805 Deferred costs and other assets 355,681 374,242 Intangible assets, net and goodwill 69,319 70,826 Total Assets $ 5,995,417 $ 6,029,188 Liabilities and Equity Current Liabilities Accounts payable $ 110,685 $ 107,604 Accrued liabilities 501,317 583,160 Current portion of long-term debt and finance 306,462 298,690 leasesCurrent portion of long-term operating leases 156,119 157,732 Total current liabilities 1,074,583 1,147,186 Other Liabilities Long-term debt and finance leases 1,990,870 2,020,451 Long-term operating leases 276,676 318,850 Deferred taxes 230,720 203,586 Financial instruments and other liabilities 39,372 77,576 Total other liabilities 2,537,638 2,620,463 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;34,495,738 and 32,877,533shares issued, 29,006,635 and 345 329 27,517,297shares outstanding (net oftreasury stock), as of March31, 2021andDecember31, 2020, respectivelyAdditional paid-in-capital 912,728 873,874 Treasury stock, at cost; 5,489,103 and (225,239 ) (217,889 )5,360,236 shares, respectivelyAccumulated other comprehensive loss (1,700 ) (1,904 )Retained earnings 1,697,062 1,607,129 Total stockholders? equity 2,383,196 2,261,539 Total Liabilities and Equity $ 5,995,417 $ 6,029,188

1Balance sheet debt at March 31, 2021 totaled $2,297.3 million, including the impact of $45.9 million of unamortized discount and debt issuance costs of $27.4 million, compared with $2,319.1 million, including the impact of $50.6 million of unamortized discount and debt issuance costs of $29.3 million at December 31, 2020.2The face value of our debt at March31, 2021 totaled $2,370.6 million, compared with $2,399.0 million on December 31, 2020.

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

For the Three Months Ended March 31, March 31, 2021 2020 Operating Activities: Net Income $ 89,933 $ 23,353 Adjustments to reconcile Net Income to net cash provided by operating activities:Depreciation and amortization 86,172 74,352 Accretion of debt securities discount - (2 )Reversal of expected credit losses (397 ) (73 )Unrealized loss (gain) on financial 113 (924 )instrumentsLoss (gain) on disposal of aircraft 16 (6,717 )Deferred taxes 27,839 7,352 Stock-based compensation 4,060 3,860 Changes in: Accounts receivable (22,745 ) 16,515 Prepaid expenses, current assets and other (7,500 ) (5,476 )assetsAccounts payable, accrued liabilities and (89,366 ) (40,393 )other liabilitiesNet cash provided by operating activities 88,125 71,847 Investing Activities: Capital expenditures (26,662 ) (8,291 )Purchase deposits and payments for flight (126,807 ) (26,000 )equipment and modificationsInvestment in joint ventures (1,608 ) - Proceeds from investments - 881 Proceeds from disposal of aircraft 1,850 44,110 Net cash provided by (used for) investing (153,227 ) 10,700 activitiesFinancing Activities: Proceeds from debt issuance 16,161 164,000 Payment of debt issuance costs (900 ) (2,386 )Payments of debt and finance lease (77,953 ) (193,644 )obligationsProceeds from revolving credit facility - 75,000 Customer maintenance reserves and deposits 5,152 2,586 receivedCustomer maintenance reserves paid (12,265 ) (2,080 )Treasury shares withheld for payment of (7,350 ) (3,834 )taxesNet cash provided by (used for) financing (77,155 ) 39,642 activitiesNet increase (decrease) in cash, cash (142,257 ) 122,189 equivalents and restricted cashCash, cash equivalents and restricted cash 856,281 113,430 at the beginning of periodCash, cash equivalents and restricted cash $ 714,024 $ 235,619 at the end of period Noncash Investing and Financing Activities: Acquisition of property and equipmentincluded in Accounts payable and accrued $ 24,938 $ 16,368 liabilitiesAcquisition of property and equipment $ 4,015 $ 670 acquired under operating leasesAcquisition of flight equipment under $ 20,171 $ - finance leaseCustomer maintenance reserves settled with $ - $ 6,497 sale of aircraftIssuance of shares related to settlement of $ 31,582 $ - warrant liability

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

For the Three Months Ended March 31, March 31, 2021 2020Operating Revenue: Airline Operations $ 826,240 $ 606,373 Dry Leasing 40,364 41,926 Customer incentive asset amortization (10,481 ) (9,022 )Other 5,177 4,225 Total Operating Revenue $ 861,300 $ 643,502 Direct Contribution: Airline Operations $ 169,150 $ 103,087 Dry Leasing 10,564 10,698 Total Direct Contribution for Reportable 179,714 113,785 Segments Unallocated expenses and (income), net (61,535 ) (88,719 )Unrealized gain (loss) on financial (113 ) 924 instrumentsTransaction-related expenses (201 ) (521 )Gain (loss) on disposal of aircraft (16 ) 6,717 Income before income taxes 117,849 32,186 Add back (subtract): Interest income (211 ) (480 )Interest expense 27,180 29,275 Capitalized interest (1,271 ) (193 )Unrealized loss (gain) on financial 113 (924 )instrumentsOther (income) expense, net (39,456 ) 1,206 Operating Income $ 104,204 $ 61,070

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: Airline Operations and Dry Leasing.

Direct Contribution consists of net income (loss) before income taxes, excluding unrealized (loss) gain on financial instruments, 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 March31, March31, PercentChange 2021 2020 Net Income $ 89,933 $ 23,353 285.1 %Impact from: CARES Act grant income^ (40,944 ) - 1Customer incentive 10,481 9,022 asset amortizationNoncash expenses and 4,672 4,386 income, net^2Unrealized loss (gain)on financial 113 (924 ) instrumentsOther, net^3 329 (5,260 ) Income tax effect of 7,631 (697 ) reconciling itemsAdjusted Net Income $ 72,215 $ 29,880 141.7 % Weighted averagediluted shares 29,478 25,966 outstanding Adjusted Diluted EPS $ 2.45 $ 1.15 113.0 %

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

For the Three Months Ended March31, March31, Percent 2021 2020 Change Income before income taxes $ 117,849 $ 32,186 266.1 %Impact from: CARES Act grant income^1 (40,944 ) - Customer incentive asset 10,481 9,022 amortizationNoncash expenses and income, 4,672 4,386 net^2Unrealized loss (gain) on 113 (924 ) financial instrumentsOther, net^3 329 (5,260 ) Adjusted income before income $ 92,500 $ 39,410 134.7 %taxesInterest expense, net 21,026 24,216 Other expense, net 1,488 1,206 Adjusted operating income $ 115,014 $ 64,832 77.4 % Income tax expense $ 27,916 $ 8,833 Income tax effect of 7,631 (697 ) reconciling itemsAdjusted income tax expense 20,285 9,530 Adjusted income before income $ 92,500 $ 39,410 taxesEffective tax rate 23.7 % 27.4 % Adjusted effective tax rate 21.9 % 24.2 %

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

For the Three Months Ended March 31, March 31, Percent 2021 2020 Change Net Income $ 89,933 $ 23,353 285.1 %Interest expense, net 25,698 28,602 Depreciation and amortization 67,789 57,584 Income tax expense 27,916 8,833 EBITDA 211,336 118,372 CARES Act grant income^1 (40,944 ) - Customer incentive asset 10,481 9,022 amortizationUnrealized loss (gain) on 113 (924 ) financial instrumentsOther, net^3 329 (5,260 ) Adjusted EBITDA $ 181,315 $ 121,210 49.6 %

1CARES Act grant income in 2021 related to income associated with the Payroll Support Program.

2Noncash expenses and income, net in 2021 and 2020 primarily related to amortization of debt discount on the convertible notes.

3Other, net in 2021 primarily related to costs associated with our acquisition of Southern Air. Other, net in 2020 primarily related to a $6.7 million net gain on the sale of aircraft, costs associated with the refinancing of debt and costs associated with our acquisition of Southern Air.

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

For the Three Months Ended March 31, March 31, 2021 2020 Net Cash Provided by Operating Activities $ 88,125 $ 71,847 Less: Capital expenditures 26,662 8,291 Capitalized interest 1,271 193 Free Cash Flow^1 $ 60,192 $ 63,363

1Free Cash Flow = Cash Flows from Operations minus Core Capital Expenditures 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/ March31, March31, (Decrease) 2021 2020 Block Hours Airline Operations 86,758 72,644 14,114 Cargo 83,110 67,838 15,272 Passenger 3,648 4,806 (1,158 )Other 1,765 603 1,162 Total Block Hours 88,523 73,247 15,276 Revenue Per Block Hour Airline Operations $ 9,524 $ 8,347 $ 1,177 Cargo $ 9,127 $ 7,594 $ 1,533 Passenger $ 18,563 $ 18,973 $ (410 ) Average Utilization (block hours per day)Airline Operations Cargo 10.1 7.8 2.3 Passenger 3.9 4.9 (1.0 )All Operating Aircraft^1 9.7 7.6 2.1 Fuel Charter Average fuel cost per gallon $ 1.71 $ 2.00 $ (0.29 )Fuel gallons consumed (000s) 95,586 54,279 41,307

1Average of All Operating Aircraft excludes Dry Leasing aircraft, which do not contribute to block-hour volumes.

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

For the Three Months Ended Increase/ March31, March31, (Decrease) 2021 2020 Segment Operating Fleet(average aircraft equivalentsduring theperiod)Airline Operations^1 747-8F Cargo 10.0 10.0 - 747-400 Cargo 33.6 31.2 2.4 747-400 Dreamlifter 1.2 3.6 (2.4 )747-400 Passenger 4.9 5.0 (0.1 )777-200 Cargo 9.0 8.0 1.0 767-300 Cargo 24.0 24.0 - 767-300 Passenger 5.0 4.8 0.2 767-200 Cargo 5.6 9.0 (3.4 )767-200 Passenger 0.6 1.0 (0.4 )737-800 Cargo 8.0 5.0 3.0 737-400 Cargo - 5.0 (5.0 )Total 101.9 106.6 (4.7 )Dry Leasing 777-200 Cargo 7.0 7.0 - 767-300 Cargo 21.0 21.0 - 757-200 Cargo - 0.5 (0.5 )737-300 Cargo 1.0 1.0 - 737-800 Passenger - 0.6 (0.6 )Total 29.0 30.1 (1.1 )Less: Aircraft Dry Leased to (21.0 ) (21.0 ) - CMI customersTotal Operating Average 109.9 115.7 (5.8 )Aircraft Equivalents Out of Service^2 - 5.4 (5.4 )

1 Airline Operations average fleet excludes spare aircraft provided by CMI customers.

2 Out-of-service includes aircraft that are temporarily parked.

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