Message #3 From:
NewsBot Date: October 16, 2006 01:00:00 AM
AAWW News Atlas Air Worldwide Holdings and DHL to Form Strategic Partnership
PURCHASE, N.Y.--(BUSINESS WIRE)--Atlas Air Worldwide Holdings, Inc. (AAWW) (Nasdaq: AAWW), a leading
provider of global air cargo services, announced today that its
subsidiary, Polar Air Cargo Worldwide, Inc., has executed a letter of
intent for DHL to acquire a 49% equity interest, including a 25% voting
interest, in the scheduled-service business of Polar Air Cargo, Inc.
(Polar), in exchange for $150 million in cash.
The proposed transaction includes a strategic 20-year commercial
arrangement that will ensure DHL access to aircraft capacity in key
global markets, while providing the AAWW companies with a valuable,
long-term customer and potential revenue stream in excess of $3.5
billion over the full-term of the agreement, although there are certain
early termination rights at five-year intervals. In addition, DHL will
have access to available additional aircraft capacity from AAWW's
subsidiary Atlas Air, Inc. (Atlas).
William J. Flynn, President and CEO of AAWW, said, “This
is a landmark transaction and exciting partnership for our Company. Our
strategy has been to maximize the value and potential of our
scheduled-service business, and this transaction accomplishes that goal.
DHL is a pre-eminent express service provider and the world’s
largest buyer of third-party airlift capacity. Their investment and the
long-term commercial agreement will markedly strengthen our
scheduled-service business, and will enhance our ability to provide
customers with superior service in key international markets. Further,
it provides our Company with a significant increase in our cash
liquidity and a very attractive long-term revenue stream. Indeed, this
transaction reinforces our leadership position as an outsource provider
of air cargo services, and greatly enhances the value of our Company.”
“This key strategic partnership ensures we can
meet the rapidly rising demand for air cargo capacities between the U.S.
and Asian destinations. DHL Express is already the market leader in Asia
and the partnership with Polar will help us offer even higher quality
levels to customers, while at the same time improving profitability on
the fast-growing routes between the U.S. and Asia,”
said John Mullen, CEO of DHL’s Express
division. “The Trans-Pacific route is one of
the most rapidly growing and competitive trade lanes globally and adding
capacity through an even stronger presence in the U.S. is a crucial
factor in supporting our dynamic Asian business. Polar is the ideal
partner to achieve that. Our long-term partnership will benefit both
companies and enhance competition in the express delivery sector of the
air cargo market.”
Added Mr. Flynn, “This partnership also marks
another important milestone for us as we continue to lay the foundation
for AAWW’s long-term strategic plan. We have
a winning strategy that is designed to meet the growing needs of our
customers and to build shareholder value, and we are successfully
delivering on each of our strategic initiatives.”
Pursuant to the terms of the letter of intent, DHL would acquire from an
AAWW subsidiary a 49% ownership interest, which includes a 25% voting
interest, in Polar’s scheduled service
business, in exchange for DHL’s cash payment
of $150 million, $75 million of which will be paid upon the closing of
the transaction, and $75 million to be paid in two installments on
January 15, 2008 and November 17, 2008 subject to certain acceleration
provisions.
Under the terms of the 20-year commercial arrangement, DHL would have
access to lift capacity through Polar’s
current fleet of six Boeing 747-400 Freighters, plus access to
additional available ACMI aircraft from Atlas. The transaction, which is
subject to the completion of definitive documentation, is targeted to
take place in late 2006 or early 2007 and will be subject to the receipt
of all applicable regulatory and other third-party approvals and other
customary closing conditions.
In recent months, AAWW has implemented and delivered on a number of
initiatives in support of its strategic plan, including: optimizing
business unit performance, fleet renewal and technology leadership, and
various continuous improvement programs.
Said Mr. Flynn, “We will gain other business
unit benefits as a result of our transaction with DHL. It will
significantly improve profitability and predictability in scheduled
service, and will mitigate our Company’s
exposure and commercial risk in that business. The transaction also
strengthens our ACMI aircraft wet-lease business through the long-term
placement of committed aircraft, with the opportunity for strategic
expansion.”
A key component of the Company’s strategic
plan focuses on fleet renewal and technology leadership, which AAWW has
addressed through its recent order for 12 state-of-the-art Boeing 747-8
Freighters, with options to purchase an additional 14. With this order,
AAWW becomes a launch customer for the 747-8F, and will be among the
first to offer its customers the greater capacity and improved operating
performance of this aircraft.
In addition, earlier this month AAWW’s
military charter business earned increased share awards, which, combined
with AMC rate increases, will help grow that business. The Company also
has implemented a number of continuous improvement programs, highlighted
by its multi-year $100 million dollar cost improvement and revenue
enhancement program, as well as a customer-focused program to deliver
exceptional service quality. AAWW has improved its financial flexibility
as evidenced by the pay-off of two outstanding aircraft debt facilities
and the retirement of a working capital credit facility.
Said Mr. Flynn, “We are firmly on track to
deliver on our savings improvements, to achieve exceptional quality for
our customers, and to improve our financial flexibility. Continuous
improvement is integral to our culture, and to our success.”
He concluded, “Over the past several months,
we have made excellent progress delivering on our strategy, with each
initiative moving us toward our goal of delivering the greatest possible
value to customers and shareholders. Clearly, our foundation is solid,
we are making excellent progress in delivering on our commitments, and
we are positioned for a winning future.”
Through its subsidiaries, Atlas and Polar, AAWW currently operates a
fleet of 35 Boeing 747 freighter aircraft, serving customers and markets
around the globe. Polar provides scheduled air cargo services to most of
the world’s largest international freight
forwarders, operating airport-to-airport routes on a specific schedule
serving Asia, Europe, North America and South America. Atlas offers
commercial cargo charters, military cargo charters, and ACMI freighter
aircraft leasing in which customers receive a dedicated aircraft, crew,
maintenance and insurance on a long-term lease basis.
Conference Call and Webcast
AAWW’s management will host a conference call
to discuss the formation of the strategic partnership with DHL at 1:00
P.M. Eastern Daylight Time on Monday, October 16, 2006.
For those unable to listen to the live call, a replay will be available
on the above Web sites through Friday, October 20, 2006. A replay will
also be available through October 20 by dialing (800) 405-2236
(domestic) and (303) 590-3000 (international) and using Pass Code
11074013#.
AAWW is the parent company of Atlas and Polar, which together operate
the world’s largest fleet of Boeing 747
freighter aircraft.
AAWW, through Atlas and Polar, offers scheduled air cargo service, cargo
charters, military charters, and ACMI aircraft leasing in which
customers receive a dedicated aircraft, crew, maintenance and insurance
on a long-term lease basis.
AAWW’s press releases, SEC filings and other
information may be accessed through the Company’s
home page, www.atlasair.com.
This release contains “forward-looking
statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 that reflect AAWW’s
current views with respect to certain current and future events and
financial performance. Such forward-looking statements are and will be,
as the case may be, subject to many risks, uncertainties and factors
relating to the operations and business environments of AAWW 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: 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 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; economic conditions; the effects
of any hostilities or act of war (in the Middle East or elsewhere) or
any terrorist attack; labor costs and relations; financing costs; the
cost and availability of war risk insurance; our continued ability to
remedy weaknesses in our internal controls over financial reporting;
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; pending and future litigation; and other risks
and uncertainties set forth from time to time in AAWW’s
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 Annual Report on Form 10-K filed by AAWW with the Securities and
Exchange Commission on April 14, 2006. Other factors and assumptions not
identified above are also involved in the preparation of forward-looking
statements, and the failure of such other factors and assumptions to be
realized may also cause actual results to differ materially from those
discussed.
AAWW 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.
