Leading the Way Forward

Transcription

1 Leading the Way Forward AAWW Investor Slides November 2014

2 Index Page 3 Safe Harbor Statement 4 AAWW Leading The Way Forward 5 Key Accomplishments: Foundation for Growth 6 Investments Driving Business Resilience 7 Airfreight Demand Growing YTD Performance; Raising Full-Year Outlook 9 Capital Allocation Strategy 10 AAWW Key Takeaways 11 Appendix 12 A Strong Leader in a Strengthening Industry 13 We Carry the World 14 Atlas Air Worldwide 15 Core Business Segments vs Revenue by Segment vs Segment Contribution Goals and Objectives Framework Maintenance Expense Page 21 Business Perspective 22 Strategic Growth Map: Strategic Growth Map: Atlas Strategy for Future Growth 25 Disciplined Approach to Business Growth 26 Our Fleet with Titan Aircraft 27 Access to Best-in-Class Fleet to Serve Multiple Market Segments 28 Integrated Partnership Our Value Proposition 29 Our Customers Reflect Our Focus on Quality 30 Global Operating Network 31 International Global Airfreight: Growth Returning 32 Global Airfreight Drivers 33 Global Airfreight Flows Major Trade Lanes 34 Reports of Modal Shift Are Overstated 35 Air vs. Ocean 36 Large Freighter Supply Trends 37 Main Deck to Belly? 38 Why Atlas? 39 The Future

3 Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect Atlas Air Worldwide Holdings, Inc. s (AAWW) 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 that may cause actual results to be materially different from any future results, express or implied, in such forward-looking statements. For additional information, we refer you to the risk factors set forth in the documents filed by AAWW with the Securities and Exchange Commission. 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 the statements in this presentation to reflect actual results, changes in assumptions, or changes in other factors affecting such estimates, other than as required by law. This presentation also includes some non-gaap financial measures. You can find our presentations on the most directly comparable GAAP financial measures calculated in accordance with accounting principles generally accepted in the United States and our reconciliations in our earnings release dated November 6, 2014, which is posted on our Web site at 3

4 AAWW Leading The Way Forward Leading Assets Quality Services Solid Financial Structure Global Scale and Scope Thought Leadership Transformed Business Diversified Mix Resilient Business Model Driving Meaningful Earnings and Cash Flow 4

5 Key Accomplishments: Foundation for Growth Our Business Begins with the Customer Providing superior value-added services An integrated partner, thought leader, advisor Added ACMI customers: Astral Aviation, Chapman Freeborn, BST Logistics ACMI / CMI Expanded ACMI service with DHL Express and Etihad Grew CMI 767 service with DHL and MLW Air Record 22 modern 747Fs in ACMI; record 18 CMI aircraft in 1Q15 Dry Leasing Acquired six 777Fs, each with long-term leases already in place Top-tier customers: AeroLogic, Emirates, TNT Commercial Charter Enhanced position as top scheduled charter carrier in South America Expanded passenger charter operations Return Capital to Shareholders Repurchased 1.7 million shares in 2013 Repurchased million shares in 3Q14 5

6 Investments Driving Business Resilience $400 $350 $300 $250 $200 $150 $100 $50 $0 Direct Contribution ($ Millions) Challenging Airfreight Environment Business Investments: ACMI 747-8Fs, AMC and Commercial Charter Passenger Operations, CMI Operations, 767 platform, 777Fs for Dry Leasing Established Business: Primarily reflects significant declines in AMC and Commercial Charter Cargo Operations 6

7 Freight Tonnes (Thousands) Y-o-Y Growth Freight Tonnes (Millions) Airfreight Demand Growing PACTL IATA Tonnage up 17.1% in October, 16.6% Y-T-D; on track for record year Total global airfreight tonnage growing from record levels International freight tonne kilometers (FTKs) up 4.6% in 2014 (thru Sept.) international FTK CAGR of 5.0% 160 Freight Tonnes (Millions) Shanghai Airport Cargo Traffic (PACTL) 25.0% 20.0% 15.0% Total Global Airfreight Tonnage % 5.0% 0.0% -5.0% % Y-o-Y % -20.0% E 2014F Y-o-Y 19.2% 2.2% (1.0)% 2.0% 3.0% Source: PACTL, ICAO , IATA F (IATA September 2014) 7

8 2014 YTD Performance; Raising Full-Year Outlook Nine-month adj. net income* of $54.7 million, adj. diluted EPS of $2.17 Nine-month reported net income of $65.1 million, diluted EPS of $2.59 Results led by: freighters in ACMI Increased CMI flying Dry Leasing 777Fs 767 platform expansion Passenger charters Free cash flow* of $150.6 million Full-year 2014 adjusted EPS outlook raised to ~$3.50-$3.60, reported EPS to ~$3.92-$4.02 *See November 6, 2014 press release for Non-GAAP reconciliations. 8

9 Capital Allocation Strategy Committed to creating, enhancing, returning value to our stockholders Cash prioritization: Balance sheet maintenance Business investment Share repurchases Repurchased 1.7 million shares, 6.5% of outstanding stock, in 2013 Additional million shares, 1.8%, repurchased in 3Q14 Remaining authority for up to $45 million 9

10 AAWW Key Takeaways Resilient Business Model Raising our full-year outlook for 2014 Airfreight volumes improving, yields picking up Nine-month results, record ACMI placements/cmi aircraft illustrate our business strength, demand for our industry-leading assets and services Well-positioned to capitalize on market improvement, longer-term business growth Returning capital to shareholders A Strong Leader in a Strengthening Industry 10

11 Appendix L E A D I N G the WAY FORWARD AAWW Investor Slides November 2014

12 A Strong Leader in a Strengthening Industry Global Aviation At center of modern, global economy Long-term growth industry Efficient access to markets; catalyst to international trade Contributes to economic and social development Drives increased competition and innovation Strategic supply chain component Over $6 trillion of goods airfreighted annually; ~35% of total world trade Atlas Recognized leader in international aviation outsourcing Resilient business model focused on long-term growth Strong customer portfolio; creative partner/advisor able to link customers with opportunities Business initiatives, investments leading the way forward Uniquely positioned to identify, secure and sustain growth opportunities Capacity to develop new organizational capabilities aligned with customers needs Well-positioned to capitalize on market improvement Committed to Creating, Enhancing and Returning Value to Shareholders. 12

13 We Carry the World Boeing Dreamliner Components High-tech Goods Pharmaceuticals Automotive Apparel Express Livestock Perishables Capital equipment Machinery / Components Intermediate Materials and People 13

14 Atlas Air Worldwide Ownership 100% Ownership 51% (49% DHL) Ownership 100% Ownership 49% Recognized leader in international aviation outsourcing World s largest fleet of Boeing 747 freighter aircraft Comprehensive global infrastructure Providing superior assets and services to the airline industry, express operators, freight-forwarding community, commercial, U.S. military customers 14

15 Core Business Segments Business Segments ACMI (2) CMI (3) Air Mobility Command (AMC) Charter Commercial Charter % of 2013 Block Hours (1) Description Offers aircraft that are crewed, maintained, and insured by Atlas for lease on a long-term basis Customers assume fuel, demand and yield risk Provides outsourced CMI operating solutions for passenger and freighter operations AMC Charter provides full planeload cargo and passenger charter flights to the U.S. military Cost-plus business Commercial Charter segment provides full planeload cargo and passenger charter services to charter brokers, freight forwarders, direct shippers, and airlines Dry Leasing -- Provides aircraft and engine dry leasing solutions to third parties Other Services -- Selected by the U.S. government to train pilots who fly the President on Air Force One Note: (1) Excludes ferry block hours (2) Aircraft, Crew, Maintenance, Insurance. (3) Crew, Maintenance, Insurance 15

16 2013 vs Revenue by Segment Core Long-term Business Leading Provider Opportunistic Flying Predictable Long-term Business Percentages subject to rounding 16

17 2013 vs Segment Contribution Core Long-term Business Leading Provider Opportunistic Flying Predictable Long-term Business Percentages subject to rounding 17

18 2014 Operational Goals and Objectives Deliver superior service quality to our customers Expand our ACMI and CMI business Maximize our AMC and Commercial Charter business opportunities Achieve Continuous Improvement savings and efficiencies Develop Titan (dry leasing) platform Execute share repurchase program In other words Drive Value for Shareholders 18

19 2014 Framework Business initiatives and investments Have positioned company to deliver meaningful earnings in any environment Encouraged by: Our performance in first nine months of 2014 Positive direction of market trends Raising our earnings outlook for the full year Airfreight volumes continue to strengthen, yields beginning to improve ACMI placements at highest level of last decade Anticipate adjusted EPS* of ~$3.50-$3.60, reported EPS of ~$3.92-$4.02 Seasonal business, majority of earnings generated in second half of the year Expect to fly approximately 160,000 Block Hours > 70% in ACMI ~ 10% in AMC Balance in Commercial Charter Dry Leasing growing dramatically Maintenance expense ~$ million Depreciation ~$120 million Core capex ~$30-$35 million *See November 6, 2014 press release for Non-GAAP reconciliations. 19

20 2014 Maintenance Expense In $Millions $59 $50 $35 $48 Totals $192 Heavy Maintenance $32 $19 $18 $76 Non-heavy Maintenance $2 $4 $7 $0 $3 $9 Line Maintenance $25 $27 $28 $27 $107 1QA 2QA 3QA 4QE Line maintenance expense increases commensurate with additional block hour flying Line maintenance expense is approximately $660 per block hour Non-heavy maintenance includes discrete events such as APU, thrust reverser, and landing gear overhauls 20

21 Business Perspective ACMI Airfreight continues to grow Market leader with multiple platforms Delivering value for customers Ability to offer turn-key solutions Strong customer base CMI Large-scale operating network Multiple aircraft platforms Delivering value to both cargo and passenger customers More than 900 experienced pilots, knowledgeable ground support Titan Dry Leasing Operating lease solutions Develop portfolio (e.g., 777Fs) Strong balance sheet Freighter aircraft conversion management and consulting services Commercial / AMC Charter Unmatched scale and infrastructure Leading charter supplier to integrators, forwarders and shippers In AMC Working with AMC to structure future CRAF program Promoting use of commercial lift 21

22 Strategic Growth Map: 2008 Polar Scheduled Service incurred losses prior to the start of DHL Express ACMI AMC produced significant profits; we expected this segment to contract long term The F was employed as swing capacity Polar Scheduled Service AAWW ACMI AMC Cargo Agency Commercial Charter 22

23 Strategic Growth Map: 2014 We continue to expand and diversify our business, leveraging our core competencies and market leadership Dry Lease Parts Supply Joint Venture CMI SonAir Boeing DHL MLW Air AAWW ACMI AMC Commercial Charter Pax Cargo Agency Cargo Pax 23

24 Atlas Strategy for Future Growth We have implemented a strategic plan that Delivers meaningful earnings Diversifies the business mix Leverages asset acquisitions Generates meaningful cash flow Future growth requires a disciplined plan that Builds on strength of core model Invests in appropriate asset portfolio Balances operation segment risk/reward profiles Develops new organizational capabilities 24

25 Disciplined Approach to Business Growth Fleet Evaluate opportunities for incremental aircraft that Provide customers most efficient assets for their needs CMI Expand asset-light business Target strategic opportunities Dry Leasing Focus on freighters Invest in quality assets with lease commitments 767s Focus on scale Nonspeculative investments for regional networks 25

26 Our Fleet with Titan Aircraft 9 Boeing 747-8Fs 22 Boeing Freighters Fs BCF 4 Boeing Large Cargo Freighters (LCFs) Customer-owned 18 Boeing Classics 4 Boeing Passenger 2 Custom Aircraft (customer-owned) 2 Boeing s for AMC and Commercial Charter 7 Boeing /300 Freighters For DHL Express service (customer-owned) 4 Boeing /300ER Passenger 3 for AMC and Commercial Charter 20 Boeing 1 Custom Aircraft (customer-owned) Freighters 6 Boeing LRF 3 TNT, 2 AeroLogic 1 Emirates 1 Boeing Freighter Shanghai Airlines Cargo 1 Boeing Freighter China Postal 2 Boeing Passenger 1 Kenya Airways 1 Skymark Airlines 26

27 Access to Best-in-Class Fleet to Serve Multiple Market Segments B747-8F: Superior technology platform Highest payload and lowest unit cost freighter Best suited to serve the trunk routes of global trade Transpacific, Transatlantic, Round-the-world, Europe-Asia, North-South Americas B777F: Superior technology platform Superior range profile Aircraft of choice for express operators Allows Integrators to offer intercontinental next day delivery services B ERF: Regional work horse Aircraft of choice for regional trade corridors (e.g., North America, Intra-Asia) Serves both general freight and express networks Increasing number of freighter conversions are expected of this aircraft type 27

28 Integrated Partnership Our Value Proposition Operations Excellence World s most efficient fleet of large- and medium-body aircraft Deliver best-in-class operational performance Flawless implementation and execution Delivering lower total operating cost Commercial Development Leading market knowledge and cross industry presence Interactive dialogue creating opportunities Best-in-class analysis capabilities and consultancy support Proactive network and route assessment We Live Our Customers' Values They are market leaders representing the entire industry We represent their brand and deliver on their customer commitments We make their operations more flexible and efficient We continuously focus on delivering increased value 28

29 Our Customers Reflect Our Focus on Quality Long-term, profitable relationships Resilient Business Model and Predictable Revenues Shippers Forwarders / Brokers Airlines Express Our strength Growth-oriented market leaders High degree of customer integration Focused on continuous development and growth Long-term contractual commitments Covering the entire air cargo supply chain 29

30 Global Operating Network 158,937 Total Block Hours Operated in ,571 Flights 430 Airports in 124 Countries 711 Charters Completed 108 Unique Customers Asian trade lanes lead market growth Globalization requires global supply chain solutions Outsourcing becoming more relevant for both cargo and passenger operators Rapid market growth in Middle East, Africa, South America Expect to grow key businesses: ACMI, CMI, Charter, Scheduled Charter, Dry Leasing 30

31 International Global Airfreight: Growth Returning IATA Total global airfreight tonnage growing from record levels IATA International freight tonne kilometers (FTKs) flown up 4.6% in 2014 (thru Sept.) IATA Forecasts international FTK CAGR of 5.0% Total Global Airfreight Tonnage Growing from Record Levels Freight Tonnes (Millions) Y-o-Y E 2014F 6.7% 9.6% 2.5% 6.2% 6.2% (3.2)% (0.8)% 19.2% 2.2% (1.0)% 2.0% 3.0% Source: ICAO , IATA F (IATA September 2014) 31

32 Global Airfreight Drivers Market Size Airfreight share: % global volume, 35% global value Products Strategic Choice Specialty Consideration High-value, time-sensitive items; items with short shelf lives Products/supply chains with just-in-time delivery requirements Products with significant security considerations By Sectors Industry Sectors Served by AAWW Customers By Region Percent of International Freight Tonne Kilometers (FTKs) Automotive Mail & Express Pharmaceuticals Other Live, 1% 6% 6% 5% 10% 11% 17% 17% High-Tech Products Capital Goods Middle East North America 14% 16% Latin America 3% Africa 2% 40% Asia Pacific Apparel Perishables 11% 16% Intermediate Materials Europe 25% By Sectors Chart Source: Atlas research By Region Chart Source: International Air Transport Association September

33 Global Airfreight Flows Major Trade Lanes Atlas global scale connects manufacturing locations and markets worldwide Allows the maximizing of stack yields by combining airfreight opportunities across multiple trade lanes 3,431 Telecom Equip., Apparel, Machinery Machinery, Chemicals Express Pkgs 8,500 Express, other 2,839 Machinery, Auto parts, Chemicals, Express Pkgs 1,400 Express, other 4,267 Machinery, Auto Parts, Express Pkgs Apparel 577 6,000 Intermediate goods flows (crossborder supply chains) 1,229 Industrial / Electrical Machinery, Small packages Flowers, Fish, Vegetables 130 Oil & gas equip, Machinery, Small packages Perishables, Apparel, Auto components 743 Industrial / Electrical Machinery, Small packages 1,075 Machinery Perishables, Apparel 1,424 Machinery Garments, Perishables Machinery Apparel, Pharma 1,193 Machinery, Perishables Apparel, Luxury goods Flowers, Fish, Vegetables Global Air Freight Volumes Figures in 000 tonnes 33

34 Tonnes (millions) Reports of Modal Shift Are Overstated Air cargo has maintained its share in the key transpacific cargo market Air Cargo Market Share in the Transpacific Cargo Market % % % 1.8% 2.0% 2.0% 2.2% 2.0% 2.0% 2.3% 2.5% 2.2% 2.1% The percentage (by weight) of the top twenty categories of goods shipped by air on transpacific lanes has remained almost constant Ocean Cargo Market Share Air Cargo Market Share Source: Boeing 34

35 Air vs. Ocean? Air continues to be an essential component of the supply chain Time Critical Products Reason for Time Criticality Current Market Dynamics / Drivers Current Conditions or Expectations Perishables Product life Economic conditions Disposable income Improving Increasing High Value (Electronics) Value of speed to market Inventory carrying cost/risk Obsolescence Interest rates Product refresh cycle Inventory velocity Increase expected Continued acceleration Continued increase High Margin (Fashion) Stock-out cost Speed to market Trends in fashion/retail Refresh cycles Trend response time Continued acceleration Importance of speed is increasing Industrial Time Critical Production cost ripple effects Sporadic disruptions (auto component recall vs. redesign) Focus on supply chain improvements, but continuing need is expected 35

36 Large Freighter Supply Trends Projected production capacity will grow in line with forecast long-term demand growth of ~4% Older technology is nearly gone MD-11F and converted freighter fleets are shrinking Large wide-body freighters will continue to dominate the major trade lanes Belly capacity cannot displace freighters F Old Technology Sunsetting 58 MD-11F / / / / / /14 Recent But Challenged SF F Current Technology F F New Technology Deliveries Measured 98 Source: Atlas (October 2014), Ascend (October 2014), Boeing (October 2014), company reports. Excludes parked aircraft, aircraft in Express operations, combis and tankers; F total includes -100s and -300s. Boeing October F total includes 40 deliveries to express operators (25 with FedEx, 8 with AeroLogic/DHL, 4 for DHL Express, and 3 with TNT). 36

37 Main Deck to Belly? Main deck freighters carry well over half of air cargo traffic and are forecast to continue to do so (more reliable schedules, service) Key Considerations 70% 60% 50% 40% 30% 20% 10% 0% Percentage of World RTKs Carried on Freighters % shift of Trans-Pac market from main deck to Pax belly requires 50 incremental aircraft Limitations on slot and route availability; not enough passenger demand; limited access to aircraft Global average capacity availability on a ER is tonnes* New Pax 787s fly point-topoint, e.g. London to Phoenix; good for passengers, not cargo Sources: ICAO, IATA, A4A, Boeing, Atlas *Considering 28 tonnes max structural cargo capacity available after allocating capacity to bags carried 37

38 Why Atlas? We manage diverse, complex and time-definite global networks We deliver superior performance and value-added solutions Our global scale and operational capabilities are unparalleled We possess industry-leading operational and technical subject-matter expertise We collaborate with customers to achieve best-in-class results We are driving Continuous Improvement We are strategically positioned and focused on new opportunities to continue to deliver future growth 38

39 The Future The Industry Airfreight and integrators integral to global trade growth Over $6 trillion of goods airfreighted annually; ~35% of total world trade Higher-growth markets demand large wide-body assets High-value, time-sensitive inventories demand airfreight-based supply chain Airfreight provides a compelling value proposition Atlas Modern, reliable, fuel-efficient fleet Differentiated fleet solutions: 747/777/ Fs performing well Strong portfolio of long-term customers committed to further expansion Unique integrated value proposition High degree of customer collaboration Atlas is uniquely positioned for the future. 39

40 The future looks bright. Thank you.