Atlas Air Upbeat On New Boeing Freighter Despite Delays
May 12 2009 - 2:24PM
Dow Jones News
Executives at cargo specialist Atlas Air said Tuesday that they
expect sufficient global freight demand to fill their delayed new
Boeing 747-8F aircraft once they receive them.
Parent Atlas Air Worldwide Holdings Inc. (AAWW) and rivals such
as United Parcel Service Inc. (UPS) and FedEx Corp. (FDX) have been
battling a slide in air freight traffic that started last June and
intensified at the end of 2008.
The weak market forced some operators to defer or cancel new
aircraft deliveries, but also left Boeing Co. (BA) as the only
provider of a new ultra-large cargo jet as Airbus lost all orders
for the freight version of its A380.
Atlas, which provides outsourced air cargo services to
commercial carriers and the U.S. military, has 12 747-8Fs on order
and is the largest operator of the now discontinued 747-400F
freighter.
The company has yet to finalize a new delivery schedule for the
747-8F, which has yet to fly after design problems and a strike at
Boeing delayed first deliveries by at least nine months.
Atlas was due to receive the first of its six orders next
February, with another six arriving in 2011.
Chief Executive William Flynn said at an investor event that it
remains committed to the aircraft, even as he described the
fall-off in freight demand since late last year as "stunning by any
comparison."
"We strongly believe that is the right aircraft for the future,"
Chief Marketing Officer Michael Steen added at the webcast
event.
Flynn said Atlas, which also owns Polar AirCargo, has seen some
anecdotal evidence to suggest freight demand is bottoming, although
he noted that "we're not up here chirping about robust demand
returning tomorrow" and stopped well short of predicting a
rebound.
"What our customers are telling us is that their load factors
are improving," he said. But, "I think their dilemma right now is,
when will they have some pricing power and increase rates on their
freight?"
He said Atlas has a number of options to match its existing
fleet with reduced demand, such as continuing to retire some of its
older 747-200s and redeploying its 747-400Fs into new markets.
Atlas shares were recently down 14.2% at $25.17 in the wake of a
common stock offering announced late Monday.
-By Bob Sechler; Dow Jones Newswires; 512-394-0285;
bob.sechler@dowjones.com