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In 1992, Michael Chowdry took notice that, while passenger airlines were losing staggering amounts of money, the few airlines whose niche consisted of high-gross-weight, long-haul freighters were profitable.
As passenger airlines lost revenues by being forced to match fares from competitors (including airlines operating under Chapter 11 who were charging fares insufficient to cover costs) Chowdry also observed that those same air carriers turned a profit on cargo hold capacity sold in the underbelly of their aircraft fleet. From this basic observation, Chowdry saw an opportunity in the dedicated air cargo sector and moved quickly to start Atlas Air in 1993.
Atlas entered the commercial cargo aviation industry with a single Boeing 747-200 that was leased to China Airlines. The airline was named after Atlas, a Titan in Greek mythology, who carried the heavens on his shoulders. Not coincidentally, Atlas Air’s symbol on the plane’s tail is a golden man carrying a golden planet. Similarly, Titan would later be chosen as the name of the airline’s leasing subsidiary.
The company gradually expanded over the next five years through an order placed with Boeing for 10 new 747-400 freighters. In 1995, Atlas began trading publicly on the NASDAQ and in 1997 appeared on the New York Stock Exchange. Later on, an initial public offering of 4 million shares was made in August 1998.
Offering cargo and leasing services to other airlines on an Aircraft, Crew, Maintenance and Insurance (ACMI) contract basis (also known as wet leasing), Atlas’s growth increased significantly to warrant Chowdry’s amending his initial order to two additional 747-400F so, as the new millennium approached, the airline’s fleet had grown to a total of 36 aircraft.
Born in Pakistan in a Muslim family, Michael A. Chowdry immigrated to England at age 15. In 1976, he moved to the United States, enrolled at the University of Minnesota, Crookston, where he graduated in 1978 with a degree in Agricultural Aviation. A life-long passion for aviation led him to become a crop-duster pilot while simultaneously selling Piper airplanes to pay off his college tuition. Soon, Chowdry expanded his business interests into buying and selling landing rights at constrained airports. In 1984, he founded a company named Aeronautics Leasing which was engaged in leasing commercial passenger aircraft to such clients as Pan American World Airways, Trans World Airlines, and British Airways.
As Atlas Air’s visionary leader, he based the company in Purchase, New York and grew the operations to encompass service to 101 cities in 46 countries. With a market capitalization at $1.39 billion, Chowdry was listed on the Forbes 400 list with a net worth of $920 million.
Tragedy struck on January 24, 2001, when Chowdry, flying his personal Czech-manufactured Aero L-39 Albatross jet trainer, crashed in Watkins, Colorado, killing him and his trainer, Jeff Cole, aerospace editor of The Wall Street Journal. Chowdry left his wife, Linda, two children, two stepchildren and one cousin.
In February 2001, Atlas Air Worldwide Holdings (AAWW) was formed with Atlas Air as a wholly owned subsidiary.
In November of that year, AAWW acquired Polar Air Cargo, Inc., an all-cargo, scheduled-service carrier, from GE Capital Aviation Services (GECAS). Polar was formed in 1993, as a joint venture between Southern Air Transport (Airways, June 2014) and GE Capital Services. The company began offering charter flights and later added scheduled passenger services. In 1994, Polar was certified as a supplemental air carrier by the Federal Aviation Administration (FAA) and a US cargo carrier by the U.S. Department of Transportation. While the Atlas and Polar fleets are staffed by the same pilot group, for marketing reasons the Polar brand remains independent. Its services include:
Polar Priority Express
On-time delivery guarantee.
Polar Priority Service
Priority boarding and quicker recover time.
Polar Plus trucking service Onward trucking service to more than 100 destinations around the world.
Polar provides scheduled freight service to the trans-Pacific, trans-Atlantic, trans-Asia, and Middle East markets. In addition, Polar offers frequent flights to China, connecting Shanghai to Anchorage, Chicago, Los Angeles, Cincinnati and multiple points in Asia and Europe, including the Leipzig/Halle Airport, founded in Germany by Aero Logic.
Polar Air Cargo’s main base of operations is at Anchorage International Airport (ANC) with hubs at Los Angeles (LAX), Cincinnati/Northern Kentucky International Airport (CVG), New York (JFK) and Seoul-Incheon (INC) in South Korea.
Polar’s special handling and time-limited shipments have included horses, cattle, race cars, and helicopters across the Atlantic; critically needed supplies to Tsunami victims; and the rock band Green Day’s musical equipment from one tightly scheduled performance in Glasgow to another at the 47th Annual Grammy Awards ceremony in Los Angeles. In addition, Polar provides scheduled service on its aircraft to freight forwarders and other customers. .
The acquisition of Polar by Atlas Air Worldwide Holdings was a first step toward diversifying Atlas’s portfolio of products. As fluid as the commercial aviation industry is, by the fourth quarter of 2003 the U.S. cargo aviation business, was subject to overcapacity.
Atlas president Jeff Erickson, former CEO of Trans World Airlines (Airways May/June, 1996) and Reno Air, noted a net loss of $65 million for the first six months of 2003. Later, on September 15, Atlas Air Worldwide Holdings, Inc., announced that it had plans to file a pre-negotiated Chapter 11 reorganization with creditors during mid-December. The airline ended the year with a net loss of $44.5 million on revenues of $1.2 billion.
As the majority owner and controlling shareholder of Polar Air Cargo Worldwide, Inc., and a 49% owner of Global Supply Systems, which provides freight services in the United Kingdom, Atlas Air, Inc., manages and operate the world’s largest fleet of Boeing 747 and 767 freighters.
Atlas became the only outsource provider of Boeing’s new 747-8, and today offers dry leasing services with Boeing’s 777F to leading carriers in the air cargo industry. In 2011, Atlas took delivery of its first three “next-generation” Boeing 747-8F. Further, a new Boeing 767 passenger and cargo operation program was expanded.
Then, in January 2012, Atlas Air negotiated favorable terms with the Export-Import Bank to finance six additional Boeing 747-8F aircraft providing substantial savings in ownership costs. Atlas took delivery of four of these aircraft in 2012 and two more in 2013.
Financial progress enabled Atlas Air Worldwide to join the S&P Small Cap 600 Index in 2013. Armed with a transformed business model, AAWW has solidified its balance sheet by focusing on four distinct core business segments.
The first is ACMI & SMI Services with Aircraft Crew, Maintenance, and Insurance by Atlas on a long-term basis. Under this model, customers assume fuel, demand and yield risk. Atlas also provides Crew, Maintenance, and Service for both passenger and cargo operations. Atlas predicts that the ACMI market will continue to show growth.
Secondly, AAWW offers Air Mobility Command (AMC) Charter, AMC Charter flights are provided to the U.S. military. Commercial Charter operations also form part of the airline’s service portfolio, with full planeload charter services to charter brokers, freight forwarders, direct shippers, and airlines. Atlas has more than 900 experienced pilots and knowledgeable ground support.
Lastly, Atlas offers dry leasing services through its subsidiary Titan Aviation Leasing Ltd. Aircraft and engine dry leasing solutions are provided to airline customers worldwide.
Complimenting Atlas’s ACMI and CMI business segments, Titan Aviation Leasing Ltd., is focused on the acquisition, sale, dry leasing, sales leaseback, marketing and servicing of commercial aircraft and related equipment.
Titan’s focus is to extend expertise and innovative, aviation solutions to help customers manage capital outlays, enabling them to lease aircraft instead of buying them, without taking on exposure to fluctuations in the value of owned aircraft. Plans to acquire additional Boeing 777F are underway, along with freighter aircraft conversion.
Atlas Air Worldwide Holdings has been structured for growth and profitability in any environment. That said, a primary, sobering consideration is that military demand is declining, as we’ve noted with the most recent demise of World Airways and Evergreen International. However, unlike the business structure of those two competitors, Atlas is financially strong and positioned with far more stability and forward momentum for growth as an industry leader.
If air freight growth returns, Atlas is positioned to be a prime beneficiary. If it doesn’t, the company expects growth to remain flat (approximate to 2013), excluding further decline from Air Mobility Command (AMC) cuts. The majority of Atlas’s earnings occur during the second half of the year. Dry leasing at subsidiary Titan is showing dramatic growth. The Boeing 777F is viewed as a strong fit for the dry leasing business and, with a strong customer base, the aircraft is delivering well on direct express service segments and residual value.
AAWW oversees six market segments: Dry Lease, Parts Supply (a joint venture), CMI (including SonAir, Boeing, DHL, and MLW Air), ACMI, AMC (comprising military troop transport, cargo and government agency contracts), and commercial charters (comprising commercial passenger and cargo).