Atlas Air flies into Chapter 11 bankruptcy

Westchester County Business Journal, Feb 09, 2004 by Philippidis, Alex

Atlas Air Worldwide Holdings Inc. says its Chapter 11 bankruptcy filing won't cuts at its Harrison headquarters or cutbacks in its air cargo operations worldwide.

"We're continuing to fly a full schedule. We're continuing to service all of our customers. It's business as usual," said Alan Caminiti, an Atlas Air spokesman, on Feb. 2.

The air cargo carrier capped a troubled three years on Jan. 30 when it filed for reorganization wider Chapter 11 of the U.S. Bankruptcy Code. The company announced that filing along with a commitment of $50 million in debtor-in-possession financing by CIT Group and Ableco Finance L.L.C., an affiliate of Cerberus Capital Management L.P. subject to Atlas Air meeting undisclosed performance and liquidity milestones.

As a result, Caminiti said, Atlas Air will not eliminate any of its approximately 350 employees at its headquarters, at 2000 Westchester Ave. - part of a total 1,600 employees worldwide.

Atlas Air will continue to lease 125,000 square feet there under a lease with eight years remaining, Caminiti said.

At deadline, Atlas Air had yet to submit a reorganization plan to the U.S. Bankruptcy Court.

Since last year, Atlas Air has negotiated with creditors to restructure its payment terms for aircraft leases and other debts, citing the reduced values of the planes.

Atlas Air publicly warned investors that it would declare Chapter 11 bankruptcy and reorganize last September (Business Journal, Sept. 22). Since then, the publicly traded company said in a Dec. 11 filing to the U.S. Securities and Exchange Commission that revenues for the third quarter and first nine months of 2003 were below projections. The company blamed rising fuel prices, fewer military charter flights than expected and less demand than planned for flights during the three-month peak season that ended with the December holidays.

In that Ming, the company also projected a 2003 loss of $71.6 million.

The troubled air cargo carrier said its Chapter 11 filing was part of a five-year turnaround plan that began in March 2003 when its current management took office.

At the time and for months afterward, Atlas Air expressed optimism that the turnaround plan would lift the company from years of financial troubles. Even as it announced plans to file for bankruptcy, Atlas Air was citing year-to-year improvements; in two business segments, scheduled cargo and charter flights, from January through August 2003, due to additional military flights related to the war in Iraq.

Caminiti said Atlas Air would not discuss the recent performance of its business units pending the release of fullyear results for 2003.

The troubled air cargo carrier said it lost $65 million for the first half of last year on revenues of $679 million, compared with a $36 million loss on $1.2 billion in revenues for all of 2002. The company blamed the results on a weak air cargo market and restatement of previous earnings.

Atlas Air has struggled financially in the three years since the economy soured and its founder and chairman, Michael A. Chowdry, died in a plane crash. Last year, the company shook up its management, replacing Chowdry's successor and three other executives.

Though Atlas Air is headquartered in Harrison, the company filed for Chapter 11 at U.S. Bankruptcy Court for the Southern District of Florida. The company has facilities in Florida and believes the Florida court would handle the case more expeditiously, Caminiti said.