ATW Online
Atlas Air pushes back Chapter 11 filing; revises business plan
Dateline: Monday December 15, 2003
Atlas Air Worldwide Holdings deferred the anticipated date of a pre-negotiated Chapter 11 filing from today to Feb. 1 to give the company "sufficient time" to continue discussions with lessors and creditors as it attempts to restructure the terms and conditions of its debt and aircraft leases.
Atlas previously had reached agreements in principle with several of its primary creditors and lessors based upon financial projections set forth in a Securities and Exchange Commission filing in Sept. However, the company's unaudited operating results for the three and nine months ended Sept. 30 were "significantly" below those projections. It said the shortfall was caused by several factors, including lower-than-anticipated military charters, termination of an ACMI contract and higher-than-projected fuel prices.
As a result, Atlas revised its business plan and modified projections of future operating results. Its revised plan, projected through 2007, reflects additional annual operating efficiencies of approximately $28 million in 2004 and $23.2 million in 2005, a reduction in fleet size, a decrease in scheduled service and a further reduction in payments for remaining 747-200/-300s for a two-year period. In addition, the plan calls for maintenance of a minimum post-confirmation cash position, which includes $50 million in debtor-in-possession financing.
Under the new plan, the company expects to post a $71.6 million net loss for 2003 and an $8.5 million loss in 2004. However, it anticipates reporting a net profit of $37 million in 2005, a $61.8 million profit in 2006 and a $79.2 million profit in 2007.
Currently, Atlas is in discussions with its major creditors and lessors in hopes of obtaining their agreement to the payment reductions and deferrals and fleet cuts in the revised business plan. It warned that in the event it is not successful in effecting a pre-negotiated filing, it could be "forced by its creditors into bankruptcy and/or be forced to take other actions, which may include ceasing operations, or selling assets for the benefit of its creditors."
Meanwhile, according to unaudited results released in a filing with the SEC, the company recorded a net loss of $19.8 million in the three months ended Sept. 30. Total operating revenue was $326.2 million and operating expenses were $326.9 million, resulting in an operating loss of $742,000. For the nine months ended Sept. 30, Atlas posted a net loss of $81.1 million. Operating revenue totaled $1 billion while operating expenses were $1.03 billion. As a result, operating loss for the period was $23.4 million. The company did not provide prior-year results.--Loren Farrar