Atlas Air lays off 105
tlas Air Inc. is laying off 105 crew members in response to weakening demand for its aircraft.
The move follows the cargo airline's decision in April to take back two 747 freighters that it had leased to Aerofloral, a financially troubled Miami-based carrier specializing in the Latin American flower trade.
"We were getting vibes that they (Aerofloral) were on the brink. We did not want to have our aircraft where we could not get access if Aerofloral filed for bankruptcy," Fred L. deLeeuw, Atlas's vice president for corporate finance, told a logistics conference May 12. Had that happened, Atlas feared that the freighters might be tied up in a court proceeding. Atlas is trying to place the aircraft with other carriers but has not yet been able to do so, he said.
Atlas, based in Purchase, N.Y., had added staff in anticipation of a significant increase in flying this year, but it no longer expects that to occur.
"We believe it is in the best interest of the company and long-term interest of our employees and shareholders that we act decisively in the face of the current economic downturn," said Richard Shuyler, Atlas's chief executive. "While we hope to see a strengthening in demand as we go into the second half of this year, it is only prudent to take those measures necessary to ensure that we are best-positioned to deal effectively with any prolonged economic weakness."
Shuyler added that Atlas is reviewing all areas of the company's cost structure and that it will take "any necessary additional actions to ensure we remain cost efficient."
Atlas operates a fleet of 37 freighters - all 747s - giving it by far the world's largest fleet of 747 freighters. Besides the two that were formally dedicated to Aerofloral, Atlas also has four that are currently undergoing heavy maintenance and three that it keeps in reserve in order to supply its clients in case of emergency.
Atlas has been enjoying record profits, and in the first quarter earned $14.4 million, excluding the effects of a change in accounting practices, up from $12 million in the same period last year.
Atlas typically supplies its aircraft, along with crew, maintenance and insurance, on a dedicated basis to individual carriers. Its customers, however, pay for fuel, meaning that Atlas has been immune from the rise in fuel prices over the past year. It also gets paid regardless of whether the aircraft are full or empty. But because of the economic slowdown, it has begun exploring other options.
Speaking at the Bear Stearns Transport and Logistics Conference last week, deLeeuw noted that Atlas has begun offering fractional charters, where two carriers can share the charter. In one case, Atlas charters an aircraft to Malaysian Airlines, which flies from Kuala Lumpur to Seoul. At that point, Korean Air takes some of the space on the aircraft for the flight to the United States.
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