Atlas Air is in talks with Boeing over compensation for delivery delays to the 12 Boeing 747-8Fs it has on order and possible further adjustments in the delivery schedule.
Atlas Air Worldwide Holdings CFO Jason Grant says the company has been given a revised delivery schedule for its 12 747-8Fs with deliveries starting in October 2010. But Atlas, which originally was going to take six 747-8Fs in 2010 and another six in 2011, has not yet accepted the revised schedule and is looking for compensation from Boeing.
"Our view is the plane is late and that's a delivery commitment on their part. There's a number of ways that we see we can get value from that," Grant told theBank of America/Merrill Lynch global transportation conference today in New York.
"Timing [further changes to the delivery schedule] may be one of those but I don't want to rule out there are other leverages as well. We're taking a pretty broad view ofhow we think about value in that negotiation."
While a further postponement in deliveries is possible, Grant says Atlas is not trying to negotiate an acceleration in the delivery schedule.
"It will be difficult for them to deliver them quicker," he says. "We're in the middle of negotiations so we're being very careful how much detail we go into on where that [the delivery schedule] will end up. But I really don't think they have the ability to deliver it quicker."
Boeing first notified Atlas and other 747-8F customers last November of a six to nine month delay in all deliveries. The delay, driven by the Boeing machinist strike and glitches in the development programme, pushed back first delivery to launch customer Cargolux to the third quarter of next year with Atlas to follow at the beginning of the fourth quarter. But further changes are likely.
"This in our perspective is not a final schedule," Grant says. "This is a preliminary proposed schedule from Boeing. We have not agreed to that schedule yet. That is subject to final negotiations."
Grant says the programme delay has allowed Atlas to delay making pre-delivery payments. He says Atlas has already made $313 million in deposits, including $217 million financed through a facility, and will look to source financing for the remaining pre-delivery payments late this year or in the first half of next year.
Atlas also plans to start sourcing permanent financing for eight of the 12 aircraft in the first half of next year. It has already completed sale and leaseback deals covering four of the aircraft.
Despite the delays to the programme, Atlas remains committed to the 747-8.
"We believe the -8 will dominate tomorrow in the same way the -400 dominates today," Grant says, pointing out the 747-8 will have a 16% lower cash operating cost per tonne mile than the 747-400.
Grant believes -8 will give Atlas a competitive advantage because "our competition mainly comprises operators of older 747-200 aircraft". As a result he says its -8 order "is really the future of the company".
The Atlas group currently operates an all-cargo fleet of 22 747-400s and 7 747-200s. Most of the 747-400s are wet leased to other cargo carriers, including six to DHL, four to Emirates, three to British Airways and three to Qantas. The 747-200s are mainly used for military charters.
The group includes Polar Air Cargo, a joint venture carrier with DHL, and Global Supply Systems, a UK-based joint venture carrier which operates 747-400Fs for British Airways. Atlas is the world's largest 747 freighter operator and the world's third largest widebody freighter operator after FedEx and UPS.
Source: Air Transport Intelligence news
