PAUL LEWIS / WASHINGTON DC
Acquisition of loss-making heavy freight carrier from GECAS comes with "jewel in the crown" 16 weekly slots at Narita
Atlas Air is positioning itself for an anticipated shake out in the financially softening air freight industry by acquiring troubled Polar Air from General Electric Capital Aviation Services (GECAS), in a move which brings with it sought after access to the Japanese market.
Polar will become a wholly owned subsidiary of the recently resurrected Atlas Air Worldwide Holdings and, for now, will remain separate from Atlas Air. Los Angeles-based Polar is a traditional heavy freight carrier. As such, it is in a different sector to Atlas' core focus on aircraft, crew, maintenance and insurance (ACMI) contracts with other airlines.
Both operators are feeling the effects of a downturn in the air freight market. Atlas recently laid up six Boeing 747-200s and Polar suffered losses of $26.8 million in the first quarter of 2001. Atlas has been looking for some time to diversify its ACMI business and was rumoured to be seeking a merger with package carrier DHL World-wide Express. The "jewel in the crown" is Polar's 16 weekly slots at Tokyo Narita Airport, says Atlas.
"In meeting the current challenging economic environment, we have initially focused on sizing our existing operations appropriately to ensure we emerge even stronger...We are turning our attention to strengthening our position in the industry through strategic opportunities," Atlas chief executive Richard Shuyler says.
GECAS agreed to sell Polar Air for $84 million along with a package of accompanying financial concessions, which is expected to cut the net cost of the deal by $25 - $30 million. Atlas will acquire the carrier free of debt, with renegotiated lease rates for the aircraft it will retain and the right to return surplus equipment.
Atlas is now focused on "right sizing" Polar subject to the deal being granted US and Japanese regulatory approval. This will entail retiring all 13 of the carrier's 747-100Fs, nine of which are owned or managed by GECAS and possibly its seven -200s. It will, however, retain five -400s in service or on order.
Source: Flight International
