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Atlas Air grounds jets
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June 19, 2001: 9:31 a.m. ET
No. 3 air cargo carrier says freight drop leading to lower profit outlook, layoffs
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NEW YORK (CNNfn) - Air cargo carrier Atlas Air said Tuesday it is grounding some of its 747 freighters and laying off staff due to a slowdown in demand for air freight shipments.
Atlas (CGO: Research, Estimates), the third-largest air cargo carrier after FedEx Corp. (FDX: down $0.05 to $37.50, Research, Estimates) and United Parcel Service Inc. (UPS: unchanged at $56.55, Research, Estimates), also warned that profit will be far less than forecasts for the current quarter and full year.
The Purchase, N.Y.-based company said it expects about break-even results in the second quarter and earnings per share of 90 cents to $1.10 for the year. Analysts surveyed by earnings tracker First Call forecast second-quarter EPS of 49 cents, down from 53 cents a year ago, and full-year EPS of $2.24, down from $2.31.
Those estimates exclude expected charges of $40 million to $50 million in the current quarter to cover severance, account reserves and other non-recurring items.
The company, which provides the jet freighters, crews, fuel and maintenance under contract for other airlines, primarily passenger carriers, said it will ground up to six of its 37 planes and lay off up to 200 ground service employees.
"The global extent of the current economic downturn has become far wider and deeper than most observers had expected, and has occurred far more quickly than anyone anticipated," Atlas CEO Richard Shuyler said. "Not only are our customers no longer flying at levels that exceed guaranteed minimums, but many are having difficulty even achieving those minimums."
The company termed the staff cuts its first layoffs, although it furloughed 105 flight crew members earlier this year. But it said no additional cuts in flight crews are anticipated at this time.
The company, whose founder, CEO and major shareholder Michael Chowdry was killed in a small plane crash earlier this year, also announced a shareholder rights plan that could serve as a takeover defense.
Atlas said it is giving a shareholders the right to buy a new series of junior preferred stock if any individual or group acquires 20 percent of the company's voting power. Chowdry owned 56 percent of the shares at the time of his death, and his wife Linda now controls 47.1 percent.
The company said the rights plan is not being distributed in response to any specific effort to acquire control of the Company, and the board is not aware of any such effort. 
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Atlas Air
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