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News
Worry over CEO's death
January 25, 2001: 4:29 p.m. ET

Analysts lower rating of Atlas Air and stock falls over fears growth will stall
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - Analysts expressed concern Thursday that the death of Atlas Air Inc. CEO Michael Chowdry in a plane crash could hurt the growth prospects for the air cargo carrier.

Shares of Atlas (CGO: Research, Estimates), which stopped trading soon after Chowdry's private jet crashed Wednesday afternoon, closed trading Thursday down $1.81 to $34.44. It opened at about that same level, then fell as low as $31.50, or down 13 percent, before rebounding.

Analysts said the drop in the stock was not the case of overreaction, and noted that the price-earnings multiple may no longer be justified with the death of the company's founder. The company was trading at about 13 times estimated 2001 earnings before the crash.

graphic"The company is solid, there's no problem with that," said Ray Neidl, analyst with ING Barings. "They've got a well-known franchise, a customer base that's well established. But he was the dealmaker who kept the company growing, kept high multiple on the stock. I don't see anyone inside who can fill that role."

Neidl lowered his ratings on the stock to a hold from a strong buy in response to Chowdry's death. Deutsche Banc Alex. Brown lowered its rating to "market perform" from "strong buy," while Alex Brand, analyst with BBB&T Capital Markets, also downgraded the stock to "long-term buy" from a "strong buy."

"We are making no estimate changes at this time, as we believe that the near-term growth outlook remains intact," said Brand's note to clients. "However, we believe that Chowdry was key to the company's sales effort and, therefore, growth prospects."

New CEO says growth can continue

Rick Shuyler, who was named CEO of the company Thursday morning, acknowledged that Chowdry's contacts and salesmanship were a key to the company's growth. But he insisted the management team he left behind would keep the company moving forward.

"There's certainly no question at all that Michael is totally irreplaceable in that regard. He was the Will Rogers of the airline industry, he never met a person he didn't like and who didn't like him," Shuyler observed.

"Nevertheless, those relationships are still in place," Shuyler said. "And since we're still a relatively small company, that allowed him to hand-pick the people he had working here, and the marketing people have many of the same relationships he had."

Chowdry founded Atlas in 1992. It flew cargo jets under contract to other carriers, primarily passenger airlines, providing both the jet, crew and covering operating costs under the contract.

It had grown to become the largest operator of Boeing 747 freighters, with 37 jets flying to 101 cities in 46 countries. It handled more freight than any carrier except FedEx Corp. (FDX: Research, Estimates) and United Parcel Service Inc. (UPS: Research, Estimates).

Shares not for sale

Chowdry owned about 51 percent of Atlas' shares outstanding, Shuyler said. Neidl said there has been some speculation that another carrier or another company might now eye a purchase of Atlas, but Shuyler said the shares are not for sale. The shares will now go to his widow, Linda Chowdry.

"She's definitely not looking for a buyer," he said. "She is as dedicated to the company as Michael was. She has been alongside Michael from the very beginning."

Chowdry's memorial service will be over the weekend. The company delayed the release of financial results Thursday. Shuyler said the plan now is to issue a brief earnings statement Friday, and have a full conference call for investors Monday.

Chowdry, 46, was a Pakistan native who came to the United States to go to college. He learned to fly as a crop dusting pilot, and worked his way up from there. Early in his career he was so poor he lived in his car, but when he died his Atlas shares were worth $706.6 million.

He was piloting an L39, a Czech jet trainer that was modeled on a fighter jet. He had owned it for almost three years. Shuyler said that Chowdry was an experienced pilot in the plane and was qualified to fly jets as large as a Boeing 737.

Company eyeing new jet

Chowdry took off at 11:25 a.m. Mountain Standard Time (1:25 p.m. ET) from Front Range Airport in Watkins, Colo., near Denver. He crashed about two minutes later in an open field. The jet can hold only the pilot and one passenger, who sits directly behind the pilot. His only passenger, Jeff Cole, the Wall Street Journal's aerospace editor, was also killed in the crash.

Both Chowdry and Shuyler had met within the last week with officials from both Boeing Co. and Airbus Industrie, the European aircraft consortium, about a purchase of a new model of cargo jet in the future. Airbus last week announced a deal to sell the first freighter versions of its A380 superjumbo, which is significantly larger than current 747 freighters, to FedEx. But Shuyler said that the FedEx configuration would not necessarily meet the demands of Atlas and its clients. Most of Atlas' 747 freighters open though the nose of the aircraft to allow loading of larger freight than can be loaded through the side doors.

"They (Airbus) wants to build a non-package freighter version of that aircraft," Shuyler said. "We're working with them on it. There's a lot of things they want to do to make sure a real freighter version gets off the ground." graphic





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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.