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Atlas Air Worldwide Reports Fourth-Quarter and Full-Year 2013 Earnings

  Atlas Air Worldwide Reports Fourth-Quarter and Full-Year 2013 Earnings    *4Q13 Adjusted Net Income of $41.8 Million, $1.66 per Share   *Full-Year Adjusted Net Income of $96.8 Million, $3.78 per Share   *4Q13 Reported Net Income of $30.0 Million, $1.19 per Share   *Full-Year Reported Net Income of $93.8 Million, $3.66 per Share  Business Wire  PURCHASE, N.Y. -- February 12, 2014  Atlas Air Worldwide Holdings, Inc. (Nasdaq:AAWW), a leading global provider of outsourced aircraft and aviation operating solutions, today announced adjusted net income attributable to common stockholders of $41.8 million, or $1.66 per diluted share, for the three months ended December 31, 2013, compared with $48.7 million, or $1.83 per diluted share, for the three months ended December 31, 2012.  On a reported basis, fourth-quarter 2013 net income attributable to common stockholders totaled $30.0 million, or $1.19 per diluted share, compared with $52.4 million, or $1.97 per diluted share, in the fourth quarter of 2012.  Free cash flow of $92.3 million in the fourth quarter of 2013 compared with $53.3 million in the fourth quarter of 2012.  “Earnings in the fourth quarter of 2013 were led by our ACMI operations, a strong contribution by our Commercial Charter segment, which reported a profit for the full year, and growth in our Dry Leasing business,” said William J. Flynn, President and Chief Executive Officer. “Results were also affected by a substantial reduction in AMC Charter volumes and segment contribution, reflecting lower demand levels than previously forecast by the military.  “Earnings in Commercial Charter were driven by a sharp increase in block hours flown by our aircraft as global-market peak-season volumes picked up in late October through December.  “Operating results during the quarter were supported by the investments we’ve made to strengthen and diversify our business mix, including our 747-8 freighters in ACMI; the addition of 777 freighters with predictable, long-term revenue and earnings streams in Dry Leasing; our expanding 767 service; growing CMI operations within ACMI; VIP and other passenger charters; and ongoing continuous improvement initiatives.”  Reported results for the period reflected our decision to reduce our operating fleet by two aircraft. In December, we permanently parked two 747-400BCFs that we had leased following delays in the delivery of our 747-8 freighters. As a consequence, our reported earnings included a special charge related to the termination of the operating leases for these BCFs.  Fourth-Quarter Results  Increased revenues, higher volumes and profitability in our ACMI business during the fourth quarter were driven by our new 747-8Fs, with an average of 1.7 additional -8F aircraft in service compared with the fourth quarter of 2012; higher rates per block hour for our -8Fs; and the continued ramp up and expansion of CMI service. ACMI customers also continued to fly above minimum contract levels. These results were offset by a lower average utilization for all aircraft in the segment and an increase in maintenance expense due to the timing of required initial airframe checks on our first three -8F aircraft.  In Dry Leasing, revenue and profitability grew following the acquisition of one 777-200LRF aircraft in March 2013 and two 777-200LRF aircraft in July 2013. Each aircraft was acquired with a long-term customer lease already in place.  In AMC Charter, a reduction in cargo and passenger block hours, as well as a reduced number of one-way AMC missions and a change in the proportion of those missions from outbound U.S. to inbound U.S., led to a significant decline in segment contribution. Lower average cargo and passenger revenue per block hour during the period stemmed from a reduction in the average pegged fuel price set by the U.S. military.  Profitability in Commercial Charter primarily reflected an increase in volumes and an improvement in aircraft utilization compared with the fourth quarter of 2012. Charter operations during the quarter benefited from the redeployment of 747-400 and 747-8F aircraft during ACMI marketing periods, higher rates on 747-8F aircraft, and passenger charters for sporting events, concert tours, VIP and other private charters. Market airfreight yields improved on a seasonal basis during the period, but remained under pressure overall.  Reported fourth-quarter results included a special charge of $18.6 million, primarily related to a lease termination charge for the two 747-400BCFs parked in December.  Reported earnings for the fourth quarter of 2013 also included an effective income tax rate of 30.7%, reflecting the ongoing beneficial impact of lower taxes for certain foreign subsidiaries in our Dry Leasing business.  Full-Year Results  For the twelve months ended December 31, 2013, adjusted net income attributable to common stockholders totaled $96.8 million, or $3.78 per diluted share, compared with $127.0 million, or $4.78 per diluted share, for the twelve months ended December 31, 2012.  On a reported basis, full-year 2013 net income attributable to common stockholders totaled $93.8 million, or $3.66 per diluted share, compared with $129.9 million, or $4.89 per diluted share, in 2012.  Reported earnings in 2013 included an effective income tax rate of 20.2%, mostly due to the tax treatment of extraterritorial income from the offshore leasing of certain of our aircraft. In addition, the effective rate reflected the net impact of the resolution of certain income tax liabilities.  Free cash flow in 2013 increased to $273.1 million from $208.5 million in 2012.  Cash and Short-Term Investments  At December 31, 2013, our cash, cash equivalents, short-term investments and restricted cash totaled $339.2 million, compared with $419.9 million at December 31, 2012.  The change in position reflected cash provided by operating and financing activities offset by cash used for investing activities.  Net cash used for investing activities during 2013 primarily related to the purchase of two 747-8F aircraft as well as three 777-200LRF aircraft for our Dry Leasing business.  Net cash provided by financing activities primarily reflected proceeds from the issuance of debt in connection with the acquisitions of these aircraft. Those proceeds were partially offset by payments on debt obligations and debt issuance costs.  Share Repurchases  During the year ended December 31, 2013, we repurchased a total of 1,723,577 shares, or 6.5%, of our outstanding common stock at December 31, 2012.  Future repurchases under our remaining $60 million authority may be made at our discretion, with the actual timing, form and amount dependent on company and market conditions.  Outlook  We enter 2014 confident about the resilience of our business model and our ability to leverage the scale and efficiencies in our operations. Reflecting the business initiatives we have undertaken and the investments we have made, we have transformed the company to deliver meaningful earnings in any environment.  Our current outlook reflects two primary considerations.  One, as U.S. military activities overseas are scaled down, the military’s demand for outsourced airlift, particularly cargo airfreight, also declines. Our most recent indication is that the decline will be steeper and faster than previously forecasted by the military. For 2014, we estimate that this decline will reduce earnings by approximately $0.70 per share from 2013 levels.  Two, global airfreight volumes have been essentially flat for the last three years. Atlas has remained healthy and profitable throughout this period by capitalizing on strategic initiatives to strengthen and diversify our business mix; generate operating efficiencies and continuous improvement gains; and enhance our portfolio of assets and services.  Should 2014 be the inflection point when growth returns to commercial airfreight, our business initiatives and the investments we have made have positioned Atlas to be one of the prime beneficiaries. If 2014 remains flat, we expect results to approximate 2013, excluding the $0.70 per share decline in AMC Charter.  At this point of the year, there is limited visibility into second-half airfreight market demand. We expect to be profitable in the first quarter, which is usually the lowest volume-generating and highest maintenance expense quarter of the year. Typically, the majority of our earnings are generated in the second half, and we will update our expectations as the year progresses.  For the full year, we expect total block hours to be several percentage points lower than 2013 block hours, with more than 70% in ACMI, less than 10% in AMC Charter, and the balance in Commercial Charter. Our Dry Leasing segment should show dramatic growth. Depreciation and heavy maintenance expense should each increase by about $10 million over 2013. As always, line maintenance will depend on block hours operated. In addition, we anticipate an effective book income tax rate of approximately 30%.  Mr. Flynn added: “As we have noted previously, airfreight remains a long-term growth industry despite current market challenges. We have transformed our business and expect to be profitable in any environment. We are well-positioned to capitalize on market improvements and to continue to focus on the long-term growth of our business. With a resilient business model, substantial operating leverage, strong customer relationships and a superior fleet, we continue to strengthen our competitive position and generate substantial free cash flow, which will enhance stockholder value.”  Conference Call  Management will host a conference call to discuss Atlas Air Worldwide’s fourth-quarter and full-year 2013 financial and operating results at 11:00 a.m. Eastern Time on Wednesday, February 12, 2014.  Interested parties are invited to listen to the call live over the Internet at www.atlasair.com (click on “Investor Information”, click on “Presentations” and on the link to the fourth-quarter call) or at the following Web address: http://www.media-server.com/m/p/kkdeegog  For those unable to listen to the live call, a replay will be available on the above Web sites following the call. A replay will also be available through February 19 by dialing (855) 859-2056 (domestic) and (404) 537-3406 (international) and using Access Code 50793956#.  About Non-GAAP Financial Measures  To supplement our financial statements presented in accordance with U.S. GAAP, we present certain non-GAAP financial measures to assist in the evaluation of our business performance. These non-GAAP measures include EBITDAR, as adjusted; EBITDA, as adjusted; Direct Contribution; Adjusted Net Income  Attributable to Common Stockholders; Adjusted Diluted EPS; and Free Cash Flow, which exclude certain items. These non-GAAP measures may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.  Our management uses these non-GAAP financial measures in assessing the performance of the Company’s ongoing operations and in planning and forecasting future periods. We believe that these adjusted measures provide meaningful information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance.  About Atlas Air Worldwide:  Atlas Air Worldwide is the parent company of Atlas Air, Inc. (Atlas) and Titan Aviation Leasing (Titan), and is the majority shareholder of Polar Air Cargo Worldwide, Inc. (Polar). Through Atlas and Polar, Atlas Air Worldwide operates the world’s largest fleet of Boeing 747 freighter aircraft.  Atlas, Titan and Polar offer a range of outsourced aircraft and aviation operating solutions that include ACMI service – in which customers receive an aircraft, crew, maintenance and insurance on a long-term basis; CMI service, for customers that provide their own aircraft; express network and scheduled air cargo service; military cargo and passenger charters; commercial cargo and passenger charters; and dry leasing of aircraft and engines.  Atlas Air Worldwide’s press releases, SEC filings and other information can be accessed through the Company’s home page, www.atlasair.com.  This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect Atlas Air Worldwide’s current views with respect to certain current and future events and financial performance. Such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of Atlas Air Worldwide and its subsidiaries (collectively, the “companies”) that may cause the actual results of the companies to be materially different from any future results, express or implied, in such forward-looking statements.  Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of the companies to operate pursuant to the terms of their financing facilities; the ability of the companies to obtain and maintain normal terms with vendors and service providers; the companies’ ability to maintain contracts that are critical to their operations; the ability of the companies to fund and execute their business plan; the ability of the companies to attract, motivate and/or retain key executives and associates; the ability of the companies to attract and retain customers; the continued availability of our wide-body aircraft; demand for cargo services in the markets in which the companies operate; economic conditions; the effects of any hostilities or act of war (in the Middle East or elsewhere) or any terrorist attack; labor costs and relations; financing costs; the cost and availability of war risk insurance; our ability to maintain adequate internal controls over financial reporting; aviation fuel costs; security-related costs; competitive pressures on pricing (especially from lower-cost competitors); volatility in the international currency markets; weather conditions; government legislation and regulation; consumer perceptions of the companies’ products and services; anticipated and future litigation; and other risks and uncertainties set forth from time to time in Atlas Air Worldwide’s reports to the United States Securities and Exchange Commission.  For additional information, we refer you to the risk factors set forth under the heading “Risk Factors” in the most recent Annual Report on Form 10-K and subsequent reports on Form 10-Q filed by Atlas Air Worldwide with the Securities and Exchange Commission. Other factors and assumptions not identified above may also affect the forward-looking statements, and these other factors and assumptions may also cause actual results to differ materially from those discussed.  Except as stated in this release, Atlas Air Worldwide is not providing guidance or estimates regarding its anticipated business and financial performance for 2014 or thereafter.  Atlas Air Worldwide assumes no obligation to update such statements contained in this release to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law.                                               Atlas Air Worldwide Holdings, Inc.  Consolidated Statements of Operations  (in thousands, except per share data)  (Unaudited)                                                                      For the Three Months          For the Twelve Months Ended                    Ended                    December     December        December 31,   December 31,                    31, 2013      31, 2012        2013            2012                                                                     Operating Revenue ACMI               $ 202,297     $ 189,343       $ 755,008       $ 682,189 AMC Charter          68,501        111,378         356,340         488,063 Commercial           182,624       144,425         496,112         450,277 Charter Dry Leasing          13,324        2,979           35,168          11,843 Other               3,855       4,647         14,272        13,660     Total Operating          $ 470,601    $ 452,772      $ 1,656,900    $ 1,646,032  Revenue Operating Expenses Aircraft fuel        120,818       125,204         410,353         436,618 Salaries, wages and            79,920        78,241          299,136         293,881 benefits Maintenance, materials and        29,820        28,194          162,972         165,069 repairs Aircraft rent        41,662        38,452          160,415         154,968 Navigation fees, landing        31,882        17,815          90,733          71,698 fees, and other rent Depreciation and                  24,549        17,683          86,389          62,475 amortization Passenger and ground               20,394        19,786          72,503          69,886 handling services Travel               17,935        14,272          61,420          56,461 Loss (gain) on disposal of          272           -               351             (2,417    ) aircraft Special charge       18,642        -               18,642          - Other               26,680      25,596        107,196       110,902    Total Operating           412,574     365,243       1,470,110     1,419,541  Expenses Operating           58,027      87,529        186,790       226,491    Income Non-operating Expenses (Income) Interest             (4,810  )     (5,007  )       (19,813   )     (19,636   ) income Interest             21,948        17,934          83,659          64,532 expense Capitalized          (365    )     (2,371  )       (2,350    )     (18,727   ) interest Loss on early extinguishment       -             291             5,518           576 of debt Other expense       539         (5,983  )      1,954         (5,529    ) (income), net Total Non-operating        17,312        4,864           68,968          21,216 Expenses Income before        40,715        82,665          117,822         205,275 income taxes Income tax          12,513      29,662        23,833        75,561     expense Net Income           28,202        53,003          93,989          129,714 Less: Net income (loss) attributable        (1,756  )    621           152           (213      ) to noncontrolling interests Net Income Attributable       $ 29,958     $ 52,382       $ 93,837       $ 129,927    to Common Stockholders Earnings per share: Basic              $ 1.20       $ 1.98         $ 3.67         $ 4.92       Diluted            $ 1.19       $ 1.97         $ 3.66         $ 4.89       Weighted average shares: Basic               25,039      26,444        25,541        26,419     Diluted             25,159      26,615        25,627        26,549                                                                                                                                             Atlas Air Worldwide Holdings, Inc.  Consolidated Balance Sheets  (in thousands, except share data)  (Unaudited)                                                                                                                     December 31, 2013     December 31, 2012 Assets Current Assets Cash and cash equivalents              $   321,816           $   409,763 Short-term investments                     10,904                10,119 Restricted cash                            6,491                 ― Accounts receivable, net of allowance of $1,402 and $3,172,            132,159               127,704 respectively Prepaid maintenance                        31,620                22,293 Deferred taxes                             54,001                26,390 Prepaid expenses and other current        36,962              36,726      assets Total current assets                       593,953               632,995 Property and Equipment Flight equipment                           2,969,379             2,209,782 Ground equipment                           46,951                39,230 Less: accumulated depreciation             (256,685   )          (185,419   ) Purchase deposits for flight              69,320              147,946     equipment Property and equipment, net                2,828,965             2,211,539 Other Assets Long-term investments and accrued          130,267               140,498 interest Deposits and other assets                  131,216               132,120 Intangible assets, net                    33,858              35,533      Total Assets                           $   3,718,259        $   3,152,685   Liabilities and Equity Current Liabilities Accounts payable                       $   65,367            $   20,789 Accrued liabilities                        194,292               152,467 Current portion of long-term              157,486             154,760     debt^1,2 Total current liabilities                  417,145               328,016 Other Liabilities Long-term debt^1,2                         1,539,139             1,149,282 Deferred taxes                             373,735               315,949 Other liabilities                         66,115              71,334      Total other liabilities                    1,978,989             1,536,565 Commitments and contingencies Equity Stockholders’ Equity Preferred stock, $1 par value; 10,000,000 shares authorized; no           ―                     ― shares issued Common stock, $0.01 par value; 50,000,000 shares authorized; 28,200,213 and 27,672,924 shares issued, 25,038,629 and 26,443,441,         282                   277 shares outstanding (net of treasury stock), as of December 31, 2013 and December 31, 2012, respectively Additional paid-in-capital                 561,481               544,421 Treasury stock, at cost; 3,161,584         (125,826   )          (44,850    ) and 1,229,483 shares, respectively Accumulated other comprehensive            (10,677    )          (14,263    ) loss Retained earnings                         892,513             798,676     Total stockholders’ equity                 1,317,773             1,284,261 Noncontrolling interest                   4,352               3,843       Total equity                              1,322,125           1,288,104   Total Liabilities and Equity           $   3,718,259        $   3,152,685                                                                                   ^1  Balance sheet debt at December 31, 2013 totaled $1,696.6 million,          including the impact of $41.4 million of unamortized discount.               ^2   The face value of our debt at December 31, 2013 totaled $1,738.0          million, compared with $1,350.8 million on December 31, 2012.                                       Atlas Air Worldwide Holdings, Inc.  Consolidated Statements of Cash Flows  (in thousands)  (Unaudited)                                                                                For the Twelve Months Ended                                        December 31, 2013   December 31, 2012                                                                   Operating Activities: Net Income Attributable to Common      $   93,837            $   129,927 Stockholders Net income (loss) attributable to         152                 (213       ) noncontrolling interests Net Income                                 93,989                129,714 Adjustments to reconcile Net Income to net cash provided by operating activities: Depreciation and amortization              101,671               72,194 Accretion of debt securities               (8,889     )          (8,560     ) discount Provision for allowance for                178                   837 doubtful accounts Special charge                             18,642                - Loss on early extinguishment of            5,518                 576 debt Loss (gain) on disposal of                 351                   (2,417     ) aircraft Deferred taxes                             22,856                75,365 Stock-based compensation expense           16,690                18,202 Changes in: Accounts receivable                        (6,029     )          (25,217    ) Prepaid expenses and other current         (4,298     )          48,213 assets Deposits and other assets                  4,106                 (26,027    ) Accounts payable and accrued              60,215              (24,383    ) liabilities Net cash provided by operating             305,000               258,497 activities Investing Activities: Capital expenditures                       (29,531    )          (31,266    ) Purchase deposits and delivery             (573,416   )          (520,770   ) payments for flight equipment Changes in restricted cash                 (6,491     )          - Investment in debt securities              -                     (6,658     ) Proceeds from short-term                   5,569                 4,342 investments Proceeds from insurance                    9,109                 3,300 Proceeds from disposal of aircraft        4,780               3,215       Net cash used for investing                (589,980   )          (547,837   ) activities Financing Activities: Proceeds from debt issuance                709,484               1,211,560 Refund of accelerated share                21,886                - repurchase Prepayment of accelerated share            (21,886    )          - repurchase Purchase of treasury stock                 (80,976    )          (3,351     ) Excess tax benefit from                    465                   551 stock-based compensation expense Payment of debt issuance costs             (19,769    )          (34,141    ) Payments of debt                          (412,171   )         (662,627   ) Net cash provided by financing             197,033               511,992 activities Net (decrease) increase in cash            (87,947    )          222,652 and cash equivalents Cash and cash equivalents at the          409,763             187,111     beginning of period Cash and cash equivalents at the       $   321,816          $   409,763     end of period Non-cash Investing and Financing Activities: Acquisition of flight equipment        $   90,498           $   -           and assumed debt Acquisition of flight equipment included in Accounts payable and       $   21,823           $   -           accrued liabilities                                                                                                                              Atlas Air Worldwide Holdings, Inc.  Direct Contribution  (in thousands)  (Unaudited)                                                                            For the Three Months            For the Twelve Months Ended                      Ended                    December 31,  December 31,     December 31,     December 31,                    2013           2012             2013               2012 Operating Revenue: ACMI               $ 202,297      $ 189,343        $ 755,008          $ 682,189 AMC Charter          68,501         111,378          356,340            488,063 Commercial           182,624        144,425          496,112            450,277 Charter Dry Leasing          13,324         2,979            35,168             11,843 Other               3,855        4,647          14,272           13,660     Total Operating          $ 470,601     $ 452,772       $ 1,656,900       $ 1,646,032  Revenue Direct Contribution: ACMI               $ 70,235       $ 74,924         $ 227,829          $ 191,497 AMC Charter          12,346         23,589           52,489             99,591 Commercial           15,080         16,520           57                 32,079 Charter Dry Leasing         5,723        631            14,017           4,598      Total Direct Contribution       $ 103,384     $ 115,664       $ 294,392         $ 327,765    for Reportable Segments                                                                          Unallocated income and           (43,755 )      (32,708 )        (152,059  )        (124,331  ) expenses, net Special charge       (18,642 )      -                (18,642   )        - Loss on early extinguishment       -              (291    )        (5,518    )        (576      ) of debt Loss (gain) on disposal of         (272    )     -              (351      )       2,417      aircraft Income before       40,715       82,665         117,822          205,275    Income Taxes                                                                          Interest             (4,810  )      (5,007  )        (19,813   )        (19,636   ) income Interest             21,948         17,934           83,659             64,532 expense Capitalized          (365    )      (2,371  )        (2,350    )        (18,727   ) interest Loss on early extinguishment       -              291              5,518              576 of debt Other expense       539          (5,983  )       1,954            (5,529    ) (income), net Operating          $ 58,027      $ 87,529        $ 186,790         $ 226,491    Income                                                                                     Atlas Air Worldwide uses an economic performance metric, Direct Contribution, to show the profitability of each of its segments after allocation of direct ownership costs. Atlas Air Worldwide currently has the following reportable segments: ACMI, AMC Charter, Commercial Charter, and Dry Leasing. Each segment has different operating and economic characteristics, which are separately reviewed by senior management.  Direct Contribution consists of income (loss) before taxes, excluding special charges, nonrecurring items, losses (gains) on the sale of aircraft, and unallocated fixed costs.  Direct costs include crew costs, maintenance costs, fuel, ground operations, sales costs, aircraft rent, interest expense related to aircraft debt and aircraft depreciation.  Unallocated income and expenses include corporate overhead, non-aircraft depreciation, interest income, foreign exchange gains and losses, other revenue and other non-operating costs, including one-time items.                              Atlas Air Worldwide Holdings, Inc.  Reconciliation to Non-GAAP Measures  (in thousands, except per share data)  (Unaudited)                                                              For the Three Months Ended                                December 31,    December 31,   Percent                                 2013               2012             Change                                                                      Net Income Attributable       $ 29,958           $ 52,382           (42.8  %) to Common Stockholders After-tax impact from: Special charge^1                11,714             - Loss on early                   -                  185 extinguishment of debt^2 Fleet retirement costs^3        -                  159 Insurance gain^4                -                  (4,032    ) Loss (gain) on disposal        174              -                of aircraft Adjusted Net Income Attributable to Common        $ 41,846          $ 48,694          (14.1  %) Stockholders                                                                      Diluted EPS                   $ 1.19             $ 1.97             (39.6  %) After-tax impact from: Special charge^1                0.47               - Loss on early                   -                  0.01 extinguishment of debt^2 Fleet retirement costs^3        -                  0.01 Insurance gain^4                -                  (0.15     ) Loss (gain) on disposal        0.01             -                of aircraft Adjusted Diluted EPS          $ 1.66      ^5     $ 1.83      ^5     (9.3   %)                                                                                                    For the Twelve Months Ended                                December 31,      December 31,     Percent                                 2013               2012             Change                                                                      Net Income Attributable       $ 93,837           $ 129,927          (27.8  %) to Common Stockholders After-tax impact from: Special charge^1                11,714 Loss on early                   5,160              367 extinguishment of debt^2 Fleet retirement costs^3        -                  2,252 ETI tax benefit                 (14,160   )        - Insurance gain^4                -                  (4,032    ) Loss (gain) on disposal        224              (1,540    )       of aircraft Adjusted Net Income Attributable to Common        $ 96,775          $ 126,974         (23.8  %) Stockholders                                                                      Diluted EPS                   $ 3.66             $ 4.89             (25.2  %) After-tax impact from: Special charge^1                0.46               - Loss on early                   0.20               0.01 extinguishment of debt^2 Fleet retirement costs^3        -                  0.08 ETI tax benefit                 (0.55     )        - Insurance gain^4                -                  (0.15     ) Loss (gain) on disposal        0.01             (0.06     )       of aircraft Adjusted Diluted EPS          $ 3.78            $ 4.78      ^5     (20.9  %)                                                                       ^1  Included in Special charge in 2013 are lease termination charges related      to two 747-400BCFs and an impairment charge for a customer intangible.       ^2   Loss on early extinguishment of debt was related to the financing of      747-8F and 777-200LRF aircraft.       ^3   Fleet retirement costs in 2012 included incremental employee costs      related to the retirement of our 747-200 fleet.       ^4   Insurance gain in 2012 related to flood damage at a warehouse.       ^5   Items may not sum due to rounding.                                             Atlas Air Worldwide Holdings, Inc.  Reconciliation to Non-GAAP Measures  (in thousands, except per share data)  (Unaudited)                                                                                For the Three Months Ended                                        December 31, 2013   December 31, 2012                                                                      Net Cash Provided by Operating         $      97,334         $      60,191 Activities Less: Capital expenditures                          4,671                 4,534 Capitalized interest                         365            2,371 Free Cash Flow^1                       $      92,298         $53,286                                                                                                                                                   For the Twelve Months Ended                                        December 31, 2013   December 31, 2012                                                                     Net Cash Provided by Operating         $     305,000         $     258,497 Activities Less: Capital expenditures                         29,531                31,266 Capitalized interest                        2,350           18,727 Free Cash Flow^1                       $     273,119         $     208,504                                                                        ^1  Free Cash Flow = Cash Flows from Operations minus Base Capital          Expenditures and Capitalized Interest.                    Base Capital Expenditures excludes purchases of aircraft.                                                            Atlas Air Worldwide Holdings, Inc.  Reconciliation to Non-GAAP Measures  (in thousands)  (Unaudited)                                                                               For the Three Months           For the Twelve Months                        Ended                          Ended                     December 31,  December 31,     December     December                     2013           2012             31, 2013       31, 2012                                                                       Income before       $  40,715      $ 82,665         $ 117,822      $ 205,275 income taxes Special                18,642        -                18,642         - Charge^1 Fleet retirement             -             249              -              3,535 costs^2 Loss on early extinguishment         -             291              5,518          576 of debt Insurance              -             (6,329  )        -              (6,329  ) gain^3 Loss (gain) on disposal of           272          -              351           (2,417  ) aircraft                                                                       Adjusted pretax        59,629        76,876           142,333        200,640 income                                                                       Interest (income)               16,773        10,556           61,496         26,169 expense, net Other non-operating         539          346            1,954         800      expenses (income)                                                                       Adjusted operating              76,941        87,778           205,783        227,609 income                                                                       Depreciation and                   24,549       17,683         86,389        62,475   amortization                                                                       EBITDA, as             101,490       105,461          292,172        290,084 adjusted^4                                                                       Aircraft rent         41,662       38,452         160,415       154,968                                                                        EBITDAR, as         $  143,152     $ 143,913       $ 452,587      $ 445,052  adjusted^5                                                                                ^1  Included in Special charge in 2013 are lease termination charges related      to two 747-400BCFs and an impairment charge for a customer intangible.       ^2   Fleet retirement costs included incremental employee costs related to the      retirement of our 747-200 fleet.       ^3   Insurance gain in 2012 related to flood damage at a warehouse.            Adjusted EBITDA: Earnings before interest, taxes, depreciation, ^4   amortization, special charge, fleet retirement costs, loss on early      extinguishment of debt, insurance gain and loss (gain) on disposal of      aircraft, as applicable.            Adjusted EBITDAR: Earnings before interest, taxes, depreciation, ^5   amortization, aircraft rent expense, special charge, fleet retirement      costs, loss on early extinguishment of debt, insurance gain and loss      (gain) on disposal of aircraft, as applicable.                                                                                 Atlas Air Worldwide Holdings, Inc.  Operating Statistics and Traffic Results  (Unaudited)                                                                                                    For the Three                       For the Twelve                    Months Ended                         Months Ended                    December 31,          Increase/      December 31,            Increase/                    2013      2012       (Decrease)     2013       2012        (Decrease)                                                                                  Block Hours ACMI               30,084     28,432     1,652          115,358     107,130     8,228 AMC Charter Cargo              1,036      2,271      (1,235   )     6,331       10,423      (4,092   ) Passenger          2,454      2,902      (448     )     10,718      12,024      (1,306   ) Commercial         9,120      7,204      1,916          25,480      21,965      3,515 Charter Nonrevenue         395        257        138           1,050       1,165       (115     ) Total Block        43,089     41,066     2,023         158,937     152,707     6,230     Hours                                                                                  Revenue Per Block Hour ACMI             $ 6,724    $ 6,660    $ 64           $ 6,545   $   6,368     $ 177 AMC Charter        19,628     21,531     (1,903   )     20,901      21,743      (842     ) Cargo              20,328     23,339     (3,011   )     22,299      23,677      (1,378   ) Passenger          19,332     20,115     (783     )     20,075      20,066      9 Commercial         20,025     20,048     (23      )     19,471      20,500      (1,029   ) Charter                                                                                  Average Utilization (block hours per day) ACMI^1             9.6        11.2       (1.6     )     10.2        12.0        (1.8     ) AMC Charter Cargo              10.2       9.9        0.3            6.9         9.2         (2.3     ) Passenger          6.8        7.5        (0.7     )     7.2         8.2         (1.0     ) Commercial         11.0       9.9        1.1           7.9         9.4         (1.5     ) Charter All Operating          9.7        10.6       (0.9     )     9.4         11.0        (1.6     ) Aircraft^1,2                                                                                  Fuel AMC Average fuel cost per         $ 3.35     $ 3.63     $ (0.28    )   $ 3.57    $   3.35      $ 0.22 gallon Fuel gallons consumed           8,317      13,270     (4,953   )     42,164      58,178      (16,014  ) (000s) Commercial Charter Average fuel cost per         $ 3.14     $ 3.27     $ (0.13    )   $ 3.14    $   3.32      $ (0.18    ) gallon Fuel gallons consumed           29,575     23,576     5,999          82,785      72,834      9,951 (000s)                                                                                            ACMI and All Operating Aircraft averages in the fourth quarter and   ^1  full-year 2013 reflect the impact of increases in the number of CMI          aircraft and amount of CMI flying compared with the same periods of          2012.               ^2   Average of All Operating Aircraft excludes Dry Leasing aircraft,          which do not contribute to block-hour volumes.                                                                    Atlas Air Worldwide Holdings, Inc.  Operating Statistics and Traffic Results  (Unaudited)                                                                                       For the Three                    For the                  Months Ended                     Twelve Months                                                   Ended                  December 31,      Increase/      December 31,      Increase/                  2013     2012     (Decrease)     2013     2012     (Decrease)                                                                                                                                           Segment Operating Fleet (average aircraft equivalents during the period) ACMI^1 747-8F Cargo     8.0      6.3      1.7            7.8      4.3      3.5 747-400          16.4     15.3     1.1            14.4     16.4     (2.0    ) Cargo^2 767-300          2.0      -        2.0            1.8      -        1.8 Cargo 767-200          5.0      4.5      0.5            5.0      2.5      2.5 Cargo 747-400          1.7      1.1      0.6            1.3      1.1      0.2 Passenger 767-300          -        0.4      (0.4    )      0.2      0.1      0.1 Passenger 767-200          1.0      -        1.0           0.5      -        0.5      Passenger Total            34.1     27.6     6.5            31.0     24.4     6.6 AMC Charter 747-400          1.1      2.5      (1.4    )      2.5      2.9      (0.4    ) Cargo 747-200          -        -        -              -        0.2      (0.2    ) Cargo 747-400          1.2      1.8      (0.6    )      1.5      1.7      (0.2    ) Passenger 767-300          2.7      2.4      0.3           2.6      2.3      0.3      Passenger Total            5.0      6.7      (1.7    )      6.6      7.1      (0.5    ) Commercial Charter 747-8F Cargo     0.9      -        0.9            0.6      -        0.6 747-400          7.7      7.6      0.1            7.8      5.8      2.0 Cargo 747-200          -        -        -              -        0.2      (0.2    ) Cargo 747-400          0.1      0.1      -              0.2      0.2      - Passenger 767-300          0.3      0.2      0.1           0.2      0.2      -        Passenger Total            9.0      7.9      1.1            8.8      6.4      2.4 Dry Leasing 777-200          3.0      -        3.0            1.7      -        1.7 Cargo 757-200          1.0      1.0      -              1.0      1.0      - Cargo 737-300          1.0      1.0      -              1.0      0.4      0.6 Cargo 737-800          2.0      2.0      -             2.0      2.0      -        Passenger Total            7.0      4.0      3.0           5.7      3.4      2.3      Total Operating        55.1     46.2     8.9           52.1     41.3     10.8     Aircraft  Out of           1.1      -        1.1            0.9      -        0.9 Service^3                                                                               ^1  ACMI average fleet excludes spare aircraft provided by CMI customers.            Includes 2.6 and 1.5 Large Cargo Freighters in the three-month periods ^2   ended December 31, 2013 and 2012, respectively. Includes 1.8 and 1.2      Large Cargo Freighters in the twelve-month periods ended December 31,      2013 and 2012, respectively.       ^3   Out-of-service aircraft were temporarily parked during the period and are      completely unencumbered.  Contact:  Atlas Air Worldwide Investors: Dan Loh, 914-701-8200 or Media: Bonnie Rodney, 914-701-8580