Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document period end date | Mar. 31, 2020 | |
Amendment flag | false | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Current fiscal year end date | --12-31 | |
Entity central index key | 0001135185 | |
Entity filer category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity registrant name | Atlas Air Worldwide Holdings, Inc. | |
Entity common stock shares outstanding | 26,126,559 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity File Number | 001-16545 | |
Entity Tax Identification Number | 13-4146982 | |
Entity Address, Address Line One | 2000 Westchester Avenue | |
Entity Address, Address Line Two | Purchase | |
Entity Address, State or Province | NY | |
Entity Address, City or Town | New York | |
Entity Address, Postal Zip Code | 10577 | |
City Area Code | 914 | |
Local Phone Number | 701-8000 | |
Entity Incorporation, State or Country Code | DE | |
Title of 12(b) Security | Common Stock, $0.01 Par Value | |
Trading Symbol | AAWW | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes | |
Document Quarterly Report | true | |
Document Transition Report | false |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 225,160 | $ 103,029 |
Short-term investments | 0 | 879 |
Restricted cash | 10,459 | 10,401 |
Accounts receivable, net of allowance of $1,182 and $1,822, respectively | 274,202 | 290,119 |
Prepaid expenses, assets held for sale and other current assets | 187,739 | 228,103 |
Total current assets | 697,560 | 632,531 |
Property and Equipment | ||
Flight equipment | 4,911,265 | 4,880,424 |
Ground equipment | 85,163 | 83,584 |
Less: accumulated depreciation | (1,026,946) | (977,883) |
Flight equipment modifications in progress | 62,953 | 67,101 |
Property and equipment, net | 4,032,435 | 4,053,226 |
Other Assets | ||
Operating lease right-of-use assets | 215,099 | 231,133 |
Deferred costs and other assets | 385,170 | 391,895 |
Intangible assets, net and goodwill | 75,348 | 76,856 |
Total Assets | 5,405,612 | 5,385,641 |
Current Liabilities | ||
Accounts payable | 91,092 | 79,683 |
Accrued liabilities | 447,379 | 481,725 |
Current portion of long-term debt and finance leases | 283,066 | 395,781 |
Current portion of long-term operating leases | 142,668 | 141,973 |
Total current liabilities | 964,205 | 1,099,162 |
Other Liabilities | ||
Long-term debt and finance leases | 2,148,200 | 1,984,902 |
Long-term operating leases | 357,533 | 392,832 |
Deferred taxes | 80,933 | 74,040 |
Financial instruments and other liabilities | 21,991 | 42,526 |
Total other liabilities | 2,608,657 | 2,494,300 |
Commitments and contingencies | 0 | 0 |
Stockholders’ Equity | ||
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued | 0 | 0 |
Common stock, $0.01 par value; 100,000,000 shares authorized; 31,483,409 and 31,048,842 shares issued, 26,126,232 and 25,870,876 shares outstanding (net of treasury stock), as of March 31, 2020 and December 31, 2019, respectively | 315 | 310 |
Additional paid-in-capital | 782,517 | 761,715 |
Treasury stock, at cost; 5,357,177 and 5,177,966 shares, respectively | (217,705) | (213,871) |
Accumulated other comprehensive loss | (2,573) | (2,818) |
Retained earnings | 1,270,196 | 1,246,843 |
Total stockholders’ equity | 1,832,750 | 1,792,179 |
Total Liabilities and Equity | $ 5,405,612 | $ 5,385,641 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 1,182 | $ 1,822 |
Preferred stock par value | $ 1 | $ 1 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Preferred stock shares issued | 0 | 0 |
Common stock par value | $ 0.01 | $ 0.01 |
Common stock shares authorized | 100,000,000 | 100,000,000 |
Common stock shares issued | 31,483,409 | 31,048,842 |
Common stock shares outstanding | 26,126,232 | 25,870,876 |
Treasury stock shares | 5,357,177 | 5,177,966 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating Revenue | $ 643,502 | $ 679,683 |
Operating Expenses | ||
Salaries, wages and benefits | 147,744 | 145,474 |
Aircraft fuel | 108,318 | 106,321 |
Travel | 42,391 | 45,029 |
Passenger and ground handling services | 31,959 | 32,160 |
Navigation fees, landing fees and other rent | 31,401 | 40,216 |
Aircraft rent | 23,967 | 41,888 |
Gain on disposal of aircraft | (6,717) | 0 |
Transaction-related expenses | 521 | 2,527 |
Other | 51,112 | 51,093 |
Total Operating Expenses | 582,432 | 632,809 |
Operating Income | 61,070 | 46,874 |
Non-operating Expenses (Income) | ||
Interest income | (480) | (2,044) |
Interest expense | 29,275 | 30,353 |
Capitalized interest | (193) | (463) |
Loss on early extinguishment of debt | 0 | 245 |
Unrealized (gain) loss on financial instruments | (924) | 46,575 |
Other (income) expense, net | 1,206 | (2,975) |
Total Non-operating Expenses (Income) | 28,884 | 71,691 |
Income (loss) before income taxes | 32,186 | (24,817) |
Income tax expense | 8,833 | 4,893 |
Net Income (Loss) | $ 23,353 | $ (29,710) |
Earnings (loss) per share: | ||
Basic | $ 0.90 | $ (1.15) |
Diluted | $ 0.90 | $ (1.15) |
Weighted average shares: | ||
Basic | 25,966 | 25,735 |
Diluted | 25,966 | 25,735 |
Service [Member] | ||
Operating Expenses | ||
Maintenance, materials and repairs | $ 94,152 | $ 103,620 |
Depreciation and amortization | $ 57,584 | $ 64,481 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net Income (Loss) | $ 23,353 | $ (29,710) |
Other comprehensive income: | ||
Reclassification to interest expense | 308 | 344 |
Income tax benefit | (63) | (81) |
Other comprehensive income | 245 | 263 |
Comprehensive Income (Loss) | $ 23,598 | $ (29,447) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating Activities: | ||
Net Income (Loss) | $ 23,353 | $ (29,710) |
Adjustments to reconcile Net Income (Loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 74,352 | 78,988 |
Accretion of debt securities discount | (2) | (127) |
Provision for expected credit losses | (73) | 34 |
Loss on early extinguishment of debt | 0 | 245 |
Unrealized (gain) loss on financial instruments | (924) | 46,575 |
Gain on disposal of aircraft | (6,717) | 0 |
Deferred taxes | 7,352 | 4,751 |
Stock-based compensation | 3,860 | 5,621 |
Changes in: | ||
Accounts receivable | 16,515 | 9,686 |
Prepaid expenses, current assets and other assets | (5,476) | (42,309) |
Accounts payable and accrued liabilities | (40,393) | (19,985) |
Net cash provided by operating activities | 71,847 | 53,769 |
Investing Activities: | ||
Capital expenditures | (8,291) | (30,584) |
Payments for flight equipment and modifications | (26,000) | (57,332) |
Proceeds from insurance | 0 | 38,133 |
Proceeds from investments | 881 | 4,961 |
Proceeds from disposal of aircraft | 44,110 | 0 |
Net cash provided by (used for) investing activities | 10,700 | (44,822) |
Financing Activities: | ||
Proceeds from debt issuance | 164,000 | 19,723 |
Payment of debt issuance costs | (2,386) | (955) |
Payments of debt and finance lease obligations | (193,644) | (90,907) |
Proceeds from revolving credit facility | 75,000 | 0 |
Customer maintenance reserves and deposits received | 2,586 | 4,144 |
Customer maintenance reserves paid | (2,080) | 0 |
Purchase of treasury stock | (3,834) | (9,189) |
Net cash provided by (used for) financing activities | 39,642 | (77,184) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 122,189 | (68,237) |
Cash, cash equivalents and restricted cash at the beginning of period | 113,430 | 232,741 |
Cash, cash equivalents and restricted cash at the end of period | 235,619 | 164,504 |
Noncash Investing and Financing Activities: | ||
Acquisition of flight equipment included in Accounts payable and accrued liabilities | 16,368 | 7,752 |
Acquisition of property and equipment acquired under operating leases | 670 | 0 |
Customer maintenance reserves settled with sale of aircraft | $ 6,497 | $ 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Retained Earnings [Member] |
Beginning Balance at Dec. 31, 2018 | $ 2,067,964 | $ 306 | $ (204,501) | $ 736,035 | $ (3,832) | $ 1,539,956 |
Net Income (Loss) | (29,710) | 0 | 0 | 0 | 0 | (29,710) |
Other comprehensive income | 263 | 0 | 0 | 0 | 263 | 0 |
Stock-based compensation | 5,621 | 0 | 0 | 5,621 | 0 | 0 |
Purchase of shares of treasury stock | (9,189) | 0 | (9,189) | 0 | 0 | 0 |
Issuance of shares of restricted stock | 0 | 4 | 0 | (4) | 0 | 0 |
Ending Balance at Mar. 31, 2019 | 2,034,949 | 310 | (213,690) | 741,652 | (3,569) | 1,510,246 |
Beginning Balance at Dec. 31, 2019 | 1,792,179 | 310 | (213,871) | 761,715 | (2,818) | 1,246,843 |
Net Income (Loss) | 23,353 | 0 | 0 | 0 | 0 | 23,353 |
Other comprehensive income | 245 | 0 | 0 | 0 | 245 | 0 |
Stock-based compensation | 3,860 | 0 | 0 | 3,860 | 0 | 0 |
Customer warrant | 2,394 | 0 | 0 | 2,394 | 0 | 0 |
Cumulative effect of change in accounting principle | 14,553 | 0 | 0 | 14,553 | 0 | 0 |
Purchase of shares of treasury stock | (3,834) | 0 | (3,834) | 0 | 0 | 0 |
Issuance of shares of restricted stock | 0 | 5 | 0 | (5) | 0 | 0 |
Ending Balance at Mar. 31, 2020 | $ 1,832,750 | $ 315 | $ (217,705) | $ 782,517 | $ (2,573) | $ 1,270,196 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity (Parentheticals) (Unaudited) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement Of Stockholders Equity [Abstract] | ||
Purchase of shares of treasury stock | 179,211 | 179,339 |
Issuance of shares of restricted stock | 434,567 | 439,544 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Basis Of Presentation [Abstract] | |
Basis of Presentation | 1. Basis of Presentation Our consolidated financial statements include the accounts of the holding company, Atlas Air Worldwide Holdings, Inc. (“AAWW”), and its consolidated subsidiaries. AAWW is the parent company of Atlas Air, Inc. (“Atlas”) and Southern Air Holdings, Inc. (“Southern Air”). AAWW is also the parent company of several subsidiaries related to our dry leasing services (collectively referred to as “Titan”). AAWW has a 51% equity interest and 75% voting interest in Polar Air Cargo Worldwide, Inc. (“Polar”). We record our share of Polar’s results under the equity method of accounting. The terms “we,” “us,” “our,” and the “Company” mean AAWW and all entities included in its consolidated financial statements. We provide outsourced aircraft and aviation operating services throughout the world, serving Africa, Asia, Australia, Europe, the Middle East, North America and South America through: (i) contractual service arrangements, including those through which we provide aircraft to customers and value-added services, including crew, maintenance and insurance (“ACMI”), as well as those through which we provide crew, maintenance and insurance, but not the aircraft (“CMI”); (ii) cargo and passenger charter services (“Charter”); and (iii) dry leasing aircraft and engines (“Dry Leasing” or “Dry Lease”). The accompanying unaudited consolidated financial statements and related notes (the “Financial Statements”) have been prepared in accordance with the U.S. Securities and Exchange Commission (the “SEC”) requirements for quarterly reports on Form 10-Q, and consequently exclude certain disclosures normally included in audited consolidated financial statements prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Intercompany accounts and transactions have been eliminated. The Financial Statements should be read in conjunction with the audited consolidated financial statements and the notes included in the AAWW Annual Report on Form 10-K for the year ended December 31, 2019, which includes additional disclosures and a summary of our significant accounting policies. The December 31, 2019 balance sheet data was derived from that Annual Report. In our opinion, the Financial Statements contain all adjustments, consisting of normal recurring items, necessary to fairly state the financial position of AAWW and its consolidated subsidiaries as of March 31, 2020, the results of operations for the three months ended March 31, 2020 and 2019, comprehensive income (loss) for the three months ended March 31, 2020 and 2019, cash flows for the three months ended March 31, 2020 and 2019, and stockholders’ equity as of and for the three months ended March 31, 2020 and 2019. Our quarterly results are subject to seasonal and other fluctuations, including fluctuations resulting from the global COVID-19 pandemic (see Note 2 for further discussion), and the operating results for any quarter are therefore not necessarily indicative of results that may be otherwise expected for the entire year. Except for per share data, all dollar amounts are in thousands unless otherwise noted. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Warrant Liability Common stock warrants that are classified as a liability are marked-to-market at the end of each reporting period with changes in fair value recorded in Unrealized (gain) loss on financial instruments. We utilize a Monte Carlo simulation approach to estimate the fair value of the warrant liability, which requires inputs such as our common stock price, the warrant strike price, estimated common stock price volatility and risk-free interest rate, among others. Our earnings are affected by changes in our common stock price due to the impact those changes have on the fair value of our warrant liability (see Note 4 for further discussion). Heavy Maintenance Except for engines used on our 747-8F aircraft, we account for heavy maintenance costs for airframes and engines used in our ACMI and Charter segments using the direct expense method. Under this method, heavy maintenance costs are charged to expense upon induction, based on our best estimate of the costs. We account for heavy maintenance costs for airframes and engines used in our Dry Leasing segment and engines used on our 747-8F aircraft using the deferral method. Under this method, we defer the expense recognition of scheduled heavy maintenance events, which are amortized over the estimated period until the next scheduled heavy maintenance event is required. Amortization of deferred maintenance expense included in Depreciation and amortization was $7.9 million and $4.4 million for the three months ended March 31, 2020 and 2019, respectively. Deferred maintenance included within Deferred costs and other assets is as follows: Balance as of December 31, 2019 $ 184,279 Deferred maintenance costs 13,710 Amortization of deferred maintenance (7,939 ) Balance as of March 31, 2020 $ 190,050 COVID-19 In December 2019, COVID-19 was first reported in China and has since spread to most other regions of the world. In March 2020, COVID-19 was determined to be a global pandemic by the World Health Organization. During the first quarter of 2020, this public health crisis disrupted global manufacturing, supply chains, passenger travel and consumer spending, resulting in flight cancellations by our ACMI customers and lower U.S. Military Air Mobility Command (“AMC”) passenger flying as the military took precautionary measures to limit the movement of personnel. A reduction of available cargo capacity in the market and increased demand for transporting goods due to the COVID-19 pandemic also resulted in increased commercial cargo charter yields, net of fuel, during the quarter. We have incurred and expect to incur significant additional costs, including premium pay; other operational costs, including costs for continuing to provide a safe working environment for our employees; and higher crew costs related to increased pay rates resulting from our recent interim agreement with the pilots. In addition, the availability of hotels and restaurants; evolving COVID-19-related travel restrictions and health screenings; and cancellations of passenger flights by other airlines globally or airport closures have impacted and could further impact our ability to position crewmembers for operating our aircraft. In March 2020, as a precautionary measure due to uncertainty arising from the COVID-19 pandemic, we drew $75.0 million under our revolving credit facility and had $19.8 million of unused availability as of March 31, 2020. Our ability to continue to service our debt and meet our lease and other obligations as they come due is dependent on our continued ability to generate earnings and cash flows. To mitigate the impact of any continuation or worsening of the COVID-19 pandemic disruptions, we have significantly reduced nonessential employee travel, reduced the use of contractors, limited ground staff hiring, implemented a number of other cost reduction initiatives and taken other actions, such as the sale of certain nonessential assets. If we are unable to implement these or additional initiatives, it could have a material adverse effect on our financial position, results of operations, and cash flows. We believe the Company will generate sufficient liquidity to satisfy its obligations over the next twelve months. Recent Accounting Pronouncements Adopted in 2020 In November 2019, the Financial Accounting Standards Board (“FASB”) amended its accounting guidance for share-based payment awards issued to a customer. The amended guidance requires share-based payment awards issued to a customer to be recorded as a reduction of the transaction price in revenue based on the fair value at grant date and to be classified on the balance sheet using accounting guidance for stock-based compensation. The amended guidance was effective for fiscal years beginning after December 15, 2019. Effective January 1, 2020, we adopted the amended guidance and applied the modified retrospective approach to the most current period presented. As a result, $14.6 million, or approximately 60% of our customer warrant liability of $24.3 million related to revenue contracts, which was included in Financial instruments and other liabilities as of December 31, 2019, was reclassified as Additional paid-in-capital within Total stockholders’ equity on January 1, 2020. As a result, these customer warrants are no longer marked-to-market at the end of each reporting period with changes in fair value recorded as an unrealized (gain) loss on financial instruments. The amended guidance did not impact the accounting for the remaining portion of our customer warrant liability related to Dry Lease contracts, which was approximately $9.7 million or approximately 40% of the total customer warrant liability as of December 31, 2019. The new guidance did not impact how we account for the amortization of the customer incentive asset (see Note 4 for further discussion). In June 2016, the FASB amended its accounting guidance for the measurement of credit losses on financial instruments. The guidance requires entities to utilize an expected credit loss model for certain financial instruments, including most trade receivables, which replaces the incurred credit loss model previously used. Under this new model, we are required to recognize estimated credit losses expected to occur over time using a broad range of information including historical information, current conditions and reasonable and supportable forecasts. Receivables related to lease contracts are not within the scope of this amended guidance. Effective January 1, 2020, we adopted the amended guidance under the modified retrospective approach and it did not have a material impact on our consolidated financial statements and related disclosures (see Note 5). |
Related Parties
Related Parties | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Parties | 3. Related Parties Polar AAWW has a 51% equity interest and 75% voting interest in Polar. DHL Network Operations (USA), Inc. (“DHL”), a subsidiary of Deutsche Post AG, holds a 49% equity interest and a 25% voting interest in Polar. Polar is a variable interest entity that we do not consolidate because we are not the primary beneficiary as the risks associated with the direct costs of operation are with DHL. Under a 20-year blocked space agreement, which began in 2008, Polar provides air cargo capacity to DHL. Atlas has several agreements with Polar to provide ACMI, CMI, Dry Leasing, administrative, sales and ground support services to one another. We do not have any financial exposure to fund debt obligations or operating losses of Polar, except for any liquidated damages that we could incur under these agreements. The following table summarizes our transactions with Polar: For the Three Months Ended Revenue and Expenses: March 31, 2020 March 31, 2019 Revenue from Polar $ 76,234 $ 98,467 Ground handling and airport fees to Polar 526 518 Accounts receivable/payable as of: March 31, 2020 December 31, 2019 Receivables from Polar $ 21,416 $ 10,855 Payables to Polar 3,233 2,161 Aggregate Carrying Value of Polar Investment as of: March 31, 2020 December 31, 2019 Aggregate Carrying Value of Polar Investment $ 4,870 $ 4,870 In addition to the amounts in the table above, Atlas recognized revenue of $27.5 million and $23.0 million for the three months ended March 31, 2020 and 2019, respectively, from flying on behalf of Polar. Dry Leasing Joint Venture We hold a 10% interest in a joint venture with an unrelated third party, which we entered into in December 2019, to develop a diversified freighter aircraft dry leasing portfolio. Through Titan, we provide aircraft and lease management services to the joint venture for fees based upon aircraft assets under management, among other things. Our investment in the joint venture is accounted for under the equity method of accounting. Under the joint venture, we have a commitment to provide up to $40.0 million of capital contributions before December 2022. Our investment in the joint venture was $0.5 million and $1.5 million as of March 31, 2020 and December 31, 2019, respectively, and our maximum exposure to losses from the entity is limited to our investment. The joint venture does not currently have any third-party debt obligations and no capital contributions have been made as of March 31, 2020. We had Accounts receivable from the joint venture of $1.3 million as of March 31, 2020 related to the reimbursement of certain expenses by the joint venture. We have recognized no service fee income for the three months ended March 31, 2020. Parts Joint Venture We hold a 50% interest in a joint venture with an unrelated third party to purchase rotable parts and provide repair services for those parts, primarily for 747-8F aircraft. Our investment in the joint venture is accounted for under the equity method of accounting. As of March 31, 2020 and December 31, 2019, our investment in the joint venture was $19.3 million and $20.0 million, respectively. We had Accounts payable to the joint venture of $1.0 million as of March 31, 2020 and $0.5 million as of December 31, 2019. |
Amazon
Amazon | 3 Months Ended |
Mar. 31, 2020 | |
Warrants And Rights Note Disclosure [Abstract] | |
Amazon | 4. Amazon In May 2016, we entered into certain agreements with Amazon.com, Inc. and its subsidiary, Amazon Fulfillment Services, Inc., (collectively “Amazon”), which involves, among other things, CMI operation of up to 20 Boeing 767-300 freighter aircraft for Amazon by Atlas, as well as Dry Leasing by Titan. The Dry Leases have a term of ten years from the commencement of each agreement, while the CMI operations are for seven years from the commencement of each agreement (with an option for Amazon to extend the term to ten years). Between August 2016 and November 2018, we placed all 20 767-300 freighter aircraft into service for Amazon. In February 2019, the number of 767-300 freighters in CMI and Dry Lease service for Amazon was reduced to 19 with the loss of an aircraft. In September 2019, the number of 767-300 freighters in CMI service for Amazon was reduced to 17 with the early termination of CMI services for two aircraft, which remain under dry lease. In conjunction with the agreements entered into in May 2016, we granted Amazon a warrant providing the right to acquire up to 20% of our outstanding common shares, after giving effect to the issuance of shares pursuant to the warrants, at an exercise price of $37.50 per share (“Warrant A”). As of December 31, 2018, this warrant to purchase 7.5 million shares had vested in full. Warrant A is exercisable in accordance with its terms through May 2021. As of March 31, 2020, no portion of Warrant A has been exercised. The agreements entered into in May 2016 also provided incentives for future growth of the relationship as Amazon may increase its business with us. In that regard, we granted Amazon a warrant to acquire up to an additional 10% of our outstanding common shares, after giving effect to the issuance of shares pursuant to the warrants, for an exercise price of $37.50 per share (“Warrant B”). This warrant to purchase 3.75 million shares will vest in increments of 37,500 shares each time Amazon has paid $ 4.2 million of revenue to us, up to a total of $ 420.0 million, for incremental business beyond the original 20 767-300 freighters. As of March 31, 2020 , 187,500 shares of Warrant B ha ve vested. U pon vesting, Warrant B become s exercisable in accordance with its terms through May 2023 . As of March 31, 2020 , no portion of Warrant B has been exercised. In March 2019, we amended the agreements entered into in 2016 with Amazon, pursuant to which we began providing CMI services using Boeing 737-800 freighter aircraft provided by Amazon. The 737-800 CMI operations are for a term of seven years from the commencement of each agreement (with an option for Amazon to extend the term to ten years). As of March 31, 2020, five 737-800 freighter aircraft entered CMI service. Amazon may, in its sole discretion, place up to 15 additional 737-800 freighter aircraft into service with us by May 31, 2021. In connection with the amended agreements, we granted Amazon a warrant to acquire up to an additional 9.9% of our outstanding common shares, after giving effect to the issuance of shares pursuant to the warrants, for an exercise price of $52.90 per share (“Warrant C”). When combined with Warrant A and Warrant B, this would allow Amazon to acquire up to a total of 39.9% (after the issuance) of our outstanding common shares and Amazon would be entitled to vote the shares it owns up to 14.9% of our outstanding common shares, in its discretion. Amazon would be required to vote any shares it owns in excess of 14.9% of our outstanding common shares in accordance with the recommendation of our board of directors. After Warrant B has vested in full, this warrant to purchase 6.6 million shares would vest in increments of 45,428 shares each time Amazon has paid $6.9 million of revenue to us, up to a total of $1.0 billion, for incremental business beyond Warrant A and Warrant B. As of March 31, 2020, no portion of Warrant C has vested. Upon vesting, Warrant C would become exercisable in accordance with its terms through March 2026. Upon the vesting of Warrant A in previous years, the fair value of the warrant was recognized as a customer incentive asset within Deferred costs and other assets, net and is amortized as a reduction of Operating Revenue in proportion to the amount of revenue recognized over the terms of the Dry Leases and CMI agreements. Determining the amount of amortization related to the CMI agreements requires significant judgment to estimate the total number of Block Hours expected over the terms of those agreements. The fair value of Warrant A was also initially recorded as a warrant liability within Financial instruments and other liabilities (the “Amazon Warrant”). The Amazon Warrant liability is marked-to-market at the end of each reporting period with changes in fair value recorded in Unrealized (gain) loss on financial instruments. As described in Note 2, we adopted the new accounting guidance for share-based payment awards issued to a customer as of January 1, 2020. Under the amended guidance, approximately 60% of the Amazon Warrant liability related to the CMI agreements as of January 1, 2020 was reclassified to Additional paid-in-capital and will no longer be marked-to-market at the end of each reporting period. The amended guidance does not impact the accounting for the remaining portion of the Amazon Warrant liability related to Dry Lease contracts. We recognized a net unrealized gain of $0.9 million and an unrealized loss of $46.6 million on the Amazon Warrant liability during the three months ended March 31, 2020 and 2019, respectively. The fair value of the Amazon Warrant liability was $8.9 million as of March 31, 2020 and $24.3 million as of December 31, 2019. When it becomes probable that an increment of either Warrant B or C will vest and the related revenue begins to be recognized, the grant date fair value of such portion is recognized as a customer incentive asset within Deferred costs and other assets, net and is amortized as a reduction of Operating Revenue in proportion to the amount of related revenue recognized. The grant date fair value of such increment is also recorded as Additional paid-in-capital. At the time of vesting, any amounts recorded in Additional paid-in-capital related to Dry Lease contracts would be reclassified to the Amazon Warrant liability. We amortized $9.0 million and $6.3 million of the customer incentive asset as a reduction of Operating Revenue for the three months ended March 31, 2020 and 2019, respectively. Customer incentive asset included within Deferred costs and other assets is as follows: Balance at December 31, 2019 $ 152,534 Initial value for estimate of vested or expected to vest warrants 2,394 Amortization of customer incentive asset (9,022 ) Balance at March 31, 2020 $ 145,906 |
Supplemental Financial Informat
Supplemental Financial Information | 3 Months Ended |
Mar. 31, 2020 | |
Supplemental Financial Information [Abstract] | |
Supplemental Financial Information | 5. Supplemental Financial Information Accounts Receivable Accounts receivable, net of allowance for expected credit losses related to customer contracts, excluding Dry Leasing contracts, was $212.5 million as of March 31, 2020 and $247.5 million as of December 31, 2019. Allowance for expected credit losses, included within Accounts receivable, is as follows: Balance as of December 31, 2019 $ 1,822 Bad debt expense (73 ) Amounts written off, net of recoveries (567 ) Balance as of March 31, 2020 $ 1,182 Accrued Liabilities Accrued liabilities consisted of the following as of: March 31, 2020 December 31, 2019 Maintenance $ 122,253 $ 136,315 Customer maintenance reserves 104,747 110,355 Salaries, wages and benefits 56,268 75,719 Aircraft fuel 24,077 28,821 Deferred revenue 30,582 26,357 Other 109,452 104,158 Accrued liabilities $ 447,379 $ 481,725 Revenue Contract Liability Deferred revenue for customer contracts, excluding Dry Leasing contracts, represents amounts collected from, or invoiced to, customers in advance of revenue recognition. The balance of Deferred revenue will increase or decrease based on the timing of invoices and recognition of revenue. Significant changes in our Revenue contract liability balances during the three months ended March 31, 2020 were as follows: Deferred Revenue Balance as of December 31, 2019 $ 19,234 Revenue recognized (39,521 ) Amounts collected or invoiced 46,077 Balance as of March 31, 2020 $ 25,790 Supplemental Cash Flow Information The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total shown in the consolidated statements of cash flows: March 31, 2020 December 31, 2019 Cash and cash equivalents $ 225,160 $ 103,029 Restricted cash 10,459 10,401 Total Cash, cash equivalents and restricted cash shown in Consolidated Statements of Cash Flows $ 235,619 $ 113,430 |
Assets Held For Sale and Other
Assets Held For Sale and Other Income | 3 Months Ended |
Mar. 31, 2020 | |
Assets Held For Sale And Other Income [Abstract] | |
Assets Held For Sale and Other Income | 6. Assets Held For Sale and Other Income As of December 31, 2019, we had two 737-400 passenger aircraft previously used for training purposes, certain spare CF6-80 engines and three aircraft in our Dry Leasing portfolio classified as held for sale. During the three months ended March 31, 2020, we received net proceeds of $44.1 million from the completion of the sales of some of the spare CF6-80 engines and two aircraft in our Dry Leasing portfolio and recognized a net gain of $6.7 million. The carrying value of the assets held for sale as of March 31, 2020 and December 31, 2019 was $111.6 million and $155.9 million, respectively, which was included within Prepaid expense, held for sale and other current assets in the consolidated balance sheets. Sales of the remaining aircraft and engines held for sale are expected to be completed in 2020. During the three months ended March 31, 2020, we recognized a refund of $1.4 million related to aircraft rent paid in previous years within Other (income) expense, net. In April 2020, we received a refund of $31.5 million related to aircraft rent paid in previous years, which will be recognized during the second quarter of 2020 within Other (income) expense, net. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 7. Debt Term Loans In February 2020, we refinanced two secured term loans, that were originally due later in 2020, with two new term loans. One term loan is for 126 months in the amount of $82.0 million at a fixed interest rate of 3.27% with a final payment of $12.5 million due in July 2030. The other term loan is for 130 months in the amount of $82.0 million at a fixed interest rate of 3.28% with a final payment of $12.5 million due in November 2030. The new term loans are each secured by a mortgage against a 777-200LRF aircraft and subject to usual and customary fees, covenants and events of default, with principal and interest payable quarterly. In April 2020, we borrowed $14.6 million related to GEnx engine performance upgrade kits and overhauls under an unsecured five-year Convertible Notes In May 2017, we issued $289.0 million aggregate principal amount of 1.875% convertible senior notes that mature on June 1, 2024 (the “2017 Convertible Notes”) in an underwritten public offering. In June 2015, we issued $224.5 million aggregate principal amount of 2.25% convertible senior notes that mature on June 1, 2022 (the “2015 Convertible Notes”) in an underwritten public offering. The 2017 Convertible Notes and the 2015 Convertible Notes (collectively, the “Convertible Notes”) are senior unsecured obligations and accrue interest payable semiannually on June 1 and December 1 of each year. The Convertible Notes are due on their respective maturity dates, unless earlier converted or repurchased pursuant to their respective terms. The Convertible Notes consisted of the following as of March 31, 2020: 2017 Convertible Notes 2015 Convertible Notes Remaining life in months 50 26 Liability component: Gross proceeds $ 289,000 $ 224,500 Less: debt discount, net of amortization (45,194 ) (18,993 ) Less: debt issuance cost, net of amortization (3,512 ) (1,766 ) Net carrying amount $ 240,294 $ 203,741 Equity component (1) $ 70,140 $ 52,903 (1) Included in Additional paid-in capital on the consolidated balance sheet as of March 31, 2020. The following table presents the amount of interest expense recognized related to the Convertible Notes: For the Three Months Ended March 31, 2020 March 31, 2019 Contractual interest coupon $ 2,618 $ 2,618 Amortization of debt discount 4,388 4,121 Amortization of debt issuance costs 387 372 Total interest expense recognized $ 7,393 $ 7,111 Revolving Credit Facility We have a $200.0 million secured revolving credit facility that matures in December 2022 (the “Revolver”). |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes The effective income tax rates were 27.4% and 19.7% for the three months ended March 31, 2020 and 2019, respectively. The rate for the three months ended March 31, 2020 differed from the U.S. statutory rate primarily due to tax expense from the vesting of share-based compensation. The rate for the three months ended March 31, 2019 differed from the U.S. statutory rate primarily due to nondeductible changes in the fair value of the customer warrant liability (see Note 4 for further discussion). For interim accounting purposes, we recognize income taxes using an estimated annual effective tax rate. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments | 9. Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Inputs used to measure fair value are classified in the following hierarchy: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 Other inputs that are observable directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, or inactive quoted prices for identical assets or liabilities in inactive markets; Level 3 Unobservable inputs reflecting assumptions about the inputs used in pricing the asset or liability. We endeavor to utilize the best available information to measure fair value. The carrying value of Cash and cash equivalents, Short-term investments and Restricted cash is based on cost, which approximates fair value. Term loans and notes consist of term loans, notes guaranteed by the Export-Import Bank of the United States (“Ex-Im Bank”) and equipment enhanced trust certificates. The fair values of these debt instruments and the Revolver are based on a discounted cash flow analysis using current borrowing rates for instruments with similar terms. The fair value of our Convertible Notes is based on unadjusted quoted market prices for these securities. The fair value of a customer warrant liability and certain long-term performance-based restricted shares are based on a Monte Carlo simulation which requires inputs such as our common stock price, the warrant strike price, estimated common stock price volatility, and risk-free interest rate, among others. The following table summarizes the carrying value, estimated fair value and classification of our financial instruments as of: March 31, 2020 Carrying Value Fair Value Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 225,160 $ 225,160 $ 225,160 $ - $ - Restricted cash 10,459 10,459 10,459 - - $ 235,619 $ 235,619 $ 235,619 $ - $ - Liabilities Term loans and notes $ 1,772,178 $ 1,749,135 $ - $ - $ 1,749,135 Revolver 175,000 160,993 - - 160,993 Convertible notes (1) 444,035 414,978 414,978 - Customer warrant 8,869 8,869 - 8,869 $ 2,400,082 $ 2,333,975 $ 414,978 $ 8,869 $ 1,910,128 December 31, 2019 Carrying Value Fair Value Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 103,029 $ 103,029 $ 103,029 $ - $ - Short-term investments 879 879 - - 879 Restricted cash 10,401 10,401 10,401 - - $ 114,309 $ 114,309 $ 113,430 $ - $ 879 Liabilities Term loans and notes $ 1,800,911 $ 1,885,750 $ - $ - $ 1,885,750 Revolver 100,000 103,575 - - 103,575 Convertible notes (1) 439,261 450,668 450,668 - - Customer warrant 24,345 24,345 - 24,345 - $ 2,364,517 $ 2,464,338 $ 450,668 $ 24,345 $ 1,989,325 (1) Carrying value is net of debt discounts and debt issuance costs (see Note 7). |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | 10. Segment Reporting Our business is organized into three operating segments based on our service offerings: ACMI, Charter and Dry Leasing. All segments are directly or indirectly engaged in the business of air transportation services but have different commercial and economic characteristics. Each operating segment is separately reviewed by our chief operating decision maker to assess operating results and make resource allocation decisions. We do not aggregate our operating segments and, therefore, our operating segments are our reportable segments. We use an economic performance metric called Direct Contribution, which shows the profitability of each segment after allocation of direct operating and ownership costs. Direct Contribution includes Income (loss) from continuing operations before income taxes and excludes the following: Special charges, Transaction-related expenses, nonrecurring items, Gains on the disposal of aircraft, Losses on early extinguishment of debt, Unrealized losses (gains) on financial instruments, Gains on investments and Unallocated income and expenses, net. Direct operating and ownership costs include crew costs, maintenance, fuel, ground operations, sales costs, aircraft rent, interest expense on the portion of debt used for financing aircraft, interest income on debt securities and aircraft depreciation. Unallocated income and expenses, net include corporate overhead, nonaircraft depreciation, noncash expenses and income, interest expense on the portion of debt used for general corporate purposes, interest income on nondebt securities, capitalized interest, foreign exchange gains and losses, other revenue and other non-operating costs. The following table sets forth Operating Revenue and Direct Contribution for our reportable segments reconciled to Operating Income and Income (loss) before income taxes: For the Three Months Ended March 31, 2020 March 31, 2019 Operating Revenue: ACMI $ 278,744 $ 306,567 Charter 327,629 305,114 Dry Leasing 41,926 69,946 Customer incentive asset amortization (9,022 ) (6,286 ) Other 4,225 4,342 Total Operating Revenue $ 643,502 $ 679,683 Direct Contribution: ACMI $ 52,306 $ 40,006 Charter 50,781 29,133 Dry Leasing 10,698 35,527 Total Direct Contribution for Reportable Segments 113,785 104,666 Unallocated expenses and (income), net (88,719 ) (80,136 ) Loss on early extinguishment of debt - (245 ) Unrealized gain (loss) on financial instruments 924 (46,575 ) Transaction-related expenses (521 ) (2,527 ) Gain on disposal of aircraft 6,717 - Income (loss) before income taxes 32,186 (24,817 ) Add back (subtract): Interest income (480 ) (2,044 ) Interest expense 29,275 30,353 Capitalized interest (193 ) (463 ) Loss on early extinguishment of debt - 245 Unrealized (gain) loss on financial instruments (924 ) 46,575 Other (income) expense, net 1,206 (2,975 ) Operating Income $ 61,070 $ 46,874 The following table disaggregates our Charter segment revenue by customer and service type: For the Three Months Ended March 31, 2020 March 31, 2019 Cargo Passenger Total Cargo Passenger Total Commercial customers $ 174,489 $ 3,105 $ 177,594 $ 148,904 $ 7,607 $ 156,511 AMC 62,475 87,560 150,035 57,446 91,157 148,603 Total Charter Revenue $ 236,964 $ 90,665 $ 327,629 $ 206,350 $ 98,764 $ 305,114 Given the nature of our business and international flying, geographic information for revenue, long-li ved assets and total assets is not presented because it is impracticable to do so. We are exposed to a concentration of revenue from the AMC, Polar and DHL (see above and Note 3 to our Financial Statements for further discussion regarding Polar). No other customer accounted for more than 10.0% of our Total Operating Revenue. Revenue from DHL was $98.4 million for the three months ended March 31, 2020 and $89.7 million for the three months ended March 31, 2019. We have not experienced any credit issues with these customers. |
Labor and Legal Proceedings
Labor and Legal Proceedings | 3 Months Ended |
Mar. 31, 2020 | |
Labor And Legal Proceedings [Abstract] | |
Labor and Legal Proceedings | 11. Labor and Legal Proceedings Labor Pilots of Atlas and Southern Air, and flight dispatchers of Atlas and Polar are represented by the International Brotherhood of Teamsters (the “IBT”). We have a five-year four-year five-year After we completed the acquisition of Southern Air in April 2016, we informed the IBT of our intention to pursue (and we have been pursuing) a complete operational merger of Atlas and Southern Air. The Atlas and Southern Air CBAs both have a defined and streamlined process for negotiating a joint CBA (“JCBA”) when a merger occurs, as in the case with the Atlas and Southern Air merger. Pursuant to the merger provisions in both CBAs, joint negotiations for a single CBA for Atlas and Southern Air should commence promptly. Further, once an integrated seniority list (“ISL”) of Atlas and Southern Air pilots is presented to the Company by the union, it triggers a nine month agreed-upon timeframe to negotiate a new JCBA with any unresolved issues promptly submitted to binding arbitration. The IBT has refused to follow the merger provisions in the Atlas and Southern Air CBAs. This has resulted in significant litigation, arbitrations and delay. As more fully stated below, the Company has prevailed in all of the merger related proceedings. After the merger process began, the IBT also filed an application for mediation with the National Mediation Board (“NMB”) on behalf of the Atlas pilots, and subsequently the IBT filed a similar application on behalf of Southern Air pilots. We have opposed both mediation applications as they are not in accordance with the merger provisions in the parties’ existing CBAs. The NMB conducted a premediation investigation on the IBT’s Atlas application in June 2016, which has remained pending (along with the IBT’s Southern Air application) since 2016. Due to the IBT’s refusal to adhere to the merger provisions of the respective CBAs, in February 2017, the Company filed a lawsuit against the IBT to compel arbitration on the issue of whether the merger provisions in Atlas and Southern Air's CBAs apply to the bargaining process. On March 13, 2018, the U.S. District Court for the Southern District of New York (“NY District Court”) ruled in the Company’s favor and ordered arbitration of this issue. The IBT appealed the NY District Court’s decision, and on November 21, 2019, the U.S. Court of Appeals for the Second Circuit Court issued its decision in the Company’s favor affirming the NY District Court’s decision. The Company and the IBT conducted the Atlas and Southern Air arbitrations for this issue in October 2018. The Company prevailed in both the Atlas and Southern Air management grievance arbitrations against the IBT, with decisions rendered on June 12, 2019 and August 26, 2019, respectively. Both arbitrators ruled that the IBT violated the CBAs by refusing to follow merger provisions in the parties’ respective CBAs, which require formulation of a JCBA covering the combined pilot group. The arbitrators each ordered the IBT to promptly comply with the CBAs by submitting an ISL to the Company within 45 days of each arbitration decision, respectively. The IBT failed to comply with both deadlines for submitting the ISL, which passed on July 27, 2019 for Southern Air, and on October 10, 2019 for Atlas. As a result, on October 25, 2019, the Company filed an action in the U.S. District Court for the District of Columbia (“DC District Court”) to enforce the Atlas and Southern Air arbitration decisions. On March 31, 2020, the DC District Court ruled in the Company’s favor, enforcing the arbitration decisions and directing the IBT to produce the ISL by May 15, 2020. The IBT subsequently requested additional time from the Company to complete the ISL and the parties agreed to a joint stipulation. As a result, on April 24, 2020, the DC District Court issued an order modifying its March 31st order, providing that the nine month timeframe to bargain for a new JCBA will be triggered on May 15, 2020 and that the IBT must produce the ISL by March 31, 2021. Any remaining open issues will then be determined by binding interest arbitration pursuant to the merger provisions in the CBAs. On April 28, 2020, the IBT and Local 2750 filed a Notice of Appeal of the DC District Court’s March 31st order, which remains in place pending appeal. In connection with its opposition to application of the merger provisions, the IBT commenced lawsuits in the DC District Court seeking to vacate both arbitration awards. On January 28, 2020, the DC District Court ruled in the Company’s favor, granting its motions to dismiss both of the IBT’s lawsuits. On April 28, 2020, the IBT and Local 2750 filed a Notice of Appeal of the DC District Court’s January 28th orders, which remains in place pending appeal. The Company and the IBT continue to meet virtually to move the process forward and bargain in good faith for a new JCBA. Substantive progress has been made with tentative agreements for more than half of the articles in a new JCBA. Despite repeated requests from the Company, the IBT has yet to provide the Company with a comprehensive economic proposal. In late September 2019, the Atlas pilots represented by the IBT formed a new local union, IBT Local 2750 to represent them. The Southern Air pilots continue to be represented by IBT Local 1224. The Company continues to work with both Local 2750 and Local 1224 leadership groups. On May 7, 2020, the Company announced that Atlas and Southern Air reached an agreement with IBT Locals 2750 and 1224, which provides for an interim ten percent pay increase for all pilots, effective as of May 1, 2020. In late November 2017, the DC District Court granted the Company’s request to issue a preliminary injunction to stop an illegal work slowdown and require the IBT to meet its obligations under the Railway Labor Act. Specifically, the DC District Court ordered the IBT to stop “authorizing, encouraging, permitting, calling, engaging in, or continuing” any illegal pilot slowdown activities, which were intended to gain leverage in pilot contract negotiations with the Company. In addition, the Court ordered the IBT to take affirmative action to prevent and to refrain from continuing any form of interference with the Company’s operations or any other concerted refusal to perform normal pilot operations consistent with its status quo obligations under the Railway Labor Act. In December 2017, the IBT appealed the District Court’s decision to the U.S. Court of Appeals for the District of Columbia Circuit (“Court of Appeals”). On July 5, 2019, the Court of Appeals, in a unanimous three judge panel, affirmed the DC District Court’s ruling and denied the IBT’s appeal. Therefore, the preliminary injunction remains in full force and effect. We are subject to risks of work interruption or stoppage as permitted by the Railway Labor Act and may incur additional administrative expenses associated with union representation of our employees. Matters Related to Alleged Pricing Practices In the Netherlands, Stichting Cartel Compensation, successor in interest to claims of various shippers, has filed suit in the district court in Amsterdam against British Airways, KLM, Martinair, Air France, Lufthansa and Singapore Airlines seeking recovery for damages purportedly arising from allegedly unlawful pricing practices of such defendants. In response, British Airways, KLM, Martinair, Air France and Lufthansa filed third-party indemnification lawsuits against Polar Air Cargo, LLC (“Old Polar”), a consolidated subsidiary of the Company, and Polar, seeking indemnification in the event the defendants are found to be liable in the main proceedings. Another defendant, Thai Airways, filed a similar indemnification claim. Activities in the case have focused on various procedural issues, some of which are awaiting court determination. The Netherlands proceedings are likely to be affected by a decision readopted by the European Commission in March 2017, finding EU competition law violations by British Airways, KLM, Martinair, Air France and Lufthansa, among others, but not Old Polar or Polar. If the Company, Old Polar or Polar were to incur an unfavorable outcome, such outcome may have a material adverse impact on our business, financial condition, results of operations or cash flows. We are unable to reasonably estimate a range of possible loss for this matter at this time. Brazilian Customs Claim Old Polar was cited for two alleged customs violations in Sao Paulo, Brazil, relating to shipments of goods dating back to 1999 and 2000. Each claim asserts that goods listed on the flight manifest of two separate Old Polar scheduled service flights were not on board the aircraft upon arrival and therefore were improperly brought into Brazil. The two claims, which also seek unpaid customs duties, taxes and penalties from the date of the alleged infraction, are approximately $4.0 million in aggregate based on March 31, 2020 exchange rates. In both cases, we believe that the amounts claimed are substantially overstated due to a calculation error when considering the type and amount of goods allegedly missing, among other things. In the pending claim for one of the cases, we have received an administrative decision dismissing the claim in its entirety, which remains subject to a mandatory appeal by the Brazil customs authorities. In the other case, we received an administrative decision in favor of the Brazil customs authorities and we are in the process of appealing this decision to the Brazil courts. As required to defend such claims, we have made deposits pending resolution of these matters. The balance was $3.2 million as of March 31, 2020 and $4.1 million as of December 31, 2019, and is included in Deferred costs and other assets. We are currently defending these and other Brazilian customs claims and the ultimate disposition of these claims, either individually or in the aggregate, is not expected to materially affect our financial condition, results of operations or cash flows. Other In addition to the matters described in this note, we have certain other contingencies incident to the ordinary course of business. Unless disclosed otherwise, management does not expect that the ultimate disposition of such other contingencies or matters will materially affect our financial condition, results of operations or cash flows. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 12. Earnings Per Share Basic earnings per share (“EPS”) represents income (loss) divided by the weighted average number of common shares outstanding during the measurement period. Diluted EPS represents income (loss) divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period using the treasury stock method. The calculations of basic and diluted EPS were as follows: For the Three Months Ended Numerator: March 31, 2020 March 31, 2019 Net Income (Loss) $ 23,353 $ (29,710 ) Denominator: Basic EPS weighted average shares outstanding 25,966 25,735 Diluted EPS weighted average shares outstanding 25,966 25,735 Earnings (loss) per share: Basic $ 0.90 $ (1.15 ) Diluted $ 0.90 $ (1.15 ) Antidilutive shares related to warrants issued in connection with our Convertible Notes and warrants issued to a customer that were out of the money and excluded from the calculation of diluted EPS were 15.5 million for the three months ended March 31, 2020 and 7.8 million for the three months ended March 31, 2019. Diluted shares reflect the potential dilution that could occur from restricted shares using the treasury stock method. The calculation of EPS does not include restricted share units and customer warrants in which performance or market conditions were not satisfied of 10.5 million for the three months ended March 31, 2020 and 10.6 million for the three months ended March 31, 2019. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income Loss [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | 13. Accumulated Other Comprehensive Income (Loss) The following table summarizes the components of Accumulated other comprehensive income (loss): Interest Rate Foreign Currency Derivatives Translation Total Balance as of December 31, 2018 $ (3,841 ) $ 9 $ (3,832 ) Reclassification to interest expense 344 - 344 Tax effect (81 ) - (81 ) Balance as of March 31, 2019 $ (3,578 ) $ 9 $ (3,569 ) Balance as of December 31, 2019 $ (2,827 ) $ 9 $ (2,818 ) Reclassification to interest expense 308 - 308 Tax effect (63 ) - (63 ) Balance as of March 31, 2020 $ (2,582 ) $ 9 $ (2,573 ) Interest Rate Derivatives As of March 31, 2020, there was $3.4 million of unamortized net realized loss before taxes remaining in Accumulated other comprehensive income (loss) related to terminated forward-starting interest rate swaps, which had been designated as cash flow hedges to effectively fix the interest rates on two 747-8F financings in 2011 and three 777-200LRF financings in 2014. The net loss is amortized and reclassified into Interest expense over the remaining life of the related debt. Net realized losses reclassified into earnings were $0.3 million for both the three months ended March 31, 2020 and 2019. Net realized losses expected to be reclassified into earnings within the next 12 months are $1.1 million as of March 31, 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Warrant Liability | Warrant Liability Common stock warrants that are classified as a liability are marked-to-market at the end of each reporting period with changes in fair value recorded in Unrealized (gain) loss on financial instruments. We utilize a Monte Carlo simulation approach to estimate the fair value of the warrant liability, which requires inputs such as our common stock price, the warrant strike price, estimated common stock price volatility and risk-free interest rate, among others. Our earnings are affected by changes in our common stock price due to the impact those changes have on the fair value of our warrant liability (see Note 4 for further discussion). |
Heavy Maintenance | Heavy Maintenance Except for engines used on our 747-8F aircraft, we account for heavy maintenance costs for airframes and engines used in our ACMI and Charter segments using the direct expense method. Under this method, heavy maintenance costs are charged to expense upon induction, based on our best estimate of the costs. We account for heavy maintenance costs for airframes and engines used in our Dry Leasing segment and engines used on our 747-8F aircraft using the deferral method. Under this method, we defer the expense recognition of scheduled heavy maintenance events, which are amortized over the estimated period until the next scheduled heavy maintenance event is required. Amortization of deferred maintenance expense included in Depreciation and amortization was $7.9 million and $4.4 million for the three months ended March 31, 2020 and 2019, respectively. Deferred maintenance included within Deferred costs and other assets is as follows: Balance as of December 31, 2019 $ 184,279 Deferred maintenance costs 13,710 Amortization of deferred maintenance (7,939 ) Balance as of March 31, 2020 $ 190,050 |
COVID-19 | COVID-19 In December 2019, COVID-19 was first reported in China and has since spread to most other regions of the world. In March 2020, COVID-19 was determined to be a global pandemic by the World Health Organization. During the first quarter of 2020, this public health crisis disrupted global manufacturing, supply chains, passenger travel and consumer spending, resulting in flight cancellations by our ACMI customers and lower U.S. Military Air Mobility Command (“AMC”) passenger flying as the military took precautionary measures to limit the movement of personnel. A reduction of available cargo capacity in the market and increased demand for transporting goods due to the COVID-19 pandemic also resulted in increased commercial cargo charter yields, net of fuel, during the quarter. We have incurred and expect to incur significant additional costs, including premium pay; other operational costs, including costs for continuing to provide a safe working environment for our employees; and higher crew costs related to increased pay rates resulting from our recent interim agreement with the pilots. In addition, the availability of hotels and restaurants; evolving COVID-19-related travel restrictions and health screenings; and cancellations of passenger flights by other airlines globally or airport closures have impacted and could further impact our ability to position crewmembers for operating our aircraft. In March 2020, as a precautionary measure due to uncertainty arising from the COVID-19 pandemic, we drew $75.0 million under our revolving credit facility and had $19.8 million of unused availability as of March 31, 2020. Our ability to continue to service our debt and meet our lease and other obligations as they come due is dependent on our continued ability to generate earnings and cash flows. To mitigate the impact of any continuation or worsening of the COVID-19 pandemic disruptions, we have significantly reduced nonessential employee travel, reduced the use of contractors, limited ground staff hiring, implemented a number of other cost reduction initiatives and taken other actions, such as the sale of certain nonessential assets. If we are unable to implement these or additional initiatives, it could have a material adverse effect on our financial position, results of operations, and cash flows. We believe the Company will generate sufficient liquidity to satisfy its obligations over the next twelve months. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted in 2020 In November 2019, the Financial Accounting Standards Board (“FASB”) amended its accounting guidance for share-based payment awards issued to a customer. The amended guidance requires share-based payment awards issued to a customer to be recorded as a reduction of the transaction price in revenue based on the fair value at grant date and to be classified on the balance sheet using accounting guidance for stock-based compensation. The amended guidance was effective for fiscal years beginning after December 15, 2019. Effective January 1, 2020, we adopted the amended guidance and applied the modified retrospective approach to the most current period presented. As a result, $14.6 million, or approximately 60% of our customer warrant liability of $24.3 million related to revenue contracts, which was included in Financial instruments and other liabilities as of December 31, 2019, was reclassified as Additional paid-in-capital within Total stockholders’ equity on January 1, 2020. As a result, these customer warrants are no longer marked-to-market at the end of each reporting period with changes in fair value recorded as an unrealized (gain) loss on financial instruments. The amended guidance did not impact the accounting for the remaining portion of our customer warrant liability related to Dry Lease contracts, which was approximately $9.7 million or approximately 40% of the total customer warrant liability as of December 31, 2019. The new guidance did not impact how we account for the amortization of the customer incentive asset (see Note 4 for further discussion). In June 2016, the FASB amended its accounting guidance for the measurement of credit losses on financial instruments. The guidance requires entities to utilize an expected credit loss model for certain financial instruments, including most trade receivables, which replaces the incurred credit loss model previously used. Under this new model, we are required to recognize estimated credit losses expected to occur over time using a broad range of information including historical information, current conditions and reasonable and supportable forecasts. Receivables related to lease contracts are not within the scope of this amended guidance. Effective January 1, 2020, we adopted the amended guidance under the modified retrospective approach and it did not have a material impact on our consolidated financial statements and related disclosures (see Note 5). |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Deferred Maintenance | Deferred maintenance included within Deferred costs and other assets is as follows Balance as of December 31, 2019 $ 184,279 Deferred maintenance costs 13,710 Amortization of deferred maintenance (7,939 ) Balance as of March 31, 2020 $ 190,050 |
Related Parties (Tables)
Related Parties (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Summary of Transactions with Polar | The following table summarizes our transactions with Polar: For the Three Months Ended Revenue and Expenses: March 31, 2020 March 31, 2019 Revenue from Polar $ 76,234 $ 98,467 Ground handling and airport fees to Polar 526 518 Accounts receivable/payable as of: March 31, 2020 December 31, 2019 Receivables from Polar $ 21,416 $ 10,855 Payables to Polar 3,233 2,161 Aggregate Carrying Value of Polar Investment as of: March 31, 2020 December 31, 2019 Aggregate Carrying Value of Polar Investment $ 4,870 $ 4,870 |
Amazon (Tables)
Amazon (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Warrants And Rights Note Disclosure [Abstract] | |
Summary of Customer Incentive Asset within Deferred Costs and Other Assets | Customer incentive asset included within Deferred costs and other assets is as follows: Balance at December 31, 2019 $ 152,534 Initial value for estimate of vested or expected to vest warrants 2,394 Amortization of customer incentive asset (9,022 ) Balance at March 31, 2020 $ 145,906 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Supplemental Financial Information [Abstract] | |
Summary of Allowance for Expected Credit Losses | Allowance for expected credit losses, included within Accounts receivable, is as follows: Balance as of December 31, 2019 $ 1,822 Bad debt expense (73 ) Amounts written off, net of recoveries (567 ) Balance as of March 31, 2020 $ 1,182 |
Schedule of Accrued Liabilities | Accrued liabilities consisted of the following as of: March 31, 2020 December 31, 2019 Maintenance $ 122,253 $ 136,315 Customer maintenance reserves 104,747 110,355 Salaries, wages and benefits 56,268 75,719 Aircraft fuel 24,077 28,821 Deferred revenue 30,582 26,357 Other 109,452 104,158 Accrued liabilities $ 447,379 $ 481,725 |
Summary of Significant Changes in Revenue Contract Liability Balances | Significant changes in our Revenue contract liability balances during the three months ended March 31, 2020 were as follows: Deferred Revenue Balance as of December 31, 2019 $ 19,234 Revenue recognized (39,521 ) Amounts collected or invoiced 46,077 Balance as of March 31, 2020 $ 25,790 |
Reconciliation of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total shown in the consolidated statements of cash flows: March 31, 2020 December 31, 2019 Cash and cash equivalents $ 225,160 $ 103,029 Restricted cash 10,459 10,401 Total Cash, cash equivalents and restricted cash shown in Consolidated Statements of Cash Flows $ 235,619 $ 113,430 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes | The Convertible Notes consisted of the following as of March 31, 2020: 2017 Convertible Notes 2015 Convertible Notes Remaining life in months 50 26 Liability component: Gross proceeds $ 289,000 $ 224,500 Less: debt discount, net of amortization (45,194 ) (18,993 ) Less: debt issuance cost, net of amortization (3,512 ) (1,766 ) Net carrying amount $ 240,294 $ 203,741 Equity component (1) $ 70,140 $ 52,903 (1) Included in Additional paid-in capital on the consolidated balance sheet as of March 31, 2020. |
Summary of Interest Expense Recognized | The following table presents the amount of interest expense recognized related to the Convertible Notes: For the Three Months Ended March 31, 2020 March 31, 2019 Contractual interest coupon $ 2,618 $ 2,618 Amortization of debt discount 4,388 4,121 Amortization of debt issuance costs 387 372 Total interest expense recognized $ 7,393 $ 7,111 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of Carrying Value, Estimated Fair Value and Classification of Financial Instruments | The following table summarizes the carrying value, estimated fair value and classification of our financial instruments as of: March 31, 2020 Carrying Value Fair Value Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 225,160 $ 225,160 $ 225,160 $ - $ - Restricted cash 10,459 10,459 10,459 - - $ 235,619 $ 235,619 $ 235,619 $ - $ - Liabilities Term loans and notes $ 1,772,178 $ 1,749,135 $ - $ - $ 1,749,135 Revolver 175,000 160,993 - - 160,993 Convertible notes (1) 444,035 414,978 414,978 - Customer warrant 8,869 8,869 - 8,869 $ 2,400,082 $ 2,333,975 $ 414,978 $ 8,869 $ 1,910,128 December 31, 2019 Carrying Value Fair Value Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 103,029 $ 103,029 $ 103,029 $ - $ - Short-term investments 879 879 - - 879 Restricted cash 10,401 10,401 10,401 - - $ 114,309 $ 114,309 $ 113,430 $ - $ 879 Liabilities Term loans and notes $ 1,800,911 $ 1,885,750 $ - $ - $ 1,885,750 Revolver 100,000 103,575 - - 103,575 Convertible notes (1) 439,261 450,668 450,668 - - Customer warrant 24,345 24,345 - 24,345 - $ 2,364,517 $ 2,464,338 $ 450,668 $ 24,345 $ 1,989,325 (1) Carrying value is net of debt discounts and debt issuance costs (see Note 7). |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting Tables [Abstract] | |
Operating Revenue and Direct Contribution For Our Reportable Business Segments | The following table sets forth Operating Revenue and Direct Contribution for our reportable segments reconciled to Operating Income and Income (loss) before income taxes: For the Three Months Ended March 31, 2020 March 31, 2019 Operating Revenue: ACMI $ 278,744 $ 306,567 Charter 327,629 305,114 Dry Leasing 41,926 69,946 Customer incentive asset amortization (9,022 ) (6,286 ) Other 4,225 4,342 Total Operating Revenue $ 643,502 $ 679,683 Direct Contribution: ACMI $ 52,306 $ 40,006 Charter 50,781 29,133 Dry Leasing 10,698 35,527 Total Direct Contribution for Reportable Segments 113,785 104,666 Unallocated expenses and (income), net (88,719 ) (80,136 ) Loss on early extinguishment of debt - (245 ) Unrealized gain (loss) on financial instruments 924 (46,575 ) Transaction-related expenses (521 ) (2,527 ) Gain on disposal of aircraft 6,717 - Income (loss) before income taxes 32,186 (24,817 ) Add back (subtract): Interest income (480 ) (2,044 ) Interest expense 29,275 30,353 Capitalized interest (193 ) (463 ) Loss on early extinguishment of debt - 245 Unrealized (gain) loss on financial instruments (924 ) 46,575 Other (income) expense, net 1,206 (2,975 ) Operating Income $ 61,070 $ 46,874 |
Schedule of Disaggregated Charter Segment Revenue by Customer and Service Type | The following table disaggregates our Charter segment revenue by customer and service type: For the Three Months Ended March 31, 2020 March 31, 2019 Cargo Passenger Total Cargo Passenger Total Commercial customers $ 174,489 $ 3,105 $ 177,594 $ 148,904 $ 7,607 $ 156,511 AMC 62,475 87,560 150,035 57,446 91,157 148,603 Total Charter Revenue $ 236,964 $ 90,665 $ 327,629 $ 206,350 $ 98,764 $ 305,114 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Calculations of Basic and Diluted EPS | The calculations of basic and diluted EPS were as follows: For the Three Months Ended Numerator: March 31, 2020 March 31, 2019 Net Income (Loss) $ 23,353 $ (29,710 ) Denominator: Basic EPS weighted average shares outstanding 25,966 25,735 Diluted EPS weighted average shares outstanding 25,966 25,735 Earnings (loss) per share: Basic $ 0.90 $ (1.15 ) Diluted $ 0.90 $ (1.15 ) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income Loss [Abstract] | |
Components of Accumulated Other Comprehensive Income (Loss) | The following table summarizes the components of Accumulated other comprehensive income (loss): Interest Rate Foreign Currency Derivatives Translation Total Balance as of December 31, 2018 $ (3,841 ) $ 9 $ (3,832 ) Reclassification to interest expense 344 - 344 Tax effect (81 ) - (81 ) Balance as of March 31, 2019 $ (3,578 ) $ 9 $ (3,569 ) Balance as of December 31, 2019 $ (2,827 ) $ 9 $ (2,818 ) Reclassification to interest expense 308 - 308 Tax effect (63 ) - (63 ) Balance as of March 31, 2020 $ (2,582 ) $ 9 $ (2,573 ) |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Details) - Polar [Member] | 3 Months Ended |
Mar. 31, 2020 | |
Basis Of Presentation [Line Items] | |
Equity interest | 51.00% |
Voting interest | 75.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Significant Accounting Policies [Line Items] | ||||
Deferred maintenance amortization expense | $ 7,939 | $ 4,400 | ||
Customer warrant liability reclassified as additional paid in capital | $ 14,600 | |||
Percentage of customer warrant liability | 60.00% | |||
Customer warrant liability | $ 24,300 | |||
Dry Leases [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Percentage of customer warrant liability | 40.00% | |||
Customer warrant liability | $ 9,700 | |||
Revolver [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Amount drawn under revolving credit facility | $ 75,000 | |||
Unused availability, amount | $ 19,800 | $ 19,800 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Deferred Maintenance (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounting Policies [Abstract] | ||
Beginning Balance | $ 184,279 | |
Deferred maintenance costs | 13,710 | |
Amortization of deferred maintenance | (7,939) | $ (4,400) |
Ending Balance | $ 190,050 |
Related Parties - Polar - Addit
Related Parties - Polar - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Polar [Member] | ||
Related Party Transaction [Line Items] | ||
Revenue recognized | $ 27.5 | $ 23 |
Polar [Member] | ||
Related Party Transaction [Line Items] | ||
Equity interest | 51.00% | |
Voting interest | 75.00% | |
DHL [Member] | Polar [Member] | ||
Related Party Transaction [Line Items] | ||
Equity interest | 49.00% | |
Voting interest | 25.00% |
Related Parties - Summary of Tr
Related Parties - Summary of Transactions with Polar (Details) - Polar [Member] - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | |||
Revenue from related party | $ 76,234 | $ 98,467 | |
Ground handling and airport fees to Polar | 526 | $ 518 | |
Receivables from related party | 21,416 | $ 10,855 | |
Payables to related party | 3,233 | 2,161 | |
Aggregate Carrying Value of Polar Investment | $ 4,870 | $ 4,870 |
Related Parties - Dry Leasing J
Related Parties - Dry Leasing Joint Venture - Additional Information (Details) - Dry Leasing Joint Venture [Member] - USD ($) | 1 Months Ended | 3 Months Ended |
Dec. 31, 2019 | Mar. 31, 2020 | |
Related Party Transaction [Line Items] | ||
Voting interest | 10.00% | |
Investment in joint venture | $ 1,500,000 | $ 500,000 |
Capital contributions | 0 | |
Accounts receivable from joint venture | 1,300,000 | |
Service fee income | 0 | |
Maximum [Member] | ||
Related Party Transaction [Line Items] | ||
Commitment to capital contributions | $ 40,000,000 |
Related Parties - Parts Joint V
Related Parties - Parts Joint Venture - Additional Information (Details) - Parts Joint Venture [Member] - Variable Interest Entity Not Primary Beneficiary [Member] - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | ||
Voting interest | 50.00% | 50.00% |
Investment in joint venture | $ 19.3 | $ 20 |
Payables to related party | $ 1 | $ 0.5 |
Amazon - Additional Information
Amazon - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 01, 2020 | Mar. 31, 2019 | May 31, 2016 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 |
Class Of Warrant Or Right [Line Items] | |||||||
Revenues | $ 643,502 | $ 679,683 | |||||
Percentage of customer warrant liability | 60.00% | ||||||
Warrant liability unrealized (gains) losses | 900 | (46,600) | |||||
Fair value of warrant liability | 8,900 | $ 24,300 | |||||
Amortization of customer incentive asset | $ 9,022 | $ 6,300 | |||||
Warrant A [Member] | |||||||
Class Of Warrant Or Right [Line Items] | |||||||
Right to acquire outstanding common shares | up to 20% of our outstanding common shares | ||||||
Warrant exercise price | $ 37.50 | ||||||
Warrant for number of shares fully vested | 7,500,000 | ||||||
Warrant vesting year | 2021-05 | ||||||
Warrants exercised | 0 | ||||||
Warrant B [Member] | |||||||
Class Of Warrant Or Right [Line Items] | |||||||
Warrants exercised | 0 | ||||||
Additional warrant to acquire outstanding shares | up to an additional 10% of our outstanding common shares | ||||||
Additional warrant exercise price | $ 37.50 | ||||||
Additional warrant to buy number of shares vesting | 3,750,000 | ||||||
Vesting increments of Amazon warrants | 37,500 | ||||||
Revenues | $ 4,200 | ||||||
Warrant vested | 187,500 | ||||||
Additional warrant vesting year | 2023-05 | ||||||
Warrant C [Member] | |||||||
Class Of Warrant Or Right [Line Items] | |||||||
Right to acquire outstanding common shares | up to an additional 9.9% of our outstanding common shares | ||||||
Warrant exercise price | $ 52.90 | $ 52.90 | |||||
Warrant vesting year | 2026-03 | ||||||
Vesting increments of Amazon warrants | 45,428 | ||||||
Revenues | $ 6,900 | ||||||
Warrant vested | 0 | ||||||
Incremental warrant to buy number of shares vesting. | 6,600,000 | ||||||
Warrant A, B and C [Member] | |||||||
Class Of Warrant Or Right [Line Items] | |||||||
Right to acquire outstanding common shares | up to a total of 39.9% (after the issuance) of our outstanding common shares | ||||||
Maximum [Member] | |||||||
Class Of Warrant Or Right [Line Items] | |||||||
Amazon entitled to vote shares of it owns of outstanding common shares percentage | 14.90% | ||||||
Maximum [Member] | Warrant A [Member] | |||||||
Class Of Warrant Or Right [Line Items] | |||||||
Warrant providing right to acquire outstanding common shares percentage | 20.00% | ||||||
Maximum [Member] | Warrant B [Member] | |||||||
Class Of Warrant Or Right [Line Items] | |||||||
Percentage of additional warrant to acquire outstanding common shares | 10.00% | ||||||
Revenues | $ 420,000 | ||||||
Maximum [Member] | Warrant C [Member] | |||||||
Class Of Warrant Or Right [Line Items] | |||||||
Warrant providing right to acquire outstanding common shares percentage | 9.90% | ||||||
Revenues | $ 1,000,000 | ||||||
Maximum [Member] | Warrant A, B and C [Member] | |||||||
Class Of Warrant Or Right [Line Items] | |||||||
Warrant providing right to acquire outstanding common shares percentage | 39.90% | ||||||
Dry Leases [Member] | |||||||
Class Of Warrant Or Right [Line Items] | |||||||
Lease term | 10 years | ||||||
Percentage of customer warrant liability | 40.00% | ||||||
CMI Operation [Member] | |||||||
Class Of Warrant Or Right [Line Items] | |||||||
Lease term | 7 years | 7 years | 7 years | ||||
Percentage of customer warrant liability | 60.00% |
Amazon - Summary of Customer In
Amazon - Summary of Customer Incentive Asset within Deferred Costs and Other Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Warrants And Rights Note Disclosure [Abstract] | ||
Balance at December 31, 2019 | $ 152,534 | |
Initial value for estimate of vested or expected to vest warrants | 2,394 | |
Amortization of customer incentive asset | (9,022) | $ (6,300) |
Balance at March 31, 2020 | $ 145,906 |
Supplemental Financial Inform_3
Supplemental Financial Information - Additional Information (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Supplemental Financial Information [Abstract] | ||
Accounts receivable related to customer contracts excluding dry leasing contracts | $ 212.5 | $ 247.5 |
Supplemental Financial Inform_4
Supplemental Financial Information - Summary of Allowance for Expected Credit Losses (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Supplemental Financial Information [Abstract] | |
Balance as of December 31, 2019 | $ 1,822 |
Bad debt expense | (73) |
Amounts written off, net of recoveries | (567) |
Balance as of March 31, 2020 | $ 1,182 |
Supplemental Financial Inform_5
Supplemental Financial Information - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Supplemental Financial Information [Abstract] | ||
Maintenance | $ 122,253 | $ 136,315 |
Customer maintenance reserves | 104,747 | 110,355 |
Salaries, wages and benefits | 56,268 | 75,719 |
Aircraft fuel | 24,077 | 28,821 |
Deferred revenue | 30,582 | 26,357 |
Other | 109,452 | 104,158 |
Accrued liabilities | $ 447,379 | $ 481,725 |
Supplemental Financial Inform_6
Supplemental Financial Information - Summary of Significant Changes in Revenue Contract Liability Balances (Details) - Non-Dry Lease Revenue Contracts with Customers [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Revenue Recognition [Line Items] | |
Balance as of December 31, 2019 | $ 19,234 |
Revenue recognized | (39,521) |
Amounts collected or invoiced | 46,077 |
Balance as of March 31, 2020 | $ 25,790 |
Supplemental Financial Inform_7
Supplemental Financial Information - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Supplemental Financial Information [Abstract] | ||||
Cash and cash equivalents | $ 225,160 | $ 103,029 | ||
Restricted cash | 10,459 | 10,401 | ||
Total Cash, cash equivalents and restricted cash shown in Consolidated Statements of Cash Flows | $ 235,619 | $ 113,430 | $ 164,504 | $ 232,741 |
Assets Held For Sale and Othe_2
Assets Held For Sale and Other Income - Additional Information (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Apr. 30, 2020USD ($) | Mar. 31, 2020USD ($)Engine | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Impairment Of Aircraft Engines Held For Sale [Line Items] | ||||
Net gain from sale of aircraft | $ 6,717 | $ 0 | ||
Net proceeds from sale of aircraft | 44,110 | $ 0 | ||
Prepaid Expenses and Other Current Assets [Member] | ||||
Impairment Of Aircraft Engines Held For Sale [Line Items] | ||||
Carrying value of asset held for sale | $ 111,600 | $ 155,900 | ||
Certain Spare CF6-80 Engines [Member] | ||||
Impairment Of Aircraft Engines Held For Sale [Line Items] | ||||
Number of aircraft held for sale | Engine | 2 | |||
Aircraft Engines [Member] | Other (Income) Expense , Net [Member] | ||||
Impairment Of Aircraft Engines Held For Sale [Line Items] | ||||
Aircraft rent refund | $ 1,400 | |||
Aircraft Engines [Member] | Other (Income) Expense , Net [Member] | Subsequent Event [Member] | ||||
Impairment Of Aircraft Engines Held For Sale [Line Items] | ||||
Aircraft rent refund | $ 31,500 | |||
Dry Leasing Portfolio [Member] | ||||
Impairment Of Aircraft Engines Held For Sale [Line Items] | ||||
Number of aircraft held for sale | Engine | 3 |
Debt - Term Loans - Additional
Debt - Term Loans - Additional Information (Details) | Feb. 01, 2020USD ($)TermLoan | Apr. 30, 2020USD ($) |
Secured Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Number of term loans | TermLoan | 2 | |
Secured Term Loan [Member] | Term Loan One [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, term | 126 months | |
Debt instrument face amount | $ 82,000,000 | |
Debt instrument fixed interest rate | 3.27% | |
Debt instrument final payment | $ 12,500,000 | |
Debt instrument maturity | 2030-07 | |
Secured Term Loan [Member] | Term Loan Two [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, term | 130 months | |
Debt instrument face amount | $ 82,000,000 | |
Debt instrument fixed interest rate | 3.28% | |
Debt instrument final payment | $ 12,500,000 | |
Debt instrument maturity | 2030-11 | |
Unsecured Term Loan [Member] | Subsequent Event [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, term | 5 years | |
Debt instrument face amount | $ 14,600,000 | |
Debt instrument fixed interest rate | 1.15% |
Debt - Convertible Notes - Addi
Debt - Convertible Notes - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
May 31, 2017 | Jun. 30, 2015 | Mar. 31, 2020 | |
2017 Convertible Notes [Member] | |||
Debt Instrument [Line Items] | |||
Convertible notes aggregate principal amount | $ 289,000 | $ 289,000 | |
Convertible notes, interest rate | 1.875% | ||
Convertible notes, date of maturity | Jun. 1, 2024 | ||
2015 Convertible Notes [Member] | |||
Debt Instrument [Line Items] | |||
Convertible notes aggregate principal amount | $ 224,500 | $ 224,500 | |
Convertible notes, interest rate | 2.25% | ||
Convertible notes, date of maturity | Jun. 1, 2022 |
Debt - Schedule of Convertible
Debt - Schedule of Convertible Notes (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | May 31, 2017 | Jun. 30, 2015 | ||
2017 Convertible Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Remaining life in months | 50 months | |||
Gross proceeds | $ 289,000 | $ 289,000 | ||
Less: debt discount, net of amortization | (45,194) | |||
Less: debt issuance cost, net of amortization | (3,512) | |||
Net carrying amount | 240,294 | |||
Equity component | [1] | $ 70,140 | ||
2015 Convertible Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Remaining life in months | 26 months | |||
Gross proceeds | $ 224,500 | $ 224,500 | ||
Less: debt discount, net of amortization | (18,993) | |||
Less: debt issuance cost, net of amortization | (1,766) | |||
Net carrying amount | 203,741 | |||
Equity component | [1] | $ 52,903 | ||
[1] | Included in Additional paid-in capital on the consolidated balance sheet as of March 31, 2020. |
Debt - Summary of Interest Expe
Debt - Summary of Interest Expense Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Short Term Debt [Line Items] | ||
Total interest expense recognized | $ 29,275 | $ 30,353 |
Convertible Notes [Member] | ||
Short Term Debt [Line Items] | ||
Contractual interest coupon | 2,618 | 2,618 |
Amortization of debt discount | 4,388 | 4,121 |
Amortization of debt issuance costs | 387 | 372 |
Total interest expense recognized | $ 7,393 | $ 7,111 |
Debt - Revolving Credit Facilit
Debt - Revolving Credit Facility - Additional Information (Details) - Revolver [Member] $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Debt Instrument [Line Items] | |
Borrowing capacity | $ 200 |
Debt instrument maturity | 2022-12 |
Outstanding balance | $ 175 |
Unused availability, amount | $ 19.8 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rates | 27.40% | 19.70% |
Financial Instruments - Summary
Financial Instruments - Summary of Carrying Value, Estimated Fair Value and Classification of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Assets | |||
Short-term investments | $ 0 | $ 879 | |
Restricted cash | 10,459 | 10,401 | |
Liabilities | |||
Customer warrant | 145,906 | 152,534 | |
Carrying (Reported) Amount, Fair Value Disclosure [Member] | |||
Assets | |||
Cash and cash equivalents | 225,160 | 103,029 | |
Short-term investments | 879 | ||
Restricted cash | 10,459 | 10,401 | |
Financial instruments assets | 235,619 | 114,309 | |
Liabilities | |||
Term loans and notes | 1,772,178 | 1,800,911 | |
Revolver | 175,000 | 100,000 | |
Convertible notes | [1] | 444,035 | 439,261 |
Customer warrant | 8,869 | 24,345 | |
Financial instruments liabilities | 2,400,082 | 2,364,517 | |
Estimate of Fair Value, Fair Value Disclosure [Member] | |||
Assets | |||
Cash and cash equivalents | 225,160 | 103,029 | |
Short-term investments | 879 | ||
Restricted cash | 10,459 | 10,401 | |
Financial instruments assets | 235,619 | 114,309 | |
Liabilities | |||
Term loans and notes | 1,749,135 | 1,885,750 | |
Revolver | 160,993 | 103,575 | |
Convertible notes | [1] | 414,978 | 450,668 |
Customer warrant | 8,869 | 24,345 | |
Financial instruments liabilities | 2,333,975 | 2,464,338 | |
Fair Value, Inputs, Level 1 [Member] | |||
Assets | |||
Cash and cash equivalents | 225,160 | 103,029 | |
Short-term investments | 0 | ||
Restricted cash | 10,459 | 10,401 | |
Financial instruments assets | 235,619 | 113,430 | |
Liabilities | |||
Term loans and notes | 0 | 0 | |
Revolver | 0 | 0 | |
Convertible notes | [1] | 414,978 | 450,668 |
Customer warrant | 0 | 0 | |
Financial instruments liabilities | 414,978 | 450,668 | |
Fair Value, Inputs, Level 2 [Member] | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Short-term investments | 0 | ||
Restricted cash | 0 | 0 | |
Financial instruments assets | 0 | 0 | |
Liabilities | |||
Term loans and notes | 0 | 0 | |
Revolver | 0 | 0 | |
Convertible notes | [1] | 0 | 0 |
Customer warrant | 8,869 | 24,345 | |
Financial instruments liabilities | 8,869 | 24,345 | |
Fair Value, Inputs, Level 3 [Member] | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Short-term investments | 879 | ||
Restricted cash | 0 | 0 | |
Financial instruments assets | 0 | 879 | |
Liabilities | |||
Term loans and notes | 1,749,135 | 1,885,750 | |
Revolver | 160,993 | 103,575 | |
Convertible notes | [1] | 0 | 0 |
Customer warrant | 0 | 0 | |
Financial instruments liabilities | $ 1,910,128 | $ 1,989,325 | |
[1] | Carrying value is net of debt discounts and debt issuance costs (see Note 7). |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)Segment | Mar. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of operating segments | Segment | 3 | |
Operating Revenue | $ 643,502 | $ 679,683 |
DHL [Member] | ||
Segment Reporting Information [Line Items] | ||
Operating Revenue | $ 98,400 | $ 89,700 |
Segment Reporting - Operating R
Segment Reporting - Operating Revenue and Direct Contribution For Our Reportable Business Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating Revenue: | ||
Customer incentive asset amortization | $ (9,022) | $ (6,286) |
Other | 4,225 | 4,342 |
Total Operating Revenue | 643,502 | 679,683 |
Direct Contribution: | ||
Total Direct Contribution for Reportable Segments | 113,785 | 104,666 |
Unallocated expenses and (income), net | (88,719) | (80,136) |
Loss on early extinguishment of debt | 0 | (245) |
Unrealized gain (loss) on financial instruments | 924 | (46,575) |
Transaction-related expenses | (521) | (2,527) |
Gain on disposal of aircraft | 6,717 | 0 |
Income (loss) before income taxes | 32,186 | (24,817) |
Interest income | (480) | (2,044) |
Interest expense | 29,275 | 30,353 |
Capitalized interest | (193) | (463) |
Loss on early extinguishment of debt | 0 | 245 |
Unrealized (gain) loss on financial instruments | (924) | 46,575 |
Other (income) expense, net | 1,206 | (2,975) |
Operating Income | 61,070 | 46,874 |
ACMI [Member] | ||
Operating Revenue: | ||
Operating Revenue | 278,744 | 306,567 |
Direct Contribution: | ||
Total Direct Contribution for Reportable Segments | 52,306 | 40,006 |
Charter [Member] | ||
Operating Revenue: | ||
Operating Revenue | 327,629 | 305,114 |
Direct Contribution: | ||
Total Direct Contribution for Reportable Segments | 50,781 | 29,133 |
Dry Leasing [Member] | ||
Operating Revenue: | ||
Operating Revenue | 41,926 | 69,946 |
Direct Contribution: | ||
Total Direct Contribution for Reportable Segments | $ 10,698 | $ 35,527 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Disaggregated Charter Segment Revenue by Customer and Service Type (Details) - Charter [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Total Charter Revenue | $ 327,629 | $ 305,114 |
Commercial Customers [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Charter Revenue | 177,594 | 156,511 |
AMC [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Charter Revenue | 150,035 | 148,603 |
Cargo [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Charter Revenue | 236,964 | 206,350 |
Cargo [Member] | Commercial Customers [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Charter Revenue | 174,489 | 148,904 |
Cargo [Member] | AMC [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Charter Revenue | 62,475 | 57,446 |
Passenger [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Charter Revenue | 90,665 | 98,764 |
Passenger [Member] | Commercial Customers [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Charter Revenue | 3,105 | 7,607 |
Passenger [Member] | AMC [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Charter Revenue | $ 87,560 | $ 91,157 |
Labor and Legal Proceedings - A
Labor and Legal Proceedings - Additional Information (Details) - USD ($) $ in Millions | May 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Brazilian Customs Claim [Member] | |||
Loss Contingencies [Line Items] | |||
Brazilian claims in the aggregate | $ 4 | ||
Amounts on deposit for Brazilian claims included in deferred costs and other assets | $ 3.2 | $ 4.1 | |
Atlas Pilots [Member] | |||
Loss Contingencies [Line Items] | |||
Collective bargaining agreement period | 5 years | ||
Southern Air Pilots [Member] | |||
Loss Contingencies [Line Items] | |||
Collective bargaining agreement period | 4 years | ||
Atlas and Polar Dispatchers [Member] | |||
Loss Contingencies [Line Items] | |||
Collective bargaining agreement period | 5 years | ||
All Pilots [Member] | |||
Loss Contingencies [Line Items] | |||
Percentage of pay increase to pilots | 10.00% |
Earnings Per Share - Calculatio
Earnings Per Share - Calculations of Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net Income (Loss) | $ 23,353 | $ (29,710) |
Denominator: | ||
Basic EPS weighted average shares outstanding | 25,966 | 25,735 |
Diluted EPS weighted average shares outstanding | 25,966 | 25,735 |
Earnings (loss) per share: | ||
Basic | $ 0.90 | $ (1.15) |
Diluted | $ 0.90 | $ (1.15) |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Restricted shares and units in which performance or market conditions were not satisfied | 10.5 | 10.6 |
Warrants [Member] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Anti-dilutive shares excluded from the calculation of diluted EPS | 15.5 | 7.8 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning Balance | $ 1,792,179 | $ 2,067,964 |
Reclassification to interest expense | 308 | 344 |
Tax effect | (63) | (81) |
Ending Balance | 1,832,750 | 2,034,949 |
Interest Rate Derivatives [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning Balance | (2,827) | (3,841) |
Reclassification to interest expense | 308 | 344 |
Tax effect | (63) | (81) |
Ending Balance | (2,582) | (3,578) |
Foreign Currency Translation [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning Balance | 9 | 9 |
Reclassification to interest expense | 0 | 0 |
Tax effect | 0 | 0 |
Ending Balance | 9 | 9 |
Accumulated Other Comprehensive Income (Loss) [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning Balance | (2,818) | (3,832) |
Ending Balance | $ (2,573) | $ (3,569) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accumulated Other Comprehensive Income Loss [Abstract] | ||
Unamortized realized loss in Accumulated other comprehensive income (loss) related to forward-starting interest rate swaps | $ 3.4 | |
Net realized losses reclassified into earnings | 0.3 | $ 0.3 |
Realized losses related to forward-starting interest rate swaps expected to be reclassified into earnings within the next 12 months | $ 1.1 |