Atlas Air reduces 2013 maintenance cost estimate by $21m

Washington DC
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Atlas Air Holdings has reduced its maintenance cost forecast for 2013 by $21 million, planning to see maintenance expenses total $172 million in 2013 compared to the $193 million projected last quarter.

The decrease is "primarily driven by our continuous improvement initiatives", says William Flynn, president and chief executive of Atlas Air Worldwide. The firm, which owns subsidiaries Atlas Air, Polar Air Cargo and dry-leasing company Titan Aviation, will offer more details on this programme at its investor day on 6 June.

Timing of maintenance events also plays a role in the decreased outlook. The carrier is expecting seven fewer General Electric CF6-80 engine overhauls in the year compared to last quarter's outlook. Atlas is now expecting the number of engine overhauls to be flat year-over-year at seven events, rather than 21 previously expected.

About 60% of Atlas Air Worldwide's maintenance expenses are expected to be realised in the first half of 2013, which is timed with Atlas' seasonally lower demand for commercial charter services in the beginning of the year.

In the first quarter, Atlas Air is expecting to see maintenance expenses total about $58.4 million, with heavy maintenance making up $30 million. These heavy overhauls will start to decline until reaching just $1.5 million by the fourth quarter.

Line maintenance will reflect additional block hour flying in the latter half of the year, growing from $24.9 million in the first quarter to $26.2 million in the fourth quarter. Non-heavy maintenance expenses, such as those covering landing gear and thrust reverser overhauls, will decline from about $3.5 million in the beginning of 2013 to a negligible amount by the end of the year.

Atlas Air spent $165 million on maintenance in 2012. A majority of this expense--$149.5 million-was spent on maintaining Atlas Air Worldwide's fleet of Boeing 747-400 freighters, which is comprised of 21 Boeing 747-400F and three 747-400BCF aircraft.

The carrier has also revised its outlook to include fewer block hours in its commercial charter segment than it previously forecast. It is now forecasting block hour volumes to total 175,000 hours in 2013 across all segments, down from 185,000 hours.