The decision by Atlas, the world's leading contract freighter operation, to acquire Polar Air Cargo has led to a rash of speculation in the cargo industry.

Some see the $84 million, acquisition, whereby Atlas will buy Polar from leasing giant GECAS, as evidence of the continuing difficulties Atlas faces in the wet lease market for Boeing 747 freighters. Its business is based on placing the fleet on the basis of aircraft, crew, maintenance and basic insurance (ACMI).

Already this year, Atlas has grounded six of its 37 747 freighters and laid off 30% of its ground staff and 13% of its pilots. Operating income plunged by 61% in the first quarter and major customers are said to be struggling to fill the aircraft Atlas flies on their behalf.

In such a climate, one suspicion is that Atlas is seeking to move from leasing into mainline freighter operations through the Polar acquisition. Atlas denies this, saying the two companies will be kept separate, but its customers, particularly major Asian airlines - to which Polar is a direct competitor on transpacific routes - may find this argument unconvincing.

The fact that Atlas considers the deal as a way to gain coveted traffic rights into and beyond Japan, the world's fourth largest freight market, will not allay airline fears. Polar has 16 landing slots a week at Tokyo Narita, along with rights to 100 other markets worldwide.

It is evident that Atlas is not interested in much of Polar's freighter fleet. Its nine 747-100Fs are to be disposed of, and Atlas is ambiguous about its eight 747-200Fs, four of them recently acquired, saying only they will "be operated or disposed of". Polar pilots seem resigned to the 747-200F fleet being sold, pointing out that they are Pratt & Whitney-powered aircraft, while the Atlas fleet has General Electric engines.

That leaves Polar's four 747-400Fs, and accusations that Atlas is engaged in little more than asset stripping. Cynics also speculate that Polar's route network, much reduced from its glory days in the mid-1990s, is wanted chiefly to provide work for the grounded Atlas aircraft.

But not all accept this theory. One industry analyst sees the purchase as the basis for a ground-breaking shift in strategy. "They plan to move into a new market, not just offering full freighters, but offering airlines maybe 30 tonnes a week on certain routes," he says. "It will carve up capacity into more flexible increments and redefine ACMI leasing services, much as Michael Chowdry did when he set the company up."

Far from struggling, Atlas is adopting a creative strategy to cope with the downturn, he says. "It is in periods of turbulence that creative companies see an opportunity to reconfigure their business. Educating carriers will be a challenge, but once they understand, I think they will see this as a beneficial move."

Source: Airline Business