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Atlas Air finally enters bankruptcy

Troubled air cargo lessor Atlas Air Worldwide Holdings is confident of an early recovery after deals with its creditors finally enabled it to enter Chapter 11 bankruptcy protection on 30 January. The group includes its cargo divisions Atlas Air and Polar Air Cargo.

Atlas Air director Alan Caminiti says the move came after agreements with all its major creditors on the restructuring of the carrier's debt. "We are very pleased with the way things have gone, and that we have managed to pre-negotiate most aspects of it," he says, adding that the carrier hoped to emerge from Chapter 11 as early as June. Atlas says it has conditionally arranged $50 million in debtor-in-possession and exit financing from CIT Group and Ableco Finance. This deal, and current cash reserves, will enable the company and its divisions to operate normally through the Chapter 11 process, it says.

Atlas Air will now be seeking to renegotiate its aircraft lease deals to get terms "more in line with the reality of the market", according to Caminiti. "We were paying very high prices for our leases that did not take into account the general economic downturn and market conditions since 9/11," he says.

Atlas Air will also be downsizing its fleet of 46 Boeing 747 freighters as part of its restructuring plan. However, Caminiti insists that there will be no change in the company's core strategy, which includes a mix of freighter wet-leasing, charter work, and the scheduled freighter operations of Polar Air Cargo.

Although refusing to comment in detail on prospects for the freighter wet-leasing market going forward, Caminiti does say that "we are optimistic that 2004 will be better than last year as the economy and marketplace improves. ACMI (aircraft, crew, maintenance and insurance) remains a viable market to be in and will be more so as the economy improves."

Atlas Air was forced to delay entering Chapter 11 in December, allegedly due to revenue falling below expectations. However, Caminiti says the delay was due to attempts to get as many creditors on board as possible. The carrier has yet to publish its calendar year 2003 results. "We were obviously paying attention to the Chapter 11 filing first," he says.

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