Atlas Air, the fifth largest cargo airline by traffic and the world’s largest operator of Boeing 747 freighter aircraft, is getting bigger.
The New York-based carrier on Thursday said it will acquire a 49% stake in Iceland-based Air Atlanta, a provider of contracted charter service, as well as its fleet of 14 owned widebody aircraft to expand capacity amid tight supply for large freighter aircraft.
As part of the new ownership structure, Air Atlanta’s CEO and vice presidents will acquire a 51% controlling interest in the operating companies (Air Atlanta Icelandic and Air Atlanta Europe). Air Atlanta will continue to operate under its existing leadership team and operating structure, while both companies collaborate commercially to pursue incremental global growth opportunities.
Atlas Air will buy the Air Atlanta aircraft through its Titan Aviation Leasing subsidiary and lease the aircraft back to Air Atlanta airlines to continue operating. Sale-leasebacks are financial transactions that allow aircraft owners to extract capital from assets while retaining their use through fixed lease payments to the new owner.
Atlas Air said that partnering with Air Atlanta strengthens its ability to provide freight service to business at a time when many large freighters are nearing retirement age and manufacturers have been unable to increase production.
Between its Iceland and Malta certified airlines, Air Atlanta operates 18 widebody aircraft and owns 14 of them: 12 Boeing 747-400 cargo jets, two Boeing 777-300 passenger-to-freighter conversions, and four 777 passenger jets. It also owns four Boeing 747-400 cargo jets that are leased to Saudia Cargo, according to aviation databases.
Air Atlanta Executive Chairman Hannes Hilmarsson will step down after 20 years in leadership roles with the company.
The transaction is expected to close in the third quarter following customary regulatory reviews.
“Teaming up with a strong, experienced international operator such as Atlas only strengthens Air Atlanta and opens new opportunities for continued growth in an ever-evolving global market. The partnership can expand access to aircraft, enhance our ability to renew the fleet and support value creation for our employees and customers around the world,” said Air Atlanta CEO Baldvin Hermannsson on LinkedIn.
Atlas Air controls about 50% of the long-term charter cargo business for large aircraft and crews. Together, the companies will control 60% of outsourced widebody lease-and-fly agreements and about 13% of the large widebody freighter fleet, said Trade and Transport Group on LinkedIn. It and other analysts project the widebody freighter market will have constrained supply through the end of the decade.
Air Atlanta operates two 777-300 converted freighters for Hong Kong-based Fly Meta, which leased the aircraft and placed them with Air Atlanta to operate on its behalf. Other Air Atlanta customers include Magma Aviation and Network Airline Management. All three companies are cargo management companies that lack aircraft operating certificates and rely on third-party carriers as their operating platform.
Atlas Air made a splash in March when it ordered 20 A350 freighters from Airbus after decades as an all-Boeing airline.
In related news, Titan Aviation Leasing announced on Friday the sale of a Boeing 767-300 converted freighter, previously leased by Ethiopian Airlines, to Cargo Aircraft Management, the leasing arm of Air Transport Services Group.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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