6 THINGS AAWW SHAREHOLDERS SHOULD KNOW ABOUT THE COMPANY’S FUTURE



11-29-2017

Atlas Air Worldwide Holdings (NASDAQ: AAWW) and its subsidiary airlines, Atlas Air, Southern Air and Polar Air Cargo Worldwide, Inc., face significant operational and staffing threats that jeopardize the future of the business. These challenges result directly from years of mismanagement of its pilot contract situation. AAWW has focused instead on diving into emerging business segments, such as e-commerce, without ensuring it has enough pilots and equipment to accommodate these changes, pushing the company’s flying operations to the brink of collapse.

1) Atlas faces a critical shortage of pilots, fueled by years of substandard pay and benefits and extensive delays in union contract negotiations that have triggered substantial attrition, retention and recruitment challenges. Since the start of 2017, 216 pilots have left Atlas Air, a 65 percent surge compared to the entirety of 2016. Atlas Air, which supplies pilots for both its own operations and those at Polar Air Cargo, has even had to reassign its pilot instructor staff to cover widening gaps in its workforce.

2) Atlas Air executives are misleading investors regarding contract negotiations with pilots. After abruptly halting negotiations in April 2016 and then only returning to the bargaining table 14 months later, the company once again appears to be intentionally delaying the negotiations process. Recently, Atlas management attended just a few hours during the last week of negotiations in November and refused to discuss any new economic terms.

3) Atlas’ business model continues to evolve beyond traditional long-haul freight toward e-commerce and express deliveries. However, the company’s old staffing models have not kept up with these changes, driving chaotic scheduling practices and workforce deficiencies at Atlas Air and Polar Air Cargo. These management failures have exacerbated existing concerns surrounding the substandard pay and conditions that have fueled AAWW’s operational risks, which could spell serious trouble for the company’s high-profile contract with Amazon. Despite its failure to address these staffing and operational problems, AAWW has continued to deepen its commitment to the e-commerce giant as it moves toward operating 20 planes for Amazon by 2018.

4) Atlas’ overstretched operation is fueling growing concerns about pilot fatigue. Chaotic scheduling practices have led to grueling hours for Atlas Air and Polar Air Cargo pilots, with some flying as many as 20 days a month around the globe and pilots being pulled from one customer’s flight to service another customer. These conditions have been worsened by breakdowns in the company’s operations, as some pilots have been left without overnight lodging or transportation between their destinations.

5) The company’s mismanaged scheduling practices have also aggravated issues with pilot health. While the company has accused the pilots of abusing sick and fatigue policies, Atlas executives were forced to admit in court that every sick call cited in a recent lawsuit against their own pilots was in fact legitimate. The pilots’ court filings detail the experiences of one Atlas Air pilot who suffered from projectile vomiting and heat stroke symptoms while working in a plane that was over 100 degrees inside and lacked air conditioning. As the company attempts to overcome an overburdened operation, pilots have even been pressured to fly without necessities being stocked on their planes, such as toilet paper or food for flight crews.

6) AAWW’s defense department contracts remain a critical part of the company’s business, and yet service for its military clients, including servicemen and their families, has continued to be plagued by staffing and maintenance-driven delays. Because the company relies on an aged fleet of aircraft to serve the military, maintenance delays occur with increasing frequency, sometimes extending hours or even days.

The Airline Professionals Association, Teamsters Local 1224 represents pilots and flight crew members from 11 airlines operating across the country.