2013 ANNUAL 2013 REPORT LEADING THE WAY FORWARD LEADING THE WAY Atlas Air Worldwide Holdings, Inc. 2013 Annual Report A tlas Air Worldwide Holdings, Inc. is the parent company of Atlas Air, Inc. (Atlas), Titan Aviation Leasing (Titan), the majority shareholder of Polar Air Cargo Worldwide, Inc. (Polar), and 49-percent owner of Global Supply Systems Limited (GSS). LEADING WITH W e are a leading global provider of outsourced aircraft and aviation services for commercial and military customers, operating the world’s largest fleet OUR FLEET of Boeing 747 Freighters, as well as Boeing 747 and OURL F EET—MAY 2014 767 passenger aircraft and Boeing 767 Freighters. Our next-generation 747-8F offers the industry the latest in technology and efficiency, and we now provide 777 freighters on a dry-leasing basis. 747–8F We operated to 430 destinations in more than 120 countries in 2013, reflecting our unmatched global scale and scope. 747–400F 747-400 LCF 747–400 767-200/ 300ER 767-200SF/ 300ERF 777-200LRF OVERVIEW New-technology freighter offering 16% more revenue cargo volume than the benchmark 747-400, plus improved fuel-burn efficiency from new engines and wing design. (9 in service) An industry leader for operating perfor- mance in the intercontinental air-freighter market due to its low cost per ton-mile and large cargo capacity. (21 in service) Modified 747-400 providing primary transport of major Boeing 787 Dreamliner assemblies from suppliers around the world. (4 in CMI service) Our heritage of operational excellence extends to Boeing 747 passenger versions, seating 189 to 474 passengers for CMI service and military/commercial charter missions. (4 in service) Mid-size, twin-engine passenger aircraft for long-haul charters, seating from 102 passengers in all-first class up to 255. (1 -200 CMI and 3 -300ER in service) Fuel-efficient freighter aircraft ideal for supporting customers with time-definite express cargo. (5 -200SF and 2 -300ERF in CMI service) World’s largest twin-engine freighter and a strong fit for our Titan dry-leasing business. (6 in dry-lease service) ATLAS AIR WORLDWIDE 1 2013 Annual Report LEADING THE MARKET BY PROVIDING UNSURPASSED OUTSOURCED AIRCRAFT AND AVIATION SERVICES ACMi—AIRCRAFT, CREW, MAINTENANCE AND INSURANCE With our leadership in the ACMI market in 2013, our diversified business model continued to drive forward as we placed our next-generation 747-8 freighters into contracts with a varied set of global customers, including Etihad Cargo and BST Logistics of Hong Kong, for use on key global routes. Meanwhile, our Boeing 747-400F standard-bearer also saw new ACMI placements in 2013 with Astral Aviation Limited, a Kenya-based cargo airline, and Chapman Freeborn, a leading air charter specialist. Our nose-loading 747-400F is the workhorse of our fleet. Here, at Portland International Airport, Portland, Oregon, ground operations is preparing to load helicopters for delivery to Jorge Chávez International Airport, Lima, Peru. 2 GROWING CUSTOMER BASE CMI—CREW, MAINTENANCE AND INSURANCE Within ACMI, we diversified our CMI offerings in 2013 with a long-term agreement to operate a VIP-configured Boeing 767-200 passenger aircraft for MLW Air, LLC. This 102-seat all-first class model expands our innovative CMI service solution and growing 767 aircraft platform into very high-end passenger transport. The aircraft is marketed to sports teams, entertainers and other high-profile users. In 2013, we also introduced 767-300ER freighters on intra-Asia flights for DHL Express. FLIGHT CREW TRAINING Our world-renowned expertise in operating Boeing 747s helped us renew and extend our long-term contract with the U.S. government to train pilots of the U.S. President’s Air Force One and the E-4B Advanced Airborne Command Post. The crews, as well as approximately 1,000 Atlas pilots, receive ground and flight-simulator instruction at our Miami training center. OUR EMPLOYEES The Atlas Air Worldwide family remains the key to our diversification and growth. Operating a 24-hour, global fleet safely, efficiently and profitably requires innovation and teamwork. That means employees who are talented, engaged, and informed—putting safety, security, compliance and customers first. With pilots operating cargo and passenger aircraft to 430 destinations, flight atten- dants providing world-class cabin service and a staff that manages complex operational and financial details, our employees are unique in the industry and dedicated to leading our business forward. ATLAS AIR WORLDWIDE 3 2013 Annual Report LEADING BY PROVIDING CUSTOMERS WITH VALUABLE KNOWLEDGE AND EXCEllENT SERVICE As an industry innovator, Atlas Air Worldwide took decisive steps in 2013 to continue the transformation and diversification of our business. While we remain a cargo leader, we’re thinking differently to pursue growth opportunities in aircraft dry leasing and passenger charter operations—all while delivering highly reliable, safe, flexible and compliant operations and service for an increasingly diverse spectrum of satisfied customers. Auburn University grads Captain Jim Hollis and First Officer Chris Guerra (pictured above) flew the Auburn band, cheerleaders and dance team from Birmingham, Alabama, to Pasadena, California, on our Atlas Air 747-400 passenger aircraft for the Championship Bowl Series title game. 4 COMMERCIAL PASSENGER CHARTERS Reflecting our extensive knowledge of the aircraft In addition to carrying thousands of tons of freight, market—especially the freighter segment—and our we safely transported nearly 265,000 passengers to access to capital markets, we are proud to empower their destinations in 2013. The growth of our passen- our customers to drive the efficiency and growth of ger business demonstrates not only our commitment their aviation operations. to diversifying our business and anticipating market needs as a way to drive shareholder value, but also BOEING 777 FREIGHTERS our promise to deliver the highest quality service to In 2013, Titan acquired its first three Boeing 777 our customers and passengers. Freighters, on long-term lease to AeroLogic and Our flexible passenger fleet enables us to carry Emirates. With the 777 freighter, the company gains between 102 and 474 people comfortably anywhere entry into an attractive aircraft type consistent with in the world. Pro and college sports teams, musical our strategy of investing in new technology that artists, celebrities, world leaders and group-travel creates superior value for our customers. In January companies continue to rely on Atlas as their choice 2014, Titan acquired three additional Boeing 777 for charter transportation. Freighters that are currently on long-term lease to Atlas also remains a trusted partner of the U.S. TNT Transport International. The addition of these Air Force’s Air Mobility Command (AMC) and the aircraft represents a continuation of our plan to grow U.S. Transportation Command to transport troops Titan’s dry-leasing platform through selective invest- safely around the world. ments in aircraft with existing leases that support leading operators in the airfreight industry. SCHEDULED CHARTERS In 2013, Atlas became the No. 1 scheduled charter carrier in South America. With the expertise to efficiently transport just about anything, freight for- warders in particular rely on Atlas to transport per- ishables that include just-picked fruits and vegetables DRY-LEASING FLEET—MAY 2014 and fresh-cut flowers to North America, Europe and beyond. 3 to TNT, 2 to AeroLogic, 777-200LRF DRY LEASING 1 to Emirates Leading the way forward means diversifying our business and fleet and developing new customers 1 to Shanghai and markets. Airlines Cargo 757–200F Our growing Titan dry-leasing subsidiary focuses on the acquisition, dry leasing, sale, sale-leaseback, marketing and servicing of commercial aircraft and 1 to Kenya Airways and related equipment. Titan typically works with niche 737-800 1 to Skymark Airlines assets that require specialized knowledge of freight markets and freighter-asset valuations. The fleet consists of Boeing 777, 757 and 737 1 to China freighters, as well as 737 passenger aircraft on lease to 737–300SF Postal Airlines customers in Europe, Asia, Africa and the Middle East. ATLAS AIR WORLDWIDE 5 2013 Annual Report A MESSAGE FROM THE CHAIRMAN OF THE BOARD MODERN, EFFICIENT AIRCRAFT. INNOVATIVE, VALUEADDED OPERATING SERVICES. A RESILIENT BUSINESS “MODEL. SOLID FINANCIAL STRUCTURE. AND A SEASONED, TALENTED MANAGEMENT TEAM. Modern, efficient aircraft. Innovative, value-added operating Enhancing these contributions,” our ongoing Continuous services. A resilient business model. Solid financial structure. Improvement efforts remain focused on generating further oper- And a seasoned, talented management team. ating efficiencies and productivity gains. Atlas Air Worldwide is the recognized leader in international Our strategies and actions position us well to capitalize aviation outsourcing. on market improvements and the strong operating leverage in With service to 430 destinations in over 120 countries in 2013, our model. And our capital allocation strategy demonstrates our the scale and scope of our operations are unrivaled. And our commitment to creating, enhancing and returning value to our business continues to expand and diversify. shareholders, both through business growth and returns of capital. Leading the way forward, we continue to leverage our core Our approach to business growth is disciplined. We will: competencies and market leadership, seizing on