DHL buys air cargo stake for $150m

16/Oct/2006

Atlas Air Worldwide Holdings, Inc., a leading provider of global air cargo services, has announced that its subsidiary, Polar Air Cargo Worldwide, Inc., has executed a letter of intent for DHL to acquire a 49% equity interest, including a 25% voting interest, in the scheduled-service business of Polar Air Cargo, Inc. (Polar), in exchange for $150 million in cash.

The proposed transaction includes a strategic 20-year commercial arrangement that will provide DHL access to aircraft capacity in key global markets, while providing the AAWW companies with a long-term customer and potential revenue stream in excess of $3.5 billion over the full-term of the agreement, although there are certain early termination rights at five-year intervals. In addition, DHL will have access to available additional aircraft capacity from AAWW's subsidiary Atlas Air, Inc. (Atlas).

William J. Flynn, President and CEO of AAWW, said, "This is a landmark transaction and exciting partnership for our company. Our strategy has been to maximize the value and potential of our scheduled-service business, and this transaction accomplishes that goal. DHL is a pre-eminent express service provider and the world's largest buyer of third-party airlift capacity. Their investment and the long-term commercial agreement will markedly strengthen our scheduled-service business, and will enhance our ability to provide customers with superior service in key international markets. Further, it provides our company with a significant increase in our cash liquidity and a very attractive long-term revenue stream."

"This key strategic partnership ensures we can meet the rapidly rising demand for air cargo capacities between the U.S. and Asian destinations. DHL Express is already the market leader in Asia and the partnership with Polar will help us offer even higher quality levels to customers, while at the same time improving profitability on the fast-growing routes between the U.S. and Asia," said John Mullen, CEO of DHL's Express division. "The Trans-Pacific route is one of the most rapidly growing and competitive trade lanes globally and adding capacity through an even stronger presence in the U.S. is a crucial factor in supporting our dynamic Asian business. Polar is the ideal partner to achieve that. Our long-term partnership will benefit both companies and enhance competition in the express delivery sector of the air cargo market."

Under the terms of the 20-year commercial arrangement, DHL would have access to lift capacity through Polar's current fleet of six Boeing 747-400 Freighters, plus access to additional available ACMI aircraft from Atlas.

Atlas Air Worldwide/DHL