Dahlman Rose Gives Color On Atlas Air Worldwide Holdings Follow Earnings Results

Atlas Air Worldwide Holdings AAWW reported 4Q10 EPS of $1.58, exceeding Dahlman Rose's estimate of $1.24 and the consensus estimate of $1.34. Revenue in the quarter grew by 11.9% due to a 29.7% increase in ACMI revenue. Total block hours flown during the quarter increased by 11.3% due to an increase of nearly four aircraft. Revenue per block hour in the ACMI business increased by 9.5% as the company saw strong demand for its 747-400. Management indicated they expect to take delivery of three B747-8F's in 2H11 and have them in service for all of 4Q11. Atlas expects to receive $0.04/share in incremental EPS for every month one B747-8F is in service. Atlas is expected to take delivery of 12 747-8F over the next three years; however, management has yet to finalize a delivery schedule with Boeing. Dahlman is raising its 2011 EPS estimate to $6.00 from $5.71 to reflect the strong outlook for Atlas Air this year. Management expects EPS in excess of $5.30 in 2011 compared with $5.75 in 2010, with a pre-tax margin in excess of 15%, compared to 17.4% in 2010. Military block hours are expected to be 17,000 for 2011, down from 18,678, due to no M-ATV missions flown in 2011, down from more than 100 last year. Dahlman is raising its price target from $67 to $72. AAWW is trading higher at $64.92