Panalpina, Atlas Air extend contract – with changes

Swiss forwarder Panalpina and U.S.-based freighter lessor Atlas Air Worldwide have extended their ongoing relationship with five-year contract extension, but the terms of the agreement include some significant changes that suggest Panalpina may be less interested in ACMI leasing.

The original ACMI lease agreement with Atlas Air, signed in 2012, was for Panalpina to ACMI-lease two 747-8Fs. Under the newly inked agreement, one of the 747-8Fs will continue to fly for Panalpina on the trans-Atlantic route, which includes calls in Mexico and the U.K., while the other747-8Fs will go to DHL. Meanwhile, Panalpina will switch to an Atlas 747-400F, which will be operated on a charter basis between Panalpina’s Huntsville, Alabama, hub and Hong Kong. Panalpina expects that it will charter an estimated 200 flights a year beginning in March.

“The new long-term agreement with Atlas Air will intensify our cooperation and increase our joint business,” says Lucas Kuehner, global head of airfreight at Panalpina. “The switch from one of our wet-leased 747-8Fs to more than 200 scheduled full charters per year as part of this agreement equals a change in our procurement strategy and prepares the ground for the continued expansion of our controlled air freight network.”

The newly expanded airfreight network already accounts for 15 percent of Panalpina’s airfreight volumes each year. Panalpina controls a series of scheduled charters using different air cargo carriers, leased aircraft, ground handling and flight operations.

Atlas Air also ACMI-leases aircraft to Astral Aviation in Kenya, Chapman Freeborn in the U.K., and BST Logistics in Hong Kong. It reported adjusted net income of US$38.8 million for Q414 and US$93.5 million for the full year. William Flynn, president and CEO of Atlas Air, said the company’s performance partially stemmed from the leadership and strength of the ACMI and charter business.

Panalpina’s full-year results for 2014 will be released March 4, but the company’s stock is about halfway between its 52-week high and 52-week low, which may indicate that it needed to revisit the lease on the one 747-8F for other reasons than restructuring.

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