Atlas Air Worldwide Holdings today said that it has entered into a definitive agreement to acquire privately held Southern Air Holdings, a premier provider of intercontinental and domestic air cargo services, in an immediately accretive, all-cash, debt-free transaction valued at approximately $110 million.
The transaction is subject to customary closing conditions and approval by the U.S. Department of Transportation, and is expected to close in the next few months.
Southern Air is the parent company of Worldwide Air Logistics Group and its two operating subsidiaries, Southern Air, Inc. and Florida West International Airways, Inc.
“We are very pleased to announce a strategically compelling, highly complementary and immediately accretive acquisition of Southern Air,” said William J. Flynn, President and Chief Executive Officer of Atlas Air Worldwide. “And we are eager to capitalize on the substantial opportunities that the transaction will provide, especially 777 and 737 aircraft operations.
“The result will be a more diversified and profitable company offering access to the widest range of modern, efficient aircraft, together with a broader mix of services and a greater scale and global footprint that will drive significant value for our customers and shareholders.”
“We very much look forward to joining the Atlas Air family of companies,” said Daniel J. McHugh, Chief Executive Officer of Southern Air Holdings. “We share the same commitment to providing superior customer service via our exceptional team of aviation professionals. And Southern Air will now have a strong and viable parent to enable us to continue to grow.”
Strategic and Financial Benefits of Transaction
– Enhanced Service Offerings and Customer Relationships: The transaction provides Atlas Air Worldwide immediate entry into 777 and 737 aircraft operating platforms, with potential for developing additional business with existing and new customers of both companies.
Southern Air’s main operating company currently flies five 777-200Fs and five 737-400Fs under flight services (CMI, or Crew, Maintenance and Insurance) agreements with DHL Express, the leading global brand in the logistics industry.
The platforms provided by these aircraft will augment Atlas Air Worldwide’s ability to offer customers the broadest array of aircraft and operating services for domestic, regional and international applications.
– Complementary Businesses: Atlas Air Worldwide and Southern Air have complementary operations, which will aid in providing seamless operations for customers. Further, the transaction will enhance Atlas Air Worldwide’s position as a leading global provider of outsourced aircraft and aviation operating services.
Southern Air’s highly professional, experienced workforce and its capabilities complement Atlas Air Worldwide’s 747 ACMI (Aircraft, Crew, Maintenance and Insurance) and Charter operations, its 747 and 767 CMI services, and its freighter-centric Dry Leasing portfolio of 777, 757 and 737 aircraft. Together, the companies will have a fleet of more than 75 aircraft.
– Increased Revenues: The combination with Southern Air is anticipated to add approximately $100 million to Atlas Air Worldwide’s annual revenues and provide a solid foundation for additional growth.
– Immediately Accretive to Earnings: The transaction is also expected to be immediately accretive to Atlas Air Worldwide’s adjusted earnings per share in 2016 with EBITDA and adjusted net income margins in line with Atlas Air Worldwide’s. The impact of this transaction will be included in Atlas Air Worldwide’s 2016 earnings framework, to be discussed during the company’s next earnings release on February 18, 2016.
– Transaction Funding: Reflecting the company’s balance sheet position, Atlas Air Worldwide intends to fund the acquisition of Southern Air using available cash on hand.