Item 7.01. Regulation FD Disclosure.
As part of a potential debt financing transaction in connection with the
previously announced pending acquisition of
Preliminary Estimated Unaudited Financial Results for the Year Ended
Set forth below are the Company's selected preliminary estimated unaudited
financial results for the year ended
For the Year Ended December 31, 2022 December 31, 2021 (Low) (High) (dollars in thousands) (estimated) (actual) Operating Revenue$ 4,500,000 $ 4,600,000 $ 4,030,829 Net income$ 341,000 $ 372,000 $ 493,317 Adjusted EBITDA$ 880,000 $ 920,000 $ 1,067,347
Operating revenue increased primarily due to an increase in revenue per block
hour, partially offset by a reduction in block hours. Revenue per block hour
rose primarily due to higher fuel prices and yields, net of fuel, including the
impact of new and extended long-term contracts and increased cargo flying for
the
Net income and Adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") decreased, primarily due to increased pilot
costs related to our new pilot collective bargaining agreement, higher overtime
pay driven by operational disruptions, including an abnormal increase in
COVID-19 cases (which were significantly higher from late June through August)
and severe weather events, and higher premium pay for pilots operating in
certain areas significantly impacted by COVID-19. In addition, Net income and
Adjusted EBITDA were negatively impacted by lower aircraft utilization and
higher crew travel costs driven by the operational disruptions noted above, as
well as higher commercial passenger airfare rates. The increase in COVID-19
cases and severe weather events also adversely impacted our crew availability
and our ability to position them due to the widespread and well-publicized
cancellations of commercial passenger flights. Partially offsetting the impact
of these items were increased yields, net of fuel, primarily driven by new and
extended long-term contracts, increased cargo flying for the
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Adjusted EBITDA is a non-GAAP financial measure, which excludes certain noncash income and expenses, and items impacting year-over-year comparisons of our results. This non-GAAP financial measure may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for net income, which is the most directly comparable measure of performance prepared in accordance with GAAP.
We use this non-GAAP financial measure in assessing the performance of our ongoing operations and in planning and forecasting future periods. This adjusted measure provides a more comparable basis to analyze operating results and earnings and is a measure commonly used by shareholders to measure our performance. In addition, management's incentive compensation is determined, in part, by using Adjusted EBITDA. We believe that this adjusted measure, when considered together with the corresponding GAAP financial measure and the reconciliation to that measure, provides meaningful supplemental information to assist investors and analysts in understanding our business results and assessing our prospects for future performance.
The following table presents a reconciliation to net income, the most comparable
GAAP financial measure, to Adjusted EBITDA for the years ended
For the Year Ended December 31, 2022 December 31, 2021 (Low) (High) (dollars in thousands) (estimated) (actual) Net income$ 341,000 $ 372,000 $ 493,317 Depreciation and amortization 303,200 303,200 281,209 Income tax expense 101,300 110,300 154,074 Interest expense, net 60,300 60,300 98,453 EBITDA 805,800 845,800 1,027,053 Customer incentive asset amortization (a) 39,800 39,800 44,162 Adjustments to CBA paid time-off benefits (b) 2,200 2,200 29,211 Noncash expenses (c) - - 5,361 CARES Act grant income (d) - - (40,944 ) Costs associated with transactions (e) 12,200 12,200 1,012 Special charge (f) 16,200 16,200 - Other net (g) 3,800 3,800 1,492 Adjusted EBITDA$ 880,000 $ 920,000 $ 1,067,347
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(a) Represents an adjustment related to the amortization of a customer incentive
asset.
(b) Adjustments to collective bargaining agreement ("CBA") paid time-off benefits
in 2022 and 2021 are related to our new CBA.
(c) Noncash expenses in 2021 are primarily related to amortization of debt
discount on convertible notes.
(d) CARES Act grant income in 2021 related to income associated with the payroll
support program available to cargo air carriers under the CARES Act during
the COVID-19 pandemic.
(e) Costs associated with transactions in 2022 are related to our proposed
Merger. Costs associated with transactions in 2021 are related to our
integration of an acquired airline.
(f) Special charge in 2022 represented a charge related to six nonoperational
spare CF6-80 engines held for sale to be traded in for newly overhauled
engines and relates to two other CF6-80 engines dry leased to a customer.
(g) Other, net in 2022 primarily related to a loss on the sale of four
nonoperational spare CF6-80 engines, partially offset by a gain during the first quarter of 2022 from the sale of six nonoperational spare CF6-80 engines, which were previously classified as assets held for sale and a loss on early extinguishment of debt. Other, net in 2021 primarily related to leadership transaction costs.
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Forward-Looking Statements
This communication contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, related to AAWW, Parent and the acquisition of AAWW by Parent that are subject to risks, uncertainties and other factors. AAWW intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Those statements are based on management's beliefs, plans, expectations and assumptions, and on information currently available to management. Generally, the words "will," "may," "should," "could," "would," "expect," "anticipate," "intend," "plan," "continue," "believe," "seek," "project," "estimate," and similar expressions used in this communication that do not relate to historical facts are intended to identify forward-looking statements.
Such forward-looking statements speak only as of the date of this communication. They are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of AAWW and its subsidiaries that may cause the actual results of AAWW or its subsidiaries to be materially different from any future results, express or implied, in such forward-looking statements.
Factors that could cause actual results to differ materially from these
forward-looking statements include, but are not limited to, the following: the
risk that the proposed Merger may not be completed in a timely manner or at all;
the possibility that any or all of the various conditions to the consummation of
the proposed Merger may not be satisfied or waived, including the failure to
receive any required regulatory approvals from any applicable governmental
entities (or any conditions, limitations or restrictions placed on such
approvals); the possibility that competing offers or acquisition proposals for
AAWW will be made; the occurrence of any event, change or other circumstance
that could give rise to the termination of the Merger Agreement, including in
circumstances which would require AAWW to pay a termination fee; the effect of
the announcement, pendency of the proposed Merger on AAWW's ability to attract,
motivate or retain key executives, pilots and associates, its ability to
maintain relationships with its customers, vendors, service providers and others
with whom it does business, or its operating results and business generally;
risks related to the proposed Merger diverting management's attention from
AAWW's ongoing business operations; the risk of shareholder litigation in
connection with the proposed Merger, including resulting expense or delay; and
(i) any other risks discussed in AAWW's annual report on Form 10-K for the
fiscal year ended
Other factors and assumptions not identified above may also affect the forward-looking statements, and these other factors and assumptions may also cause actual results to differ materially from those discussed.
AAWW assumes no obligation to update such statements contained in this communication to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law and expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.
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