Atlas Air refuses to repay $406mn in US bailout funds

Atlas Air (5Y, New York JFK) has refused to return USD406 million in United States government CARES Act aid – intended for at-risk airlines to retain staff – even though it recently reported an eightfold rise in third-quarter profits. Atlas Air ended the quarter with USD729 million in cash and short-term investments and a debt-to-income ratio 2.5 times lower than it had a year ago. It now expects fourth-quarter profits to grow by 25% from the one ended September 30. John Dietrich, chief executive of the all-cargo carrier, told analysts during a conference call to discuss the results that the company had fully qualified and complied with legislation for the federal funds. There was no guarantee at the time the act was passed in March that the cargo market would flourish, and the funds were channelled towards staff salaries just as the United States Congress intended, he said. “What we evaluated was kind of the totality of our circumstances, including some of the challenges that presented themselves immediately when Covid hit. There was a tremendous amount of uncertainty. China effectively shut down not only during Lunar New Year but for weeks thereafter, for which we experienced a significant impact on our business,” Dietrich said. According to American Shipper magazine, Jim Clyburn, a Democratic member of the US House of Representatives and chairman of the House Oversight and Reform subcommittee on the coronavirus crisis, said in October that four cargo carriers – Atlas Air, Amerijet International, Kalitta Air, and Western Global Airlines – had not been eligible for the payroll aid as the freight business was booming. He asked them to return a combined USD630 million. The CARES Act provides USD32 billion in grants for airlines and eligible contractors and subcontractors, which must be used exclusively for employee salaries and benefits on condition that no employees will be laid off. This includes USD25 billion for passenger carriers, USD4 billion for cargo carriers, and USD3 billion for contractors. “It was not something that we had to demonstrate, our need to be able to pay on payroll,” Dietrich said. “But […] we are not intending to return the funds, and we responded accordingly and have been in full compliance, not only with the committee’s request but sharing the documents and so forth that they’ve asked for, and we’ll continue to fully cooperate.”