ATLAS AIR WORLDWIDE HOLDINGS INC (Form: 10-Q, Received: 08/14/2006 16:26:56)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

____________

FORM 10-Q

____________

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2006

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___

0-25732
( Commission File Number)
Atlas Air Worldwide Holdings, Inc.
(Exact name of registrant as specified in its charter)


Delaware		13-4146982
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)

2000 Westchester Avenue, Purchase, New York		10577
(Address of principal executive offices)		(Zip Code)

(914) 701-8000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
____________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, per Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [X] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS: As of June 30, 2006, there were 20,049,108 shares of the registrant’s Common Stock outstanding.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets at June 30, 2006 (unaudited)	1
	and December 31, 2005

	Condensed Consolidated Statements of Operations for the Three and Six Months	2
	Ended June 30, 2006, and 2005 (unaudited)

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended	3
	June 30, 2006, and 2005 (unaudited)

	Notes to the Unaudited Condensed Consolidated Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition
	and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	27

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 4	Submission of Matters to a Vote of Security Holders	28

Item 6.	Exhibits	29

	Signatures	30

	Exhibit Index	31

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Atlas Air Worldwide Holdings, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)

	June 30,			December 31,
	2006			2005
Assets	(Unaudited)
Current Assets
Cash and cash equivalents	$	311,623		$	305,890
Restricted funds held in trust		168			1,077
Accounts receivable, net of allowance of $3,304
and $4,898, respectively		105,611			131,244
Prepaid maintenance		50,873			49,619
Deferred taxes		12,500			10,094
Prepaid expenses and other current assets		54,741			31,298
Total current assets		535,516			529,222
Other Assets
Property and equipment, net		543,941			573,870
Deposits and other assets		21,268			22,147
Lease contracts and intangible assets, net		49,826			55,571
Total Assets	$	1,150,551		$	1,180,810

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	25,304		$	27,588
Accrued liabilities		154,711			178,741
Current portion of long-term debt and capital leases		151,548			53,380
Total current liabilities		331,563			259,709
Other Liabilities
Long-term debt and capital leases		403,240			529,742
Deferred tax liability		18,540			18,540
Other liabilities		24,680			14,914
Total other liabilities		446,460			563,196
Commitments and contingencies (Note 6)
Stockholders’ Equity
Preferred stock, $1 par value; 10,000,000 shares authorized;
no shares issued		—			—
Common stock, $0.01 par value; 50,000,000 shares authorized;
20,118,612 and 19,881,907 shares issued,
20,049,108 and 19,815,338 shares outstanding (net of treasury
stock) at June 30, 2006 and December 31, 2005, respectively		201			199
Additional paid-in-capital		258,371			256,046
Common stock to be issued to creditors		12,782			13,389
Treasury stock, at cost; 69,504 and 66,569 shares, respectively		(2,394	)		(2,257	)
Deferred compensation		-			(6,043	)
Retained earnings		103,568			96,571
Total stockholders’ equity		372,528			357,905
Total Liabilities and Stockholders’ Equity	$	1,150,551		$	1,180,810

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

Atlas Air Worldwide Holdings, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)


	For the Three Months Ended						For the Six Months Ended
	June 30, 2006			June 30, 2005			June 30, 2006			June 30, 2005

Operating Revenues	$	366,420		$	395,185		$	698,570		$	742,131

Operating Expenses
Aircraft fuel		115,311			101,911			216,487			181,518
Salaries, wages and benefits		59,099			57,709			119,170			114,061
Maintenance, materials and repairs		43,495			58,936			83,879			122,955
Aircraft rent		38,166			37,570			75,955			74,429
Ground handling and airport fees		19,025			19,350			34,910			37,508
Landing fees and other rent		17,561			20,665			33,877			39,052
Depreciation and amortization		6,520			13,066			20,045			26,070
Gain on sale of aircraft		(2,779	)		-			(2,779	)		-
Travel		12,589			14,553			25,838			29,352
Pre-petition and post-emergence costs
and related professional fees		179			843			277			2,484
Other		26,684			26,825			53,236			50,463
Total operating expenses		335,850			351,428			660,895			677,892

Operating income		30,570			43,757			37,675			64,239

Non-operating Expenses
Interest income		(3,627	)		(1,301	)		(7,242	)		(2,119	)
Interest expense		17,188			17,976			34,488			35,798
Other (income) expense, net		(481	)		212			(911	)		2,170
Total non-operating expenses		13,080			16,887			26,335			35,849

Income before income taxes		17,490			26,870			11,340			28,390
Income tax expense		6,795			11,016			4,343			11,861
Net income	$	10,695		$	15,854		$	6,997		$	16,529

Income per share:

Basic	$	0.52		$	0.78		$	0.34		$	0.82

Diluted	$	0.51		$	0.77		$	0.33		$	0.80

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

Atlas Air Worldwide Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)


	For the Six Months Ended
	June 30, 2006			June 30, 2005

Cash Flows from Operating Activities:
Net income	$	6,997		$	16,529
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization		20,045			26,070
Accretion of debt discount		6,953			7,250
Amortization of operating lease discount		919			918
Provision (release of allowance) for doubtful accounts		(193	)		(3,595	)
Gain on sale of aircraft		(2,779	)
Amortization of debt issuance cost		168			168
Stock-based compensation expense		3,530			2,082
Other, net		2,363			4,060
Changes in certain operating assets and liabilities		3,872			56,280
Net cash provided by operating activities		41,875			109,762

Cash Flows from Investing Activities:
Capital expenditures		(14,110	)		(17,641	)
Decrease in restricted funds held in trust		909			4,248
Proceeds from sale of aircraft		8,380			-
Net cash used by investing activities		(4,821	)		(13,393	)

Cash Flows from Financing Activities:
Proceeds from loan		-			10,000
Proceeds from stock option exercises		3,107			-
Purchase of treasury stock		(137	)		(81	)
Excess tax benefits from share-based compensation expense		1,312			-
Loan fees		-			(92	)
Payments on debt		(35,603	)		(47,574	)
Net cash used by financing activities		(31,321	)		(37,747	)

Net increase in cash and cash equivalents		5,733			58,622

Cash and cash equivalents at the beginning of period		305,890			133,917

Cash and cash equivalents at the end of period	$	311,623		$	192,539

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

Atlas Air Worldwide Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2006

1. Basis of Presentation

The accompanying interim Condensed Consolidated Financial Statements (the “Financial Statements”) are unaudited and have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. As permitted by the rules and regulations of the Securities and Exchange Commission (the “SEC”), the Financial Statements exclude certain footnote disclosures normally included in audited consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In the opinion of management, the Financial Statements contain all adjustments, consisting of normal recurring items, necessary to fairly present the financial position of Atlas Air Worldwide Holdings, Inc. (“Holdings” or “AAWW”) and its consolidated subsidiaries as of June 30, 2006, the results of operations for the three and six months ended June 30, 2006 and 2005 and cash flows for the six months ended June 30, 2006 and 2005. The Financial Statements include the accounts of Holdings and its consolidated subsidiaries. All significant inter-company accounts and transactions have been eliminated. The Financial Statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2005 included in the Annual Report on Form 10-K of Holdings that was filed with the SEC on April 14, 2006 (the “2005 10-K”).

Holdings is the parent company of two principal operating subsidiaries, Atlas Air, Inc. (“Atlas”) and Polar Air Cargo, Inc. (“Polar”). Holdings, Atlas, Polar and Holdings’ other subsidiaries are referred to collectively as the (“Company”). The Company provides air cargo and related services throughout the world, serving Asia, Australia, the Pacific Rim, Europe, South America and the United States through: (i) airport-to-airport scheduled air cargo service (“Scheduled Service”); (ii) contractual lease arrangements in which the Company provides the aircraft, crew, maintenance and insurance (“ACMI”); and (iii) seasonal, commercial, military and ad-hoc charter services (see Note 5). The Company operates only Boeing 747 freighter aircraft.

The Company’s quarterly results have in the past been subject to seasonal and other fluctuations and the operating results for any quarter are therefore not necessarily indicative of results that may be otherwise expected for the entire year.

Except for per share data, all dollar amounts are in thousands unless otherwise noted.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the Financial Statements and footnotes thereto. Actual results may differ from those estimates. Important estimates include asset lives, valuation allowances (including, but not limited to, those related to receivables, inventory and deferred taxes), income tax accounting, self-insurance employee benefit accruals, accounting for stock options and contingent liabilities.

Assets Held for Sale

On April 25, 2006, the Company filed a Form 8-K with the SEC announcing, among other things, that Polar expects to cease flying its remaining five Boeing 747-200 aircraft and one Boeing 747-100 by mid-2006. As of June 30, 2006, three of the five Boeing 747-200 aircraft that are owned by the Company were listed for sale and accounted for as assets held for sale, and depreciation ceased as of that date. The aggregate carrying value of aircraft tail numbers N355MC, N509MC, and N534MC and spare engines at June 30, 2006 was $22.2 million, which is included within Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. The other two Boeing 747-200 aircraft tail numbers N508MC and N920FT are under capital lease and are available for sublease. The Company performed an impairment test on all the aircraft and spare engines and determined that fair market value exceeded book value.

In August 2005, aircraft tail number N921FT and two related spare engines were listed for sale by the Company and were accounted for as assets held for sale, and depreciation ceased. The aggregate carrying value of the aircraft and spare engines at December 31, 2005 was $5.7 million, which is included within Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. On April 7, 2006, the aircraft was sold for approximately $8.4 million and the Company recorded a gain on the sale of approximately $2.8 million, net of related selling expenses.

Investments

The Company holds a minority interest (49%) in a private company, which is accounted for under the equity method.

The June 30, 2006 and December 31, 2005 aggregate carrying value of the investment of $4.7 million and $8.2 million, respectively, is included within Deposits and other assets in the Condensed Consolidated Balance Sheets.

These assets principally relate to the private company’s airline operating certificate and finite-lived intangible assets related to existing customer contracts and the Company’s proportionate share of the equity in the private company. Fair value of this investment was determined by an independent appraisal as of July 27, 2004 as part of fresh start accounting. The finite-lived intangible asset is amortized on a straight-line basis over the three year estimated life of the contracts.

Concentration of Credit Risk and Significant Customers

United States Military Airlift Mobility Command (“AMC”) charters accounted for 19.6% and 26.4% of the Company’s total revenues for the three months ended June 30, 2006 and 2005, respectively, and 20.8% and 26.0% of the Company’s total revenues for the six months ended June 30, 2006 and 2005, respectively. Accounts receivable from the AMC were $12.7 million and $24.4 million at June 30, 2006 and December 31, 2005, respectively. The International Airline of United Arab Emirates (“Emirates”) accounted for 12.3% and 9.8% of the Company’s total revenues for the three months ended June 30, 2006 and 2005, respectively, and 12.1% and 10.0% of the Company’s total revenues for the six months ended June 30, 2006 and 2005, respectively. Accounts receivable from Emirates were $9.5 million and $13.4 million at June 30, 2006 and December 31, 2005, respectively. No other customer accounted for 10% or more of the Company’s total operating revenues during these periods.

Debt Discount

At June 30, 2006, and December 31, 2005, the Company had $99.9 million and $106.8 million, respectively, of unamortized discount related to fair market value adjustments recorded against debt upon application of fresh-start accounting, which is included in Long term debt and capital leases in the Condensed Consolidated Balance Sheets (including current portions thereof). The discount is being amortized to interest expense using the effective interest method.

Lease Contracts and Intangible Assets

During the six months ended June 30, 2006, the Company recorded a reduction of intangible assets of $4.9 million as a result of the reduction of the Company’s tax liability and valuation allowances (see Note 8 for further discussion).

Recent Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 (“FIN 48”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. This interpretation is effective for fiscal years beginning after December 15, 2006. The Company has not yet determined the impact that this interpretation will have on its results from operations or financial position.

Reclassifications

Certain reclassifications have been made in the prior year’s Condensed Consolidated Financial Statement amounts and related note disclosures to conform to the current year’s presentation.

3. Stock-Based Compensation Plans

At June 30, 2006, the Company has a 2004 Long Term Incentive and Share Award Plan (the “2004 LTIP”) which provides for awards of up to approximately 2.3 million shares of AAWW’s common stock to employees in various forms. These include non-qualified options, incentive stock options, share appreciation rights, restricted shares, restricted share units, performance shares and performance units, dividend equivalents and other share-based awards. Prior to January 1, 2006, the Company accounted for these awards under the recognition and measurement provisions of Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related Interpretations, as permitted by Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-

Based Compensation (“SFAS No. 123”). Stock-option based employee compensation cost recognized in the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2005 related only to restricted stock awards, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant, which under APB 25 was deemed to be non-compensatory. Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123R, Share-Based Payment (“SFAS No. 123R”), using the modified-prospective transition method. Therefore, compensation expense recognized during the three and six months ended June 30, 2006 includes compensation expense for all newly granted and unvested stock options, restricted shares and options that are expected to vest subsequent to January 1, 2006, and results for prior periods have not been restated.

In November 2005, the FASB staff issued FASB Staff Position (“FSP”) No. FAS 123R-3, Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards . This FSP provides an elective alternative simplified method for calculating the pool of excess tax benefits available to absorb tax deficiencies recognized subsequent to the adoption of SFAS No. 123R and reported in the Condensed Consolidated Statements of Cash Flows. Companies may take up to one year from the effective date of the FSP to evaluate the available transition alternatives and make a one-time election as to which method to adopt. The Company is currently in the process of evaluating the alternative methods.

As a result of the adoption of SFAS No. 123R on January 1, 2006, the Company’s income before income taxes and net income for the three months ended June 30, 2006 are $0.8 million and $0.5 million lower, respectively, and for the six months ended June 30, 2006, are $1.5 million and $0.9 million lower, respectively, than if the Company had continued to account for share-based compensation under APB 25. Basic and diluted income per share for the three months ended June 30, 2006 would have been $0.03 higher and for the six months ended June 30, 2006 would have been $0.05 higher, if the Company had not adopted SFAS No. 123R.

Prior to the adoption of SFAS No. 123R, the Company presented all tax benefits of deductions resulting from the exercise of stock options as operating cash flows in the Condensed Consolidated Statement of Cash Flows. SFAS No. 123R requires the cash flows resulting from the tax benefits resulting from tax deductions in excess of the compensation expense recognized for those options (excess tax benefits) to be classified as financing cash flows. The excess cash tax benefit classified as a financing cash inflow for the six months ended June 30, 2006 was $1.3 million.

The fair value of all option grants is estimated using the Black-Scholes-Merton option pricing model. The fair value is then amortized on a straight-line basis over the vesting period or requisite service period, if shorter. The following table illustrates the effect on net income if the fair-value-based method per SFAS No. 123 had been applied to all outstanding awards for the three and six months ended June 30, 2005.

	For the Three				For the Six
	Months Ended				Months Ended
	June 30, 2005				June 30, 2005

Net income, as reported		$	15,854			$	16,529
Add: Restricted stock expense, net of tax			661				1,258
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards			(1,051	)			(1,843	)

Pro forma net income		$	15,464			$	15,944

Basic income per share:
As reported		$	0.78			$	0.82
Pro forma		$	0.77			$	0.79
Diluted income per share:
As reported		$	0.77			$	0.80
Pro forma		$	0.75			$	0.77

While the fair-value-based method prescribed by SFAS No. 123R is similar to the fair-value-based method disclosed under the provisions of SFAS No. 123 in most respects, there are some differences. SFAS No. 123R requires the Company to estimate pre-vesting option forfeitures at the time of grant and periodically revise those estimates in subsequent periods if actual forfeitures differ from those estimates. As a result, the Company records stock-based compensation expense only for those awards expected to vest. For periods prior to January 1, 2006, the Company accounted for forfeitures as they occurred under the pro forma disclosure provisions of SFAS No. 123.

The fair value of all option grants is estimated using the Black-Scholes-Merton option pricing model. The fair value is then amortized on a straight-line basis over the vesting period or requisite service period, if shorter. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility is calculated based on the average of the historical volatility of a peer group of several similar entities, due to the limited trading history of the Company’s stock. Historically, the average expected life is based on the vesting period of the option. Option grants on or after January 1, 2006 will have expected lives adjusted for the expected exercise behavior of option recipients. The risk-free interest rate is based on U.S. Treasury constant maturities (nominal) with a term equal to the expected life assumed at the date of grant. Forfeitures are estimated based on historical termination behavior, as well as an analysis of actual option forfeitures. The assumptions used in the Black-Scholes-Merton option pricing model are as follows:

	For the Six Months Ended
	June 30, 2006	June 30, 2005
Expected stock price volatility	26.1-37.4%	38.5 %
Risk free interest rate	2.81-5.17%	3.80-4.03%
Expected life of options (years)	0.75-4.25	3.0-4.0
Expected annual dividend per share	None	None
Estimated annual forfeiture rate	5.0 %	None

Non-qualified Stock Options

The portion of the 2004 LTIP applicable to employees is administered by the compensation committee (the “Compensation Committee”) of the board of directors of the Company (the “Board”), which also establishes the terms of the awards. Non-qualified stock options and restricted shares have been the only forms of awards under the 2004 LTIP granted by the Compensation Committee to date. A total of 632,827 shares of common stock remained available for future award grants (including restricted stock and stock options) to management and the Board as of June 30, 2006.

Non-qualified stock options granted under the 2004 LTIP vest over a three or four year period, which generally is the requisite service period, and expire seven to ten years from the date of grant. As of June 30, 2006, options to acquire a total of 1,063,100 shares of common stock have been granted to management under the 2004 LTIP. Non-qualified stock options may be granted at any price but, generally, are not granted with an exercise price less than the fair market value of the stock on the date of grant.

Included within the 2004 LTIP is a separate sub-plan (the “2004 Employee Plan”), which provides for awards of up to 495,303 shares of common stock to employees in the form of non-qualified options or incentive stock options. The portion of the 2004 Employee Plan applicable to employees is administered by the Compensation Committee of the Board of Directors of the Company, which also establishes the terms of the awards. As of June 30, 2006, non-qualified stock options have been the only form of award granted by the Compensation Committee since the adoption of the 2004 Employee Plan.

Non-qualified stock options granted under the 2004 Employee Plan vest over a three year period, which generally is the requisite service period, and expire seven years from the date of grant. Options to acquire a total of 299,979 shares of common stock have been granted to employees under the 2004 Employee Plan. A total of 195,324 shares of common stock remained available for future award grants as of June 30, 2006.

A summary of the Company’s options as of June 30, 2006 and changes during the six months then ended is presented below:

					Weighted-Average		Aggregate
			Weighted-		Remaining		Intrinsic
	Number of		Average		Contractual Term		Value
	Options		Exercise Price		(in years )		(in thousands )
Outstanding at December 31, 2005	1,102,122		$	21.29
Granted	65,000			49.54
Exercised	(135,688	)		22.90
Forfeited	(30,723	)		26.25
Outstanding at June 30, 2006	1,000,711		$	22.76		6.7	$	26,348

Exercisable at June 30, 2006	164,138		$	21.32		6.8	$	4,550

The weighted average fair value of the options granted during the three months ended June 30, 2006 and 2005 was $18.93 and $9.15, respectively, and $18.32 and $8.52 respectively, during the six months ended June 30, 2006 and 2005. The total intrinsic value for the options that vested during the three months ended June 30, 2006 was $2.6 million.

The total intrinsic value of options exercised for the three and six months ended June 30, 2006 was $1.5 million and $3.2 million, respectively.

As of June 30, 2006, there was $4.6 million of total unrecognized compensation cost related to non-vested stock options granted. The cost is expected to be recognized over the remaining weighted-average life of 1.5 years.

Restricted Share Awards

Restricted shares granted under the 2004 LTIP vest and are being expensed over three, four or five year periods which generally are the requisite service periods, as applicable. As of June 30, 2006, a total of 733,800 restricted shares have been granted under the 2004 LTIP. All shares were valued at their fair market value on the date of issuance and the fair value for all shares granted is $12.3 million. This amount was originally recorded in equity as Deferred compensation and the unamortized amount of $6.0 million at December 31, 2005 was reclassified to Additional paid-in capital upon adoption of SFAS No. 123R. For the three months ended June 30, 2006 and 2005, the Company recognized compensation expense of $1.2 million and $1.1 million, respectively, and for the six months ended June 30, 2006 and 2005, the Company recognized compensation expense of $2.0 million and $2.0 million, respectively for restricted share awards. The compensation expense recognized for restricted share awards subsequent to adoption of SFAS No. 123R is net of estimated forfeitures. The effect of estimated forfeitures to unvested awards previously expensed prior to January 1, 2006 was immaterial. Unrecognized compensation cost as of June 30, 2006 was $7.8 million and will be recognized over the remaining weighted average life of 1.6 years.

A summary of the Company’s restricted shares as of June 30, 2006 and changes during the six months then ended are presented below:

			Weighted-Average
	Number		Grant-Date
Restricted Share Awards	of Shares		Fair Value
Unvested at December 31, 2005	413,665			$	18.74
Granted	75,200				49.68
Vested	(50,000	)			23.04
Forfeited	(22,501	)			24.29
Unvested at June 30, 2006	416,364			$	23.51

The weighted-average grant-date fair value of restricted shares granted during the three months ended June 30, 2006 and June 30, 2005, was $49.83 and $28.53, respectively, and $49.68 and $25.92 for the six months ended June 30, 2006 and June 30, 2005, respectively.

4. Related Party Transactions

James S. Gilmore III, a non-employee director of the Company, is a partner at the law firm of Kelley Drye & Warren LLP, outside counsel to the Company. The Company paid legal fees to the firm of Kelley Drye & Warren LLP of $0.1 million and $1.2 million for the three months ended June 30, 2006 and 2005, respectively and $0.5 million and $2.5 million for the six months ended June 30, 2006 and 2005, respectively. At December 31, 2005, the Company had a payable balance to Kelley Drye & Warren LLP of $0.2 million, which is included in Accrued liabilities in the Condensed Consolidated Balance Sheets. Mr. Gilmore has not served on the Audit Committee since joining the Board in July 2004.

Atlas dry leases three owned aircraft to a company in which the Company owns a minority investment as of June 30, 2006. The investment is accounted for under the equity method. The leases have terms that mature at various dates through July 2007. The leases provide for payment of rent and a provision for maintenance costs associated with the aircraft. Total rental income for the three aircraft was $11.2 million and $11.1 million for the three months ended June 30, 2006 and 2005, respectively and $22.5 million and $22.3 million for the six months ended June 30, 2006 and 2005, respectively.

5. Segment Reporting

The Company has four reportable segments: Scheduled Service, ACMI, AMC Charter and Commercial Charter. All reportable segments are engaged in the business of transporting air cargo but have different operating and economic characteristics which are separately reviewed by the Company’s management. The Company evaluates performance and allocates resources to its segments based upon income (loss) before taxes, excluding pre-petition and post-emergence costs and related professional fees, unallocated corporate and other items (“Fully Allocated Contribution” or “FAC”). Management views FAC as the best measure to analyze profitability and contribution to net income or loss of the Company’s individual segments. Management allocates the cost of operating aircraft among the various segments on an average cost per aircraft type. Under-utilized aircraft costs are allocated to segments based on Block Hours flown for Scheduled Service, AMC and Commercial Charter. For ACMI, management only allocates costs of operating aircraft based on the number of aircraft dedicated to ACMI customers.

The Scheduled Service segment provides airport-to-airport scheduled airfreight and available on-forwarding services provided primarily to freight forwarding customers. By transporting cargo in this way, the Company carries all of the commercial revenue risk (yields and cargo loads) and bears all of the direct costs of operation, including fuel. Distribution costs include direct sales costs through the Company’s own sales force and through commissions paid to general sales agents. Commission rates typically range between 2.5% and 5% of commissionable revenue sold. Scheduled Service is highly seasonal, with peak demand coinciding with the retail holiday season, which traditionally begins in September and lasts through mid-December.

The ACMI segment provides aircraft, crew, maintenance and insurance services, whereby customers receive the use of an aircraft and crew in exchange for, in most cases, a guaranteed monthly level of operation at a predetermined rate for defined periods of time. The customer bears the commercial revenue risk and the obligation for other direct operating costs, including fuel.

The AMC Charter segment provides full-planeload charter flights to the U.S. Military through the AMC. The AMC Charter business is similar to the Commercial Charter business in that the Company is responsible for the direct operating costs of the aircraft. However, in the case of AMC operations, the price of fuel used during AMC flights is fixed by the military. The contracted charter rates (per mile) and fuel prices (per gallon) are established and fixed by the AMC for twelve-month periods running from October to September of the next year. The Company receives reimbursement from the AMC each month if the price of fuel paid by the Company to vendors for AMC missions exceeds the fixed price; if the price of fuel paid by the Company is less than the fixed price, then the Company pays the difference to the AMC. The AMC buys capacity on a fixed basis annually and on an ad-hoc basis continuously. The Company competes for this business through a teaming arrangement devised for the allocation of AMC flying among competing carriers. At June 30, 2006, there were three groups of carriers (or teams) and several independent carriers that are not part of either team that compete for the business. The Company is a member of a team led by FedEx Corporation (“FedEx”) and pays a commission to the FedEx team based upon the revenues the Company receives under such contracts. The formation of additional competing teaming arrangements, an increase by other air carriers in their commitment of aircraft to the Civil Reserve Air Fleet Program, or the withdrawal of any of the current team members, could adversely affect the amount of AMC business awarded to the Company in the future.

The Commercial Charter segment provides full-planeload airfreight capacity on one or multiple flights to freight forwarders, airlines and other air cargo customers. Charters are typically paid in advance and as with Scheduled Service, the Company bears the direct operating costs (except as otherwise defined in the charter contracts).

All other revenue includes dry lease income and other incidental revenue not allocated to any of the four segments described above.

The following table sets forth revenues and FAC for the Company’s four reportable business segments reconciled to operating income (loss) and income (loss) before income taxes as required by SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, for the three and six months ended June 30, 2006 and 2005:

	For the Three Months Ended				For the Six Months Ended
	June 30, 2006		June 30, 2005		June 30, 2006		June 30, 2005
Revenues:
Scheduled Service	$	152,579	$	140,971	$	281,259	$	262,115
ACMI		102,368		122,624		200,552		232,161
AMC Charter		71,951		104,357		145,077		193,273
Commercial Charter		27,799		15,562		48,283		31,100
All Other		11,723		11,671		23,399		23,482
Total operating revenues	$	366,420	$	395,185	$	698,570	$	742,131

FAC:
Scheduled Service	$	(2,539	)	$	(629	)	$	(10,551	)	$	(7,511	)
ACMI		12,567			9,118			16,047			4,307
AMC Charter		(406	)		14,285			(2,052	)		27,141
Commercial Charter		(1,503	)		2,085			(4,596	)		1,285
Total FAC		8,119			24,859			(1,152	)		25,222

Add back (subtract):
Unallocated other		6,771			2,854			9,990			5,652
Gain on sale of aircraft		2,779			-			2,779			-
Pre-petition and post-emergence costs and
related professional fees		(179	)		(843	)		(277	)		(2,484	)
Interest income		(3,627	)		(1,301	)		(7,242	)		(2,119	)
Interest expense		17,188			17,976			34,488			35,798
Other, net		(481	)		212			(911	)		2,170
Operating income		30,570			43,757			37,675			64,239
(Add back) subtract:
Interest income		(3,627	)		(1,301	)		(7,242	)		(2,119	)
Interest expense		17,188			17,976			34,488			35,798
Other, net		(481	)		212			(911	)		2,170
Income before income taxes	$	17,490		$	26,870		$	11,340		$	28,390

6. Commitments and Contingencies

On May 12, 2005, the Company entered into a slot conversion agreement with Israel Aircraft Industries Ltd. and PSF Conversions LLP (“IAI”) pursuant to which the Company has the option to convert four Boeing 747-400 passenger aircraft to Boeing 747-400 special freighter (“747-400SF”) configuration during the period from late-2007 to mid-2009. The agreement also includes an option covering the modification of up to six additional Boeing 747-400 passenger aircraft to 747-400SF aircraft during the period from 2009 to 2011. The Company has not yet committed to acquire the related aircraft. At June 30, 2006 and December 31, 2005, the Company had a balance of $6.1 million and $2.5 million of capitalized option costs including capitalized interest of $0.3 million and $0.1 million, respectively, which are included in Property and equipment, net in the Condensed Consolidated Balance Sheets.

Guarantees and Indemnifications

Financings and Guarantees

Information with respect to indemnities and guarantees appears in Note 13 of the 2005 10-K.

Restricted Deposits and Letters of Credit

The Company had $3.9 million and $0.9 million of restricted deposits either pledged under standby letters of credit related to collateral or for certain deposits required in the normal course for items, including, but not limited to, foreign exchange trades, airfield privileges and insurance at June 30, 2006 and December 31, 2005, respectively. These amounts are included in Deposits and other assets in the Condensed Consolidated Balance Sheets.

Legal Proceedings

Except for the items below, information with respect to legal proceedings appears in Note 13 of the 2005 10-K.

Brazilian Customs Claim

Polar was cited for two alleged customs violations in Sao Paulo, Brazil relating to shipments of goods dating back to 1999 and 2000. Each claim asserts that goods listed on the flight manifest of two separate Polar scheduled service flights were not on board the aircraft upon arrival in Brazil. The claims seek unpaid customs duties, taxes, penalties and interest from the date of the alleged infraction in the amounts of approximately $10.0 million and $7.9 million, respectively.

The Company has presented defenses in each case to the customs authority in Campinas, Brazil. With respect to the $10.0 million claim, the Company’s defense was denied at the first level of the administrative process. On June 28, 2006 the Company filed its appeal of the administrative decision with the Council of Contributors. As required by local law, the appeal was accompanied by a judicial deposit of approximately 30% of the claimed amount. If the appeal is denied by the Council of Contributors, the Company intends to pursue further appeals in the Brazilian federal courts. With respect to the $7.9 million claim, the customs authority has yet to rule on the Company’s defense.

In both cases, the Company believes that the amounts claimed are substantially overstated due to a gross calculating error when considering the type and amount of goods missing. Furthermore, the Company will seek appropriate indemnity from the shipper in each claim.

Finally, the Company is currently defending other Brazilian customs claims which individually, or in the aggregate, will not have a material impact on the Company.

Department of Justice Investigation and Related Litigation

The Department of Justice (the “DOJ”) has initiated an investigation into the pricing practices of a number of cargo carriers, including Polar (the “DOJ Investigation”). In connection with the DOJ Investigation, Polar was served with a search warrant at its Long Beach, California office on February 14, 2006, pursuant to which government agents obtained certain files and interviewed a number of office staff members. Polar also received a subpoena for records dated February 14, 2006 requesting discovery of additional relevant documents. The Company is fully cooperating with the DOJ in its investigation. Other than the subpoena, there has been no complaint or demand of the Company by the DOJ regarding the matters that are the subject of the DOJ Investigation.

As a result of the DOJ Investigation, AAWW, Polar and a number of other cargo carriers have been named co-defendants in approximately 25 class action suits filed in multiple jurisdictions of the U.S. Federal District Court. The complaints universally allege, among other things, that the defendants, including AAWW and Polar, manipulated the market price for air cargo services sold domestically and abroad through the use of surcharges. They seek treble damages and injunctive relief. All of the suits have been transferred or are awaiting transfer to the United States District Court for the Eastern District of New York, where the cases have been consolidated for pre-trial purposes. The Company has notified its directors and officers’ insurance carrier of these lawsuits and has engaged outside counsel. Also, the Company has contacted counsel for the other named defendants with respect to conducting a joint defense in an effort to limit defense costs where possible. Further, the Company, Polar and a number of other cargo carriers have been named as defendants in a civil class action suit in Ontario, Canada that is substantially similar to the class action suits in the United States.

Additionally in early 2006, Polar also received notification from Swiss authorities that they have opened an investigation into the freight pricing practices of several carriers, including Polar, on routes between Switzerland and the United States. While there has been no specific complaint or demand by the Swiss authorities of Polar in respect of the matters that are the subject of the Swiss investigation, Polar may be called upon to provide information to the Swiss authorities at some future time.

Bankruptcy Proofs of Claim

Since the Company’s emergence from bankruptcy in July of 2004, the Company has devoted significant effort to reconcile claims to determine the validity, extent, priority and amount of asserted claims against the debtors’ bankruptcy estates. To further this process, the Company has filed several objections to general unsecured claims and to cure claims, including the objection to the November 12, 2004 claims made by the Internal Revenue Service (the “IRS”), which is described below.

Total Claims

As of June 30, 2006, the Company has reviewed over 3,050 scheduled and filed claims aggregating approximately $7.7 billion, with a maximum of $704.3 million of claims that could potentially be allowed. Approximately $662.7 million of claims have been allowed as of June 30, 2006, including $13.0 million of cure claims and $1.4 million of other secured and priority claims. Claims of $41.6 million remain unresolved, including $5.1 million of unresolved administrative, priority and general unsecured IRS claims discussed below; however, the amount of unresolved claims continues to be reduced by virtue of the ongoing claims reconciliation process.

Atlas General Unsecured Claims

As of June 30, 2006, the Company has made pro rata distributions of 16,185,033 of the 17,202,666 shares of common stock allocated to holders of allowed general unsecured claims against Holdings, Atlas, Airline Acquisition Corp. I and Atlas Worldwide Aviation Logistics, Inc., based on the allowed claims through April 1, 2006. General unsecured claims of approximately $2.6 billion were filed against these entities. As of June 30, 2006, claims of $607.0 million have been allowed, claims of $35.7 million, remain disputed and the balance of claims have been withdrawn or disallowed; however, the amount of unresolved claims continues to be reduced by virtue of the ongoing claims reconciliation process.

On April 12, 2006, the Company distributed 40,824 shares of common stock pursuant to the claims process. As of June 30, 2006, there are 1,017,633 shares of common stock to be distributed to claim holders. The remaining shares of common stock will be distributed to general unsecured claim holders on a periodic basis.

Polar General Unsecured Claims

The Company has paid cash equal to sixty cents on the dollar for allowed unsecured claims against Polar. General unsecured claims of approximately $408.5 million were filed against Polar. As of June 30, 2006, claims of $41.3 million have been allowed, claims of $0.1 million remain disputed and the balance of claims have been withdrawn or disallowed; however, the amount of unresolved claims continues to be reduced by virtue of the ongoing claims reconciliation process. The Company estimates the additional allowed general unsecured claims against Polar will ultimately be less than $0.1 million.

Administrative Claims

IRS Claim

As part of an ongoing audit and in conjunction with the claims process from the Company’s bankruptcy, the IRS submitted proofs of claim with the bankruptcy court for alleged income tax, employee withholding tax, Federal Unemployment Tax Act (“FUTA”) and excise tax obligations, including penalties and interest. On July 20, 2006, the Bankruptcy Court confirmed an “Order to Allow IRS Employment Tax Claims.” The IRS amended its proofs of claim against Atlas and Polar for employee withholding tax and FUTA tax, reducing the asserted liability to approximately $4.6 million of priority unsecured claims pursuant to an agreement reached with the Company. The Company paid the IRS claim on July 24, 2006 and the Company has reversed $5.4 million in excess reserves to income in the second quarter of 2006. In addition, the Company reached an agreement in principle to resolve its income tax audit for 2001 which is subject to review by the Joint Committee of Taxation.

Other Contingencies

In May 2006, as part of the Company’s ongoing review of internal processes and procedures, Polar identified and notified HM Revenue and Customs (“HMRC”) in the United Kingdom that certain contractors, who were engaged to perform various services at Polar’s Prestwick, Scotland maintenance facility, may now be deemed employees under UK law. As a result, Polar may have been required to withhold taxes and other amounts on behalf of such persons. Polar is attempting to settle this matter with the HMRC and has established a payroll tax accrual for its estimated liability. The Company believes that its ultimate exposure to this matter is not expected to materially affect the Company’s financial condition, results of operations or liquidity.

The Company has certain other contingencies resulting from litigation and claims incident to the ordinary course of business. Management believes that the ultimate disposition of these contingencies, with the exception of those noted above, is not expected to materially affect the Company’s financial condition, results of operations or liquidity.

7. Income Per Share and Number of Common Shares Outstanding

Basic income per share represents the income divided by the weighted average number of common shares outstanding during the measurement period. Diluted income per share represents the income divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period.

The calculation of basic and diluted income per share is as follows for the three and six months ended June 30, 2006 and 2005 (dollars and shares in thousands):

	For the Three Months Ended				For the Six Months Ended
	June 30, 2006		June 30, 2005		June 30, 2006		June 30, 2005
Numerator:
Net income	$	10,695	$	15,854	$	6,997	$	16,529

Denominator for basic earnings per share		20,591		20,209		20,554		20,210

Effect of dilutive securities:
Stock options		310		229		314		220
Restricted stock		193		262		195		240
Denominator for diluted earnings per share		21,094		20,700		21,063		20,670
Basic income per share	$	0.52	$	0.78	$	0.34	$	0.82
Diluted income per share	$	0.51	$	0.77	$	0.33	$	0.80

8. Taxes

The Company’s effective tax rates of 38.9% and 41.0% for the three months ended June 30, 2006 and 2005, respectively, and 38.3% and 41.8% for the six months ended June 30, 2006 and 2005, respectively, differ from the statutory rate primarily due to the non-deductibility of certain items for tax purposes and the relationship of these items to the Company’s projected operating results for the year.

During the three and six months ended June 30, 2006, the Company recorded a deferred tax provision of approximately $6.8 million and $4.3 million, respectively. In addition, during the three months ended June 30, 2006, the Company released approximately $4.9 million of the valuation allowance previously recorded against its deferred tax assets pursuant to American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code. The reduction in the valuation allowance has been recorded as a reduction of intangible assets. As a result of these changes to the Company’s valuation allowance and deferred tax liabilities, the Company has a net deferred tax liability of approximately $6.0 million at June 30, 2006, compared with a net deferred tax liability of approximately $8.4 million at December 31, 2005 (see Note 10 to the audited consolidated financial statements included in the 2005 10-K for further discussion).

9. Subsequent Events

On July 24, 2006, the Company delivered written notice of termination of its revolving credit facility (the “Revolving Credit Facility”) with Congress Financial Corporation and Wachovia Bank, National Association. The termination of the Revolving Credit Facility was effective on August 1, 2006. No borrowings are outstanding under the Revolving Credit Facility, although letters of credit totaling approximately $0.4 million were outstanding. The outstanding letters of credit were subsequently cash collateralized. No early termination penalties or fees resulted from the early termination of the Revolving Credit Facility.

On July 31, 2006, the Company repaid in full approximately $140.8 million in outstanding loans and terminated the two credit facilities with Deutsche Bank Trust Company Americas (“Deutsche Bank”). The Company’s two credit facilities with Deutsche Bank were a loan that was made to a wholly-owned subsidiary, Atlas Freighter Leasing III, Inc. (“AFL III”) (the “AFL III Credit Facility”), and another loan made to Atlas (the “Aircraft Credit Facility” or “ACF”). See Note 7 to the audited consolidated financial statements included in the 2005 10-K for a full description of these facilities. The Company has paid the loans with cash on hand. In connection with the repayment, the Company will incur a one-time, non-cash pre-tax expense of approximately $12.5 million in the third quarter related to the write-off of the remaining, unamortized discount associated with such debt. As a result of the facility terminations, all covenants associated with them have been eliminated. In addition, liens will be removed on certain Company assets, including one 747-100 aircraft, fourteen 747-200 aircraft, one 747-300 aircraft, certain accounts receivable, certain inventory and spare parts, and certain spare engines. The prepayment of the loans described above resulted in the entire balance of the loans being reclassified as current liabilities as of June 30, 2006.

On July 31, 2006, the Company sent IAI a notice of terminaton of the slot conversion agreement that is described in Note 6. At such time, the Company entered into discussions for alternative uses of the slots and deposit that the Company had made on the slot conversion agreement. The Company has a long standing business relationship with IAI for various aircraft services, including maintenance. Discussions are ongoing.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited Financial Statements and notes thereto appearing in this report and our audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2005 included in our 2005 10-K.

In this report, references to “we,” “our” and “us” are references to AAWW and its subsidiaries, as applicable.

Background

Certain Terms - Glossary

The following terms represent industry-related items and statistics specific to the airline and cargo industry sectors. They are used by management for statistical analysis purposes to better evaluate and measure operating levels, results, productivity and efficiency.

ATM	Available Ton Miles, which represent the maximum available tons (capacity) per actual miles
	flown. It is calculated by multiplying the available capacity (tonnage) of the aircraft against the
	miles flown by the aircraft.

Block Hours	The time interval between when an aircraft departs the terminal until it arrives at the destination
	terminal.

RATM	Revenue per Available Ton Mile, which represents the average revenue received per available ton
	mile flown. It is calculated by dividing operating revenues by ATMs.

Revenue Per	Calculated by dividing operating revenues by Block Hours.
Block Hour

RTM	Revenue Ton Mile, which is calculated by multiplying actual revenue tons carried against miles
	flown.

Load Factor	The average amount of weight flown per the maximum available capacity. It is calculated by
	dividing RTMs by ATMs.

Yield	The average amount a customer pays to fly one ton of cargo one mile. It is calculated by dividing
	operating revenues by RTMs.

A/B Checks	Low level maintenance checks performed on aircraft at an interval of approximately 400 to 1,100
	flight hours.

C Checks	High level or “heavy” airframe maintenance checks which are more intensive in scope than an A/B
	Check and are generally performed on an 18 to 24 month interval.

D Checks	High level or “heavy” airframe maintenance checks, which are the most extensive in scope and are
	generally performed on an interval of 6 to 10 years or 25,000 to 28,000 flight hours, whichever
	comes first.

FAC	Income (loss) before taxes, excluding pre-petition and post-emergence costs and related
	professional fees, unallocated corporate and other items. We evaluate performance and allocate
	resources to our segments based upon this measure.

Business Strategy and Outlook

Our principal business is wide-body freighter operations. We pursue this through two primary lines of business: (i) outsourced freighter services provided primarily to major passenger and cargo airlines through ACMI as well as to the AMC for the AMC Charter business, and (ii) airport-to-airport Scheduled Service. We also provide Commercial Charter services.

Our primary focus is to maintain a safe and efficient operation, sustain profitability and grow stockholder value. We are undertaking a number of strategic measures designed to achieve these objectives. These measures include the following:

ongoing operational excellence initiatives focused on improving efficiency and reducing costs;
selectively disposing of assets, which may include aging aircraft, and replacing such aircraft in the future with newer, more efficient aircraft;
pursuing growth opportunities, including forming strategic alliances with other companies and offering customers new services and fleet types;
optimizing our Scheduled Service network so that this business segment can sustain profitability, the realization of which is expected to be aided by an increased presence in China; and
continuing our efforts to maximize our financial flexibility, which may include issuing new debt and/or equity securities.

In late 2005, we announced a cost-savings and revenue-enhancement program that, if successfully implemented, could benefit our operating performance by more than $100 million. We expect our second-half performance to include approximately $13.0 million in benefits from these cost saving initiatives, mainly in the fourth quarter of 2006, with the majority of the remaining cost savings likely to be realized in 2007.

Approximately one-quarter to one-third of the potential benefits associated with this program are expected to be derived from revenue enhancements, mainly through the development of better revenue and capacity management capability. The remaining benefits are expected to be generated from cost savings, principally through improved procurement policies and procedures and improved efficiencies and processes through our operations.

Our objectives for 2006 include:

transforming our operations into a more efficient and lower cost operating platform;
continuing our fleet renewal and asset optimization efforts; and
leveraging additional frequencies in China to drive profitability in the Scheduled Service segment.

Our fleet renewal efforts are currently focused on phasing out the older aircraft in our fleet. We have sold one Boeing 747-200 aircraft in April 2006 and we have ceased flying five additional Boeing 747-200 aircraft as of June 30, 2006 (of the five, three are owned and two are leased). The three owned aircraft have been classified as held for sale as of June 30, 2006 and the leased aircraft are available for sub-lease. In addition, we have retired our only Boeing 747-100 as it has reached the end of its service life, thereby reducing our total fleet by seven aircraft. Replacement aircraft are not expected to be incorporated into our fleet until after 2006. In response to this fleet reduction, we have begun to make corresponding reductions in our staffing levels.

On July 31, 2006, we repaid in full approximately $140.8 million in outstanding loans and terminated the two credit facilities with Deutsche Bank. As a result, we will incur a one-time, non-cash pre-tax expense of approximately $12.5 million in the third quarter related to the write-off of the remaining, unamortized discount associated with such debt. We also terminated our Revolving Credit Facility on August 1, 2006. The prepayment and terminations are expected to have a positive effect on future pre-tax earnings and cash flow as the variable rates on the debt far exceed the average investment rate on the cash used to repay the debt, subject to any future financings. This provides us with increased financial flexibility, as all the restrictive covenants associated with the three facilities have been eliminated.

Our business is highly seasonal. We currently expect the 2006 commercial peak season, which generally runs from September through mid-December, to be relatively stronger, compared with peak seasons in 2005 and 2004.

Block Hours operated in the ACMI segment declined during the first six months of 2006 compared with the same period in 2005, primarily due to reduced Boeing 747-200 aircraft Block Hours. We expect this trend to continue through the remainder of 2006.

AMC flying has continued to operate at reduced levels during 2006 and is expected to continue to operate at reduced levels for the remainder of this year. While AMC is expected to be a significant contributor to our 2006 business activity, Block Hours are not expected to equal 2005 levels. We have received notice from the AMC that the base rate per Block Hour, excluding fuel costs, will increase in excess of 5% beginning October 1, 2006.

Despite continuing high fuel prices, we expect improving performance in our Scheduled Service segment in the second half of 2006 compared with the same period in 2005 principally due to three additional weekly frequencies awarded to Polar for services between the United States and China (bringing the total frequencies to 12). The Department of Transportation has recently announced that 15 additional weekly frequencies will be available in March 2007, and we will be filing an application to obtain a portion of those rights. Aviation fuel is a significant operating cost in our Scheduled Service business. During the first six months of 2006, the average price per gallon for non-AMC aviation fuel was 206 cents, an increase of 26.4% over the average price of 163 cents per gallon during the same period in 2005. We expect fuel costs to continue to be above those of the same period of 2005 and expect to recover only as much as 60% of the increase through a fuel surcharge mechanism.

Also, effective March 2006, Atlas received approval from the Federal Aviation Administration to operate its fleet of Boeing 747-400s under a revised maintenance program, which we expect will help control future maintenance expense. We currently expect our maintenance expense for the remainder of 2006 to be somewhat lower than the comparable period of 2005, primarily due to reduced overall Block Hours and the reduction in our operating fleet as described above.

Results of Operations

Three Months Ended June 30, 2006 and 2005

The following discussion should be read in conjunction with our Financial Statements and notes thereto and other financial information appearing and referred to elsewhere in this report.

Operating Statistics

The table below sets forth selected operating data for the three months ended June 30:

							Increase /			Percent
	2006			2005			(Decrease)			Change
Block Hours
Scheduled Service		10,090			9,935			155		1.6%
ACMI		17,292			22,611			(5,319	)	(23.5%	)
AMC Charter		4,565			7,507			(2,942	)	(39.2%	)
Commercial Charter		1,822			998			824		82.6%
All Other		215			203			12		5.9%
Total Block Hours		33,984			41,254			(7,270	)	(17.6%	)

Revenue Per Block Hour
ACMI	$	5,920		$	5,423		$	497		9.2%
AMC Charter		15,761			13,901			1,860		13.4%
Commercial Charter		15,257			15,593			(336	)	(2.2%	)

Scheduled Service Traffic
RTM’s (000’s)		376,986			385,631			(8,645	)	(2.2%	)
ATM’s (000’s)		597,889			580,186			17,703		3.1%
Load Factor		63.1	%		66.5	%		(3.4	)	(5.1%	)
RATM	$	0.255		$	0.243		$	0.012		4.9%
Yield	$	0.405		$	0.366		$	0.039		10.7%

Fuel
Scheduled Service and Commercial Charter:
Average fuel cost per gallon	$	2.06		$	1.77		$	0.29		16.4%
Fuel gallons consumed (000’s)		40,063			37,155			2,908		7.%8

AMC:
Average pegged fuel cost per gallon	$	2.20		$	1.40		$	0.80		57.1%
Fuel gallons consumed (000’s)		14,831			25,939			(11,108	)	(42.8%	)

Fleet (average during the period)
Operating Aircraft count *		38.1			39.0			(0.9	)	(2.3%	)
Dry Leased **		3.0			3.0			-		-
Out of service **		-			0.7			(0.7	)	-

* The operating aircraft count includes the three aircraft held for sale and the two aircraft available for lease at June 30, 2006 as these aircraft were operated during the quarter.

** Dry leased and out of service aircraft are not included in the operating fleet aircraft count average.

Operating Revenues

The following table compares our operating revenues for the three months ended June 30:

					Increase /			Percent
	2006		2005		(Decrease)			Change
Operating Revenues
Scheduled Service	$	152,579	$	140,971	$	11,608		8.2%
ACMI		102,368		122,624		(20,256	)	(16.5%	)
AMC Charter		71,951		104,357		(32,406	)	(31.1%	)
Commercial Charter		27,799		15,562		12,237		78.6%
Other revenue		11,723		11,671		52		0.4%
Total operating revenues	$	366,420	$	395,185	$	(28,765	)	(7.3%	)

Scheduled Service revenue increased primarily due to higher Yields and a slight increase in Block Hours offset by a reduction in RTMs. The increase in Yield is partially attributable to the increase in rates reflecting higher fuel prices. RTMs in the Scheduled Service segment were 377.0 million on a total capacity of 598.0 million ATMs in the second quarter of 2006, compared with RTMs of 385.6 million on a total capacity of 580.2 million ATMs in the second quarter of 2005. Block Hours were 10,090 in the second quarter of 2006, compared with 9,935 for the second quarter of 2005, an increase of 155, or 1.6% . Load Factor was 63.1% with a Yield of $0.405 in the second quarter of 2006, compared with a Load Factor of 66.5% with a Yield of $0.366 in the second quarter of 2005, representing a decrease of 5.1% and an increase of 10.7%, respectively. RATM in our Scheduled Service segment was $0.255 in the second quarter of 2006, compared with $0.243 in the second quarter of 2005, representing an increase of 5.0% .

ACMI revenue decreased primarily due to lower Block Hours, partially offset by an increase in Revenue per Block Hour. ACMI Block Hours were 17,292 for the second quarter of 2006, compared with 22,611 for the second quarter of 2005, a decrease of 5,319 Block Hours, or 23.5% . Revenue per Block Hour was $5,920 for the second quarter of 2006, compared with $5,423 for the second quarter of 2005, an increase of $497 per Block Hour, or 9.2% . The increase in rate per Block Hour reflects higher proportional Boeing 747-400 usage in this segment. The reduction in Block Hours is the result of the continuing weakness in the Boeing 747-200 ACMI market. Total aircraft supporting ACMI, excluding dry leased aircraft as of June 30, 2006, were two Boeing 747-200 aircraft and 10 Boeing 747-400 aircraft, compared with nine Boeing 747-200 aircraft and 10 Boeing 747-400 aircraft supporting ACMI at June 30, 2005.

AMC Charter revenue decreased primarily due to lower volume of AMC Charter flights offset by an increase in AMC Charter rates. AMC Charter Block Hours were 4,565 for the second quarter of 2006, compared with 7,507 for the second quarter of 2005, a decrease of 2,942 Block Hours, or 39.2% . Revenue per Block Hour was $15,761 for the second quarter of 2006, compared with $13,901 for the second quarter of 2005, an increase of $1,860 per Block Hour, or 13.4 %. The decrease in AMC Charter activity was the result of an overall reduction in U.S. Military’s heavy lift requirements and a reduction in the amount of ad-hoc business received. The increase in rate was primarily a function of an increase in the pegged rate for AMC fuel, which increased from 140 cents per gallon for the second quarter of 2005 to 220 cents per gallon for the second quarter of 2006.

Commercial Charter revenue increased primarily as a result of a higher volume of Commercial Charter flights offset by a slight decrease in Revenue per Block Hour. Commercial Charter Block Hours were 1,822 for the second quarter of 2006, compared with 998 for the second quarter of 2005, an increase of 824, or 82.5% . Revenue per Block Hour was $15,257 for the second quarter of 2006, compared with $15,593 for the second quarter of 2005, a decrease of $336 per Block Hour, or 2.2% . As more aircraft became available as a result of a reduction in AMC flying, we have sought to utilize this idled capacity by expanding our Commercial Charter activity, resulting in higher Block Hours.

Total Operating Revenue decreased 7.3% in the second quarter of 2006 compared with the second quarter of 2005, primarily as a result of a reduction in Block Hours partially offset by an increase in Revenue per Block Hour.

Operating Expenses

The following table compares our operating expenses for the three months ended June 30:

						Increase /			Percent
	2006			2005		(Decrease)			Change
Operating Expenses
Aircraft fuel	$	115,311		$	101,911	$	13,400		13.1%
Salaries, wages and benefits		59,099			57,709		1,390		2.4%
Maintenance, materials and repairs		43,495			58,936		(15,441	)	(26.2%	)
Aircraft rent		38,166			37,570		596		1.6%
Ground handling and airport fees		19,025			19,350		(325	)	(1.7%	)
Landing fees and other rent		17,561			20,665		(3,104	)	(15.0%	)
Depreciation and amortization		6,520			13,066		(6,546	)	(50.1%	)
Gain on sale of assets		(2,779	)		-		(2,779	)	-
Travel		12,589			14,553		(1,964	)	(13.5%	)
Pre-petition and post-emergence costs
and related professional fees		179			843		(664	)	(78.8%	)
Other		26,684			26,825		(141	)	(0.5%	)
Total operating expense	$	335,850		$	351,428	$	(15,578	)	(4.4%	)

Aircraft fuel expense increased as a result of the increase in fuel prices offset in part by a decrease in fuel consumption. The average fuel price per gallon for the Scheduled Service and Commercial Charter businesses was approximately 206 cents for the second quarter of 2006, compared with approximately 177 cents for the second quarter of 2005, an increase of 29 cents, or 16.4% . Fuel consumption for the Scheduled Service and Commercial Charter businesses increased 2.9 million gallons or 7.8% to 40.1 million gallons for the second quarter of 2006 from 37.2 million gallons during the second quarter of 2005. The average pegged fuel price per gallon for the AMC business was approximately 220 cents for the second quarter of 2006, compared with approximately 140 cents for the second quarter of 2005, an increase of 80 cents, or 57.1%, partially offset by a 11.1 million gallon, or 42.8%, decrease in fuel consumption, to 14.8 million gallons for the second quarter of 2006 from 25.9 million gallons during the second quarter of 2005. The decrease in our AMC fuel consumption corresponds to the decrease of 2,942 Block Hours. We do not incur fuel expense in our ACMI service as the cost of fuel is borne by the customer.

Salaries, wages and benefits increased primarily as a result of a $1.6 million increase in non-crew salaries. Included in the increase is the expensing of stock options of $0.8 million for management, crew and other employees under SFAS No. 123R for the second quarter of 2006 and a $1.8 million payroll tax accrual related to foreign based employees. The increases in salaries, wages and benefits are partially offset by a $4.3 million decrease in employment taxes related to the settlement with the IRS in the second quarter of 2006.

Maintenance materials and repair decreased primarily as a result of fewer C Checks and engine overhauls. There was one C Check on a Boeing 747-200 aircraft in the second quarter of 2006, as compared with four C Checks on four Boeing 747-200 aircraft during the second quarter of 2005. There were 13 engine overhauls in the second quarter of 2006 compared with 16 during the second quarter of 2005. The reduction in maintenance costs is also the result of lower Block Hours during 2006 and the reduction of maintenance expense related to aircraft that currently are parked.

Aircraft rent was essentially unchanged for the comparable periods.

Ground handling and airport fees decreased slightly due to an improvement in efficiency of ground handling services in the Scheduled Service business, the primary user of such services.

Landing fees and other rent decreased primarily due to a reduction in AMC Block Hours.

Depreciation and amortization decreased primarily due to a decrease of $3.8 million in the scrapping of rotable parts combined with a $2.5 million decrease in amortization of customer contracts as a result of the substantial reduction in the related intangibles due to the utilization of pre-emergence tax loss carryforwards (see Note 10 to the audited consolidated financial statements included in our 2005 10-K).

Gain on sale of aircraft was the result of the sale of aircraft tail number N921FT (see Note 2 to our Financial Statements for further discussion).

Travel decreased primarily due to a reduction in crew travel related to the decrease in total Block Hours.

Pre-petition and post-emergence costs and related professional fees decreased due the winding down of the claims reconciliation process related to the bankruptcy proceedings.

Other operating expenses decreased slightly due to a decrease in professional fees of $1.5 million associated with the redesign of internal controls that occurred in 2005, a $1.6 million decrease in freight and other sundry expenses, and a $1.1 million benefit caused by a reduction in accrued interest and penalties from the settlement with the IRS in the second quarter of 2006 offset by an increase in legal and consulting fees of $4.2 million.

Total operating expense decreased in the second quarter of 2006 compared with the second quarter of 2005 primarily as a result of a decrease in maintenance expense and depreciation and amortization partially offset by increased fuel costs. Total operating expenses in the second quarter of 2006 also benefited from a $2.8 million one-time gain on sale of aircraft tail number N921FT.

Non-operating Expenses

The following table compares our non-operating expenses for the three months ended June 30:

								Increase /		Percent
		2006			2005			(Decrease)		Change
Non-operating Expenses
Interest income	$	(3,627	)	$	(1,301	)	$	2,326		178.8	%
Interest expense		17,188			17,976			(788	)	(4.4	%)
Other (income) expense, net		(481	)		212			(693	)	(326.9	%)

Interest income increased primarily due to an increase in our available cash balances, augmented by a general increase in interest rates.

Interest expense decreased primarily as a result of repayment of debt, partially offset by an increase in short term rates on floating rate debt.

Other, net improved primarily due to unrealized gains on the revaluation of foreign denominated receivables into U.S. dollars. The U.S. dollar had weakened against most foreign currencies during the period compared with the prior year when the U.S. dollar had strengthened against most foreign currencies.

Income taxes. The effective tax rate for the second quarter of 2006 was 38.9% compared with an effective tax rate of 41.0% for the second quarter of 2005. Our rates for the second quarter of 2006 and 2005 differ from the statutory rate primarily due to the non-deductibility of certain items for tax purposes and the relationship of these items to our projected operating results for the year.

Segments

Management allocates the cost of operating aircraft among the various segments on an average cost per aircraft type. Under-utilized aircraft costs are allocated to segments based on Block Hours flown for Scheduled Service, AMC and Commercial Charter. For ACMI, we only allocate costs of operating aircraft based on the number of aircraft dedicated to ACMI customers.

The following table compares our FAC for segments (see Note 5 to our Financial Statements for the reconciliation to operating income (loss) and our reasons for using FAC) for the three months ended June 30:

							Increase /			Percent
	2006			2005			(Decrease)			Change
FAC:
Scheduled Service	$	(2,539	)	$	(629	)	$	(1,910	)	(303.7%	)
ACMI		12,567			9,118			3,449		37.8%
AMC Charter		(406	)		14,285			(14,691	)	(102.8%	)
Commercial Charter		(1,503	)		2,085			(3,588	)	(172.1%	)
Total FAC	$	8,119		$	24,859		$	(16,740	)	(67.3%	)

Scheduled Service Segment

FAC relating to the Scheduled Service segment decreased despite the improvement in revenue driven by an increase

in Yield. The reduction in FAC is driven primarily by higher fuel costs and the impact of excess, under-utilized Boeing 747-200 capacity.

ACMI Segment

FAC relating to the ACMI segment increased substantially as a result of the reduction of Block Hours of the less profitable Boeing 747-200 ACMI leases and an increase in Block Hours in the more profitable Boeing 747-400 ACMI leases.

AMC Charter Segment

FAC relating to the AMC Charter segment decreased significantly despite an increase in revenue per Block Hour. The most significant factor impacting the AMC Charter segment was the reduction in Block Hours and the increased fixed cost allocation related to the excess, under-utilized Boeing 747-200 capacity in the second quarter of 2006.

Commercial Charter Segment

FAC relating to the Commercial Charter segment decreased primarily due to higher fuel costs and the impact of excess, under-utilized Boeing 747-200 capacity.

Six Months Ended June 30, 2006 and 2005

Operating Statistics

The table below sets forth selected operating data for the six months ended June 30:

							Increase /			Percent
	2006			2005			(Decrease)			Change
Block Hours
Scheduled Service		18,651			19,017			(366	)	(1.9%	)
ACMI		34,066			43,098			(9,032	)	(21.0%	)
AMC Charter		9,076			13,738			(4,662	)	(33.9%	)
Commercial Charter		3,264			2,231			1,033		46.3%
All Other		377			467			(90	)	(19.3%	)

Total Block Hours		65,434			78,551			(13,117	)	(16.7%	)

Revenue Per Block Hour
ACMI	$	5,887		$	5,387		$	500		9.3%
AMC Charter		15,985			14,068			1,917		13.6%
Commercial Charter		14,793			13,940			853		6.1%

Scheduled Service Traffic
RTM’s (000’s)		694,017			722,296			(28,279	)	(3.9%	)
ATM’s (000’s)		1,098,496			1,109,884			(11,388	)	(1.0%	)
Load Factor		63.2	%		65.1	%		(1.9	)	(2.9%	)
RATM	$	0.256		$	0.236		$	0.020		8.4%
Yield	$	0.405		$	0.363		$	0.042		11.7%

Fuel
Scheduled Service and Commercial Charter:
Average fuel cost per gallon	$	2.06		$	1.63		$	0.43		26.4%
Fuel gallons consumed (000’s)		73,473			70,935			2,538		3.6%

AMC:
Average pegged fuel cost per gallon	$	2.20		$	1.40		$	0.80		57.1%
Fuel gallons consumed (000’s)		29,750			46,856			(17,106	)	(36.5%	)

Fleet (average during the period)
Operating Aircraft count *		38.5			39.1			(0.6	)	(1.5%	)
Dry Leased **		3.0			3.1			(0.1	)	(3.3%	)
Out of service **		-			0.7			(0.7	)	-

* Includes tail number N921FT which did no commercial flying in the first half of 2006 and was sold in April of 2006. The operating aircraft count also includes the three aircraft held for sale and the two aircraft available for lease at June 30, 2006.

** Dry leased and out of service aircraft are not included in the operating fleet aircraft count average.

Operating Revenues

The following table compares our operating revenues for the six months ended June 30:

					Increase /			Percent
	2006		2005		(Decrease)			Change
Operating Revenues
Scheduled Service	$	281,259	$	262,115	$	19,144		7.3%
ACMI		200,552		232,161		(31,609	)	(13.6%	)
AMC Charter		145,077		193,273		(48,196	)	(24.9%	)
Commercial Charter		48,283		31,100		17,183		55.3%
Other revenue		23,399		23,482		(83	)	(0.4%	)
Total operating revenues	$	698,570	$	742,131	$	(43,561	)	(5.9%	)

Scheduled Service revenue increased primarily due to higher Yields offset by a slight reduction in capacity. The increase in Yield is partially attributable to the increase in rates reflecting higher fuel prices. RTMs in the Scheduled Service segment were 694.0 million on a total capacity of 1,098.5 million ATMs in the first half of 2006, compared with RTMs of 722.3 million on a total capacity of 1,109.9 million ATMs in the first half of 2005. Block Hours were 18,651 in the first half of 2006, compared with 19,017 for the first half of 2005, a decrease of 366, or 1.9% . Load Factor was 63.2% with a Yield of $0.405 in the first half of 2006, compared with a Load Factor of 65.1% and a Yield of $0.363 in the first half of 2005. RATM in our Scheduled Service segment was $.0256 in the first half of 2006, compared with $0.236 in the first half of 2005, representing an increase of 8.4% .

ACMI revenue decreased primarily due to lower Block Hours partially offset by an increase in Revenue per Block Hour. ACMI Block Hours were 34,066 for the first half of 2006, compared with 43,098 for the first half of 2005, a decrease of 9,032 Block Hours, or 21.0% . Revenue per Block Hour was $5,887 for the first half of 2006, compared with $5,387 for the first half of 2005, an increase of $500 per Block Hour, or 9.3% . The reduction in Block Hours is the result of the continuing weakness in the Boeing 747-200 ACMI market. The increase in rate per Block Hour reflects higher proportional Boeing 747-400 usage in this segment. Total aircraft supporting ACMI, excluding dry leased aircraft as of June 30, 2006, were two Boeing 747-200 aircraft and 10 Boeing 747-400 aircraft, compared with nine Boeing 747-200 aircraft and 10 Boeing 747-400 aircraft supporting ACMI at June 30, 2005.

AMC Charter revenue decreased primarily due to lower volume of AMC Charter flights offset by an increase in our AMC Charter rates. AMC Charter Block Hours were 9,076 for the first half of 2006, compared with 13,738 for the first half of 2005, a decrease of 4,662 Block Hours, or 33.9% . Revenue per Block Hour was $15,985 for the first half of 2006, compared with $14,068 for the first half of 2005, an increase of $1,917 per Block Hour, or 13.6% . The decrease in AMC Charter activity was the result of an overall reduction in U.S. Military’s heavy lift requirements and a reduced amount of ad-hoc business received. The increase in rate was primarily a function of an increase in the pegged rate for AMC fuel, which increased from 140 cents per gallon for the first half of 2005 to 220 cents per gallon for the first half of 2006.

Commercial Charter revenue increased primarily as a result of both a higher volume of flights and higher Revenue per Block Hour. Commercial Charter Block Hours were 3,264 for the first half of 2006, compared with 2,231 for the first half of 2005, an increase of 1,033, or 46.3% . Revenue per Block Hour was $14,793 for the first half of 2006, compared with $13,940 for the first half of 2005, an increase of $853 per Block Hour, or 6.1% . The increase in rates is primarily attributed to higher fuel prices and the increase in Block Hour availability due to the reduction in AMC flying.

Total Operating Revenue decreased 5.9% in the first half of 2006 compared with the first half of 2005, primarily as a result of a reduction in Block Hours partially offset by an increase in Revenue per Block Hour.

Operating Expenses

The following table compares our operating expenses for the six months ended June 30:

						Increase /			Percent
	2006			2005		(Decrease)			Change
Operating Expenses
Aircraft fuel	$	216,487		$	181,518	$	34,969		19.3%
Salaries, wages and benefits		119,170			114,061		5,109		4.5%
Maintenance, materials and repairs		83,879			122,955		(39,076	)	(31.8%	)
Aircraft rent		75,955			74,429		1,526		2.1%
Ground handling and airport fees		34,910			37,508		(2,598	)	(6.9%	)
Landing fees and other rent		33,877			39,052		(5,175	)	(13.3%	)
Depreciation and amortization		20,045			26,070		(6,025	)	(23.1%	)
Gain on sale of assets		(2,779	)		-		2,779		-
Travel		25,838			29,352		(3,514	)	(12.0%	)
Pre-petition and post-emergence costs
and related professional fees		277			2,484		(2,207	)	(88.8%	)
Other		53,236			50,463		2,773		5.5%
Total operating expense	$	660,895		$	677,892	$	(16,997	)	(2.5%	)

Aircraft fuel expense increased primarily as a result of an increase in Scheduled Service and Commercial Charter fuel costs of $35.7 million slightly offset by a reduction in AMC fuel costs of $0.7 million. The average fuel price per gallon for

the Scheduled Service and Commercial Charter businesses was approximately 206 cents for the first half of 2006, compared with approximately 163 cents for the first half of 2005, an increase of 43 cents, or 26.4% and a 2.5 million gallon, or 3.6%, increase in fuel consumption to 73.5 million gallons for the first half of 2006 from 70.9 million gallons during the first half of 2005. The average pegged fuel price per gallon for the AMC business was approximately 220 cents for the first half of 2006, compared with approximately 140 cents for the first half of 2005, an increase of 80 cents, or 57.1%, partially offset by a 17.1 million gallon, or 36.5%, decrease in fuel consumption to 29.8 million gallons for the first half of 2006 from 46.9 million gallons during the first half of 2005. The decrease in our AMC fuel consumption corresponds to the decrease of 4,662 Block Hours. We do not incur fuel expense in our ACMI service as the cost of fuel is borne by the customer.

Salaries, wages and benefits increased as a result of a $1.5 million or 2.2% increase in crew salary attributable to minimum hour guarantees and contractual pay increases and a $3.6 million or 8.1% increase in ground salaries. Included in the increase is the expensing of stock options for management, crew and other employees under SFAS No. 123R of $1.5 million for the first half of 2006, $1.4 million related to a one time severance accrual and increases in health insurance premiums. The increases are partially offset by a $4.3 million decrease in employment taxes related to the settlement with the IRS in the second quarter of 2006.

Maintenance materials and repair decreased primarily as a result of fewer C Checks and engine overhauls. There were three C Checks on Boeing 747-200 aircraft in the first half of 2006, as compared with seven C Checks on Boeing 747-200 aircraft during the first half of 2005. There were three D Checks on Boeing 747-200 aircraft in the first half of 2006 compared with one D Check on Boeing 747-200 aircraft and three D Checks on Boeing 747-200 aircraft during the first half of 2005. There were 23 engine overhauls in the first half of 2006 compared with 35 during the first half of 2005. In addition, the reduction in maintenance costs results from lower Block Hours during 2006 and the reduction of maintenance expense related to aircraft that we are parking.

Aircraft rent was essentially unchanged for the comparable periods.

Ground handling and airport fees decreased primarily due to a reduction in Scheduled Service Block Hours and improvement in efficiency of ground handling services in the Scheduled Service business which is the primary user of such services.

Landing fees and other rent decreased primarily due to a reduction in Scheduled Service and AMC Block Hours.

Depreciation and amortization decreased primarily due to a $1.2 million decrease in the scrapping of rotable parts and a $4.6 million decrease in amortization of customer contracts as a result of the substantial reduction in the related intangibles due to the utilization of pre-emergence tax loss carryforwards (see Note 10 to the audited consolidated financial statements included in our 2005 10-K).

Gain on sale of aircraft was the result of the sale of aircraft tail number N921FT (see Note 2 to our Financial Statements for further discussion).

Travel decreased primarily due to a reduction in crew travel related to the decrease in total Block Hours.

Pre-petition and post-emergence costs and related professional fees decreased due the winding down of the claims reconciliation process related to the bankruptcy proceedings.

Other operating expenses increased primarily due to an increase in legal fees and consulting fees of $6.9 million and $2.9 million increase in cargo claims, increased use of contractors and the expensing of restricted stock awards for directors in 2006 offset by a decrease in professional fees of $2.6 million associated with the redesign of internal controls and a $1.1 million benefit for a reduction in interest and penalties from the settlement with the IRS in second quarter of 2006. The first half of 2005 also benefited from a $3.4 million reversal of an allowance for doubtful accounts.

Total operating expense decreased in the first half of 2006 compared with the first half of 2005, primarily as a result of a decrease in maintenance expense partially offset by increased fuel costs.

Non-operating Expenses

The following table compares our non-operating expenses for the six months ended June 30:

							Increase /			Percent
		2006			2005		(Decrease)			Change
Non-operating Expenses
Interest income	$	(7,242	)	$	(2,119	)	$	5,123		241.8	%
Interest expense		34,488			35,798			(1,310	)	(3.7	%)
Other (income) expense, net		(911	)		2,170			(3,081	)	(142.0	%)

Interest income increased primarily due to an increase in our available cash balances, augmented by a general increase in interest rates.

Interest expense decreased primarily as a result of repayment of debt, partially offset by an increase in short term rates on floating rate debt.

Income taxes. The effective tax rate for the first half of 2006 was 38.3% compared with an effective tax rate of 41.8% for the first half of 2005. Our rates for the first half of 2006 and 2005 differ from the statutory rate primarily due to the non-deductibility of certain items for tax purposes and the relationship of these items to our projected operating results for the year.

Segments

Management allocates the cost of operating aircraft among the various segments on an average cost per aircraft type. Under-utilized aircraft costs are allocated to segments based on Block Hours flown for Scheduled Service, AMC and Commercial Charter. ACMI is only allocated costs of operating aircraft based on the number of aircraft dedicated to ACMI customers.

The following table compares our FAC for segments (see Note 5 to our Financial Statements for the reconciliation to operating income (loss) and our reasons for using FAC) for the six months ended June 30:

							Increase /			Percent
	2006			2005			(Decrease)			Change
FAC:
Scheduled Service	$	(10,551	)	$	(7,511	)	$	(3,040	)	(40.5%	)
ACMI		16,047			4,307			11,740		272.6%
AMC Charter		(2,052	)		27,141			(29,193	)	(107.6%	)
Commercial Charter		(4,596	)		1,285			(5,881	)	(457.7%	)
Total FAC	$	(1,152	)	$	25,222		$	(26,374	)	(104.6%	)

Scheduled Service Segment

FAC relating to the Scheduled Service segment decreased despite the improvement in revenue driven by an increase in Yield. The reduction in FAC is driven primarily by higher fuel costs and the impact of excess, under-utilized Boeing 747-200 capacity.

ACMI Segment

AMC Charter Segment

FAC relating to the AMC Charter segment decreased significantly despite an increase in Revenue per Block Hour. The most significant factor impacting the AMC Charter segment was the reduction in Block Hours and the increased fixed cost allocation related to the excess, under-utilized Boeing 747-200 capacity in the first half of 2006.

Commercial Charter Segment

FAC relating to the Commercial Charter segment decreased primarily due to higher fuel costs and the impact of excess, under-utilized Boeing 747-200 capacity.

Liquidity and Capital Resources

At June 30, 2006, we had cash and cash equivalents of $311.6 million, compared with $305.9 million at December 31, 2005, an increase of $5.7 million, or 1.9% . Subsequent to June 30, 2006, we used approximately $140.8 million of available cash to prepay our two credit facilities with Deutsche Bank and we terminated our Revolving Credit Facility. Despite a reduction in our cash balance as a result of this transaction, we still consider cash on hand and cash generated from operations to be more than sufficient to meet our debt and lease obligations and to finance expected capital expenditures of approximately $23.1 million for the remainder of 2006.

Operating Activities. Net cash provided by operating activities for the first half of 2006 was $41.9 million, compared with net cash provided by operating activities of $109.8 million for the first half of 2005. The decrease in cash provided by operating activities is primarily related to a decrease in operating results and a larger reduction in accrued liabilities in the first half of 2006 compared with 2005.

Investing Activities. Net cash used by investing activities was $4.8 million for the first half of 2006 consisting primarily of capital expenditures of $14.1 million offset by proceeds from sale of aircraft of $8.4 million and a decrease in restricted funds held in trust of $0.9 million. Net cash used by investing activities was $13.4 million for the first half of 2005, which reflects capital expenditures of $17.6 million offset by a decrease in restricted funds held in trust of $4.2 million.

Financing Activities. Net cash used by financing activities was $31.3 million for the first half of 2006, which consisted primarily of $35.6 million of payments on long-term debt and capital lease obligations and a $0.1 million purchase of treasury stock offset by $3.1 million in proceeds from the exercise of stock options and a $1.3 million tax benefit on restricted stock and stock options. Net cash used by financing activities was $37.7 million for the first half of 2005, which consisted primarily of $47.7 million of payments on long-term debt and capital lease obligations and a $0.1 million purchase of treasury stock, offset by $10.0 million in loan proceeds from our Revolving Credit Facility that were subsequently repaid.

Debt Agreements

See Note 7 to the audited consolidated financial statements included in the 2005 10-K for a description of the Company’s debt obligations and amendments thereto during the bankruptcy proceedings.

At June 30, 2006, we had no borrowings outstanding under our Revolving Credit Facility and letters of credit totaling $0.4 million had been issued. On August 1, 2006, this facility was cancelled. Also as of June 30, 2006, we believe that we were in compliance with all of our debt covenants (see Note 9 to our Financial Statements for a discussion of our prepayment and termination of three credit facilities).

Off-Balance Sheet Arrangements

There were no material changes in our off-balance sheet arrangements during the three months ended June 30, 2006.

Contractual Obligations

There were no material changes in our non-cancelable contractual cash obligations during the three months ended June 30, 2006 (see Note 3 to our Financial Statements for a further discussion). As noted above, however, we have prepaid in full a large portion of our on-balance sheet debt in July 2006.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," included in our 2005 10-K except for the adoption of SFAS No. 123R on January 1, 2006.

Stock-based compensation. The adoption of SFAS No. 123R, in 2006 requires the recording of stock-based compensation expense for issuances under our stock option plan over their requisite service period using a fair value approach similar to the pro forma disclosure requirements of SFAS No. 123. SFAS No. 123R does not mandate an option-pricing model to be used in determining fair value, but does require that the model selected consider certain variables. Different models would result in different valuations. Regardless of the method selected, significant judgment is required for some of the valuation assumptions. The most significant of these is the volatility of our common stock, estimated forfeiture rate and the estimated term that our stock options will be outstanding. The valuation calculation is sensitive to even slight changes in these estimates (see Note 3 to our Financial Statements for a further discussion).

Recent Accounting Pronouncements

See Note 2 to our Financial Statements for a discussion of new accounting pronouncements.

Other Matters

Effective April 25, 2006, Herbert J. Lanese resigned from the Boards of AAWW, Atlas and Polar. Mr. Lanese also resigned as a member of AAWW's Audit Committee at such time.

On May 3, 2006, AAWW announced that it has appointed William J. Flynn to succeed Jeffery H. Erickson as President and Chief Executive Officer, effective June 22, 2006. Mr. Erickson remained as a special advisor to the Company until his retirement date of July 28, 2006. In addition, Mr. Erickson was reelected to the Board of Directors at the annual meeting of stockholders on June 27, 2006 (see Part II Item 4 of this report for further discussion of election of directors).

Additionally, following the annual meeting of stockholders, the Board selected the members of our Audit Committee. The Audit Committee now consists of Messrs. Agnew (Chairman), Butler, Bernlohr, and Davis. Our Board has determined that Messrs. Butler and Davis are independent “audit committee financial experts” within the meaning of the federal securities laws.

On May 31, 2006, our common stock began trading on The NASDAQ Stock market. Our common stock is currently listed on The NASDAQ Global Select Market under the ticker symbol “AAWW.”

Forward Looking Statements

Our disclosure and analysis in this report, including but is not limited to the information discussed in the “Outlook” section above, contain forward-looking information about our financial results and estimates and business prospects that involve substantial risks and uncertainties. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historic or current facts. They use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "will," "target" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance, sales efforts, expenses, interest rates, foreign exchange rates, the outcome of contingencies such as legal proceedings and financial results.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Forms 10-Q, 8-K and 10-K reports to the SEC. Our 2005 10-K listed various important factors that could cause actual results to differ materially from expected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Item 1 of that filing under the heading "Risk Factors." We incorporate that section of our 2005 10-K in this filing and investors should refer to it. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risks from the information provided in Item 7A “Quantitative and Qualitative Disclosures About Market Risk” included in our 2005 10-K, except as follows:

Aviation fuel . Our results of operations are affected by changes in the price and availability of aviation fuel. Market risk is estimated at a hypothetical 10% increase in the average cost per gallon of fuel for the first half of 2006. Based on actual first half of 2006 fuel consumption for the Scheduled Service and Commercial Charter business segments, such an increase would result in an increase to aviation fuel expense of approximately $15.1 million for the first half of 2006. Fuel prices for AMC are set each September by the military and are fixed for the year and adjusted to actual costs incurred. ACMI does not present an aviation fuel market risk, as the cost of fuel is borne by the customer.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The term "disclosure controls and procedures" is defined in Rules 13a- 15(e) and 15d-15(e) of the Exchange Act. This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC. An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures as of June 30, 2006. Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of June 30, 2006.

Remediation of Material Weaknesses and Significant Deficiencies

Management has continued to make significant progress to remediate identified internal control deficiencies and to establish adequate disclosure controls and internal controls over financial reporting during the quarter ended June 30, 2006. As we continue to evaluate the operating effectiveness of internal controls during 2006, it is possible that management will identify additional deficiencies that meet the definition of a material weakness or significant deficiency and there can be no assurance that all material weaknesses or significant deficiencies will be remediated by December 31, 2006.

Changes in Internal Control over Financial Reporting

Other than as expressly noted above in this Item 4, there were no changes in our internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f), identified in connection with the evaluation of our controls performed during the fiscal quarter ended June 30, 2006 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

With respect to the fiscal quarter ended June 30, 2006, the information required in response to this Item is set forth in Note 6 to our Financial Statements contained in this report, and such information is hereby incorporated herein by reference. Such description contains all of the information required with respect hereto.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We made the following repurchases of shares of our common stock during the fiscal quarter ended June 30, 2006:

						Maximum Number (or
					Total Number of	Approximate Dollar
					Shares Purchased as	Value) of Shares that
					Part of Publicly	May Yet Be Purchased
	Total Number of		Average Price		Announced Plans or	Under the Plans or
Period	Shares Purchased (a)		Paid per Share		Programs (b)	Programs

April 1, 2006 through		1,690		$46.00	—	—
April 30, 2006

May 1, 2006 through May		836		50.00	—	—
31, 2006

June 1, 2006 through June		—		—	—	—
30, 2006

Total		2,526		$47.34	—	—

(a) This column reflects the repurchase of 2,526 shares of common stock to satisfy individual tax liabilities of our employees relating to the vesting of restricted shares.

(b) There are no approved share repurchase programs.

ITEM 4 . SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At our annual meeting of stockholders held in New York, New York on June 27, 2006, our stockholders elected directors, and the shares present at the meeting were voted for or withheld from each nominee as follows:

Name	Number of Shares Voted For	Number of Shares Withheld

Robert F. Agnew	15,356,791	2,325,632

Timothy J. Bernlohr	16,490,184	1,192,239

Keith E. Butler	16,679,921	1,002,502

Eugene I. Davis	16,475,084	1,207,339

Jeffrey H. Erickson	16,707,366	975,057

William J. Flynn	16,707,366	975,057

James S. Gilmore	15,356,791	2,325,632

Carol B Hallett	16,695,021	987,402

Frederick McCorkle	16,694,921	987,502

At the meeting, our stockholders also approved the Atlas Air Worldwide Holdings, Inc. 2006 Annual Incentive Plan for Senior Executives (the “2006 Plan”). The shares present at the meeting were voted on the proposal as follows:

12,843,411 shares voted for approval, 960,408 shares voted against the proposal, with 259,628 shares abstaining. There were no broker non-votes in respect of this proposal.

The 2006 Plan replaces the 2005 Annual Incentive Plan for Senior Executives, which expired on December 31, 2005, and provides, among other things, for the payment of incentive awards primarily in the form of cash. In addition, the 2006 Plan contains provisions that protect our ability to take a tax deduction for performance-based awards made under the 2006 Plan, in conformance with Section 162(m) of the Internal Revenue Code (the “Code”) and related regulations, in the event that certain executive officers, who are awardees, receive more than $1.0 million of compensation in any one year. Section 162(m) of the Code limits the deductibility of certain compensation in excess of $1.0 million per year paid to “covered employees,” defined as our CEO and our other four most highly-compensated executive officers. The 2006 Plan addresses the limitation on deductibility by providing for compensation that qualifies as “performance-based compensation,” which is not subject to the limitation.

The following paragraphs provide a summary of the principal features of the 2006 Plan. This summary is subject to, and qualified in its entirety by, the provisions of the 2006 Plan, which is filed as Exhibit 10.3 to this Quarterly Report on Form 10-Q.

The 2006 Plan is administered by the Compensation Committee of our Board of Directors. The Plan’s participants include our CEO, President, Executive Vice Presidents and Senior Vice Presidents (five persons at the time of stockholder approval of the 2006 Plan). All eligible employees will be eligible to participate in the 2006 Plan if they are employed as eligible employees as of the first day of the 2006 Plan year, which is the calendar year. An individual who becomes an eligible employee during the 2006 Plan year will participate immediately, but only with respect to base salary earned on and after the date he or she first becomes an eligible employee, except as determined by the Compensation Committee in its sole discretion to allow exceptions (e.g., the consideration of base salary on an annualized basis).

For each plan year, each participant in the 2006 Plan is entitled to receive a cash payment under the 2006 Plan based upon our achievement of a 2006 financial goal established by the Compensation Committee. Our 2006 financial goal is based upon our 2006 pre-tax profits. The Compensation Committee, in its sole discretion, may also reduce the award otherwise payable to a participant based upon other performance goals established by the Compensation Committee. Participants other than the CEO have a maximum bonus opportunity of 100% of annual base salary earned in the plan year. For the CEO, the maximum bonus opportunity is 160% of base annual salary earned in the plan year. However, no bonus awards will be paid unless we achieve a minimum pre-tax profit amount. If the financial goal is satisfied and such satisfaction is certified by the Compensation Committee, a participant is automatically entitled to one-half of his or her bonus, with payment of the remaining half dependent upon the participant’s individual performance.

All amounts payable for an award will be paid in cash or our stock, as determined by the Compensation Committee, but our stock may be used only for the portion of an award that exceeds fifty percent (50%) of a participant’s base salary. If the Board of Directors determines in good faith that exigent circumstances exist which could have a material adverse impact on us if awards are paid, the Board of Directors will have the authority, in its absolute and sole discretion, to determine that (i) no awards will be paid under the 2006 Plan, (ii) awards will be reduced, (iii) payment of awards will be deferred for possible payment at a future date, or (iv) other adjustments will be made to the awards otherwise payable.

ITEM 6. EXHIBITS

a. Exhibits

See accompanying Exhibit Index included after the signature page of this report for a list of exhibits filed or furnished with this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Atlas Air Worldwide Holdings, Inc.

	Dated: August 14, 2006		/s/ William J. Flynn
			William J. Flynn
			President and Chief Executive Officer

	Dated: August 14, 2006		/s/ Michael L. Barna
			Michael L. Barna
			Senior Vice President and Chief Financial Officer

EXHIBIT INDEX


Exhibit Number		Description
	10.1	Employment Agreement dated April 21, 2006, between Atlas Air, Inc. and William Flynn.

	10.2	Agreement between Atlas Air Worldwide Holdings, Inc. and Herbert J. Lanese, dated April 25, 2006, with respect to certain matters related to Mr. Lanese’s resignation.

	10.3	Atlas Air Worldwide Holdings, Inc. 2006 Annual Incentive Plan for Senior Executives.

	31.1	Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer, furnished herewith.

	31.2	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer, furnished herewith.

	32.1	Section 1350 Certifications, furnished herewith.

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (hereinafter referred to as the "Agreement") is made and entered into as of the 21st day of April, 2006 by and between William Flynn (hereinafter referred to as "Employee") and Atlas Air, Inc., a Delaware corporation (hereinafter referred to as "Atlas")

WHEREAS, Atlas believes that it is in the best interests of Atlas to retain the services of the Employee and the Employee desires an affiliation with Atlas, on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, Employee warrants that Employee is entering voluntarily into this Agreement, and that no promises or inducements for this Agreement have been made outside of the terms and conditions referred to herein, and Employee enters into this Agreement without reliance upon any statement or representation by Atlas or any other person, concerning any fact material hereto.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, covenant and agree as follows:

1. DEFINITIONS

For purposes of this Agreement, the following terms shall have the following meanings:

1.1. " Cause " means (i) any act or acts of material dishonesty taken by the Employee, (ii) the failure of the Employee to comply with any of the Employee’s material obligations within ten (10) days of written notice from Atlas, (iii) any material violations by

Employee of Atlas corporate policies as set forth in the Employee Compliance Manual, Employee Handbook or related corporate policies; provided that, if such violation is subject to cure, Employee shall have ten (10) days within which to cure such violation, or (iv) the conviction of or "no contest" plea by the Employee to any misdemeanor of moral turpitude or any felony.

1.2. " Employment Period " means the period commencing on the date hereof and extending until this Agreement is terminated by either party in accordance with Section 4; provided that this Agreement shall not become effective and the Employment Period shall not commence until (i) the satisfactory completion of a background check on Employee, (ii) the satisfactory completion of a drug screening test by the Employee as required by Atlas policy and (iii) the formal approval of this Agreement by the Board.

1.3. " Permanent Disability " shall be deemed to have been sustained by Employee if Employee shall have been continuously disabled from performing the duties assigned to Employee during the Employment Period for a period of six (6) consecutive calendar months, and such Permanent Disability shall be deemed to have commenced on the day following the end of such six (6) consecutive calendar months.

1.4. " Change of Control " means the acquisition by any person, entity or "group" within the meaning of Section 13 (d) (3) or 14 (d) (2) of the Securities Exchange Act of 1934 (the "Exchange Act") (excluding, for this purpose any employee benefit plan of Atlas or its affiliates) of beneficial ownership, within the meaning of Rule 13(d) (c) promulgated under the Exchange Act, of greater than fifty percent (50%) of the combined voting power of the

outstanding voting securities of either Atlas or of Atlas Air Worldwide Holdings, Inc. ("Holdings") entitled to vote generally in the election of directors.

1.5. “ Confidential or Proprietary ” shall refer to all information relative to the plans, structure and practices, including information relating to its customers, contracts and aircraft of Atlas or any affiliate or subsidiary thereof, except:

(a) information that is or becomes a matter of public knowledge through no fault of the Employee; or

(b) information rightfully received by the Employee from a third party without a duty of confidentiality; or

1.6. " Good Reason " means (i) a reduction in the Employee’s Base Annual Salary or other benefits provided to officers of Atlas, (ii) a reduction in the percentage target bonus opportunity from the level described in Section 3.2 of this Agreement, (iii) a substantial and material reduction in the Employee’s title or job responsibilities from the Employee’s title or job responsibilities on the date of this Agreement, (iv) any reduction, within twelve (12) months following a Change of Control, in the Employee’s title or job responsibilities from the Employee’s title or job responsibilities on the date of this Agreement, and (v) a requirement by Atlas, within twelve (12) months following a Change of Control, that Employee relocate his principal residence from the Purchase, New York area.

2. EMPLOYMENT AND OBLIGATIONS OF EMPLOYEE

Atlas and Employee agree to the following rights, obligations and duties with respect to employment:

2.1. Employment . During the Employment Period, Atlas agrees to employ the Employee as President and Chief Executive Officer of Atlas and Holdings, reporting directly to the Board of Directors of Holdings (the "Board"). The scope of Employee’s responsibilities shall be as determined by the Board. During the Employment Period, Holdings will nominate Employee for election to, and if elected, Employee shall serve on the Board for so long as he is employed. Except as may otherwise be determined by the Board, Employee shall not be entitled to any additional compensation for serving in any other office for Atlas or subsidiary or affiliate of Atlas.

2.2. Obligations of Employee . During the Employment Period, the Employee agrees, except when prevented by illness or Permanent Disability, or during a period of vacation, to devote substantially all of Employee’s business time and attention to the good faith performance of the duties contemplated; provided, however, that Employee may serve on boards and committees of other businesses, industry groups or tax-exempt institutions, attend to personal investments and engage in civic and charitable endeavors, so long as such activities are not competitive with the Company and do not interfere with Employee’s discharge of his obligations hereunder and so long as Employee obtains approval from the Chairman of the Board for any such service.

2.3. Principal Residence of Employee . During the Employment Period, Employee shall maintain Employee’s principal residence in the Purchase, New York area (or such other area to which Atlas might relocate its headquarters); provided that Employee shall

have up to ninety (90) days to relocate himself and his immediate family to the Purchase, NY area. Employee’s failure to so relocate himself and his immediate family within such 90 day period shall be considered a failure of the Employee to comply with a material obligation and shall be subject to Section 1.1(ii) of this Agreement.

3. COMPENSATION

During the Employment Period, Atlas will pay Employee as follows:

3.1. Base Annual Salary . Atlas will pay Employee a base annual salary (the "Base Annual Salary") of $650,000 per annum, payable in semi-monthly installments. Atlas shall review Base Annual Salary not less frequently than annually for increases, including among other considerations, Employee’s performance, it being understood that any increases shall be at the discretion of Atlas.

3.2. Incentive Bonus Payments . Employee will be eligible to participate in Holdings’ Annual Incentive Plan. The level of the bonus available to the Employee will be set forth in the Annual Incentive Plan and will be awarded in consideration of individual and Atlas performance based on performance goals and objectives determined by the Compensation Committee of Holdings (the "Compensation Committee"). A fuller description of how corporate and individual performance operate in tandem to determine the calculation of bonuses will be described in the Annual Incentive Plan. The Annual Incentive Plan document will be developed by the Compensation Committee, and is subject to amendment from time to time with changes as adopted by the Compensation Committee or full Board of Directors of Holdings. As further described in the Annual Incentive Plan (i) corporate and individual performance in combination may permit the employee to earn a target bonus equal to 80% of Base Annual Salary, (ii) lesser corporate or individual performance may cause bonus payments to be in an amount less than

80% of Base Annual Salary or result in no bonus being payable and (iii) greater corporate and individual performances may result in the bonus being more than 80% of Base Annual Salary, with a maximum of 160% of Base Annual Salary. When the bonus payment reaches more than 50% of Base Annual Salary, Atlas reserves the right to pay some or all of the portion of the bonus that is above 50% of Base Annual Salary in Holdings unrestricted stock. Any bonus paid under the Annual Incentive Plan will be paid no later than two weeks following the completion of the year-end audit for the applicable year. The bonus payable for 2006 shall be pro-rated, i.e., based only on the portion of Base Annual Salary actually earned during such year.

3.3. Sign on Compensation . Employee shall receive the following within 30 days after his first day of employment under this Agreement:

(a) A cash payment of $200,000.

(b) A grant of shares of Holdings restricted stock, with a value on the date of grant of $900,000 (the number of shares rounded to the nearest full share) which will vest one-quarter on each of the first four anniversaries of the date of this Agreement, provided Employee remains employed on each such vesting date.

3.4. Long Term Equity Compensation . Employee shall receive the following effective as of his first day of employment under this Agreement:

(a) A grant of 50,000 stock options, which will vest one-quarter on each of the first four anniversaries of the date of this Agreement, provided Employee remains employed on each such vesting date.

(b) A grant of 25,000 shares of Holdings restricted stock, which will vest one-quarter on each of the first four anniversaries of the date of this Agreement, provided Employee remains employed on each such vesting date; and further provided, however, that no shares will vest unless specified performance goals, determined by the Compensation Committee and Employee, are achieved.

Employee understands that he shall not be entitled to any further grants of equity compensation before 2008 and that any such grants shall be solely at the discretion of the Holdings Compensation Committee.

At such time or times that restricted stock granted to Employee hereunder vests, Atlas shall, at Employee’s request, withhold a number of vested shares having a then-fair market value sufficient to discharge minimum required federal, state and local tax withholding resulting from the vesting.

3.5. Benefits . Employee and Employee’s dependents shall be eligible to participate in the Atlas health insurance plan, provided that the Employee and Atlas will each contribute to Employee’s monthly premium as provided by such plan. Atlas reserves the right to discontinue participation in any health insurance plan at any time with the understanding that Atlas will comply in full measure with all state and federal laws regarding the changes of insurance coverage by private employers and notification under the Consolidated Omnibus Budget Reconciliation Act. Employee’s medical benefits shall include one major medical examination per year. Employee also shall be entitled, to the same extent and at a level commensurate with the corporate officers of Atlas, to participate in any other benefit plans or arrangements of Atlas. Employee shall be entitled to four weeks of paid vacation per year (pro-

rated for 2006). Employee shall be entitled to reimbursement of business expenses in accordance with Atlas policy.

3.6. Relocation Expenses . Atlas shall reimburse Employee for reasonable and customary moving expenses from Employee’s current home to the Purchase, New York area through Atlas’ relocation vendor, including up to 90 days temporary living accommodations while Employee locates a home. The Atlas policy for reimbursement of costs associated with selling Employee’s current home will be extended to two years from the date the Employment Period commences. Atlas will reimburse Employee for the cost of two house hunting trip to the Purchase, New York area for Employee and his spouse.

3.7. Financial Planning . Atlas shall reimburse Employee for personal financial planning services incurred during the first two years of his employment with Atlas, to a maximum of $15,000.

3.8. Attorneys Fees . Atlas shall reimburse Employee for (or pay directly if Employee so requests) reasonable attorneys fees incurred by Employee in connection with negotiating the terms of his employment with Atlas.

4. TERMINATION OF EMPLOYMENT PERIOD

The Employment Period shall terminate under the following terms and conditions:

4.1. At Will Arrangement . Atlas and Employee expressly understand and agree that the employment relationship is at-will. Either party may terminate the Employment Period and the employment relationship upon written notice to the other at any time and for any reason, subject to the terms of this Agreement. Employee shall make every reasonable effort to

give Atlas at least three months prior, written notice of Employee’s voluntary termination of employment for other than Good Reason.

4.2. Rights Following Termination .

(a) If the Employment Period is terminated by Atlas for reasons other than Cause or if the Employment Period is terminated by the Employee for Good Reason, and subject to Employee’s execution of a release upon terms and conditions acceptable to Atlas, the Employee shall be entitled to: (i) receive an amount equal to one and one-half times Employee’s then current Annual Base Salary, payable in accordance with Atlas’ normal pay schedule and commencing as soon as practicable without causing any penalties under Internal revenue Code Section 409A, (ii) accrued but unused vacation pay through the employment termination date, (iii) all other rights and benefits in which Employee is vested pursuant to other plans and programs of Atlas and (iv) continued coverage and rights and benefits available under the employee benefit programs of Atlas as provided in Section 3.3 above for a period of 12 months from the date of termination; and to the extent Atlas is unable to continue such coverage, Atlas shall provide the Employee with economically equivalent benefits determined on an after-tax basis; provided , however , that any such continued coverage shall cease in the event Employee obtains comparable coverage in connection with subsequent employment.

(b) Upon the death or Permanent Disability of the Employee, the Employment Period shall terminate and the Employee’s Base Annual Salary which is accrued for the current pay period but unpaid as of the date of such death or Permanent Disability shall be paid to the Employee or Employee’s personal representative. In addition, upon the Permanent Disability of the Employee, Employee shall be entitled to the compensation and benefits set forth in Section

4.2 (a) (i) and (ii) above, and upon the death of Employee, Employee’s immediate family shall be entitled to the compensation and benefits set forth in Section 4.2 (a) (i) and (ii) above.

(c) If the Employment Period is terminated by Atlas for Cause or by the Employee for other than Good Reason, the Employee shall be entitled to receive Employee’s Base Annual Salary which is accrued for the current pay period but unpaid as of the date of termination.

(d) If, within six months preceding or twelve months following, a Change in Control, the Employment Period is terminated by Atlas for reasons other than Cause or if the Employment Period is terminated by the Employee for Good Reason, and subject to Employee’s execution of a release upon terms and conditions acceptable to Atlas, the Employee shall be entitled to receive the payments and benefits described in (a) above, except that the cash payment described in (a)(i) above will be increased to twenty-four months of Base Annual Salary.

(e) Benefits provided hereunder shall be subject to reduction as follows:

		(i)	Notwithstanding any other provision of this Agreement, and except as provided in subparagraph (ii) below, the payments or benefits to which Employee will be entitled under this Agreement will be reduced to the extent necessary so that Employee will not be liable for the federal excise tax levied on certain "excess parachute payments" under section 4999 of the Internal Revenue Code of 1986, as amended (the "Code").

		(ii)	The limitations of subparagraph (i) will not apply if:

			(A) the difference between (x) the present value of all payments and benefits to which Employee is entitled under this Agreement, determined without regard to subparagraph (i), and (y) the present value of all federal, state and other income and excise taxes for which Employee is liable as a result of such payments exceeds

			(B) the difference between (x) the present value of all payments and benefits to which Employee is entitled under this Agreement

			calculated as if the limitation of subparagraph (i) applies and (y) the present value of all federal, state and other income and excise taxes for which Employee is liable as a result of such reduced payments.


		Present values will be determined using the interest rate specified in section 280G of the Code and will be the present values as of the date on which Employee’s employment terminates.

		(iii)	Whether payments to Employee are to be reduced pursuant to subparagraph (i), and the extent to which they are to be so reduced, will be determined by Atlas in goodfaith and Atlas will notify Employee in writing of its determination. Any such notice shall describe in reasonable detail the basis of Atlas’s determination. If Employee accepts Atlas’s determination, he shall so Atlas of his determination pursuant to subparagraph (iv) hereof within thirty (30) days of receipt of notice from Atlas. If Employee objects to such determination within 30 days of receipt of notice from Atlas, Atlas will retain, at its expense, a nationally recognized public accounting firm, employment consulting firm or law firm selected by Atlas and reasonably acceptable to Employee to review the matter. Such firm shall meet with Employee and Employee’s representatives and Atlas and its representatives and thereafter render its written opinion as to the extent, if any, that in such firm’s reasonable judgment the payments and benefits otherwise due to Employee hereunder must be reduced hereunder. The decision of such firm concerning the extent of any required reduction in. such payments and benefits shall be final and binding on both Employee and Atlas.


		(iv)	If a reduction is made pursuant to subparagraph (i), Employee will have the right to determine which payments and benefits will be reduced.

4.3. Non-Competition Provision . (a) Employee covenants and agrees that except when required to do so in the ordinary course of his duties, Employee will not, at any time, reveal, divulge or make known to any third party any confidential or proprietary records, data, trade secrets, pricing policies, strategy, rate structure, personnel policy, management methods, financial reports, methods or practice of obtaining or doing business, or any other confidential, or proprietary information of Atlas or any of its parents, subsidiaries or affiliates (collectively the "Atlas Companies" and each, an "Atlas Company") which is not in the public domain.

(b) In addition, Employee covenants and agrees that, at no time before the second anniversary of Employee’s termination of employment with Atlas, will Employee engage in any of the following activities directly or indirectly, for any reason, whether for Employee’s own account or for the account of any other person, firm, corporation or other organization:

	(i)	solicit, employ or otherwise interfere with any of the Atlas Companies contracts or relationships with any client, employee, officer, director or any independent contractor whether the person is employed by or associated with an Atlas Company on the date of this Agreement or at any time thereafter; or

(ii)

solicit, accept or otherwise interfere with any of the Atlas Companies’ contracts or relationships with any independent contractor, customer, client or supplier, or any person who is a bona fide prospective independent contractor, customer, client or supplier of an Atlas Company.

(c) In addition, Employee covenants and agrees that, at no time before the first anniversary of Employee’s termination of employment with Atlas, will Employee directly or indirectly, for any reason, whether for Employee’s own account or for the account of any other person, firm, corporation or other organization, accept employment with, or give advice to, (i) any air, cargo carrier, (ii) any air cargo division or affiliate of any other airline or (iii) any company that leases cargo aircraft on an ACMI, wet lease, charter or dry lease basis. The parties agree and intend that breach of this non-competition clause shall subject Employee to the full measure of contract and equitable damages.

5. DISPUTE RESOLUTION AND CHOICE OF LAW

5.1. Negotiation . If a dispute between the Parties arises under this Agreement, the Parties shall negotiate in good faith in an attempt to resolve their differences. The obligation of the Parties to negotiate in good faith shall commence immediately, and shall continue for a period of at least thirty (30) days ("Negotiation").

If Negotiation fails to resolve a dispute between the Parties within the first thirty (30) days, either Party may proceed to demand mediation ("Mediation"). Upon agreement of both Parties, arbitration may be initiated immediately, in lieu of Mediation.

5.2. Mediation . If a dispute between the Parties arises under this Agreement and has not been resolved under the Negotiation procedures described herein, either Party may require, by written notice to the other Party, that Negotiation be facilitated by a single mediator, to be selected by the Parties (the "Mediator").

The Parties shall select the Mediator within ten (10) days after receipt of notice. If the Parties are unable to agree on the Mediator, the Mediator shall be selected by Atlas, but the selected Mediator shall be independent of Atlas and its affiliates. The fees of the Mediator shall be divided equally between the Parties.

With the assistance of the Mediator, the Parties shall continue Negotiation in good faith for a period not to exceed thirty (30) days. If the Parties are unable to reach agreement during this period, the Mediator shall be discharged and the Parties’ obligations under this Mediation section shall be deemed satisfied.

5.3. Arbitration . Subject to the duty to negotiate and mediate set forth above, all disputes, claims, or causes of action arising out of or relating to this Agreement or the validity, interpretation, breach, violation, or termination thereof not resolved by Mediation, shall be finally and solely determined and settled by arbitration, to be conducted in the State of New York, USA, in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA") in effect at the date of arbitration ("Arbitration"). This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws.

Any Arbitration commenced pursuant to this Agreement shall be conducted by a single neutral arbitrator, who shall have a minimum of three (3) years of commercial experience (the "Arbitrator"). The Parties shall meet within ten (10) days of failure to resolve by Mediation to attempt to agree on an Arbitrator. Absent agreement at this meeting, the Arbitrator shall be selected by AAA. Such Arbitrator shall be free of any conflicts with Atlas and shall hold a hearing within thirty (30) days of the notice to Employee.

If the terms and conditions of this, Agreement are inconsistent with the Commercial Arbitration Rules of the AAA, the terms and conditions of this Agreement shall control.

The Parties hereby consent to any process, notice, or other application to said courts and any document in connection with Arbitration may be served by (i) certified mail, return receipt requested; (ii) by personal service; or (iii) in such other manner as may be permissible under the rules of the applicable court or Arbitration tribunal; provided , however , a reasonable time for appearance is allowed. The Parties further agree that Arbitration proceedings must be instituted within one (1) year after the occurrence of any dispute, and failure to institute Arbitration proceedings within such time period shall constitute an absolute bar to the institution of any proceedings and a waiver of all claims. The Parties shall equally divide all costs and expenses incurred in such, proceeding and related legal proceedings, unless otherwise determined by the Arbitrator. The Judgment of the Arbitrator shall be final and either Party may submit such decision to courts for enforcement thereof.

6. SEVERABILITY AND ENFORCEABILITY

It is expressly acknowledged and agreed that the covenants and provisions, hereof are separable; that the enforceability of one covenant or provision shall in no event affect the full

enforceability of any other covenant or provision herein. Further, it is agreed that, in the event any covenant or provision of this Agreement is found by any court of competent jurisdiction or Arbitrator to be unenforceable, illegal or invalid, such invalidity, illegality or unenforceability shall not affect the validity or enforceability of any other covenant or provision of this Agreement. In the event a court of competent jurisdiction or an Arbitrator would otherwise hold any part hereof unenforceable by reason of its geographic or business scope or duration, said part shall be construed as if its geographic or business, scope or duration had been more narrowly drafted so as not to be invalid or unenforceable.

7. MISCELLANEOUS

7.1. No Mitigation . The amounts to be paid to Employee are net to Employee, without any reduction or duty to mitigate, except for taxes, other governmental charges or amounts owed to Atlas by Employee, and all payments to be made hereunder shall be net of all applicable income and employment taxes required to be withheld therefrom.

7.2. Pro-Ration . In the event the Employment Period is terminated in the middle of any calendar month, the amount due for such month shall be pro-rated on a daily basis.

7.3. No Waiver Except in Writing . No waiver, or modification of this Agreement or any of the terms and conditions set forth herein shall be effective unless submitted to a writing duly executed by the parties.

7.4. Successors and Assigns . This Agreement shall be binding on Atlas and any successor thereto, whether by reason of merger, consolidation or otherwise. The duties and obligations of Employee may not be assigned by Employee.

7.5. Confidentiality of Terms . Atlas and Employee agree that the terms and conditions of this Agreement are confidential and that they will not disclose the terms of this Agreement to any third parties, other than the Employee’s spouse, their attorneys, auditors, accountants or as required by law or as may be necessary to enforce this Agreement.

7.6. Full Understanding . Employee declares and represents that Employee has carefully read and fully understands the terms of this Agreement, has had the opportunity to obtain advice and assistance of counsel with respect thereto, and knowingly and of Employee’s own free will, without any duress, being fully informed and after due deliberation, voluntarily accepts the terms of this Agreement and represents that the execution, delivery and performance of this Agreement does not violate any agreement to which Employee is subject.

7.7. Entire Agreement . This Agreement sets forth the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements, arrangements, and understandings between the parties with respect to the subject matter hereof.

IN WITNESS WHEREOF, the parties hereto have executed this agreement the date, and year first above written.

EMPLOYEE		ATLAS AIR, INC.


/s/ William Flynn		/s/ Eugene I. Davis

William Flynn		Eugene I. Davis, Chairman of the Board

Exhibit 10.2

Execution Version

AGREEMENT

This Agreement (the " Agreement ") is entered into as this 25th day of April, 2006 by and between Atlas Air Worldwide Holdings, Inc. (" Atlas ") and Herbert J. Lanese (" Director ").

WHEREAS , Director is a member of Atlas's board of directors (" Board "), the Audit Committee of the Board (" Audit Committee ") and the board of certain of Atlas's subsidiaries (collectively with Atlas, " Company ");

WHEREAS , Director is contemplating resigning from the Board, the Audit Committee and the other board and committee positions with the Company in order to pursue other opportunities;

WHEREAS , the Board recognizes that the extraordinary circumstances surrounding the Company's emergence from bankruptcy in July 2004 and the Company's rapid turnaround and return to profitability have required Board and committee members to spend unusual amounts of uncompensated time on Company matters, time far in excess of what would ordinarily be expected by Board members.

WHEREAS , in consideration of Director's efforts in this regard, and in recognition of Director's diligence in the performance of his board and committee obligations, including Director's service to the Company for a substantial portion of the year prior to the Company's 2006 annual meeting of stockholders (the "2006 Annual Meeting"), and in recognition of the mutual decision of the Company and the Director that it is in the best interest of the Company and the Director for the Director to resign from service prior to the 2006 Annual Meeting, the Board believes that an equitable adjustment of Director's cash and equity compensation is appropriate.

NOW, THEREFORE , for good and valuable consideration, receipt of which is hereby acknowledged, Atlas and Director hereby agree as follows:

1. Resignation : Director resigns (the "Resignation") from the Board, the Audit Committee and all other boards and committees of the Company to which the Director is a member, effective as of the date of this Agreement (" Resignation Date "), and concurrently with the execution of this Agreement, Director will submit a letter of resignation to Atlas, in the form set forth in Exhibit A hereto.

2. Accelerated Vesting and Other Matters :

(a) Restrictions applicable to the following restricted stock awards shall terminate as of the Resignation Date as follows:

	(i)	1,500 (of the 1,667) shares of Atlas's common stock (" Common Stock ") granted on July 27, 2004, which restriction would otherwise not terminate until July 27, 2006; and

	(ii)	5,000 shares of Atlas's Common Stock granted on November 4, 2004, which restriction would otherwise not terminate until Atlas's 2006 Annual Meeting.

Such 6,500 shares of Common Stock shall be issued by the Company to Director's Atlas Air Worldwide Holdings account currently managed by Fidelity as soon as reasonably practicable following the parties execution and delivery of this Agreement and the Director's delivery of the letter of resignation.

(b) At the time that all other members of the Board receive their third quarter 2006 retainer checks from Atlas, Director shall receive a payment equal to the amount a standing member of the Board and the Audit Committee would be entitled to receive for attendance at all meetings for the Board and the Audit Committee held from April 1, 2006 through the 2006 Annual Meeting. Additionally, Director agrees to cooperate with the Company to promptly resolve all expense account statements to the Company's reasonable satisfaction.

(c) Atlas will pay Director's reasonable attorneys' fees, up to a maximum of $25,000, incurred in connection with his Resignation, the negotiation of this Agreement, and any other related matters that may occur up to the date of the 2006 Annual Meeting, upon presentation to Atlas of detailed invoices for such fees.

3. Comprehensive General Release and Waiver :

(a) In consideration of the equitable compensation adjustments provided to Director under Paragraph 2, and except as expressly set forth in this Agreement (including, without limitation, Paragraph 4(a) below), Director hereby releases, waives, and forever discharges the Company, individually and in his capacity as a stockholder of the Company, its officers, directors, employees, partners, owners, affiliates, and agents, and its and their respective officers, directors, employees, partners, owners, affiliates, agents, successors, assigns, benefit plans, and programs (collectively, the " Company Releasees ") from any claim, demand, action, or cause of action, whether known or unknown, which arose at any time during Director's tenure. Accordingly, Director waives and releases all rights, individually and in his capacity as a stockholder of the Company, relating to, arising out of, or in any way connected with his service to or Resignation from the Company, including, but not limited to, any claim, demand, cause of action, or right, including claims for attorneys' fees based on, but not limited to:

	(i)	Any and all rights or claims under any express or implied contract or covenant, covenant of good faith and fair dealing, promissory estoppel, or other promises;


	(ii)	Any and all common law claims such as wrongful discharge, violation of public policy, defamation, slander, negligence, infliction of emotional distress, any intentional torts, outrageous conduct, interference with contract, fraud, misrepresentation, and invasion of privacy; and

(iii)

Any and all claims for any of the following: money damages including actual, compensatory, or punitive damages, equitable relief such as reinstatement or injunctive relief, front or back pay, wages, sick pay, stock options, vacation pay, bonuses, stock awards, liquidated damages, costs, expenses, or any other remedies.

Director acknowledges that he is generally releasing all claims and potential claims, individually and in his capacity as a stockholder of the Company, pursuant to this Paragraph 3 to the fullest extent permitted at law. The waiver and release contained in this Paragraph 3, however, does not include: (a) any rights or claims arising exclusively after the Resignation Date; (b) any rights under this Agreement; and (c) all rights to indemnification that Director may otherwise have under law.

(b) In consideration of the agreements by the parties hereunder and for other valuable consideration, and except as expressly set forth in this Agreement (including, without limitation, Paragraph 4(b) below), Atlas, on behalf of itself and the Company Releasees, hereby releases, waives, and forever discharges Director from any claim, demand, action, or cause of action, whether known or unknown, which arose at any time during Director's tenure. Accordingly, Atlas waives and releases all rights relating to, arising out of, or in any way connected with Director's service to or Resignation from the Company, including, but not limited to, any claim, demand, cause of action, or right, including claims for attorneys' fees based on, but not limited to:

	(i)	Any and all rights or claims under any express or implied contract or covenant, covenant of good faith and fair dealing, promissory estoppel, or other promises;

	(ii)	Any and all common law claims such as wrongful discharge, violation of public policy, defamation, slander, negligence, infliction of emotional distress, any intentional torts, outrageous conduct, interference with contract, fraud, misrepresentation, and invasion of privacy; and

	(iii)	Any and all claims for any of the following: money damages including actual, compensatory, or punitive damages, equitable relief such as reinstatement or injunctive relief, front or back pay, wages, sick pay, stock options, vacation pay, bonuses, stock awards, liquidated damages, costs, expenses, or any other remedies.

Atlas, on behalf of itself and the Company Releasees, acknowledges that Atlas and each of the Company Releasees is generally releasing all claims and potential claims pursuant to this Paragraph 3 to the fullest extent permitted at law. The waiver and release contained in this Paragraph 3, however, does not include: (a) any rights or claims arising exclusively after the Resignation Date; (b) any rights under this Agreement; and (c) all rights regarding indemnification that Atlas or any of the Company Releasees may otherwise have under law.

4. Covenant Not To Sue : (a) Director agrees not to file any claims, complaints, charges, or lawsuits against or about any Company Releasees, individually and in his capacity as

a stockholder of the Company, for any of the claims or other matters that are released, waived, or discharged in Paragraph 3 of this Agreement. Accordingly, Director covenants and agrees, individually and in his capacity as a stockholder of the Company, not to sue any of the Company Releasees concerning any claim relating to, arising out of, or occurring during the course of his service to or Resignation from the Company.

(b) Atlas covenants and agrees not to sue, and agrees to cause the Company Releasees to covenant and agree not to sue, Director concerning any claim relating to, arising out of, or occurring as a result of Director's service as a director of the Company and while Director acted within the scope of his duties, or as a result of his Resignation, except to the extent such claim resulted from the intentional or willful misconduct of Director or breach of this Agreement.

5. Non-Disclosure and Return Of Company Property : Director covenants and agrees that at any time in the future he will not reveal, divulge, or make known to any third party any Confidential or Proprietary Information of the Company which is not in the public domain, except as required by law. " Confidential or Proprietary Information " includes, but is not limited to, records, data, trade secrets, pricing policies, strategy, rate structure, personnel policy, management methods, financial reports, methods or practice of obtaining or doing business and any oral or written information disclosed to Director or known by Director as a consequence of or through Director's service to the Company which relates to the Company's business, products, processes, contracts, or services, including, but not limited to, information relating to research, development, inventions, products under development, manufacturing, processes, formulas, purchasing, finance, accounting, revenues, expenses, marketing, selling, suppliers, customer lists, customer requirements, and the documentation thereof. Except as specifically set forth herein, Director has returned or agrees to return to Atlas within seven (7) business days of the Resignation Date, any and all Company property (including any electronic equipment) and records in Director's possession or control, whether prepared by Director or by others, including, but not limited to, Company: notes, memoranda, correspondence, documents, records, notebooks, tapes, disks, and other repositories or potential or possible repositories of Confidential or Proprietary Information. At the direction of the Director, within such seven (7) business days, Director shall return all such Company property either by (a) sending it to the Company by overnight delivery by a nationally recognized courier service (with such fees incurred by Director to be reimbursed by Atlas upon presentation of the invoice(s) for such fees) or (b) arranging with the Company to have the Company travel to Director's residence in Connecticut at a mutually convenient time to remove such property. Director also agrees to return all Company identification and credit cards on or before the Resignation Date.

6. Non-Disparagement : The parties mutually covenant and agree not to make any oral or written statement or communication, or take any other action, which disparages or criticizes, or tends to disparage or criticize, the other (including, with respect to such statements or actions of the Director, the Company's officers and directors), and agrees not to make statements about the other to public media without prior consent of the other party; provided , however , Atlas shall be authorized to issue a press release and file a Current Report on Form 8-K (" Form 8-K ") with the U.S. Securities and Exchange Commission (" SEC "), in accordance with Paragraph 18 below. Director agrees not to send bulk-mails or faxes or other communications to Company employees or members of the Board generally or to large groups of Company

employees or members of the Board. Director agrees to cooperate with the Company to promptly resolve all expense account statements to the Company's reasonable satisfaction.

7. Confidentiality : Until Atlas files this Agreement with the SEC, Director agrees to keep the terms of this Agreement confidential and not to disclose those terms to anyone except immediate family members, legal counsel, and tax or financial advisors on a need-to-know basis; provided , however , that Director advises such persons of the confidential nature of this Agreement and they agree not to disclose such information further, and except as may otherwise be necessary to enforce the terms of this Agreement or as required by law.

8. Cooperation : Director agrees to cooperate fully with the Company in connection with any actions, proceedings, investigations or reviews or potential actions, proceedings, investigations or reviews, the subject matter of which arose, occurred, or transpired while Director was a director or otherwise represented the Company. Such cooperation will include, but is not limited to, interviews, and testimony at deposition, trial, or arbitration; submission of affidavits, certifications, or other court documents; and preparation for the foregoing via personal meetings and telephone conferences with the Company and/or its counsel. Atlas agrees to pay Director's reasonable out-of-pocket expenses arising from such interviews, testimony and preparation for such interviews or testimony.

9. Successors : This Agreement shall apply to Director, as well as his heirs, agents, executors, and administrators. The Agreement also shall apply to, and inure to the benefit of, the predecessors, successors, and assigns of Atlas and each past, present, or future employee, agent, representative, officer, partner, owner, or director of Atlas and any division, subsidiary, parent, or affiliated entity.

10. Prior Agreements : Except as provided herein, this Agreement shall supersede and effectively terminate any prior agreement(s) and writing(s) between Atlas and the Director, whether oral or written. Director hereby releases Atlas and the Company Releasees from any and all obligations under those respective agreements and writings. Nothing herein shall supersede any indemnification agreements or arrangements for the benefit of Director.

11. Severability : If any provision of this Agreement is found to be invalid or unenforceable by a court of competent jurisdiction, the remaining terms of this Agreement will remain in full force and effect.

12. Complete Agreement : The parties agree that this Agreement sets forth all of the terms of the agreement between the parties with respect to the subject matter of this Agreement, and there are no other promises, understandings, or agreements relating thereto except as may be provided herein.

13. No Oral Modification : This Agreement may only be amended in a writing signed by Director and Atlas.

14. No Admission : Nothing in this Agreement shall be construed as an admission of liability by either party. The purpose of this Agreement is solely to amicably resolve all issues relating to Director's tenure and Resignation.

15. Drafting : Both parties have participated in the preparation of this Agreement, and no rules of construction or interpretation based upon which party drafted any portion of the Agreement shall be applicable or invoked.

16. Choice of Law and Jurisdiction : This Agreement shall be construed and enforced in accordance with the law of the State of New York. Any action brought by or on behalf of Director, his agents, heirs, administrators, or executors against Atlas (or any of its officers, directors, employees, partners, owners, affiliates, or agents) to enforce this Agreement shall be maintained in a court located in the jurisdiction in which Director was retained by Atlas as a director.

17. No Representations : The parties agree and acknowledge that they have not relied upon any representation, whether written or oral, of the other party in connection with entering into this Agreement, other than as set forth herein.

18. Public Announcements : The parties will cooperate in the issuance of any press releases or otherwise in the making of any public statements with respect to Director's Resignation and related matters contemplated hereby. Director acknowledges and agrees that Atlas intends to issue a press release and file a related Form 8-K with the SEC promptly following the parties' execution and delivery of this Agreement; provided , however , such press release and Form 8-K shall be subject to Director's prior approval (subject to Form 8-K legal requirements), such approval not to be unreasonably withheld.

19. Notices : All notices, requests, demands, claims and other communications required or permitted to be delivered, given or otherwise provided under this Agreement must be in writing and must be delivered, given or otherwise provided:

(a) by hand (in which case, it will be effective upon delivery);

(b) by facsimile (in which case, it will be effective upon receipt of confirmation of good transmission); or

(c) by overnight delivery by a nationally recognized courier service (in which case, it will be effective on the Business Day after being deposited with such courier service);

in each case, to the address (or facsimile number) listed below:

If to the Company, to it at:

Atlas Air Worldwide Holdings, Inc.

2000 Westchester Avenue

Purchase, New York 10577

Telephone number: (914) 701-8000

Facsimile number: (914) 701-8333

Attention: Legal Department

with a copy to:

	Ropes & Gray, LLP
	45 Rockefeller Plaza
	New York, New York 10111-0087
	Telephone number: (212) 841-5700
	Facsimile number: (212) 841-5725
	Attention: Adam R. Kokas, Esq.

If to the Director, at:

	Herbert J. Lanese
	792 N. Wilton Road
	New Canaan, Connecticut 06840
	Telephone number: (203) 801-0122
	Facsimile number: (203) 801-0043

with a copy to:

	Robinson & Cole LLP
	695 East Main Street
	Stamford, Connecticut 06904
	Telephone number: (203) 462-7505
	Facsimile number: (203) 462-7599
	Attention: Richard A. Krantz, Esq.

20. Counterparts : This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned.

[Signature page follows.]

IN WITNESS WHEREOF, the undersigned individually or as a duly authorized officer of Atlas cause the Agreement to be executed,

ATLAS:	DIRECTOR:


ATLAS AIR WORLDWIDE HOLDINGS, INC.	HERBERT J. LANESE

By:	/s/ Jeffrey H. Erickson	/s/ Herbert J. Lanese

	Name: Jeffrey H. Erickson
	Title: President & CEO

EXHIBIT A

FORM OF LETTER OF RESIGNATION

April ___, 2006

Atlas Air Worldwide Holdings, Inc.
2000 Westchester Avenue
Purchase, NY 10577
Attention: Chairman of the Board of Directors

I hereby resign my position as a member of the Board of Directors, Audit Committee and any other committees of Atlas Air Worldwide Holdings, Inc., and any and all positions I may hold as a director of any subsidiaries of Atlas Air Worldwide Holdings, Inc., effective as of the date of this letter.

Sincerely,

___________________________
Herbert J. Lanese

Exhibit 10.3

ATLAS AIR WORLDWIDE HOLDINGS, INC.

2006 ANNUAL INCENTIVE PLAN

FOR SENIOR EXECUTIVES

1. Purpose .

The purpose of the Plan, which shall be known as the Atlas Air Worldwide Holdings, Inc. 2006 Annual Incentive Plan for Senior Executives, is to (a) provide incentives and rewards to certain management employees of Atlas Air Worldwide Holdings, Inc. (“AAWW”) by allowing them to earn awards based upon the financial performance of AAWW and upon their individual achievement of established personal goals; (b) assist AAWW in attracting, retaining, and motivating employees of high ability and experience; and (c) promote the long term interests of AAWW and its shareholders. The Plan is intended to provide performance based awards which are exempt from the limitations on tax deductibility imposed by Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), and to allow performance based awards under AAWW’s Long Term Incentive and Share Award Plan which are similarly exempt.

The Plan shall be effective as of January 1, 2006, and shall be applicable for all future fiscal years of AAWW unless amended or terminated by the Committee pursuant to Section 11. Notwithstanding the foregoing, the Plan’s material terms (as defined Section 162(m)) shall be subject to re-approval by the stockholders of AAWW no later than the first meeting of stockholders to take place in 2011, if such approval is required by Section 162(m) at the time, and if such terms have not been earlier modified and submitted for stockholder approval.

2.	Definitions .

	2.1.	Award shall mean any payments made under the Plan.

	2.2.	Base Salary shall mean gross wages reported on an Eligible Employee’s federal W-2 Form, less all of the following: profit sharing payments made under any AAWW profit sharing program, bonus, per diem, compensation paid prior to becoming an employee of AAWW, expense reimbursements, life insurance imputed income, travel benefits, relocation reimbursement, housing allowances and other payments not ordinarily considered as part of an employee’s basic salary.

	2.3.	Board shall mean the Board of Directors of AAWW.

	2.4.	Beneficiary shall mean a Participant’s beneficiary pursuant to Section 10.

	2.5.	Committee shall mean the Compensation Committee of the Board.

	2.6.	Eligible Employee means the Chief Executive Officer, President, Executive Vice Presidents and Senior Vice Presidents of AAWW.

	2.7.	LTIP means AAWW’s Long Term Incentive and Share Award Plan.

	2.8.	Objectives shall mean the personal performance objectives particular to each Participant.

	2.9.	Participant shall mean any Eligible Employee during such Eligible Employee’s period of participation in the Plan.

	2.10.	Performance Measure shall mean the performance measure selected by the Committee for a Plan Year.

	2.11.	Plan shall mean this AAWW Worldwide Holdings, Inc. 2006 Annual Incentive Plan for Senior Executives, as it may be amended from time to time.

	2.12.	Plan Year shall mean the calendar year.

3.	Administration

	3.1.	The Plan shall be administered by the Committee.

		(a)	The Committee shall have full power and authority in its sole discretion to construe and interpret the Plan, establish and amend administrative regulations to further the purpose of the Plan, determine the extent to which Awards have been earned by virtue of satisfying the criteria described in Section 5, determine whether to reduce the Award otherwise payable as a result of meeting the established Performance Measure, determine whether to pay a portion of the Award in AAWW stock and take any other action necessary to administer the Plan. All decisions, actions or interpretations of the Committee shall be final, conclusive, and binding upon all Participants.

		(b)	If any Participant or Beneficiary objects to any such interpretation or action, formally or informally, the expenses of the Board, the Committee, AAWW and their agents and counsel in responding to such objection shall be chargeable against any amounts otherwise payable under the Plan to such Participant or Beneficiary if such objection is ultimately unsuccessful.

4.	Participation .

All Eligible Employees shall be eligible to participate in the Plan if they are employed as Eligible Employees as of the first day of the Plan Year. An individual who becomes an Eligible Employee during a Plan Year will participate immediately, but only with respect to Base Salary earned on and after the date he or she first becomes an Eligible Employee except to the extent the Committee determines in its sole discretion to allow exceptions, such as the consideration of Base Salary on an annualized basis.

5.	Performance Measures .

	5.1.	Performance Measures . The performance measures upon which the payment or vesting of an Award to a Participant that is intended to qualify as performance- based compensation for Code Section 162(m) purposes shall be limited to the following Performance Measures:

		(a)	Net earnings, net income or profits (before or after taxes);

		(b)	Earnings per share (basic or diluted);

		(c)	Net sales or revenue growth;

		(d)	Net operating profit;

		(e)	Return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue);

		(f)	Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment);

		(g)	Earnings before or after taxes, interest, depreciation, amortization and/or rent;

		(h)	Gross or operating margins;

		(i)	Productivity ratios;

		(j)	Share price (including, but not limited to, growth measures and total shareholder return);

		(k)	Expense targets;

		(l)	Margins;

		(m)	Operating efficiency;

		(n)	Market share;

		(o)	Working capital targets; and

		(p)	Cost reduction targets.

Any Performance Measure(s) may be used to measure the performance of AAWW or any of its business units, subsidiaries or affiliates separately or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate.

6.	Awards under this Plan

	6.1.	Maximum Bonus Award . A maximum annual bonus Award is hereby established at one-hundred sixty percent (160%) of Base Salary for the Chief Executive Officer and one-hundred percent (100%) of Base Salary for each other Participant.

	6.2.	Reductions in Bonus Award . The Committee shall have the discretion to reduce (but not to increase) the bonus Award otherwise payable based on such factors it chooses, including, without limitation, the Eligible Employee’s individual performance.

	6.3.	Effect of Corporate Exigencies . Notwithstanding anything in this Plan to the contrary, in any Plan Year for which the Board determines in good faith that exigent circumstances exist which could have a material adverse impact on AAWW if Awards were paid, the Board shall have the authority, in its absolute and sole discretion, to determine that (i) no Awards will be paid for that Plan Year, (ii) Awards for that Plan Year will be reduced, (iii) payment of Awards for that Plan Year will be deferred for possible payment at a future date, to the extent permissible under Internal Revenue Code Section 409A, or (iv) other adjustments will be made to the awards otherwise payable for that Plan Year.

	6.4.	Effect of Corporate Transactions . In the event of a corporate transaction, such as a divestiture, sale of assets or acquisition, which could have a material effect on AAWW, the Committee shall have the discretion to make equitable adjustments in the financial goals established under the Performance Measure.

7.	Payment of Awards under this Plan .

	7.1.	General . A Participant may receive an Award in each Plan Year in accordance with Section 5 and will be entitled to receive such Award if the Participant was still employed by AAWW as of the last day of the Plan Year for which the Award is paid, except as described in Section 7.4. A Participant will receive an Award in the manner and at the times set forth in Sections 7.2, 7.3 and 7.4.

	7.2.	Time of Payment . Any amount payable for an Award for a Plan Year shall be paid by AAWW within two weeks following the completion of the year-end audit for the applicable Plan Year.

	7.3.	Form of Payment . All amounts payable for an Award shall be paid in cash or AAWW stock, but AAWW stock may be used, if at all, only for the portion of the Award that exceeds fifty percent (50%) of Base Salary.

7.4.	Termination of Employment .

	(a)	If a Participant terminates employment because of death, disability or retirement after attaining age 62 with five years of continuous AAWW employment, such Participant will remain eligible to participate in the Plan for that Plan Year, but considering only Base Salary earned prior to the termination.

	(b)	If a Participant terminates employment during the Plan Year for reasons other than those described in Section 7.4(a), such Participant will not be eligible to receive any portion of the Award.

	(c)	A Participant’s voluntary termination of employment after the completion of the Plan Year, but before Awards are paid out, will preclude the Participant from receiving that Award. A termination of employment during such time period by action of AAWW taken without cause, or for of any of the reasons described in Section 7.4(a), will not affect the right of the Participant to receive payment of an Award.

8. Grants under Long Term Incentive and Share Award Plan

The Committee may select Performance Measures and determine that vesting or payment of grants made under the LTIP shall be subject to the satisfaction of financial goals established n connection with such Performance Measure. No Eligible Employee may receive a grant under the LTIP in any one year which exceeds 50,000 shares of AAWW’s common stock, or exceeds 100,000 stock options, where such grant is subject to Performance Measures and thus intended to constitute performance based compensation under Section 162(m).

9. Change in Control .

In the event of a change in control of AAWW during a Plan Year, Awards shall become payable as if the date of the change in control was the last day of a Plan Year, with the financial goal adjusted accordingly. (For example, if the change in control occurred on September 1, the financial goals would generally be 2/3 of the amount previously determined.) For this purpose, “change in control” shall mean any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934) (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing more than 50% of the combined voting power of AAWW’s then outstanding securities eligible to vote for the election of the Board; provided , however , that the event described above shall not be deemed to be a change in control by virtue of any of the following acquisitions: (i) by any employee benefit plan sponsored or maintained by AAWW of any subsidiary, or (ii) by any underwriter temporarily holding securities pursuant to an offering of such securities.

10.	Beneficiary Designation .

	10.1.	Designation and Change of Designation . Each Participant shall file with AAWW a written designation of one or more persons as the Beneficiary who shall be

		entitled to receive the Award, if any, payable under the Plan upon the Participant’s death. A Participant may, from time to time, revoke or change his Beneficiary designation without the consent of any prior Beneficiary by filing a new designation with AAWW. The last such designation received by AAWW shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by AAWW prior to the Participant’s death, and in no event shall it be effective as of any date prior to such receipt.

	10.2.	Absence of Valid Designation . If no such Beneficiary designation is in effect at the time of a Participant’s death, or if no designated Beneficiary survives the Participant, or if such designation conflicts with law, the Participant’s estate shall be deemed to have been designated as the Participant’s Beneficiary and shall receive the payment of the amount, if any, payable under the Plan upon his death. If AAWW is in doubt as to the right of any person to receive such amount, AAWW may retain such amount, without liability for any interest thereon, until the rights thereto are determined, or AAWW may pay such amount into any court of appropriate jurisdiction and such payment shall be a complete discharge of the liability of the Plan and AAWW therefor.


11.	General Provisions .

	11.1.	A Participant may not assign an Award without the Committee’s prior written consent. Any attempted assignment without such consent shall be null and void. For purposes of this paragraph, any designation of, or payment to, a Beneficiary shall not be deemed an assignment.

	11.2.	The Plan is intended to constitute an unfunded incentive compensation arrangement. Nothing contained in the Plan, and no action taken pursuant to the Plan, shall create or be construed to create a trust of any kind. A Participant’s right to receive an Award shall be no greater than the right of an unsecured general creditor of AAWW. All Awards shall be paid from the general funds of AAWW, and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such Awards. The Plan is not intended to be a plan of deferred compensation as described in Section 409A of the Internal Revenue Code of 1986, as amended.

	11.3.	Nothing contained in the Plan shall give any Eligible Employee the right to continue in the employment of AAWW, or limit the right of AAWW to discharge an Eligible Employee.

	11.4.	The Plan shall be construed and governed in accordance with the laws of the State of New York.

	11.5.	There shall not vest in any Participant or Beneficiary any right, title, or interest in and to any specific assets of AAWW.

	11.6.	There shall be deducted from all amounts paid under the Plan all federal, state, local and other taxes required by law to be withheld with respect to such payments.

12.	Amendment. Suspension or Termination .

	The Committee reserves the right to amend, suspend, or terminate the Plan at any time.

13.	Effective Date .

	This Plan shall be effective with the Plan Year beginning January 1, 2006, subject to approval by AAWW’s
shareholders.

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer

I, William J. Flynn, President and Chief Executive Officer of Atlas Air Worldwide Holdings, Inc., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Atlas Air Worldwide Holdings, Inc.;

2.	Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3.	Based on my knowledge, the Financial Statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

	a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

	b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation;

	c) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2006		/s/ William J. Flynn
		William J. Flynn
		President and Chief Executive Officer

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer

I, Michael L. Barna, Senior Vice President and Chief Financial Officer of Atlas Air Worldwide Holdings, Inc., certify that:

	1.	I have reviewed this Quarterly Report on Form 10-Q of Atlas Air Worldwide Holdings, Inc.;

	2.	Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

	3.	Based on my knowledge, the Financial Statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

	4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

		a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

		b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation;

		c) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

	5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

		a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

		b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2006		/s/ Michael L. Barna
		Michael L. Barna
		Senior Vice President and Chief Financial Officer

EXHIBIT 32.1

Section 1350 Certifications
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Atlas Air Worldwide Holdings, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2006 as filed with the Securities and Exchange Commission (the “Report”), we, William J. Flynn and Michael L. Barna, Chief Executive Officer and Chief Financial Officer, respectively, of the Company certify that to our knowledge:

1. the Report complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2006


	/s/ William J. Flynn
	William J. Flynn
	President and Chief Executive Officer




	/s/ Michael L. Barna
	Michael L. Barna
	Senior Vice President and Chief Financial Officer