ATLAS AIR WORLDWIDE HOLDINGS INC (Form: 10-Q, Received: 05/03/2018 12:14:04)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-16545

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of April 27, 2018, there were 25,561,798 shares of the registrant’s Common Stock outstanding.

TABLE OF CONTENTS

		Page

Part I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 (unaudited)	3

	Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and 2017 (unaudited)	4

	Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2018 and 2017 (unaudited)	5

	Consolidated Statements of Cash Flows for the Three Months ended March 31, 2018 and 2017 (unaudited)	6

	Consolidated Statements of Stockholders’ Equity as of and for the Three Months ended March 31, 2018 and 2017 (unaudited)	7

	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 6.	Exhibits	30

	Exhibit Index	31

	Signatures	32

PART I — FINANCI AL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Atlas Air Worldwide Holdings, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

(Unaudited)

	March 31, 2018			December 31, 2017
Assets
Current Assets
Cash and cash equivalents	$	119,294		$	280,809
Short-term investments		17,127			13,604
Restricted cash		11,110			11,055
Accounts receivable, net of allowance of $4,542 and $1,494, respectively		195,117			194,478
Prepaid maintenance		25,641			13,346
Prepaid expenses and other current assets		64,904			74,294
Total current assets		433,193			587,586
Property and Equipment
Flight equipment		4,658,870			4,447,097
Ground equipment		72,909			70,951
Less: accumulated depreciation		(739,778	)		(701,249	)
Flight equipment modifications in progress		242,084			186,302
Property and equipment, net		4,234,085			4,003,101
Other Assets
Long-term investments and accrued interest		10,680			15,371
Deferred costs and other assets		234,615			242,919
Intangible assets, net and goodwill		104,259			106,485
Total Assets	$	5,016,832		$	4,955,462

Liabilities and Equity
Current Liabilities
Accounts payable	$	90,333		$	65,740
Accrued liabilities		430,146			454,843
Current portion of long-term debt and capital lease		223,308			218,013
Total current liabilities		743,787			738,596
Other Liabilities
Long-term debt and capital lease		2,047,562			2,008,986
Deferred taxes		217,223			214,694
Financial instruments and other liabilities		215,961			203,330
Total other liabilities		2,480,746			2,427,010
Commitments and contingencies
Equity
Stockholders’ Equity
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued		-			-
Common stock, $0.01 par value; 100,000,000 shares authorized; 30,544,374 and 30,104,648 shares issued, 25,560,678 and 25,292,454 shares outstanding (net of treasury stock), as of March 31, 2018 and December 31, 2017, respectively		305			301
Additional paid-in-capital		721,577			715,735
Treasury stock, at cost; 4,983,696 and 4,812,194 shares, respectively		(203,950	)		(193,732	)
Accumulated other comprehensive loss		(4,635	)		(3,993	)
Retained earnings		1,279,002			1,271,545
Total stockholders’ equity		1,792,299			1,789,856
Total Liabilities and Equity	$	5,016,832		$	4,955,462

See accompanying Notes to Unaudited Consolidated Financial Statements

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

	For the Three Months Ended
	March 31, 2018			March 31, 2017

Operating Revenue	$	590,014		$	475,394

Operating Expenses
Salaries, wages and benefits		125,082			104,087
Aircraft fuel		96,303			82,432
Maintenance, materials and repairs		84,879			72,816
Depreciation and amortization		49,630			37,894
Travel		39,847			32,359
Aircraft rent		39,524			36,073
Navigation fees, landing fees and other rent		35,597			18,535
Passenger and ground handling services		28,062			25,123
Gain on disposal of aircraft		-			(54	)
Transaction-related expenses		270			915
Other		50,251			41,178
Total Operating Expenses		549,445			451,358

Operating Income		40,569			24,036

Non-operating Expenses (Income)
Interest income		(1,724	)		(1,256	)
Interest expense		27,342			21,524
Capitalized interest		(1,750	)		(1,780	)
Unrealized loss on financial instruments		7,740			5,213
Other income		(4,475	)		(253	)
Total Non-operating Expenses (Income)		27,133			23,448

Income from continuing operations before income taxes		13,436			588
Income tax expense		3,808			553

Income from continuing operations, net of taxes		9,628			35

Loss from discontinued operations, net of taxes		(16	)		(787	)

Net Income (Loss)	$	9,612		$	(752	)

Earnings per share from continuing operations:
Basic	$	0.38		$	-

Diluted	$	0.37		$	-

Loss per share from discontinued operations:
Basic	$	(0.00	)	$	(0.03	)

Diluted	$	(0.00	)	$	(0.03	)

Earnings (loss) per share:
Basic	$	0.38		$	(0.03	)

Diluted	$	0.37		$	(0.03	)

Weighted average shares:
Basic		25,436			25,162

Diluted		25,956			25,744

See accompanying Notes to Unaudited Consolidated Financial Statements

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(Unaudited)

	For the Three Months Ended
	March 31, 2018			March 31, 2017

Net Income (Loss)	$	9,612		$	(752	)
Other comprehensive income:
Net change in fair value
Reclassification to interest expense		385			418
Income tax expense		(57	)		(162	)
Other comprehensive income		328			256

Comprehensive Income (Loss)	$	9,940		$	(496	)

See accompanying Notes to Unaudited Consolidated Financial Statements

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	For the Three Months Ended
	March 31, 2018			March 31, 2017

Operating Activities:
Income from continuing operations, net of taxes	$	9,628		$	35
Less: Loss from discontinued operations, net of taxes		(16	)		(787	)
Net Income (Loss)		9,612			(752	)

Adjustments to reconcile Net Income (Loss) to net cash provided by operating activities:
Depreciation and amortization		59,796			43,217
Accretion of debt securities discount		(270	)		(307	)
Provision for allowance for doubtful accounts		3,064			435
Unrealized loss on financial instruments		7,740			5,213
Gain on disposal of aircraft		-			(54	)
Deferred taxes		3,716			418
Stock-based compensation		5,846			4,212
Changes in:
Accounts receivable		(3,414	)		8,134
Prepaid expenses, current assets and other assets		(986	)		(30,336	)
Accounts payable and accrued liabilities		(15,979	)		(11,526	)
Net cash provided by operating activities		69,125			18,654
Investing Activities:
Capital expenditures		(26,091	)		(21,673	)
Payments for flight equipment and modifications		(236,536	)		(118,897	)
Proceeds from investments		1,438			631
Proceeds from disposal of aircraft		-			137
Net cash used for investing activities		(261,189	)		(139,802	)
Financing Activities:
Proceeds from debt issuance		19,357			-
Payment of debt issuance costs		(810	)		(90	)
Payments of debt		(56,819	)		(47,099	)
Proceeds from revolving credit facility		75,000			150,000
Customer maintenance reserves and deposits received		4,094			14,837
Customer maintenance reserves paid		-			(6,384	)
Purchase of treasury stock		(10,218	)		(9,430	)
Net cash provided by financing activities		30,604			101,834
Net decrease in cash, cash equivalents and restricted cash		(161,460	)		(19,314	)
Cash, cash equivalents and restricted cash at the beginning of period		291,864			138,250
Cash, cash equivalents and restricted cash at the end of period	$	130,404		$	118,936

Noncash Investing and Financing Activities:

Acquisition of flight equipment included in Accounts payable and accrued liabilities	$	61,846		$	48,015
Acquisition of flight equipment under capital lease	$	-		$	32,380

See accompanying Notes to Unaudited Consolidated Financial Statements

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(Unaudited)

									Accumulated
						Additional			Other						Total
	Common		Treasury			Paid-In			Comprehensive			Retained			Stockholders'
	Stock		Stock			Capital			Loss			Earnings			Equity
Balance at December 31, 2017	$	301	$	(193,732	)	$	715,735		$	(3,993	)	$	1,271,545		$	1,789,856
Net Income (Loss)		-		-			-			-			9,612			9,612
Other comprehensive income		-		-			-			328			-			328
Cumulative effect of change in accounting principle		-		-			-			-			(3,125	)		(3,125	)
Stock-based compensation		-		-			5,846			-			-			5,846
Purchase of 171,502 shares of treasury stock		-		(10,218	)		-			-			-			(10,218	)
Issuance of 439,726 shares of restricted stock		4		-			(4	)		-			-			-
Reclassification of tax effect on other comprehensive loss		-		-			-			(970	)		970			-
Balance at March 31, 2018	$	305	$	(203,950	)	$	721,577		$	(4,635	)	$	1,279,002		$	1,792,299

									Accumulated
						Additional			Other						Total
	Common		Treasury			Paid-In			Comprehensive			Retained			Stockholders'
	Stock		Stock			Capital			Loss			Earnings			Equity
Balance at December 31, 2016	$	296	$	(183,119	)	$	657,082		$	(4,993	)	$	1,048,072		$	1,517,338
Net Income (Loss)		-		-			-			-			(752	)		(752	)
Other comprehensive income		-		-			-			256			-			256
Stock-based compensation		-		-			4,212			-			-			4,212
Purchase of 177,371 shares of treasury stock		-		(9,430	)		-			-			-			(9,430	)
Issuance of 418,490 shares of restricted stock		4		-			(4	)		-			-			-
Balance at March 31, 2017	$	300	$	(192,549	)	$	661,290		$	(4,737	)	$	1,047,320		$	1,511,624

See accompanying Notes to Unaudited Consolidated Financial Statements

Atlas Air Worldwide Holdings, Inc.

Notes to Unaudited Consolidated Financial Statements

March 31, 2018

1. Basis of Presentation

Our consolidated financial statements include the accounts of the holding company, Atlas Air Worldwide Holdings, Inc. (“AAWW”), and its consolidated subsidiaries. AAWW is the parent company of Atlas Air, Inc. (“Atlas”) and Southern Air Holdings, Inc. (“Southern Air”). AAWW is also the parent company of several subsidiaries related to our dry leasing services (collectively referred to as “Titan”). AAWW has a 51% equity interest and 75% voting interest in Polar Air Cargo Worldwide, Inc. (“Polar”). We record our share of Polar’s results under the equity method of accounting.

The terms “we,” “us,” “our,” and the “Company” mean AAWW and all entities included in its consolidated financial statements.

We provide outsourced aircraft and aviation operating services throughout the world, serving Africa, Asia, Australia, Europe, the Middle East, North America and South America through: (i) contractual service arrangements, including those through which we provide aircraft to customers and value-added services, including crew, maintenance and insurance (“ACMI”), as well as those through which we provide crew, maintenance and insurance, but not the aircraft (“CMI”); (ii) cargo and passenger charter services (“Charter”); and (iii) dry leasing aircraft and engines (“Dry Leasing” or “Dry Lease”).

The accompanying unaudited consolidated financial statements and related notes (the “Financial Statements”) have been prepared in accordance with the U.S. Securities and Exchange Commission (the “SEC”) requirements for quarterly reports on Form 10-Q, and consequently exclude certain disclosures normally included in audited consolidated financial statements prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Intercompany accounts and transactions have been eliminated. The Financial Statements should be read in conjunction with the audited consolidated financial statements and the notes included in the AAWW Annual Report on Form 10-K for the year ended December 31, 2017, which includes additional disclosures and a summary of our significant accounting policies. The December 31, 2017 balance sheet data was derived from that Annual Report. In our opinion, the Financial Statements contain all adjustments, consisting of normal recurring items, necessary to fairly state the financial position of AAWW and its consolidated subsidiaries as of March 31, 2018, the results of operations for the three months ended March 31, 2018 and 2017, comprehensive income (loss) for the three months ended March 31, 2018 and 2017, cash flows for the three months ended March 31, 2018 and 2017, and shareholders’ equity as of and for the three months ended March 31, 2018 and 2017.

Our quarterly results are 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

Heavy Maintenance

Except for engines used on our 747-8F aircraft, we account for heavy maintenance costs for airframes and engines used in our ACMI and Charter segments using the direct expense method. Under this method, heavy maintenance costs are charged to expense upon induction, based on our best estimate of the costs.

We account for heavy maintenance costs for airframes and engines used in our Dry Leasing segment and engines used on our 747-8F aircraft using the deferral method. Under this method, we defer the expense recognition of scheduled heavy maintenance events, which are amortized over the estimated period until the next scheduled heavy maintenance event is required. Amortization of deferred maintenance expense included in Depreciation and amortization was $2.4 million and $0.8 million for the three months ended March 31, 2018 and March 31, 2017, respectively.

Deferred maintenance included within Deferred costs and other assets is as follows:

	Deferred
	Maintenance
Balance as of December 31, 2017	$	63,868
Deferred maintenance costs		6,803
Amortization of deferred maintenance		(2,358	)
Balance as of March 31, 2018	$	68,313

Supplemental Cash Flow Information

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total shown in the consolidated statements of cash flows:

	March 31, 2018		December 31, 2017
Cash and cash equivalents	$	119,294	$	280,809
Restricted cash		11,110		11,055
Total Cash, cash equivalents and restricted cash shown in consolidated statements of cash flows	$	130,404	$	291,864

Accounting Pronouncements Adopted in 2018

In February 2018, the Financial Accounting Standards Board (“FASB”) amended its accounting guidance for the reporting of comprehensive income. The guidance permits entities to reclassify to retained earnings the excess tax effects remaining in accumulated other comprehensive income/(loss) after the reduction in the federal corporate income tax rate from 35% to 21% as a result of the U.S. Tax Cuts and Jobs Act of 2017. The amended guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. We have early adopted the new guidance effective as of January 1, 2018. The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.

In May 2014, the FASB amended its accounting guidance for revenue recognition. Subsequently, the FASB has issued several clarifications and updates. The fundamental principles of the new standard are that companies should recognize revenue in a manner that reflects the timing of the transfer of services to customers and consideration that a company expects to receive for the services provided. It also requires additional disclosures necessary for the financial statement users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We adopted the new guidance on January 1, 2018 using the modified retrospective approach, under which the guidance is applied beginning on the date of adoption. Comparative information has not been restated and continues to be reported under the accounting guidance in effect for those periods. The adoption did not have a material effect on our financial statements (see Note 4 to our Financial Statements). As a result of adoption, revenue recognized under previous guidance based on flight departure is now recognized over time as the services are performed. In addition, revenue under certain ACMI and CMI contracts, such as revenue related to contracted minimum block hour guarantees, is now recognized in later periods, and some revenue adjustments related to meeting or exceeding on-time performance targets are now recognized in earlier periods. . Revenue under our Dry Leasing contracts is explicitly excluded from the scope of the new guidance as it is covered by accounting guidance for leases.

Recent Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB amended its accounting guidance for leases. The guidance requires a lessee to recognize assets and liabilities on the balance sheet arising from leases with terms greater than 12 months. While lessor accounting guidance is relatively unchanged, certain amendments were made to conform with changes made to lessee accounting and the amended revenue recognition guidance. The new guidance will continue to classify leases as either finance or operating, with classification affecting the presentation and pattern of expense and income recognition, in the statement of operations. It also requires additional quantitative and qualitative disclosures about leasing arrangements. The amended guidance is effective as of the beginning of 2019, with early adoption permitted. While we are still assessing the impact the amended guidance will have on our financial statements, we expect that recognizing the right-of-use asset and related lease liability will impact our balance sheet materially. We plan to adopt the new guidance on its required effective date of January 1, 2019 and the implementation is progressing as expected.

3. Related Parties

DHL Investment and Polar

AAWW has a 51% equity interest and 75% voting interest in Polar. DHL Network Operations (USA), Inc. (“DHL”), a subsidiary of Deutsche Post AG (“DP”), holds a 49% equity interest and a 25% voting interest in Polar. Polar is a variable interest entity that we do not consolidate because we are not the primary beneficiary as the risks associated with the direct costs of operation are with DHL. Under a 20-year blocked space agreement, which began in 2008 (the “BSA”), Polar provides air cargo capacity to DHL. Atlas has several agreements with Polar to provide ACMI, CMI, Dry Leasing, administrative, sales and ground support services to one another. We do not have any financial exposure to fund debt obligations or operating losses of Polar, except for any liquidated damages that we could incur under these agreements.

The following table summarizes our transactions with Polar:

	For the Three Months Ended
Revenue and Expenses:	March 31, 2018		March 31, 2017
Revenue from Polar	$	102,105	$	102,228
Ground handling and airport fees to Polar		636		466

Accounts receivable/payable as of:	March 31, 2018		December 31, 2017
Receivables from Polar	$	19,603	$	9,558
Payables to Polar		3,101		2,751

Aggregate Carrying Value of Polar Investment as of:	March 31, 2018		December 31, 2017
Aggregate Carrying Value of Polar Investment	$	4,870	$	4,870

GATS

We hold a 50% interest in GATS GP (BVI) Ltd. (“GATS”), a joint venture with an unrelated third party. As of March 31, 2018 and December 31, 2017, our investment in GATS was $23.0 million and $22.1 million, respectively. We had Accounts payable to GATS of $0.8 million as of March 31, 2018 and $0.4 million as of December 31, 2017.

4. Revenue Recognition

Adoption

We adopted the new revenue recognition guidance using the modified retrospective method and applied it to all customer contracts, excluding Dry Leasing contracts, based on the contract terms in effect as of January 1, 2018. Revenue under our Dry Leasing contracts is explicitly excluded from the scope of the new guidance. We recognized the cumulative effect of initially applying the new revenue recognition guidance as an adjustment to the opening balance of retained earnings as of January 1, 2018 as follows:

	Balance					Balance
	December 31, 2017		Adjustments			January 1, 2018
Accounts receivable	$	194,478	$	(407	)	$	194,071
Accrued liabilities		454,843		3,614			458,457
Deferred taxes		214,694		(895	)		213,799
Retained earnings		1,271,545		(3,126	)		1,268,419

The following tables provide disclosure of the impact of adoption of the new revenue recognition guidance on our consolidated statement of operations and balance sheet:

	For the Three Months Ended March 31, 2018
	As Reported		Amounts without Adoption of New Revenue Recognition Guidance		Effect of Change Inc/(Dec)
Consolidated Statement of Operations
Operating Revenue	$	590,014	$	588,404	$	1,610
Operating Expenses
Other		50,251		49,562		689

Income from continuing operations before income taxes		13,436		12,515		921
Income tax expense		3,808		3,606		202

Income from continuing operations, net of taxes		9,628		8,909		719

	As of March 31, 2018
	As Reported		Amounts without Adoption of New Revenue Recognition Guidance		Effect of Change Inc/(Dec)
Consolidated Balance Sheet
Assets
Accounts receivable, net	$	195,117	$	194,408	$	709
Liabilities and Equity
Accrued liabilities		430,146		430,358		(212	)
Deferred taxes		217,223		217,021		202
Retained earnings		1,279,002		1,278,283		719

Deferred Revenue

Deferred revenue for customer contracts, excluding Dry Leasing contracts, represents amounts collected from, or invoiced to, customers in advance of revenue recognition. The balance of Deferred revenue will increase or decrease based on the timing of invoices and recognition of revenue. Significant changes in our Deferred Revenue liability balances during the three months ended March 31, 2018 were as follows:

	Deferred
	Revenue
Balance at beginning of period	$	14,958
Revenue recognized		(13,351	)
Amounts collected or invoiced		8,094
Balance at end of period	$	9,701

Accounts Receivable

Accounts receivable, net of allowances related to customer contracts, excluding Dry Leasing contracts, was $163.7 million as of March 31, 2018 and $173.2 million as of December 31, 2017.

Performance Obligations and Accounting Policies

ACMI and CMI Services

Our performance obligations under ACMI contracts involve outsourced cargo and passenger aircraft operating services, including the provision of an aircraft, crew, maintenance and insurance. Our performance obligations under CMI contracts also involve outsourced aircraft operating services, including the provision of crew, line maintenance and insurance, but not the aircraft. ACMI and CMI contracts generally provide for the transfer of the benefits from these performance obligations on a combined basis through the operation of the aircraft over time. The time interval between when an aircraft departs the terminal until it arrives at the destination terminal is measured in hours and called a “Block Hour”. Customers assume fuel, demand and price risk. Generally, customers are also responsible for landing, navigation and most other operational fees and costs and, in the case of CMI customers, the provision of the aircraft and heavy and non-heavy maintenance. When we act as an agent for these costs reimbursed by customers, such reimbursed amounts are recorded as Operating Revenue, net of the related costs, when the costs are incurred. When we are responsible for any of these costs, such reimbursed amounts are recorded as Operating Revenue and the costs are recorded as Operating Expenses as incurred.

Revenue from ACMI and CMI contracts is typically recognized over time as the services are performed based on Block Hours operated on behalf of a customer during a given month. Revenue for contracts with scheduled rate changes, excluding inflationary adjustments, is recognized over the term of the contract using an estimated average rate per Block Hour, which requires significant judgment to estimate the total number of Block Hours expected. Any revenue adjustments, including those related to minimum contracted Block Hour guarantees and on-time performance targets, are recognized over the applicable measurement period for the adjustment. See Note 5 to our Financial Statements for a discussion of a customer incentive asset.

ACMI and CMI customers are billed monthly based on Block Hours operated on behalf of a customer during a given month, as defined contractually. Payment terms and conditions vary by contract, although terms generally require partial payment for minimum

contracted Block Hour guarantees in advance of the services being provided. Since advance paymen ts are typically made shortly before the services are performed, such payments are not considered significant financing components.

Charter Services

Our performance obligations under Charter contracts involve the provision of cargo and passenger aircraft charter services to customers, including the U.S. Military Air Mobility Command (“AMC”), brokers, freight forwarders, direct shippers, airlines, sports teams and fans, and private charter customers. Our obligations are for one or more flights based on a specific origin and destination. We also provide limited airport-to-airport cargo services to select markets, including several cities in South America. The customer pays a fixed charter fee and we typically bear all direct operating costs for both cargo and passenger charters, which include fuel, insurance, landing and navigation fees, and most other operational fees and costs. When we purchase cargo capacity from our ACMI customers for Charter flights, we are responsible for selling the capacity we purchase. We record revenue related to such purchased capacity as part of Charter revenue and record the related expenses in Navigation fees, landing fees and other rent.

Revenue from Charter contracts is typically recognized over time as the services are performed based on Block Hours operated on behalf of a customer. Any revenue adjustments related to on-time performance targets with the AMC are recognized over the applicable measurement period for the target, which requires significant judgment to estimate the total number of Block Hours expected. We generally expense sales commissions when incurred because the amortization period is less than one year. Payment terms and conditions vary by charter contract, although terms generally require payment in advance of the service being provided. Since advance payments are typically made shortly before the services are performed, such payments are not considered significant financing components.

Dry Leasing

Our performance obligations under Dry Lease contracts involve the provision of aircraft and engines to customers for compensation that is typically based on a fixed monthly amount and are all accounted for as operating leases. We record Dry Lease rental income on a straight-line basis over the term of the operating lease. Rentals received but unearned under the lease agreements are recorded in deferred revenue and included in Accrued liabilities until earned.

Customer maintenance reserves are amounts received under our Dry Lease contracts that are subject to reimbursement to the lessee upon the completion of qualifying maintenance work on the specific Dry Leased aircraft and are included in Accrued liabilities. We defer revenue recognition for customer maintenance reserves until the end of the lease, when we are able to finalize the amount, if any, to be reimbursed to the lessee.

Other Services

Other services include administrative and management support services and flight simulator training. Revenue for these services is recognized when the services are provided.

Estimated revenue expected to be recognized in the future is not presented because our contracts, excluding Dry Leasing contracts, typically involve either a duration or measurement period for revenue recognition of one year or less.

5. Amazon

In May 2016, we entered into certain agreements with Amazon.com, Inc. and its subsidiary, Amazon Fulfillment Services, Inc., (collectively “Amazon”), which involves, among other things, CMI operation of 20 Boeing 767-300 freighter aircraft for Amazon by Atlas, as well as Dry Leasing by Titan. The Dry Leases will have a term of ten years from the commencement of each agreement, while the CMI operations are for seven years from the commencement of each agreement (with an option for Amazon to extend the term to a total of ten years). Between August 2016 and April 2018, we have placed 13 freighter aircraft into service for Amazon and we expect to be operating all 20 before the end of 2018.

In conjunction with these agreements, we granted Amazon a warrant providing the right to acquire up to 20% of our outstanding common shares, after giving effect to the issuance of shares pursuant to the warrants, at an exercise price of $37.50 per share. A portion of the warrant, representing the right to purchase 3.75 million shares, vested immediately upon issuance of the warrant. The remainder of the warrant, representing the right to purchase 3.75 million shares, would vest in increments of 375,000 as the lease and operation of each of the 11 ^th through 20 ^th aircraft commences. During the fourth quarter of 2017, a portion of the warrant representing the right to purchase 750,000 shares vested as the lease and operation of the 11 ^th and 12 ^th aircraft commenced. In April 2018, a portion of the warrant representing the right to purchase 375,000 shares vested as the lease and operation of the thirteenth aircraft

commenced. The warrant will be exercisable in accordance with its terms through 2021. As of March 31, 2018, no portion of the warrant has been exercise d.

The agreements also provide incentives for future growth of the relationship as Amazon may increase its business with us. In that regard, we granted Amazon a warrant to acquire up to an additional 10% of our outstanding common shares, after giving effect to the issuance of shares pursuant to the warrants, for an exercise price of $37.50 per share. This warrant to purchase 3.75 million shares would vest in conjunction with payments by Amazon for additional business with us. As of March 31, 2018, no portion of this warrant has vested. Upon vesting, the warrant would become exercisable in accordance with its terms through 2023.

At the time of vesting, the fair value of the vested portion of the warrant issued to Amazon is recorded as a warrant liability within Financial instruments and other liabilities (the “Amazon Warrant”). This initial fair value of the vested portion of the warrant is also recognized as a customer incentive asset within Deferred costs and other assets, net and is amortized as a reduction of revenue in proportion to the amount of revenue recognized over the terms of the Dry Leases and CMI agreements. Determining the amount of amortization related to the CMI agreements requires significant judgment to estimate the total number of Block Hours expected over the terms of those agreements. The following table provides a summary of the customer incentive asset:

Balance at December 31, 2017	$	106,538
Initial value for vested portion of warrant		-
Amortization of customer incentive asset		(2,596	)
Balance at March 31, 2018	$	103,942

We amortized $0.4 million of the customer incentive asset for the three months ended March 31, 2017. There were no impairment losses for the three months ended March 31, 2018 and 2017.

The Amazon Warrant liability is marked-to-market at the end of each reporting period with changes in fair value recorded in Unrealized loss (gain) on financial instruments. We utilize a Monte Carlo simulation approach to estimate the fair value of the Amazon Warrant, which requires inputs such as our common stock price, the warrant strike price, estimated common stock price volatility and risk-free interest rate, among others. We recognized a net unrealized loss of $7.7 million and $5.2 million on the Amazon Warrant during the three months ended March 31, 2018 and March 31, 2017, respectively. The fair value of the Amazon Warrant liability was $135.5 million as of March 31, 2018 and $127.8 million as of December 31, 2017.

6. Accrued Liabilities

Accrued liabilities consisted of the following as of:

	March 31, 2018		December 31, 2017
Maintenance	$	186,008	$	156,042
Customer maintenance reserves		93,280		89,037
Salaries, wages and benefits		43,359		65,546
U.S. class action settlement		-		30,000
Aircraft fuel		15,692		22,196
Deferred revenue		19,214		20,986
Other		72,593		71,036
Accrued liabilities	$	430,146	$	454,843

7. Debt

Term Loan

In March 2018, we borrowed $19.4 million under an unsecured five-year term loan due in February 2023 (the “First 2018 Term Loan”) for GEnx engine performance upgrade kits and overhauls. The First 2018 Term Loan contains customary covenants, events of default and accrues interest at a fixed rate of 3.12%, with principal and interest payable quarterly.

Convertible Notes

In May 2017, we issued $289.0 million aggregate principal amount of 1.875% convertible senior notes that mature on June 1, 2024 (the “2017 Convertible Notes”) in an underwritten public offering. In June 2015, we issued $224.5 million aggregate principal amount of 2.25% convertible senior notes that mature on June 1, 2022 (the “2015 Convertible Notes”) in an underwritten public offering. The 2017 Convertible Notes and the 2015 Convertible Notes (collectively, the “Convertible Notes”) are senior unsecured

obligations and accrue interest payable semiannually on June 1 and December 1 of each year. The Convertible Notes are due on their respective maturity dates, unless earlier converted or repurchased pursuant to their respective terms.

The Convertible Notes consisted of the following as of March 31, 2018:

	March 31, 2018
	2017 Convertible Notes			2015 Convertible Notes
Remaining life in months		74			50
Liability component:
Gross proceeds	$	289,000		$	224,500
Less: debt discount, net of amortization		(63,098	)		(34,326	)
Less: debt issuance cost, net of amortization		(5,036	)		(3,265	)
Net carrying amount	$	220,866		$	186,909

Equity component ⁽¹⁾	$	70,140		$	52,903

(1)

Included in Additional paid-in capital on the consolidated balance sheet as of March 31, 2018.

The following table presents the amount of interest expense recognized related to the Convertible Notes:

	For the three months ended
	March 31, 2018		March 31, 2017
Contractual interest coupon	$	2,618	$	1,263
Amortization of debt discount		3,871		1,671
Amortization of debt issuance costs		359		173
Total interest expense recognized	$	6,848	$	3,107

Revolving Credit Facility

In December 2016, we entered into a three-year $150.0 million secured revolving credit facility (the “Revolver”) for general corporate purposes, including financing the acquisition of aircraft prior to obtaining permanent financing for the aircraft. As of March 31, 2018, the outstanding balance on the Revolver was $75.0 million at an interest rate of 4.11% and there was $64.3 million of unused availability under the Revolver, based on the collateral borrowing base.

8. Income Taxes

The effective income tax expense rates of 28.3% and 94.0% for the three months ended March 31, 2018 and 2017, respectively differed from the U.S. statutory rate primarily due to nondeductible changes in the value of the Amazon Warrant liability (see Note 5 to our Financial Statements). The effective tax rate for the three months ended March 31, 2018 also reflects the reduced federal corporate income tax rate from 35% to 21% as a result of the enactment of the U.S. Tax Cuts and Jobs Act of 2017. To a lesser extent, the effective income tax rates for both periods were impacted by excess tax benefits associated with share-based compensation, which reduced income tax expense in our consolidated statement of operations. We continue to analyze the different aspects of the U.S. Tax Cuts and Jobs Act of 2017 which could potentially affect the provisional estimates that were recorded at December 31, 2017, including reassessing our intent to invest unremitted earnings of foreign subsidiaries outside the U.S. We may repatriate these earnings to the extent the associated taxes are not significant. For interim accounting purposes, we recognize income taxes using an estimated annual effective tax rate.

We participate in an aircraft leasing incentive program in Singapore that entitles us to a reduced tax rate of 10.0% on our Singapore Dry Leasing income. Our participation is set to expire on July 31, 2018, at which time we expect it to be renewed at a further reduced tax rate of 8.0%. Should the program not be renewed, the tax rate would revert to 17.0%. Either result will have a material impact on our 2018 results.

The U.S. Internal Revenue Service is currently examining the 2015 tax year. It is reasonably possible that the balance of our unrecognized tax benefits could significantly decrease within the next twelve months. Due to the uncertainty related to the potential outcome of this examination, we cannot estimate a range of reasonably possible adjustments to our unrecognized tax benefits.

9. Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Inputs used to measure fair value are classified in the following hierarchy:

Level 1

Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2

Other inputs that are observable directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, or inactive quoted prices for identical assets or liabilities in inactive markets;

Level 3

Unobservable inputs reflecting assumptions about the inputs used in pricing the asset or liability.

We endeavor to utilize the best available information to measure fair value.

The carrying value of Cash and cash equivalents, Short-term investments and Restricted cash is based on cost, which approximates fair value.

Long-term investments consist of debt securities, maturing within five years, for which we have both the ability and the intent to hold until maturity. These investments are classified as held-to-maturity and reported at amortized cost. The fair value of our Long-term investments is based on a discounted cash flow analysis using the contractual cash flows of the investments and a discount rate derived from unadjusted quoted interest rates for debt securities of comparable risk. Such debt securities represent investments in Pass-Through Trust Certificates (“PTCs”) related to enhanced equipment trust certificates (“EETCs”) issued by Atlas in 1998 and 1999.

Term loans and notes consist of term loans, notes guaranteed by the Export-Import Bank of the United States (“Ex-Im Bank”), the Revolver and EETCs. The fair values of these debt instruments are based on a discounted cash flow analysis using current borrowing rates for instruments with similar terms.

The fair value of our convertible notes is based on unadjusted quoted market prices for these securities.

The fair value of the Amazon Warrant and certain long-term performance-based restricted shares are based on a Monte Carlo simulation which requires inputs such as our common stock price, the warrant strike price, estimated common stock price volatility, and risk-free interest rate, among others.

The following table summarizes the carrying value, estimated fair value and classification of our financial instruments as of:

	March 31, 2018
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	119,294	$	119,294	$	119,294	$	-	$	-
Short-term investments		17,127		17,127		-		-		17,127
Restricted cash		11,110		11,110		11,110		-		-
Long-term investments and accrued interest		10,680		12,571		-		-		12,571
	$	158,211	$	160,102	$	130,404	$	-	$	29,698

Liabilities
Term loans and notes	$	1,863,095	$	1,837,612	$	-	$	-	$	1,837,612
Convertible notes (1)		407,775		602,958		602,958		-		-
Amazon Warrant		135,495		135,495		-		135,495		-
	$	2,406,365	$	2,576,065	$	602,958	$	135,495	$	1,837,612

	December 31, 2017
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	280,809	$	280,809	$	280,809	$	-	$	-
Short-term investments		13,604		13,604		-		-		13,604
Restricted cash		11,055		11,055		11,055		-		-
Long-term investments and accrued interest		15,371		18,074		-		-		18,074
	$	320,839	$	323,542	$	291,864	$	-	$	31,678

Liabilities
Term loans and notes	$	1,791,918	$	1,844,445	$	-	$	-	$	1,844,445
Convertible notes (1)		403,544		602,846		602,846		-		-
Amazon Warrant		127,755		127,755		-		127,755		-
	$	2,323,217	$	2,575,046	$	602,846	$	127,755	$	1,844,445

(1) Carrying value is net of debt discounts and debt issuance costs. Hedge transactions associated with the Convertible Notes are reflected in additional paid-in-capital (see Note 7 to our Financial Statements).

Gross unrealized gains on our long-term investments and accrued interest were $1.9 million at March 31, 2018 and $2.7 million at December 31, 2017.

10. Segment Reporting

Our business is organized into three operating segments based on our service offerings: ACMI, Charter and Dry Leasing. All segments are directly or indirectly engaged in the business of air transportation services but have different commercial and economic characteristics. Each operating segment is separately reviewed by our chief operating decision maker to assess operating results and make resource allocation decisions. We do not aggregate our operating segments and, therefore, our operating segments are our reportable segments.

We use an economic performance metric (“Direct Contribution”) that shows the profitability of each segment after allocation of direct operating and ownership costs. Direct Contribution represents Income (loss) from continuing operations before income taxes excluding the following: Special charges, Transaction-related expenses, nonrecurring items, Losses (gains) on the disposal of aircraft, Losses on early extinguishment of debt, Unrealized losses (gains) on financial instruments, Gains on investments and Unallocated income and expenses, net. Direct operating and ownership costs include crew costs, maintenance, fuel, ground operations, sales costs, aircraft rent, interest expense on the portion of debt used for financing aircraft, interest income on debt securities and aircraft depreciation. Unallocated income and expenses, net include corporate overhead, nonaircraft depreciation, noncash expenses and income, interest expense on the portion of debt used for general corporate purposes, interest income on nondebt securities, capitalized interest, foreign exchange gains and losses, other revenue and other non-operating costs.

The following table sets forth Operating Revenue and Direct Contribution for our reportable segments reconciled to Operating Income and Income from continuing operations before income taxes:

	For the Three Months Ended
	March 31, 2018			March 31, 2017
Operating Revenue:
ACMI	$	266,380		$	200,694
Charter		285,197			243,898
Dry Leasing		36,392			26,757
Customer incentive asset amortization		(2,596	)		(445	)
Other		4,641			4,490
Total Operating Revenue	$	590,014		$	475,394

	For the Three Months Ended
	March 31, 2018			March 31, 2017 *
Direct Contribution:
ACMI	$	40,872		$	35,580
Charter		34,278			16,833
Dry Leasing		11,359			9,723
Total Direct Contribution for Reportable Segments		86,509			62,136

Unallocated income and expenses, net		(65,063	)		(55,474	)
Unrealized loss on financial instruments		(7,740	)		(5,213	)
Transaction-related expenses		(270	)		(915	)
Gain (loss) on disposal of aircraft		-			54
Income (loss) from continuing operations before income taxes		13,436			588

Add back (subtract):
Interest income		(1,724	)		(1,256	)
Interest expense		27,342			21,524
Capitalized interest		(1,750	)		(1,780	)
Unrealized loss on financial instruments		7,740			5,213
Other income		(4,475	)		(253	)
Operating Income	$	40,569		$	24,036

* The direct contribution amounts for the ACMI and Charter segments and the unallocated income and expenses, net above have been revised to reflect immaterial adjustments. The Company does not believe the impact to the previously issued consolidated financial statements was material.

The following table disaggregates our Charter segment revenue by customer and service type, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors:

	For the Three Months Ended
	March 31, 2018							March 31, 2017
		Cargo		Passenger		Total			Cargo		Passenger		Total
Commercial customers		$	131,173	$	2,046	$	133,219		$	108,979	$	2,975	$	111,954
AMC			74,428		77,550		151,978			58,269		73,675		131,944
Total Charter Revenue		$	205,601	$	79,596	$	285,197		$	167,248	$	76,650	$	243,898

Given the nature of our business and international flying, geographic information for revenue, long-lived assets and total assets is not presented because it is impracticable to do so.

We are exposed to a concentration of revenue from the AMC, Polar and DHL (see above and Note 3 to our Financial Statements for further discussion regarding the AMC and Polar). No other customer accounted for more than 10.0% of our Total Operating Revenue. Revenue from DHL was $67.0 million for the three months ended March 31, 2018 and $54.9 million for the three months ended March 31, 2017. We have not experienced any credit issues with either of these customers.

11. Labor and Legal Proceedings

Labor

Pilots of Atlas and Southern Air, and flight dispatchers of Atlas and Polar are represented by the International Brotherhood of Teamsters (the “IBT”). We have a five-year collective bargaining agreement (“CBA”) with our Atlas pilots, which became amendable in September 2016 and a four-year CBA with the Southern Air pilots, which became amendable in November 2016. We also have a five-year CBA with our Atlas and Polar dispatchers, which was extended in April 2017 for an additional four years, making the CBA amendable in November 2021.

After we completed the acquisition of Southern Air in April 2016, we informed the IBT of our intention to pursue (and we have been pursuing) a complete operational merger of Atlas and Southern Air. Pursuant to the merger provisions in both the Atlas and Southern Air CBAs, joint negotiations for a single CBA for Atlas and Southern Air should commence promptly. Further to this process, once a seniority list is presented to us by the unions, it triggers an agreed-upon time frame to negotiate a new joint CBA with any unresolved issues submitted to binding arbitration. After the merger process began, the IBT filed an application for mediation

with the National Mediation Board (“NMB”) on behalf of the Atlas pilots, and subsequently the IBT filed a similar application on behalf of Southern Air pilots. We have opposed both mediati on applications as they are not in accordance with the merger provisions in the parties’ existing CBAs. The Atlas and Southern Air CBAs have a defined and streamlined process for negotiating a joint CBA when a merger occurs, as in the case with the Atlas and Southern Air merger. The NMB conducted a pre-mediation investigation on the IBT’s Atlas application in June 2016, which is currently pending (along with the IBT’s Southern Air application). Due to a lack of meaningful progress in such merger discussi ons, in February 2017, we filed a lawsuit against the IBT to compel arbitration on the issue of whether the merger provisions in Atlas and Southern Air's CBAs apply to the bargaining process. On March 13, 2018, the Southern District Court of New York gran ted the Company’s motion to compel arbitration. The Company and the IBT have scheduled the Atlas and Southern arbitrations during the second half of 2018. Also, the Company and the IBT have an interim agreement in place which provides a process for proce eding with negotiations for a new joint CBA pending the outcome of the arbitrations. These negotiations commenced on July 6, 2017 and the parties have continued to meet regularly since then and bargain for a new joint CBA.

In September 2017, the Company requested the U.S. District Court for the District of Columbia (the “Court”) to issue a preliminary injunction to require the IBT to meet its obligations under the Railway Labor Act of 1926 (the “Railway Labor Act”) and stop the intentional and illegal work slowdowns and service interruptions. In its filing, the Company states that the IBT is engaging in unlawful, concerted work slowdowns to gain leverage in pilot contract negotiations with the Company. The Company sought to have the Court compel the IBT to stop the illegal work actions and return to normal operations. The hearing was completed in early November 2017.

In late November 2017, the Court granted the Company’s request to issue a preliminary injunction to require the IBT to meet its obligations under the Railway Labor Act and stop “authorizing, encouraging, permitting, calling, engaging in, or continuing” any illegal pilot slowdown activities, which were intended to gain leverage in pilot contract negotiations with the Company. In addition, the Court ordered the IBT to take affirmative action to prevent and to refrain from continuing any form of interference with the Company’s operations or any other concerted refusal to perform normal pilot operations consistent with its status quo obligations under the Railway Labor Act. In December 2017, the IBT appealed the Court’s decision to the U.S. Court of Appeals for the District of Columbia Circuit. Pending the outcome of the appeal, the preliminary injunction remains in effect. We believe the IBT’s appeal will be unsuccessful and expect the preliminary injunction to remain in effect.

We are subject to risks of work interruption or stoppage as permitted by the Railway Labor Act and may incur additional administrative expenses associated with union representation of our employees.

Matters Related to Alleged Pricing Practices

In the Netherlands, Stichting Cartel Compensation, successor in interest to claims of various shippers, has filed suit in the district court in Amsterdam against British Airways, KLM, Martinair, Air France, Lufthansa and Singapore Airlines seeking recovery for damages purportedly arising from allegedly unlawful pricing practices of the defendants. In response, British Airways, KLM, Martinair, Air France and Lufthansa filed third-party indemnification lawsuits against Polar Air Cargo, LLC (“Old Polar”), a consolidated subsidiary of the Company, and Polar, seeking indemnification in the event the defendants are found to be liable in the main proceedings. Another defendant, Thai Airways, filed a similar indemnification claim. The case is in its early stages, and various procedural issues are awaiting court determination. The Netherlands proceedings are likely to be affected by a decision readopted by the European Commission in March 2017, finding EU competition law violations by British Airways, KLM, Martinair, Air France and Lufthansa, among others, but not Old Polar or Polar. We are unable to reasonably predict the outcome of the litigation. If the Company, Old Polar or Polar were to incur an unfavorable outcome, such outcome may have a material adverse impact on our business, financial condition, results of operations or cash flows. We are unable to reasonably estimate a range of possible loss for this matter at this time.

Brazilian Customs Claim

Old 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 Old Polar scheduled service flights were not on board the aircraft upon arrival and therefore were improperly brought into Brazil. The two claims, which also seek unpaid customs duties, taxes and penalties from the date of the alleged infraction, are approximately $9.2 million in aggregate based on March 31, 2018 exchange rates.

In both cases, we believe that the amounts claimed are substantially overstated due to a calculation error when considering the type and amount of goods allegedly missing, among other things. Furthermore, we may seek appropriate indemnity from the shipper in each claim as may be feasible. In the pending claim for one of the cases, we have received an administrative decision dismissing the claim in its entirety, which remains subject to a mandatory appeal by the Brazil customs authorities. As required to defend such

claims, we have made deposits pending resolution of these matters. The balance was $4.7 million as of March 31, 2018 and $5.1 million as of December 31, 2017, and is included in Deferred c osts and other assets.

We are currently defending these and other Brazilian customs claims and the ultimate disposition of these claims, either individually or in the aggregate, is not expected to materially affect our financial condition, results of operations or cash flows.

Other

We have certain other contingencies incident to the ordinary course of business. Management does not expect that the ultimate disposition of such other contingencies will materially affect our financial condition, results of operations or cash flows.

12. Earnings Per Share

Basic earnings per share (“EPS”) represents income (loss) divided by the weighted average number of common shares outstanding during the measurement period. Diluted EPS represents income (loss) 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 using the treasury stock method.

The calculations of basic and diluted EPS were as follows:

	For the Three Months Ended
Numerator:	March 31, 2018			March 31, 2017
Income from continuing operations, net of taxes	$	9,628		$	35

Denominator:
Basic EPS weighted average shares outstanding		25,436			25,162
Effect of dilutive stock options and restricted stock		520			582
Diluted EPS weighted average shares outstanding		25,956			25,744

Earnings per share from continuing operations:
Basic	$	0.38		$	0.00
Diluted	$	0.37		$	0.00
Loss per share from discontinued operations:
Basic	$	(0.00	)	$	(0.03	)
Diluted	$	(0.00	)	$	(0.03	)
Earnings (loss) per share:
Basic	$	0.38		$	(0.03	)
Diluted	$	0.37		$	(0.03	)

Anti-dilutive shares related to warrants that were out of the money and excluded were 7.8 million for the three months ended March 31, 2018 and 3.0 million for the three months ended March 31, 2017. Diluted shares reflect the potential dilution that could occur from restricted shares using the treasury stock method. The calculation of EPS does not include restricted share units and warrants in which performance or market conditions were not satisfied of 6.9 million for the three months ended March 31, 2018 and 7.6 million for the three months ended March 31, 2017.

13. Accumulated Other Comprehensive Income (Loss)

The following table summarizes the components of Accumulated other comprehensive income (loss):

	Interest Rate			Foreign Currency
	Derivatives			Translation
Balance as of December 31, 2016	$	(5,002	)	$	9
Reclassification to interest expense		418			-
Tax effect		(162	)		-
Balance as of March 31, 2017	$	(4,746	)	$	9

Balance as of December 31, 2017	$	(4,002	)	$	9
Reclassification to interest expense		385			-
Tax effect		(57	)		-
Reclassification of taxes		(970	)		-
Balance as of March 31, 2018	$	(4,644	)	$	9

Interest Rate Derivatives

As of March 31, 2018, there was $6.1 million of unamortized net realized loss before taxes remaining in Accumulated other comprehensive income (loss) related to terminated forward-starting interest rate swaps, which had been designated as cash flow hedges to effectively fix the interest rates on two 747-8F financings in 2011 and three 777-200LRF financings in 2014. The net loss is amortized and reclassified into Interest expense over the remaining life of the related debt. Net realized losses reclassified into earnings were $0.4 million for both the three months ended March 31, 2018 and 2017. Net realized losses expected to be reclassified into earnings within the next 12 months are $1.4 million as of March 31, 2018.

14. Subsequent Events

In May 2018, we borrowed $83.5 million related to the purchase of a 777-200 aircraft under a ten-year term loan due in May 2028 (the “Second 2018 Term Loan”). The Second 2018 Term Loan, which is secured by a mortgage against the aircraft, contains customary covenants, as well as events of default, and accrues interest at a fixed rate of 4.63%, with principal and interest payable quarterly.

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 Financial Statements appearing in this report and our audited consolidated financial statements and related notes included in our 2017 Annual Report on Form 10-K.

Background

Certain Terms - Glossary

The following represents terms and statistics specific to our business and industry. They are used by management to evaluate and measure operations, results, productivity and efficiency.

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

C Check		“Heavy” airframe maintenance checks, which are more intensive in scope than Line Maintenance and are generally performed between 18 and 24 months depending on aircraft type.

D Check		“Heavy” airframe maintenance checks, which are the most extensive in scope and are generally performed every six and eight years depending on aircraft type.

Heavy Maintenance		Scheduled maintenance activities that are extensive in scope and are primarily based on time or usage intervals, which include, but are not limited to, C Checks, D Checks and engine overhauls. In addition, unscheduled engine repairs involving the removal of the engine from the aircraft are considered to be Heavy Maintenance.

Line Maintenance		Maintenance events occurring during normal day-to-day operations.

Non-heavy Maintenance		Discrete maintenance activities for the overhaul and repair of specific aircraft components, including landing gear, auxiliary power units and engine thrust reversers.

Yield		The average amount a customer pays to fly one tonne of cargo one mile.

Business Overview

We are a leading global provider of outsourced aircraft and aviation operating services. We operate the world’s largest fleet of 747 freighters and provide customers a broad array of 747, 777, 767, 757 and 737 aircraft for domestic, regional and international cargo and passenger operations. We provide unique value to our customers by giving them access to highly reliable modern production freighters that deliver the lowest unit cost in the marketplace combined with outsourced aircraft operating services that we believe lead the industry in terms of quality and global scale. Our customers include express delivery providers, e-commerce retailers, airlines, freight forwarders, the U.S. military and charter brokers. We provide global services with operations in Africa, Asia, Australia, Europe, the Middle East, North America and South America.

Our primary service offerings include the following:

•

ACMI, whereby we provide outsourced cargo and passenger aircraft operating solutions, including the provision of an aircraft, crew, maintenance and insurance, while customers assume fuel, demand and price risk. In addition, customers are generally responsible for landing, navigation and most other operational fees and costs;

•

CMI, which is part of our ACMI business segment, whereby we provide outsourced cargo and passenger aircraft operating solutions, generally including the provision of crew, Line Maintenance and insurance, but not the aircraft. Customers assume fuel, demand and price risk, and are responsible for providing the aircraft (which they may lease from us) and generally responsible for Heavy and Non-Heavy Maintenance, landing, navigation and most other operational fees and costs;

•

Charter, whereby we provide cargo and passenger aircraft charter services to customers, including the AMC, brokers, freight forwarders, direct shippers, airlines, sports teams and fans, and private charter customers. The customer pays a fixed charter fee that includes fuel, insurance, landing fees, navigation fees and most other operational fees and costs; and

•

Dry Leasing, whereby we provide cargo and passenger aircraft and engine leasing solutions. The customer operates, and is responsible for insuring and maintaining, the flight equipment.

We look to achieve our growth plans and enhance shareholder value by:

•

Delivering superior service quality to our valued customers;

•

Focusing on securing attractive long-term customer contracts;

•

Aggressively managing our fleet with a focus on modern, efficient aircraft;

•

Driving significant ongoing productivity improvements;

•

Selectively pursuing and evaluating future acquisitions and alliances; while

•

Appropriately managing capital allocation and delivering value to shareholders.

See “Business Overview” and “Business Strategy” in our 2017 Annual Report on Form 10-K for additional information.

Business Developments

Our ACMI results for the first quarter of 2018, compared with 2017, were positively impacted by increased flying reflecting the following events:

•

Between August 2016 and March 2018, we began CMI flying for Amazon the first 12 of 20 Boeing 767-300 freighter aircraft Dry Leased from Titan. During the first quarter of 2018, we operated 12 of the aircraft compared to 2 of the aircraft during the first quarter of 2017. In April 2018, we began flying the thirteenth aircraft and we expect to be operating all 20 by the end of 2018.

•

During the first quarter of 2017, we began flying a 747-400 freighter for Nippon Cargo Airlines on transpacific routes. In September 2017, we began flying a second 747-400 freighter for them on transpacific routes.

•

During the first quarter of 2017, we began flying a 747-400 freighter for Asiana Cargo on transpacific routes.

•

During the second quarter of 2017, we began ACMI flying two 747-8F aircraft for Cathay Pacific Cargo to supplement capacity on its existing route network.

•

In September 2017, we began ACMI flying a 747-400 freighter for DHL Global Forwarding on routes between the United States, Europe, and Asia.

In February 2018, we signed long-term CMI and Dry Lease contracts with DHL for two 777-200 freighter aircraft. The first of the two aircraft was previously in CMI service with us and the second is expected to begin CMI and Dry Lease service during the second quarter of 2018.

Charter results for the first quarter of 2018 reflected higher commercial cargo Yields from increased demand, increased 747-400 flying and higher aircraft utilization, which were partially offset by the redeployment of 747-8F aircraft to the ACMI segment.

During 2017, we entered into six operating leases for 747-400 freighter aircraft to meet increased customer demand in our ACMI and Charter businesses. Two aircraft entered service in 2017 and one aircraft entered service during the first quarter of 2018. The other three are expected to enter service throughout 2018.

In February 2018, we acquired a 777-200 freighter aircraft and Dry Leased it to DHL on a long-term basis, as described above. We expect to complete the acquisition of a second 777-200 freighter aircraft and Dry Lease it to DHL on a long-term basis during the second quarter of 2018. As described above, between August 2016 and March 2018, we began Dry Leasing 12 767-300 converted freighter aircraft to Amazon on a long-term basis. In April 2018, we began Dry Leasing the thirteenth aircraft to Amazon.

Results of Operations

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

Three Months Ended March 31, 2018 and 2017

Operating Statistics

The following tables compare our Segment Operating Fleet (average aircraft equivalents during the period) and total Block Hours operated for the three months ended March 31:

Segment Operating Fleet	2018			2017			Inc/(Dec)
ACMI*
747-8F Cargo		9.0			7.0			2.0
747-400 Cargo		15.8			12.8			3.0
747-400 Dreamlifter		3.1			3.0			0.1
777-200 Cargo		5.0			5.0			-
767-300 Cargo		17.2			5.8			11.4
767-200 Cargo		9.0			9.0			-
737-400 Cargo		5.0			5.0			-
747-400 Passenger		1.0			1.0			-
767-200 Passenger		1.0			1.0			-
Total		66.1			49.6			16.5

Charter
747-8F Cargo		1.0			2.9			(1.9	)
747-400 Cargo		11.7			11.0			0.7
747-400 Passenger		2.0			2.0			-
767-300 Cargo		0.3			-			0.3
767-300 Passenger		4.0			4.9			(0.9	)
Total		19.0			20.8			(1.8	)

Dry Leasing
777-200 Cargo		6.3			6.0			0.3
767-300 Cargo		14.0			3.6			10.4
757-200 Cargo		1.0			1.0			-
737-300 Cargo		1.0			1.0			-
737-800 Passenger		1.0			1.0			-
Total		23.3			12.6			10.7

Less: Aircraft Dry Leased to CMI customers		(14.3	)		(3.6	)		(10.7	)
Total Operating Average Aircraft Equivalents		94.1			79.4			14.7

ACMI average fleet excludes spare aircraft provided by CMI customers.

Block Hours		2018				2017				Inc/(Dec)				% Change
Total Block Hours**			66,495				55,116				11,379				20.6	%

Includes ACMI, Charter and other Block Hours.

Operating Revenue

The following table compares our Operating Revenue for the three months ended March 31 (in thousands):

	2018			2017			Inc/(Dec)			% Change
Operating Revenue
ACMI	$	266,380		$	200,694		$	65,686			32.7	%
Charter		285,197			243,898			41,299			16.9	%
Dry Leasing		36,392			26,757			9,635			36.0	%
Customer incentive asset amortization		(2,596	)		(445	)		(2,151	)	NM
Other		4,641			4,490			151			3.4	%
Total Operating Revenue	$	590,014		$	475,394		$	114,620			24.1	%

NM represents year-over-year changes that are not meaningful.

ACMI

	2018		2017		Inc/(Dec)		% Change
ACMI Block Hours		49,862		38,916		10,946		28.1	%
ACMI Revenue Per Block Hour	$	5,342	$	5,157	$	185		3.6	%

ACMI revenue increased $65.7 million, or 32.7%, primarily due to increased flying and an increase in Revenue per Block Hour. The increase in Block Hours was primarily driven by increased 767 flying for Amazon, the start-up of 747 flying for several new customers and the redeployment of 747-8F aircraft from the Charter segment. Revenue per Block Hour increased primarily due to the impact of increased 747-8F and 747-400 flying for new customers.

Charter

	2018		2017		Inc/(Dec)			% Change
Charter Block Hours:
Cargo		11,390		10,939		451			4.1	%
Passenger		4,670		4,845		(175	)		(3.6	)%
Total		16,060		15,784		276			1.7	%

Charter Revenue Per Block Hour:
Cargo	$	18,051	$	15,289	$	2,762			18.1	%
Passenger	$	17,044	$	15,820	$	1,224			7.7	%
Charter	$	17,758	$	15,452	$	2,306			14.9	%

Charter revenue increased $41.3 million, or 16.9%, primarily due to an increase in Revenue per Block Hour. Revenue per Block Hour increased primarily due to higher Yields for commercial cargo, higher fuel prices and the impact of Charter capacity purchased from our ACMI customers that had no associated Charter Block Hours. Charter Block Hours increased slightly as increased 747-400 flying and higher aircraft utilization were partially offset by the redeployment of 747-8F aircraft to the ACMI segment.

Dry Leasing

Dry Leasing revenue increased $9.6 million, or 36.0%, primarily due to the placement of 767-300 converted freighter aircraft throughout 2017 and the placement of one 777-200 freighter aircraft in February 2018.

Operating Expenses

The following table compares our Operating Expenses for the three months ended March 31 (in thousands):

	2018		2017			Inc/(Dec)			% Change
Operating Expenses
Salaries, wages and benefits	$	125,082	$	104,087		$	20,995			20.2	%
Aircraft fuel		96,303		82,432			13,871			16.8	%
Maintenance, materials and repairs		84,879		72,816			12,063			16.6	%
Depreciation and amortization		49,630		37,894			11,736			31.0	%
Travel		39,847		32,359			7,488			23.1	%
Aircraft rent		39,524		36,073			3,451			9.6	%
Navigation fees, landing fees and other rent		35,597		18,535			17,062			92.1	%
Passenger and ground handling services		28,062		25,123			2,939			11.7	%
Gain on disposal of aircraft		-		(54	)		54		NM
Transaction-related expenses		270		915			(645	)	NM
Other		50,251		41,178			9,073			22.0	%
Total Operating Expenses	$	549,445	$	451,358

Salaries, wages and benefits increased $21.0 million, or 20.2%, primarily driven by increased flying and fleet growth initiatives.

Aircraft fuel increased $13.9 million, or 16.8%, primarily due to an increase in the average fuel cost per gallon and an increase in consumption related to increased flying. We do not incur fuel expense in our ACMI or Dry Leasing businesses as the cost of fuel is borne by the customer. Average fuel cost per gallon and fuel consumption for the three months ended March 31 were:

	2018		2017		Inc/(Dec)		% Change
Average fuel cost per gallon	$	2.14	$	1.88	$	0.26		13.8	%
Fuel gallons consumed (000s)		44,950		43,927		1,023		2.3	%

Maintenance, materials and repairs increased by $12.1 million, or 16.6%, primarily reflecting $11.2 million of increased Line Maintenance expense due to increased flying and additional repairs performed, and $1.9 million of increased Heavy Maintenance expense. The higher Line Maintenance primarily reflected increases of $6.2 million for 767 aircraft and $5.4 million for 747-400 aircraft, partially offset by a decrease of $1.0 million for 747-8F aircraft. Heavy Maintenance expense on 747-400 aircraft increased $6.1 million primarily due to an increase in the number of engine overhauls, C Checks and additional repairs performed, partially offset by a decrease in the number of D Checks. Heavy Maintenance expense on 747-8F aircraft decreased $2.7 million primarily due to a decrease in the number of C Checks. Heavy Maintenance expense on 767 aircraft decreased $1.4 million primarily due to a decrease in the number of C Checks. Heavy airframe maintenance checks and engine overhauls impacting Maintenance, materials and repairs for the three months ended March 31 were:

Heavy Maintenance Events	2018		2017		Inc/(Dec)
747-8F C Checks		-		2		(2	)
747-400 C Checks		4		2		2
767 C Checks		-		1		(1	)
747-400 D Checks		1		4		(3	)
CF6-80 engine overhauls		6		3		3

Depreciation and amortization increased $11.7 million, or 31.0%, primarily due to additional aircraft operating in 2018, an increase in the scrapping of rotable parts and an increase in the amortization of deferred maintenance costs related to 747-8F engine overhauls (see Note 2 to our Financial Statements).

Travel increased $7.5 million, or 23.1%, primarily due to increased flying.

Aircraft rent increased $3.5 million, or 9.6%, primarily due to additional operating leases for 747-400 freighter aircraft to meet increased customer demand.

Navigation fees, landing fees and other rent increased $17.1 million, or 92.1%, primarily due to an increase in purchased capacity and increased flying.

Passenger and ground handling services increased $2.9 million, or 11.7%, primarily due to increased Charter flying and higher costs from flying to more expensive locations.

Transaction-related expenses were for the integration of Southern Air, which primarily included professional fees and integration costs.

Other increased $9.1 million, or 22.0%, primarily due to an increase in the allowance for doubtful accounts, higher passenger taxes and commission expense on increased revenue from the AMC and the impact of fleet growth initiatives.

Non-operating Expenses (Income)

The following table compares our Non-operating Expenses (Income) for the three months ended March 31 (in thousands):

	2018			2017			Inc/(Dec)			% Change
Non-operating Expenses (Income)
Interest income	$	(1,724	)	$	(1,256	)	$	468			37.3	%
Interest expense		27,342			21,524			5,818			27.0	%
Capitalized interest		(1,750	)		(1,780	)		(30	)		(1.7	)%
Unrealized loss on financial instruments		7,740			5,213			2,527			48.5	%
Other income		(4,475	)		(253	)		4,222		NM

Interest expense increased $5.8 million, or 27.0%, primarily due to the issuance of the 2017 Convertible Notes and the financing of 767-300 aircraft purchases and conversions.

Unrealized loss on financial instruments represents the change in fair value of the Amazon Warrant (see Note 5 to our Financial Statements) primarily due to changes in our common stock price.

Other income increased in 2018 primarily due to the receipt of a refund for aircraft rent paid in previous years.

Income taxes . Our effective income tax expense rates of 28.3% and 94.0% for the three months ended March 31, 2018 and 2017, respectively, differed from the U.S. statutory rate primarily due to nondeductible changes in the value of the Amazon Warrant liability (see Note 5 to our Financial Statements). The effective tax rate for the three months ended March 31, 2018 also reflects the reduced federal corporate income tax rate from 35% to 21% as a result of the enactment of the U.S. Tax Cuts and Jobs Act of 2017. To a lesser extent, the effective income tax rates for both periods were impacted by excess tax benefits associated with share-based compensation, which reduced income tax expense in our consolidated statement of operations. We continue to analyze the different aspects of the U.S. Tax Cuts and Jobs Act of 2017, which could potentially affect the provisional estimates that were recorded at December 31, 2017, including reassessing our intent to invest unremitted earnings of foreign subsidiaries outside the U.S. We may repatriate these earnings to the extent the associated taxes are not significant.

Segments

The following table compares the Direct Contribution for our reportable segments for the three months ended March 31 (see Note 10 to our Financial Statements for the reconciliation to Operating income) (in thousands):

	2018		2017		Inc/(Dec)		% Change
Direct Contribution:
ACMI	$	40,872	$	35,580	$	5,292		14.9	%
Charter		34,278		16,833		17,445		103.6	%
Dry Leasing		11,359		9,723		1,636		16.8	%
Total Direct Contribution	$	86,509	$	62,136	$	24,373		39.2	%

Unallocated income and expenses, net	$	65,063	$	55,474	$	9,589		17.3	%

ACMI Segment

ACMI Direct Contribution increased $5.3 million, or 14.9%, primarily due to increased flying and higher Revenue per Block Hour, partially offset by higher Heavy Maintenance costs and amortization of deferred maintenance costs.

Charter Segment

Charter Direct Contribution increased $17.4 million, or 103.6%, primarily due to higher commercial cargo Yields and higher aircraft utilization, partially offset by the redeployment of 747-8F aircraft to the ACMI segment.

Dry Leasing Segment

Dry Leasing Direct Contribution increased $1.6 million, or 16.8%, primarily due to the placement of additional aircraft.

Unallocated income and expenses, net

Unallocated income and expenses, net increased $9.6 million, or 17.3%, primarily due to higher costs for unallocated interest expense, fleet growth initiatives and amortization of the Amazon customer incentive asset.

Reconciliation of GAAP to non-GAAP Financial Measures

To supplement our Financial Statements presented in accordance with GAAP, we present certain non-GAAP financial measures to assist in the evaluation of our business performance. These non-GAAP financial measures include Adjusted Income from continuing operations, net of taxes and Adjusted Diluted EPS from continuing operations, net of taxes, which exclude certain noncash income and expenses, and items impacting year-over-year comparisons of our results. These non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for Income from continuing operations, net of taxes and Diluted EPS from continuing operations, which are the most directly comparable measures of performance prepared in accordance with GAAP.

We use these non-GAAP financial measures in assessing the performance of our ongoing operations and in planning and forecasting future periods. In addition, management’s incentive compensation will be determined, in part, by using Adjusted Income from continuing operations, net of taxes. We believe that these adjusted measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to assist investors and analysts in understanding our business results and assessing our prospects for future performance.

The following is a reconciliation of Income from continuing operations, net of taxes and Diluted EPS from continuing operations, net of taxes to the corresponding non-GAAP financial measures (in thousands, except per share data):

	For the Three Months Ended
	March 31, 2018			March 31, 2017			Percent Change

Income from continuing operations, net of taxes	$	9,628		$	35		NM
Impact from:
Gain on disposal of aircraft		-			(54	)
Costs associated with transactions (a)		270			915
Accrual for legal matters and professional fees		218			74
Noncash expenses and income, net (b)		6,675			2,412
Unrealized loss on financial instruments		7,740			5,213
Income tax effect of reconciling items		(747	)		(320	)
Adjusted income from continuing operations, net of taxes	$	23,784		$	8,275			187.4	%

Weighted average diluted shares outstanding		25,956			25,744
Add: dilutive warrant (c)		1,653			1,111
Adjusted weighted average diluted shares outstanding		27,609			26,855

Adjusted Diluted EPS from continuing operations, net of taxes	$	0.86		$	0.31			177.4	%

(a)

Costs associated with transactions relate to integration costs associated with our acquisition of Southern Air.

(b)

Noncash expenses and income, net in 2018 and 2017 primarily related to amortization of debt discount on the convertible notes (see Note 7 to our Financial Statements) and amortization of the customer incentive asset related to the Amazon Warrant (see Note 5 to our Financial Statements).

(c)

Dilutive warrants represent potentially dilutive common shares related to the Amazon Warrant (see Note 5 to our Financial Statements). These shares were excluded from Diluted EPS from continuing operations, net of taxes prepared in accordance with GAAP as they would have been anti-dilutive.

Liquidity and Capital Resources

The most significant liquidity events during the first quarter of 2018 were as follows:

Debt Transactions

In February 2018, we drew $75.0 million under the Revolver for the acquisition of a 777-200 aircraft prior to obtaining permanent financing for the aircraft (see Note 7 to our Financial Statements).

In March 2018, we borrowed $19.4 million related to GEnx engine upgrade kits and overhauls under an unsecured five-year term loan at a fixed interest rate of 3.12% ( see Note 7 to our Financial Statements).

Operating Activities. Net cash provided by operating activities was $69.1 million for the first quarter of 2018, which primarily reflected $9.6 million of Net Income, noncash adjustments of $59.8 million for Depreciation and amortization and $7.7 million for Unrealized loss on financial instruments. Partially offsetting these items was a $16.0 million decrease in Accounts payable and accrued liabilities. Net cash provided by operating activities was $18.7 million for the first quarter of 2017, which primarily reflected $0.8 million of Net Loss, noncash adjustments of $43.2 million for Depreciation and amortization, an $8.1 million increase in Accounts receivable and $5.2 million for Unrealized loss on financial instruments. Partially offsetting these items were a $30.3 million decrease in Prepaid expenses, current assets and other assets and a $11.5 million decrease in Accounts payable and accrued liabilities.

Investing Activities. Net cash used for investing activities was $261.2 million for the first quarter of 2018, consisting primarily of $236.5 million of payments for flight equipment and modifications, and $26.1 million of core capital expenditures, excluding flight equipment. Payments for flight equipment and modifications during the first quarter of 2018 were primarily related to the purchase of 777-200 aircraft, 767-300 passenger aircraft and related freighter conversion costs, spare engines and GEnx engine performance upgrade kits. All capital expenditures for 2018 were funded through working capital and the financings discussed above. Net cash used for investing activities was $139.8 million for the first quarter of 2017, consisting primarily of $118.9 million of payments for flight equipment and modifications, and $21.7 million of core capital expenditures, excluding flight equipment.

Financing Activities. Net cash provided by financing activities was $30.6 million for the first quarter of 2018, which primarily reflected $75.0 million of proceeds from revolving credit facility and $19.4 million of proceeds from debt issuance, partially offset by $56.8 million of payments on debt obligations and $10.2 million related to the purchase of treasury stock. Net cash provided by financing activities was $101.8 million for the first quarter of 2017, which primarily reflected $150.0 million of proceeds from revolving credit facility and $14.8 million of customer maintenance reserves and deposits received, partially offset by $47.1 million of payments on debt obligations, $9.4 million related to the purchase of treasury stock and $6.4 million of customer maintenance reserves paid.

We consider Cash and cash equivalents, Short-term investments, Restricted cash and Net cash provided by operating activities to be sufficient to meet our debt and lease obligations and to fund core capital expenditures for 2018. Core capital expenditures for the remainder of 2018 are expected to range between $75.0 to $85.0 million, which excludes flight equipment and capitalized interest. Our payments remaining for flight equipment purchase and passenger-to-freighter conversion commitments are expected to be approximately $152.4 million, all of which are expected to be made during 2018. We expect to finance the acquisition and conversion of this flight equipment with working capital and the Revolver prior to obtaining permanent financing for the converted aircraft.

We may access external sources of capital from time to time depending on our cash requirements, assessments of current and anticipated market conditions, and the after-tax cost of capital. To that end, we filed a shelf registration statement with the SEC in May 2017 that enables us to sell debt and/or equity securities on a registered basis over the subsequent three years, depending on market conditions, our capital needs and other factors. Our access to capital markets can be adversely impacted by prevailing economic conditions and by financial, business and other factors, some of which are beyond our control. Additionally, our borrowing costs are affected by market conditions and may be adversely impacted by a tightening in credit markets.

We do not expect to pay any significant U.S. federal income tax in this or the next decade. Our business operations are subject to income tax in several foreign jurisdictions. We do not expect to pay any significant cash income taxes in foreign jurisdictions for at least several years. Due to the U.S. Tax Cuts and Jobs Act of 2017, we may repatriate the unremitted earnings of our foreign subsidiaries to the extent taxes are insignificant.

Contractual Obligations and Debt Agreements

See Note 7 to our Financial Statements for a description of our new debt obligations. See our 2017 Annual Report on Form 10-K for a tabular disclosure of our contractual obligations as of December 31, 2017 and a description of our other debt obligations and amendments thereto.

Off-Balance Sheet Arrangements

There were no material changes in our off-balance sheet arrangements during the three months ended March 31, 2018.

Recent Accounting Pronouncements

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Report”), as well as other reports, releases and written and oral communications issued or made from time to time by or on behalf of AAWW, contain statements that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements are based on management’s beliefs, plans, expectations and assumptions, and on information currently available to management. Generally, the words “will,” “may,” “should,” “expect,” “anticipate,” “intend,” “plan,” “continue,” “believe,” “seek,” “project,” “estimate” and similar expressions used in this Report that do not relate to historical facts are intended to identify forward-looking statements.

The forward-looking statements in this Report are not representations or guarantees of future performance and involve certain risks, uncertainties and assumptions. Such risks, uncertainties and assumptions include, but are not limited to, those described in our Annual Report on Form 10-K for the year ended December 31, 2017. Many of such factors are beyond AAWW’s control and are difficult to predict. As a result, AAWW’s future actions, financial position, results of operations and the market price for shares of AAWW’s common stock could differ materially from those expressed in any forward-looking statements. Readers are therefore cautioned not to place undue reliance on forward-looking statements. Such forward-looking statements speak only as of the date of this report. AAWW does not intend to publicly update any forward-looking statements that may be made from time to time by, or on behalf of, AAWW, whether as a result of new information, future events or otherwise, except as required by law and expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our market risk during the three months ended March 31, 2018. For additional discussion of our exposure to market risk, refer to Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” included in our 2017 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d - 15(e) under the Exchange Act) as of March 31, 2018. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHE R INFORMATION

ITEM 1. LEGAL PROCEEDINGS

With respect to the fiscal quarter ended March 31, 2018, the information required in response to this Item is set forth in Note 11 to our Financial Statements and such information is incorporated herein by reference. Such description contains all of the information required with respect hereto.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in our 2017 Annual Report on Form 10-K.

ITEM 6. EXHIBITS

Exhibits

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

EXHIBIT INDEX

Exhibit Number		Description


10.1		Atlas Air Worldwide Holdings, Inc. 2018 Long Term Cash Incentive Plan

10.2		Atlas Air Worldwide Holdings, Inc. Annual Incentive Program for Senior Executives

10.3		Atlas Air Worldwide Holdings, Inc. Benefits Program for Senior Executives

10.4		Form of Performance Share Unit Agreement between Atlas Air Worldwide Holdings, Inc. and William J. Flynn

10.5		Form of Restricted Stock Unit Agreement between Atlas Air Worldwide Holdings, Inc. and William J. Flynn

10.6		Form of Performance Share Unit Agreement

10.7		Form of Restricted Stock Unit Agreement

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

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

32.1		Section 1350 Certifications.

101.INS		XBRL Instance Document. *

101.SCH		XBRL Taxonomy Extension Schema Document. *

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document. *

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document. *

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document. *

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document. *

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017, (ii) Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017, (iii) Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2018 and 2017, (iv) Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017, (v) Consolidated Statement of Stockholders’ Equity as of and for the three months ended March 31, 2018 and 2017 and (vi) Notes to the Unaudited Consolidated Financial Statements.

S IGNATURES

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: May 3, 2018		/s/ William J. Flynn
		William J. Flynn
		President and Chief Executive Officer

Dated: May 3, 2018		/s/ Spencer Schwartz
		Spencer Schwartz
		Executive Vice President and Chief Financial Officer

Exhibit 10.1

ATLAS AIR WORLDWIDE HOLDINGS, INC.

2018 LONG TERM CASH INCENTIVE PROGRAM

ATLAS AIR WORLDWIDE HOLDINGS, INC.

2018 LONG TERM CASH INCENTIVE PROGRAM

Section 1. Purpose .

The purpose of the Program is to set forth certain terms and conditions governing cash awards made under Atlas Air Worldwide Holdings, Inc.’s (“AAWW”) 2016 Incentive Plan (the “Plan”). The Program shall be treated for all purposes as a sub-plan or arrangement for the grant of Cash Awards under the Plan and shall be subject to the Plan, which is incorporated herein by reference. The Program shall be effective as of January 1, 2018, and shall be applicable for the 2018-2020 Performance Period. Capitalized terms not defined herein shall have the meanings given in the Plan.

Section 2. Definitions .

2.1. Award shall mean an opportunity to earn benefits under the Program.

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

2.3. Beneficiary shall mean a Participant’s beneficiary designated pursuant to Section 8.

2.4. Code shall mean the Internal Revenue Code of 1986, as amended from time to time.

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

2.6. Company shall mean AAWW or its subsidiaries.

2.7. Eligible Participant shall mean any of the Chief Executive Officer, President, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents and Staff Vice Presidents of the Company, and such other Company officers as may from time to time be designated by the Committee.

2.8. Participant shall mean any Eligible Participant during such Eligible Participant’s period of participation in the Program.

2.9. Performance Period shall mean January 1, 2018 through December 31, 2020.

2.10. Program shall mean this Atlas Air Worldwide Holdings, Inc. 2018 Long Term Cash Incentive Program, as it may be amended from time to time.

Section 3. Administration .

The Program shall be administered by the Committee in accordance with and subject to the provisions of Section 3 of the Plan.

Section 4. Participation .

Each individual who is employed as an Eligible Participant on the first day of the Performance Period shall participate in the Program. An individual who first becomes employed as an Eligible Participant on or prior to September 30, 2018 may participate in the Program in the discretion of the Committee (or, in the case of officers below the level of Senior Vice President, its delegate). An individual employed by the Company, including an Eligible Participant, may be awarded incentive compensation outside the Program in lieu of or in addition to Awards, if any, under the Program.

Section 5. Determination of Awards .

5.1. Target Bonus Award . The target cash bonus payable under an Award for the Performance Period will be the amount established by the Committee (or, in the case of officers below the level of Senior Vice President, its delegate) for each Participant classification (the “Target Bonus Amount”).

5.2. Performance Measures . Payment of an Award is conditioned upon written certification by the Committee of satisfaction of the achievement of certain internal ROIC and EBITDA Growth levels, as may be modified by Comparative TSR attainment, as described below (the “Performance Criteria”) during the Performance Period. The actual amount payable pursuant to an Award (the “Payable Amount”) shall be determined in accordance with Annex A hereto (the “Performance Plan Schedule”). In no event shall the Payable Amount exceed, for any Participant, the maximum amount specified in Section 4(c) of the Plan.

(1) “ROIC” for the Company shall be an average of the Company’s actual ROIC for 2018, 2019 and 2020 and shall mean a fraction where the numerator is NOPAT and the denominator is Average Invested Capital. “NOPAT” is defined as adjusted operating income, as included in the Company’s press release, minus Cash Tax Paid as reported in the SEC Form 10-K. “Average Invested Capital” is defined as the average of the beginning and ending Invested Capital during the year. “Invested Capital” is defined as capital lease obligations, plus short-and long-term debt, plus total stockholders equity, minus an amount equal to cash, cash equivalents, restricted cash, and short-term investments. Invested Capital shall exclude investment amounts associated with aircraft acquisition until the first time that such aircraft is flown under a customer contract, at which time all amounts accrued with respect to such aircraft shall be considered in the Average Invested Capital calculation from such date. Invested Capital shall be reduced by the amount of any investments held in the Company’s direct or indirect debt securities that remain outstanding and that have not otherwise been defeased.

(2) “EBITDA” for the Company shall mean adjusted income from continuing operations, before interest, income taxes, depreciation expense and amortization expense as included in the Company’s press release. “EBITDA Growth” shall be calculated by averaging the percentage increase or decrease in EBITDA for each of the three years ended December 31 in the Performance Period. EBITDA increase or decrease for each twelve month period shall be calculated by subtracting EBITDA for the twelve months ended December 31 for the prior year from EBITDA for the twelve months ended December 31 for the current year and

dividing the resulting difference in EBITDA by the EBITDA for the twelve months ended December 31 for the prior year.

(3) In the calculation of EBITDA Growth and NOPAT, amounts objectively demonstrated to be attributable to the following items will not be taken into account: (i) any benefit or detriment resulting from changes in the Company’s financial reporting (including but not limited to changes in accounting principles) or from statutory changes in federal, state or foreign income tax rates; (ii) any aggregate costs in excess of $500,000 for business initiatives not specified in the Company’s operating plans; (iii) any costs related to retention, recruitment, or termination of executive officers; (iv) any costs related to collective bargaining, other labor negotiations, grievances , union motivated work disruptions determined to be in violation of the preliminary injunction issued by the Federal District Court for the District of Columbia on November 30, 2017, or other disputes including labor unions in excess of the Company’s operating plans; and (v) any costs or the payment of any fines, penalties, deposits or settlement amounts in connection with (A) foreign or domestic antitrust investigations and related lawsuits, (B) Brazilian customs or labor claims or investigations, or (C) environmental, regulatory or compliance matters (including any related compliance or other costs or actions) resulting from changes in applicable law or otherwise. These adjustments shall be made on a pre-tax basis. The ROIC ratio will exclude the unconsolidated results of Polar Air Cargo Worldwide, Inc.

(4) “Comparative TSR” shall mean the Absolute TSR, on a percentile basis, of the Company relative to the Absolute TSR of the component companies of the Comparator Group set forth in Annex A hereto, in each case measured over the applicable Performance Period, as reasonably determined by the Committee.

(5) “Absolute TSR” shall mean, on a percentage basis, with respect to the Company or any component company of the Comparator Group set forth in Annex A hereto, the price appreciation of such entity’s common stock plus the value of reinvested dividends, calculated using the average closing price for the 20 consecutive trading days ending immediately prior to the first day of the relevant period and the 20 consecutive trading days ending immediately prior to and including the last day of the relevant period, as reasonably determined by the Committee.

Section 6. Payment of Awards under this Program .

6.1. General . A Participant will be entitled to receive payment, if any, under an Award if the Participant’s Employment continues through December 31, 2020, subject to this Section 6 and Section 7. A Participant will receive an Award in the manner and at the times set forth in Sections 6.2, 6.3, 6.4 and Section 7.

6.2. Time of Payment . In connection with the completion of performance, the Committee shall certify whether and at what level the Performance Criteria have been achieved. For the purposes of this Program, the term “Determination Date” means the date in 2021 on which the Committee makes such certification. Any Payable Amount for an Award for the Performance Period shall be paid by the Company within two weeks following the Determination Date, but in no event later than March 15, 2021.

6.3. Form of Payment . All Payable Amounts for an Award shall be paid in cash.

6.4. Termination of Employment .

(a) General . Except as provided otherwise in this Section 6.4 or Section 7, a Participant whose Employment terminates for any reason prior to the last day of the Performance Period shall forfeit such Award.

(b) Termination by Reason of Death or Disability; Termination by the Company Not For Cause . In the event of the termination of the Participant’s Employment (i) due to death, (ii) by the Company by reason of the Participant’s Disability (as defined below), or (iii) by reason of an involuntary termination by the Company not for Cause (as defined below), in each case occurring after January 1, 2018, but before the end of the Performance Period and before the occurrence of a Change in Control of the Company (as defined below), the portion of the Award that will be payable is calculated by dividing the number of days from January 1, 2018 until the date of such termination of Employment, by the total number of days in the Performance Period, and multiplying that fraction by the Payable Amount. Subject to Section 7, the reduced (prorated) Payable Amount, if any (calculated as provided in Section 5.2) shall not be payable until after the Determination Date in accordance with Section 6.2 above.

(1) A termination of Employment shall be deemed to be by reason of “Disability” if immediately prior to such termination of Employment, the Participant shall have been continuously disabled from performing the duties assigned to the Participant for a period of not less than six consecutive calendar months, in which case such Disability shall be deemed to have commenced on the date following the end of such six consecutive calendar month period; and

(2) “Cause” shall mean (i) the Participant’s refusal or failure (other than during periods of illness or disability) to perform the Participant’s material duties and responsibilities to the Company, (ii) the conviction or plea of guilty or nolo contendere of the Participant in respect of any felony, other than a motor vehicle offense, (iii) the commission of any act which causes material injury to the reputation, business or business relationships of the Company including, without limitation, any breach of written policies of the Company with respect to trading in securities, (iv) any other act of fraud, including, without limitation, misappropriation, theft or embezzlement, or (v) a violation of any applicable material policy of the Company, including, without limitation, a violation of the laws against workplace discrimination.

(d) Retirement of the Chief Executive Officer . In the event of a termination of Employment of the Chief Executive Officer of the Company (the “Chief Executive Officer”) by reason of the Chief Executive Officer’s Retirement (as defined below)

occurring after the date hereof and before the end of the Performance Period and before the occurrence of a Change in Control of the Company, the Payable Amount shall be payable as if the Chief Executive Officer’s Employment had continued during the entire Performance Period. Subject to Section 7, the Payable Amount, if any (calculated as provided in Section 5.2) shall not be delivered until after the Determination Date. For purposes of this Program, “Retirement” shall mean a termination of the Chief Executive Officer ’s Employment with the Company for any reason other than Cause on or after the Chief Executive Officer ’s attainment of age sixty (60) and ten (10) years of service with the Company; provided, however, that a voluntary resignation from Employment shall not be considered Retirement for purposes of the Program unless (1) the Chief Executive Officer shall have given not less than six (6) months’ advance written notice of such proposed retirement to the Chair of the Board (or such lesser period of notice as may be determined by the Board) and (2) a majority of the members of the Board (disregarding the Employee’s membership on the Board for these purposes) has approved such proposed retirement as a Retirement entitling the Employee to vesting under this Section 6.4(d) or Section 7 , as applicable .

(e) Other Terminations of Employment . Except as provided in this Section 6.4 or in Section 7, any termination of Employment of the Participant occurring prior to the end of the Performance Period (including a termination of Employment initiated by the Participant) shall result in the immediate and automatic termination and forfeiture of the Award.

Section 7. Change in Control .

7.1. Vesting; Determination of Payable Amount . Immediately following a Change in Control of the Company (as defined below) unless in connection therewith an Award is assumed (or a substitute award granted) pursuant to Section 7(a)(1) of the Plan, if an Award is then outstanding, ROIC and EBITDA Growth shall each be deemed to have been satisfied based on assumed achievement at the maximum achievement level, and Comparative TSR shall be deemed satisfied based on actual performance over a shortened performance period ending as of (and taking into account) the Change in Control of the Company (collectively, “Deemed CIC Achievement”) and the Company shall pay to the Participant (except with respect to the Chief Executive Officer, as provided below), in full satisfaction of its obligations with respect thereto, cash in an amount equal to the Payable Amount on the basis of such Deemed CIC Achievement, within ten (10) days following the Change in Control of the Company. Notwithstanding the immediately preceding sentence, if in connection with the Change in Control of the Company, an Award is assumed (or a substitute award granted) pursuant to Section 7(a)(1) of the Plan, then such Award shall become payable (except with respect to the Chief Executive Officer) only if (A) the Participant’s Employment continues until the end of the Performance Period, in which case this Award will become fully payable at the end of the Performance Period, or (B) there is a Change in Control Termination before the end of the Performance Period, in which case this Award will become fully payable in connection with the Change in Control Termination. The Company shall pay to the Participant the vested portion of the Payable Amount on the basis of the Deemed CIC Achievement within ten (10) days following the earliest of (x) the period specified in (A), (y) the time specified in (B), and (z) in the event a termination of Employment described in Section 6.4(b) has occurred prior to such Change in Control of the Company, the

Change in Control of the Company . Solely i n the case of the Chief Executive Officer, in the event of a Change in Control of the Company, the Company shall pay the Payable Amount, on the basis of the Deemed CIC Achievement , upon the earliest of (1) as soon as practicable following the end of the Performance Period, but in any event no later than March 15 , 2021, ( 2 ) within ten (10) days following such Change in Control of the Company , if such Change in Control of the Company occurs following a termination of the Chief Executive Officer’s Employment as described in Section 6.4(b) or Section 6.4(d) , and ( 3 ) within ten (10) days following a Change in Control Termination .

7.2. Definitions . For purposes of this Program, the following definitions shall apply:

(a) “Change in Control Termination” means the termination of a Participant’s Employment following a Change in Control of the Company (i) by the Company and its subsidiaries not for Cause, (ii) by the Participant for Good Reason, (iii) by reason of the Participant’s death or Disability, or (iv) solely in the case of the Chief Executive Officer, by reason of his Retirement which is approved by a majority of the members of the Board (disregarding the Chief Executive Officer’s membership on the Board for these purposes) in accordance with Section 6.4(d) hereof.

(b) “Change in Control of the Company” means a “change in control event” (as that term is defined at Section 1.409A-3(i)(5) of the Treasury Regulations) with respect to the Company, which generally will include the following events, subject to such additional rules and requirements as may be set forth in the Treasury Regulations and related guidance:

(1) a transfer or issuance of stock of the Company, where stock in the Company remains outstanding after the transaction, and one person, or more than one person acting as a group (as determined under the Treasury Regulations), acquires ownership of stock in the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company (however, if a person or group is considered to own more than 50% of the total fair market value or 30% of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group will not be considered a change in control for purposes of this Section 7);

(2) the acquisition by a person or group, during the 12-month period ending on the date of the most recent acquisition by such person or group, of ownership of stock possessing 30% or more of the total voting power of the Company (however, if a person or group is considered to control the Company within the meaning of this sentence (i.e., owns stock of the Company possessing 30% or more of the total voting power of the Company), then the acquisition of additional control will not be considered a change in control for purposes of this Section 7);

(3) the replacement of a majority of members of the Company’s Board of Directors during any 12-month period by directors whose appointment or

election is not endorsed by a majority of the members of the Company’s Board of Directors before the appointment or election; or

(4) the acquisition by a person or group, during the 12-month period ending on the date of the most recent acquisition by such person or group, of assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all the assets of the Company, as determined under the Treasury Regulations (however, a transfer of assets to certain related persons, as provided under the Treasury Regulations, or to an entity that is controlled by the shareholders of the Company immediately after the transfer, will not be considered a change in control for purposes of this Section 7).

(c) “Good Reason” means (i) a material reduction in a Participant’s duties and responsibilities from those of the Participant’s most recent position with the Company, (ii) a reduction of a Participant’s aggregate salary, benefits and other compensation (including incentive opportunity) from that which the Participant was most recently entitled during Employment with the Company other than in connection with a reduction as part of a general reduction applicable to all similarly-situated Participants of the Company, or (iii) a relocation of a Participant to a position that is located greater than 40 miles from the location of such Participant’s most recent principal location of Employment; provided , however , that a Participant will be treated as having resigned for Good Reason only if he or she provides the Company with a notice of termination within 90 days of the initial existence of one of the conditions described above, following which the Company shall have 30 days from the receipt of the notice of termination to cure the event specified in the notice of termination and, if the Company fails to so cure the event, the Participant must terminate his or her Employment not later than 30 days following the end of such cure period.

Section 8. Beneficiary Designation .

8.1. Designation and Change of Designation . Each Participant shall file with the Company a written designation of one or more persons as the Beneficiary who shall be entitled to receive the Award, if any, payable under the Program 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 the Company. The last such designation received by the Company shall be controlling; provided , however , that no designation, or change or revocation thereof, shall be effective unless received by the Company prior to the Participant’s death, and in no event shall it be effective as of any date prior to such receipt.

8.2. 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 Program upon the Participant’s death. If the Company is in doubt as to the right of any person to receive such amount, the Company may retain such amount, without

liability for any interest thereon, until the rights thereto are determined, or the Company may pay such amount into any court of appropriate jurisdiction and such payment shall be a complete discharge of the liability of the Program and the Company therefor.

Section 9. General Provisions .

9.1. Program to be Unfunded . The Program is intended to constitute an unfunded incentive compensation arrangement. Nothing contained in the Program, and no action taken pursuant to the Program, 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 the Company. All Awards shall be paid from the general funds of the Company, and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such Awards. There shall not vest in any Participant or Beneficiary any right, title, or interest in and to any specific assets of the Company.

9.2. Section 409A of the Code . Awards under the Program are intended to be exempt from, or comply with, the requirements of Section 409A of the Code and shall be construed and administered accordingly. Notwithstanding anything to the contrary in this Program, if at the time of the Participant’s termination of employment, the Participant is a “specified employee,” as defined below, any and all amounts payable under this Program on account of such separation from service that constitute deferred compensation and would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon the Participant’s death; except (A) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Section 1.409A-1(b) of the Treasury Regulations, as determined by the Company in its reasonable good faith discretion or (B) other amounts or benefits that are not subject to the requirements of Section 409A. For purposes of this Program, all references to “termination of employment” and correlative phrases shall be construed to require a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury Regulations after giving effect to the presumptions contained therein), and the term “specified employee” means an individual determined by the Company to be a specified employee under Section 1.409A-1(i) of the Treasury Regulations. Notwithstanding anything to the contrary in the Program, neither the Company, nor any affiliate, nor the Committee, nor any person acting on behalf of the Company, any affiliate, or the Committee, shall be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax, asserted by reason of the failure of an Award to be exempt from the requirements of Section 409A or by reason of Section 4999 of the Code; provided , that nothing in this Section 9.2 shall limit the ability of the Committee or the Company to provide by separate express written agreement with a Participant for a gross-up payment or other payment in connection with any such tax or additional tax.

9.3. Rights Limited . Nothing contained in the Program shall give any Eligible Participant the right to continue in the employment of the Company, or limit the right of the Company to discharge an Eligible Participant.

9.4. Governing Law . The Program shall be construed and governed in accordance with the laws of the State of New York.

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

Section 10. Amendment, Suspension, or Termination .

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

Exhibit 10.2

ATLAS AIR WORLDWIDE HOLDINGS, INC.

ANNUAL INCENTIVE PROGRAM

FOR SENIOR EXECUTIVES

Adopted by Compensation Committee: As of March 8, 2018

ATLAS AIR WORLDWIDE HOLDINGS, INC.

ANNUAL INCENTIVE PROGRAM

FOR SENIOR EXECUTIVES

Section 1. Purpose .

The purpose of the Program is to set forth certain terms and conditions governing cash awards made under Atlas Air Worldwide Holdings, Inc.’s (“AAWW”) 2016 Incentive Plan, as amended (the "Plan"). The Program shall be treated for all purposes as a sub-plan or arrangement for the grant of Cash Awards under the Plan. The Program shall be effective as of January 1, 2018, and shall be applicable for the 2018 Program Year and subsequent Program Years during the continuance of the Plan unless amended or terminated by the Committee pursuant to Section 10. Capitalized terms not defined herein shall have the meanings given in the Plan.

Section 2. Definitions .

Award

shall mean an opportunity to earn benefits under the Program.

Atlas

shall mean AAWW or its subsidiaries, as applicable.

Base Salary

shall mean an Eligible Employee’s actual base salary for the applicable period.

Board

shall mean the Board of Directors of AAWW.

Beneficiary

shall mean a Participant's beneficiary designated pursuant to Section 8.

Code

shall mean the Internal Revenue Code of 1986, as amended from time to time.

Committee

shall mean the Compensation Committee of the Board.

Eligible Employee

means any of the Chief Executive Officer, President and Executive Vice Presidents AAWW and such other Atlas senior executive officers as shall be designated by the Committee.

Participant

shall mean any Eligible Employee during such Eligible Employee’s period of participation in the Program.

Program

shall mean this Atlas Air Worldwide Holdings, Inc. Annual Incentive Program for Senior Executives, as it may be amended from time to time.

Program Year

shall mean the calendar year.

Section 3. Administration .

The Program shall be administered by the Committee. The Committee shall have full power and authority in its sole discretion to construe and interpret the Program, establish and amend administrative regulations to further the purpose of the Program, determine the extent to

which Award payments have been earned by virtue of satisfying the financial goal described in Section 5.2, determine whether to reduce under Sections 5.2(b) through 5.2(e), to the extent that cost control, service reliability, management-business objectives and any other performance criteria have not been satisfied, the amount otherwise payable under Section 5.2, determine whether to settle a portion of the Award in Atlas stock and take any other action necessary to administer the Program. All decisions, actions or interpretations of the Committee shall be final, conclusive, and binding upon all Participants.

Section 4. Participation .

Each Eligible Employee shall participate in the Program if he or she is employed as an Eligible Employee on the first day of the Program Year. An individual who becomes an Eligible Employee during a Program Year but prior to September 30 of the applicable year will participate only with respect to Base Salary earned on and after the date he or she first becomes an Eligible Employee. Any determination by the Committee to provide incentive compensation to an Eligible Employee other than as described in the preceding two sentences shall be treated as a separate award made outside the Program.

Section 5. Section 5: Determination of Awards.

5.1. Maximum Bonus Award . The maximum bonus payable under an Award for each Program Year will be the lesser of (i) the dollar limit set forth in Section 4(c) of the Plan, and (ii) the following percentage of Base Salary for each Participant, as such percentages may be increased by the Committee from time to time: two-hundred percent (200%) of Base Salary for the Chief Executive Officer, one-hundred eighty percent (180%) of Base Salary for Executive Vice Presidents who also hold the title of President of Atlas Air, Inc. or Chief Executive Officer of Titan Aviation Holdings, Inc., and one-hundred and seventy percent (170%) of Base Salary for other Executive Vice Presidents.

5.2. Performance Measures . Payment under an Award is conditioned upon achievement of the threshold Financial Goal, as described below. If the threshold Financial Goal is achieved, the Award payment will be the maximum bonus amount described in Section 5.1 minus such adjustments, if any, as the Committee determines to be appropriate to reflect levels of achievement with respect to the Financial Goal (if that Goal is achieved at a level below the maximum level) and/or one or more of the other factors described below and/or such other factors as shall be designated by the Committee.

(a) Financial Goal . The financial goal is based on Atlas's adjusted income from continuing operations, net of taxes (”Adjusted Income”) as reported in Atlas’s press release, as may be further provided in any exhibit to the Program. For each Program Year, the threshold Adjusted Income level (which must be met before any amounts will be payable under Awards), the maximum Adjusted Income level, intermediate Adjusted Income levels, and the percentage of each Participant's target bonus award that will be deemed achieved at each such profit level, will be determined by the Committee.

(b) Service Reliability . The Committee may also reduce maximum Award

payments, if any, to reflect the level of achievement of such service reliability factors as the Committee may determine for the Program Year.

(c) Management Business Objectives Adjustment . The Committee may also reduce maximum Award payments, if any, to reflect the level of achievement of such individual management business objectives as the Committee may determine in the case of any Participant for the Program Year.

(d) Effect of Corporate Transactions and other Exigencies . Without limiting the generality of the foregoing, the Committee shall have the authority to identify objectively determinable events (for example, but without limitation, acquisitions or dispositions) which, if they occur, would have a material effect on objective Performance Criteria applicable to Awards under the Program, and to adjust such Performance Criteria in an objectively determinable manner to reflect such events.

Section 6. Payment of Awards under this Program .

6.1. General . Subject to Section 6.4, Participant will be entitled to receive payment, if any, under an Award if the Participant is still employed by Atlas on the last day of the Program Year for which the Award is paid, unless in the period between the last day of the Program Year and any payout under the Program, the Participant is terminated by Atlas for Cause (as defined in Section 7) or the Participant terminates his employment with Atlas for any reason. A Participant will receive an Award in the manner and at the times set forth in this Sections 6.

6.2. Time of Payment . Any amount payable for an Award for a Program Year shall be paid by Atlas within two weeks following certification by the Committee as to achievement of the performance goals following the completion of the year-end audit for the applicable Program Year, but in no event later than March 15 of the year following the applicable Program Year.

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

6.4. Termination of Employment .

(a) In General . Except as provided otherwise in this Section 6.4, a Participant whose employment terminates for any reason prior to the last day of the Program Year for which an Award is payable shall forfeit such Award.

(b) Death or Disability . In the event of death or termination by the Company of the Participant’s employment with the Company or its Subsidiaries (a “Termination of Service”) by reason of the Participant’s Disability the Committee may, in its sole discretion, direct that all or a portion of a Participant's Award be paid, taking into account the duration of employment during the Program Year, the Participant's performance, and such other matters as the Committee shall deem appropriate. For purposes of this Agreement, a termination of Service shall be deemed to be by reason of “Disability” if upon such Termination of Service, the Participant shall have been continuously disabled from performing the duties assigned to the Participant for a period of not less than six consecutive calendar months and such Disability shall be deemed to have commenced on the date following the end of such six consecutive calendar months.

(c) Retirement; Involuntary Termination; Good Reason . If a Participant's employment terminates during a Program Year by reason of (i) an involuntary termination by Atlas not for Cause (as defined in Section 7 below), (ii) termination by the Participant for Good Reason (as defined below), or (iii) in the sole discretion of the Committee, normal retirement under a retirement program of Atlas, the Participant shall be entitled to receive a payment with respect to an Award for the Program Year in which such termination occurred, as if he or she had been employed by Atlas on the last day of such Program Year, in an amount equal to the lesser of (1) the amount he or she would have received if he or she was employed by Atlas on the last day of the Program Year based upon actual company performance measured pursuant to the plan (and assuming for such purpose that 50% of his or her individual Management Business Objectives (“MBOs”) have been achieved), or (2) his or her Target Bonus Percentage. Such payment shall be subject to all terms and conditions of the Program, including without limitation the provisions of Section 5 (relating to determination of the Award) and Section 6.2 (relating to the time of payment of the Award). This Section 6.4 shall not apply to the extent the rights of a Participant in such circumstances are governed by another agreement. "Good Reason" under this Section 6 shall mean (i) a material reduction in Participant’s duties and responsibilities from those of Participant's most recent position with Atlas, or (ii) a reduction of Participant’s aggregate salary, benefits and other compensation (other than bonus opportunity, which shall be paid as provided above) from that which the Participant was most recently entitled during employment with Atlas other than in connection with a reduction as part of a general reduction applicable to all participants in the Program. This Section 6.4 shall not apply to the extent the rights of a Participant in such circumstances are governed by another agreement.

Section 7. Change in Control .

In the event Atlas undergoes a Change in Control, Awards will be determined and paid in accordance with this Section 7 based on the assumption that each of the Financial Goal, the Service Reliability Goal, the MBOs and any other Performance Criteria under Section 2 have

been achieved at a level of 100% of target for the Plan Year in which the Change in Control takes place pursuant to Section 5 of the Program; provided, however, if upon completion of the year-end audit for the applicable Program Year it is determined that the Financial Goal or any other Performance Criteria was achieved at a level higher than 100% of target, Awards will be correspondingly adjusted pursuant to Section 5 of the Program. Notwithstanding the above, a Participant whose employment with Atlas terminates prior to the Change in Control shall forfeit such Award, unless such termination is by reason of (i) death, (ii) Disability (as defined in the Plan), (iii) normal retirement under a retirement program of Atlas, (iv) by Atlas not for Cause, or (v) by the Participant for Good Reason (as defined below) . For purposes of this Program, "Change in Control of Atlas ” shall mean a “change in control event” (as that term is defined at Section 1.409A-3(i)(5) of the Treasury Regulations) with respect to the Company, which generally will include the following events, subject to such additional rules and requirements as may be set forth in the Treasury Regulations and related guidance:

(1)

A transfer or issuance of stock of the Company, where stock in the Company remains outstanding after the transaction, and one person, or more than one person acting as a group (as determined under the Treasury Regulations), acquires ownership of stock in the Company that, together with stock held by such person or group, constitutes more than 50% of total fair market value or total voting power of the stock of the Company (however, if a person or group is considered to own more than 50% of the total fair market value or 30% of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group will not be considered a change in control for purposes of this Section 7);

(2)

The acquisition by a person or group, during the 12-month period ending on the date of the most recent acquisition by such person or group, of ownership of stock possessing 30% or more of the total voting power of the Company (however, if a person or group is considered to control the Company within the meaning of this sentence (i.e. owns stock of the Company possessing 30% or more of the total voting power of the Company), then the acquisition of additional control will not be considered a change in control for purposes of this Section 7);

(3)

The replacement of a majority of members of the Company’s Board of Directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board of Directors before the appointment or election; or

(4)

The acquisition by a person or group, during the 12-month period ending on the date of the most recent acquisition by such person or group, of assets from the Company that have a total gross fair market value equal to more than 40% of the total gross fair market value of all the assets of the Company, as determined under the Treasury Regulations, or to an entity that is controlled by the shareholders of the Company immediately after the transfer, will not be considered a change in control for purposes of this Section 7). For purposes of this Program, “Continuing Directors” shall mean the directors of Atlas on the date hereof and each other director, if such other director’s nomination for election to the Board of Directors of Atlas is recommended by a majority of the then Continuing Directors. “Cause” shall mean (i) the

Participant’s refusal or failure (other than during periods of illness or Disability (as defined in the Plan) ) to perform his or her material duties and responsibilities to Atlas, (ii) the conviction or plea of guilty or nolo contendere of the Participant in respect of any felony, other than a motor vehicle offense, (iii) the commission of any act which causes material injury to the reputation, business or business relationships of Atlas including, without limitation, any material breach of written policies of Atlas with respect to trading in securities, (iv) other acts of fraud in connection with the Participant’s duties and responsibilities to Atlas, including, without limitation, misappropriation, theft or embezzlement in the performance of the Participant's duties and responsibilities as an employee of Atlas, or (v) a violation of any material Atlas policy, including, without limitation, a violation of the laws against workplace discrimination. "Good Reason" under this Section 7 shall mean the failure of the surviving entity in the Change in Control, of failure of an affiliate of the surviving entity, to continue the Participant in a position with the surviving entity or affiliate that (a) is not located within 40 miles of the location of such Participant's most recent principal location of employment with Atlas, (ii) does not involve substantially comparable duties and responsibilities as such Participant's most recent position with Atlas, or (iii) does not entitle the Participant to salary, benefits and other compensation (other than bonus opportunity, which shall be paid as provided above) that, in the aggregate, are substantially comparable or more favorable than those to which the Participant most recently was entitled during employment with Atlas. This Section 7 shall not apply to the extent the rights of a Participant in such circumstances are governed by another agreement.

Section 8. Beneficiary Designation .

8.1. Designation and Change of Designation . Each Participant shall file with Atlas a written designation of one or more persons as the Beneficiary who shall be entitled to receive the Award, if any, payable under the Program 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 Atlas. The last such designation received by Atlas shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by Atlas prior to the Participant's death, and in no event shall it be effective as of any date prior to such receipt.

8.2. 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 Program upon his death. If Atlas is in doubt as to the right of any person to receive such amount, Atlas may retain such amount, without liability for any interest thereon, until the rights thereto are determined, or Atlas may pay such amount into any court of appropriate jurisdiction and such payment shall be a complete discharge of the liability of the Program and Atlas therefor.

Section 9. General Provisions .

9.1. Plan to be Unfunded . The Program is intended to constitute an unfunded incentive compensation arrangement. Nothing contained in the Program , and no action taken pursuant to the Program, 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 Atlas. All Awards shall be paid from the general funds of Atlas, and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such Awards. There shall not vest in any Participant or Beneficiary any right, title, or interest in and to any specific assets of Atlas.

9.2. Section 409A of the Code . Awards under the Program are intended to be exempt from the requirements of Section 409A of the Code and shall be construed and administered accordingly. Notwithstanding anything to the contrary in the Program, neither Atlas, nor any affiliate, nor the Committee, nor any person acting on behalf of Atlas, any affiliate, or the Committee, shall be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax, asserted by reason of the failure of an Award to satisfy the requirements of Section 409A or by reason of Section 4999 of the Code; provided, that nothing in this Section 9.3 shall limit the ability of the Committee or Atlas to provide by separate express written agreement with a Participant for a gross-up payment or other payment in connection with any such tax or additional tax.

9.3. Rights Limited; Conflicts . Nothing contained in the Program shall give any Eligible Employee the right to continue in the employment of Atlas, or limit the right of Atlas to discharge an Eligible Employee. If there is a conflict between this Program and another senior executive employment program or arrangement, such other program or arrangement shall control.

9.4. Governing Law . The Program shall be construed and governed in accordance with the laws of the State of New York.

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

Section 10. Amendment, Suspension, or Termination .

Except with respect to 6.4(c) for any Program Year in effect, the Committee reserves the right to amend, suspend, or terminate the Program at any time.

Section 11. Awards Subject to Clawback

Pursuant to the Company’s Executive Compensation Clawback Policy, as the same is in effect following its adoption by the Board and as may be subsequently amended from time to time (the “Clawback Policy”), by his or her acceptance of an Award under the Program, the Participant agrees that the Committee may withhold, and participant will forfeit, compensation otherwise payable under an Award or seek recovery from, and the participant agrees to repay, compensation previously paid under an Award, as the case may be, as provided by the Clawback Policy, or to the extent required to comply with applicable law.

Exhibit 10.3

ATLAS AIR WORLDWIDE HOLDINGS, INC.
BENEFITS PROGRAM FOR SENIOR EXECUTIVES

Amended and Restated as of January 1, 2018

This document describes the Atlas Air Worldwide Holdings, Inc. (“Holdings”) Benefits Program for Senior Executives (the “Benefits Program”), under which individuals employed and elected as Executive Vice Presidents (or more senior offices) of Holdings and certain of its operating subsidiaries, including Atlas Air, Inc. ("Atlas"), Polar Air Cargo Worldwide, Inc. ("Polar") and Titan Aviation Leasing, Ltd. ("Titan") (such individuals are hereinafter referred to as "Executives") are eligible to participate. This Benefits Program is effective as of January 1, 2018, and amends and restates the Atlas Air Worldwide Holdings, Inc. Benefits Program for Senior Executives dated January 1, 2015 .

Individuals employed and elected as Executive Vice Presidents (or more senior offices) by other subsidiaries of Holdings (Holdings collectively with Atlas, Polar and Titan, hereby defined as the "Company") may participate in this program only if expressly approved for such participation by the Compensation Committee of the Board of Directors of Holdings.

All references in this document to the Compensation Committee or the Board of Directors refer to those bodies of Holdings. All references to the “Employer” are to the Company entity employing the Executive.

. I. Annual Salary .

Each Executive will receive a base annual salary ("Base Annual Salary") reviewed at least every other year for possible increases by the Compensation Committee. Included among other considerations in the annual review will be the Executive's individual job performance. Increases, if any, shall be at the discretion of the Compensation Committee.

II. Annual Bonus Plan .

Each Executive shall be eligible to participate in Holdings' Annual Incentive Plan or successor plan (the “Annual Incentive Plan”) at the Executive Vice President or higher level, as applicable. The Executive’s applicable annual bonus participation level will be set forth in the Annual Incentive Plan and will be awarded in consideration of individual and company performance based on performance goals and objectives determined by the Compensation Committee. A complete description of the effect of company and individual performance attainment on bonuses payable is described in the Annual Incentive Plan and any exhibits incorporated thereto (the “AIP Plan Document”). The AIP Plan Document is developed by the Compensation Committee and is subject to amendment from time to time with changes as adopted by the Compensation Committee or Board of Directors of Holdings, as applicable. Subject to the full language of the AIP Plan Document, attainment of company and individual performance in combination generally permits the Executive to earn a target bonus equal to at least 85% of Base Annual Salary for Executive Vice Presidents, 90% for Executive Vice Presidents of Holdings who also hold the title of President of Atlas or Chief Executive Officer of Titan and 100% for the Chief Executive Officer of Holdings and Atlas a may be adjusted upward by the Compensation Committee. Company or individual performance attainment at levels below the applicable goals set forth in the AIP Plan Document may cause bonus payments to be in lesser percentage amounts, as applicable, of Base Annual Salary or

result in no bonus being payable. C o mpany and individual performance attainment at levels above the applicable goals may result in the bonus being greater percentage amounts as applicable, of Base Annual Salary. When the bonus payment reaches more than 85% , 90% , or 100% , as applicable , of Base Annual Salary, the Employer 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 common stock payable under the Atlas Air Worldwide Holdings, Inc. 20 16 Incentive Plan, as may be amended or superseded, or any successor plan , subject to the terms and conditions of such plan and any applicable award agreement issued in connection with such award of unrestricted Holdings stock . Any bonus paid to Executive under the Annual Incentive Plan will be paid no later than two weeks following the completion of the year-end audit for the applicable performance year, but in no event later than March 15 of the year following the applicable performance year unless otherwise provided in the Annual Incentive Plan.

III. Health Benefits.

Each Executive and each Executive's eligible dependents shall be entitled to participate in the health insurance plan offered by the Employer, provided that the Executive and the Employer will each contribute to the Executive's monthly premium as provided by such plan, except following an Executive’s termination such Executive’s monthly premium charged under such plan shall be paid in the manner described in Section IV below , subject to the terms and conditions of the applicable health insurance plan . The Employer reserves the right to modify or discontinue any health insurance plan at any time with the understanding that the Employer will comply in full measure with all applicable state and federal laws relating to employer-provided health care coverage, including without limitation the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and the Patient Protection and Affordable Care Act of 2010, each as may be amended or superseded.

IV. Severance.

A. If an Executive's employment is terminated (i) by the Employer for reasons other than Cause (as defined below), or Permanent Disability (as defined below) or (ii) by the Executive for Good Reason (as defined below) , and subject, in each case, to the Executive's execution of a release upon terms and conditions reasonably acceptable to the Employer and Executive (such acceptance not to be unreasonably withheld) , which release must be presented to Executive, executed, no longer be subject to revocation, and become effective no later than the sixtieth (60th) day following the date of termination, then the Executive shall be entitled to:

(i) receive a severance payment equal to twenty-four (24) months of the Executive's monthly Base Annual Salary, at the rate in effect on the date of termination, and except as otherwise required by Section XI below, all severance pay to which the Executive is entitled shall be in the form of salary continuation, payable in accordance with the normal payroll practices of the Employer for its executives (each such payment to be treated as a separate payment under Section 409A of the Internal Revenue Code), with the first payment, which shall be retroactive to the day immediately following the date the Executive's employment terminated, being due and payable on the later of the sixty-first (61st) day following the date of termination or the date specified in Section XI below (if applicable) (the "Lump-Sum Payment Date”);

(ii) provided Executive timely elects COBRA coverage for himself or herself and any eligible dependents and submits the applicable COBRA premium payments on a timely basis, reimbursement on an after-tax basis of the employer portion of COBRA premiums for a period of twelve (12) months from the date of termination ; provided, however, that any such reimbursement shall cease in the event the Executive obtains comparable coverage in connection with subsequent employment or otherwise; and

(iii) receive a payment with respect to an annual bonus award under the Annual Incentive Plan for the year in which such termination occurred, as if Executive had been employed by Employer on the last day of such year, in an amount equal to the lesser of (1) the amount Executive would have received if Executive were employed by Employer on the last day of the such year, based upon actual company performance measured in accordance with the applicable company performance goals set forth in the AIP Plan Document (and assuming for such purpose that “MBOs” (as defined in the AIP Plan Document) are attained at 100% (target) instead of a greater or lesser amount), or (2) Executive’s target bonus percentage. Such payment shall be subject to all other terms and conditions of the AIP Plan Document under which the award was granted, including without limitation any provisions related to whether all required performance measures for the payment of an award have been satisfied and the provisions of the Annual Incentive Plan regarding the timing of payment of such award.

The above benefits are in addition to an Executive's right to receive accrued but unused vacation pay through the date the employment period terminates, and all other benefits in which the Executive is vested pursuant to other plans and programs of the Company at the time of the Executive’s date of termination.

Upon the death of an Executive while severance payments are due to the Executive, the Executive's personal representative shall be entitled to the unpaid severance payments described in this Section IV.A and the Executive's spouse and eligible dependents, if any, shall be entitled to the health benefit coverage described in this Section IV.A, except that the remaining severance payments under this Section IV.A shall be made in a lump sum within (10) days immediately following the Company’s receipt of notice of Executive's death.

In the event that any of the above benefits as described could reasonably result in adverse tax or legal consequences to the Company, the Company will provide in good faith a reasonable equivalent to the affected benefit(s).

B. If an Executive's employment is terminated by the Employer for Cause or if the Executive resigns for other than Good Reason, the Executive shall be entitled to receive only the Executive's accrued but unpaid Base Annual Salary and vacation as of the date of termination.

C. "Good Reason" as used herein shall mean for any Executive subject to this Benefits Program, any of (i) a reduction in the Executive's Base Annual Salary from the Base Annual Salary the previous year, except where such reduction is part of a general salary reduction by the Employer, or the Executive ceasing to be eligible to earn an annual bonus under the Annual Incentive Plan, (ii) the Executive ceasing to hold the title of Executive Vice President, or Chief Executive Officer, as applicable other than through promotion or through reassignment to another job title of comparable responsibility, and

(iii) any reduction in job responsibilities which diminishes the opportunity for the Executive to earn the same bonus under the Annual Incentive Plan for which the Executive was previously eligible.

An Executive will be treated as having resigned for Good Reason only if he or she provides the Employer with a notice of termination within 90 days of the initial existence of one of the conditions described in the definition of Good Reason below, following which t he Employer shall have 30 days from the receipt of the notice of termination to cure the event specified in the notice of termination and, if the Employer fails to so cure the event, the Executive must terminate his or her employment not later than thirty (30) days following the end of such cure period

D. "Cause" as used herein shall mean (i) any act or acts of material dishonesty by the Executive, (ii) the failure of the Executive to comply with any of the Executive's material obligations to the Employer within ten (10) days of written notice from the Employer, (iii) any material violations by the Executive of the Employer’s policies as set forth in the Employer’s employee handbook, compliance manual, policies or programs, or related corporate policies, provided that, if such violation is subject to cure, the Executive shall have ten (10) days within which to cure such violation, or (iv) the conviction of or "no contest" plea by the Executive to any misdemeanor involving moral turpitude or any felony.

E. "Permanent Disability" as used herein shall mean, in the Company’s sole determination, an Executive having been continuously disabled from performing the duties assigned to the Executive for a period of six (6) consecutive calendar months . Notwithstanding the foregoing, in the event that, as a result of an absence because of a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, the Executive incurs an earlier "separation from service" within the meaning of Section 409A of the Internal Revenue Code, as may be amended ("Section 409A"), the Executive shall on such date automatically be terminated from employment as a result of Permanent Disability.

V. Change of Control.

If, within the twelve-month period immediately following a Change of Control (defined below), the Executive's employment is terminated by the Employer for reasons other than Cause or if the Executive resigns for Good Reason, and subject to the Executive's execution of a general release upon terms and conditions consistent with this Agreement and acceptable to the Employer and the Executive (such acceptance not to be unreasonably withheld), which release must be presented to Executive upon or promptly after termination of the Executive's employment, fully executed, no longer subject to revocation, and become effective no later than the sixtieth (60 ^th ) day following the date on which the Executive's employment terminates, then the Executive shall be entitled to the compensation and benefit coverage set forth in Section IV.A above, except that the severance payments in Section IV.A shall be in the form of a single lump-sum payment payable on the Lump-Sum Payment Date in an amount equal to thirty six (36) months of the Executive Vice President's Base Annual Salary , as applicable.

If, within the six-month period immediately following a termination of the

Executive's employment by the Employer for reasons other than Cause or by the Executive for Good Reason, a Change of Control occurs, then, in addition to the payment set forth in Section IV.A above (which shall be paid in the manner specified in Section IV.A above), and subject to satisfaction by the Executive of the release requirements of Section IV.A above, the Executive shall receive a lump-sum payment on the Lump-Sum Payment Date equal to twelve (12) months (in the case of an Executive Vice President) of the Executive's Base Annual Salary, as applicable.

For purposes of this Benefits Program, "Change in Control of the Company" means a "change in control event" (as that term is defined at Section 1.409A-3(i)(5) of the Treasury Regulations) with respect to the Company, which generally will include the following events, subject to such additional rules and requirements as may be set forth in the Treasury Regulations and related guidance:

(2) the acquisition by a person or group, during the 12-month period ending on the date of the most recent acquisition by such person or group, of ownership of stock possessing 30% or more of the total voting power of the Company (however, if a person or group is considered to control the Company within the meaning of this sentence (i.e., owns stock of the Company possessing 30% of the total voting power of the Company), then the acquisition of additional control will not be considered a “Change in Control of the Company”;

(3) the replacement of a majority of members of the Company's Board of Directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's Board of Directors before the appointment or election; or

(4) the acquisition by a person or group, during the I2-month period ending on the date of the most recent acquisition by such person or group, of assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all the assets of the Company, as determined under the Treasury Regulations (however, a transfer of assets to certain related persons, as provided under the Treasury Regulations, or to an entity that is controlled by the shareholders of the Company immediately after the transfer, will not be considered a Change in Control of the Company”.

VI. Vacation .

Each Executive shall be entitled to four weeks of paid vacation per year, prorated for partial years of employment.

VII.	401(k) Plan, Annual Executive Physical and Other Benefits.

Each Executive shall be eligible to participate in the Employer's 401(k) plan and any other pension or welfare plan generally available from time to time to Executives or other employees of the Employer, the latter as determined by the Compensation Committee, as well as an annual executive physical as administered by the Benefits Department.

VIII.

Non-Competition

As a condition of employment and participation in this Benefits Program, each Executive shall execute a Non-Competition Agreement in a form approved by Holdings. The release referred to in Sections IV and V as a condition to the payments and benefits set forth respectively therein also shall contain non-competition and other Company deemed appropriate restrictive covenants.

IX. Principal Residence

Each Executive shall be required to maintain his or her principal residence within reasonable commutable distance to the Purchase, New York area, except as may be otherwise expressly agreed in Section X, below, based upon Employer's specific business need.

X. Variations from Benefits Program

Any variation from the provisions of this Benefits Program (whether by separate employment agreement otherwise) shall be effective only if such variation is contained in a writing provided to the affected Executive and signed by the CEO, President, General Counsel or Chief Human Resources Officer of Holdings or of the Employer; any variation in writing so signed shall be binding on the affected Executive, provided, however, that no such modification or amendment after the date on which the Executive’s employment has been terminated for reasons other than Cause, due to Permanent Disability, death or for Good Reason or after the occurrence of a Change in Control shall adversely affect an Executive’s entitlement to severance benefits under Sections IV or V above. Amendments to or restatements of this Benefits Program shall apply prospectively from the date of effectiveness; such amendments or restatements shall be binding on each Executive, provided, however, that no such modification or amendment after the date on which the Executive’s employment has been terminated for reasons other than Cause, due to Permanent Disability, death or for Good Reason or after the occurrence of a Change in Control shall adversely affect an Executive’s entitlement to severance benefits under Sections IV or V above. Notwithstanding the foregoing, any amendments, restatements or variations to this Benefits Program must be approved by the Compensation Committee.

XI. Section 409A

Notwithstanding anything to the contrary in this Benefits Program, if at the time of an Executive's termination of employment, the Executive is a "specified

employee," as defined below, any and all amounts payable under this Benefits Program on account of such separation from service that constitute deferred compensation and would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon the Executive's death; except (A) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury regulation Section 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in Section 1.409A-1(b)(9)(iii), as determined by the Company in its reasonable good faith discretion); (B) benefits that qualify as excepted welfare benefits pursuant to Treasury regulation Section 1.409A-1(a)(5); or (C) other amounts or benefits that are not subject to the requirements of Section 409A.

For purposes of this Benefits Program, all references to "termination of employment" and correlative phrases shall be construed to require a "separation from service" (as defined in Section 1.409A-1(h) of the Treasury regulations after giving effect to the presumptions contained therein), and the term "specified employee" means an individual determined by the Company to be a specified employee under Treasury regulation Section 1.409A-1(i).

Each payment made under this Benefits Program shall be treated as a separate payment and the right to a series of installment payments under this Benefits Program is to be treated as a right to a series of separate payments.

In no event shall the Company have any liability relating to the failure or alleged failure of any payment or benefit under this Benefits Program to comply with, or be exempt from, the requirements of Section 409A.

XII. Conflict with Benefits Program

In the event there is any conflict or inconsistency between the terms and conditions of this Benefits Program and those set forth in any employment agreement which an Executive may maintain with Holdings, Atlas, Polar or Titan, the terms and conditions of such employment agreement shall govern and control.

Exhibit 10.4

ATLAS AIR WORLDWIDE HOLDINGS, INC.
PERFORMANCE SHARE UNIT AGREEMENT

THIS PERFORMANCE SHARE UNIT AGREEMENT, dated as of March 8, 2018 (the “Agreement”), is between Atlas Air Worldwide Holdings, Inc. (the “Company”), a Delaware corporation, and William J. Flynn (the “Employee”).

WHEREAS, the Employee has been granted the following award under the Company’s 2016 Incentive Plan (the “Plan”) as of March 8, 2018 (the “Date of Grant”);

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the parties hereto agree as follows.

1. Award of Performance Share Units . Pursuant to the provisions of the Plan, the terms of which are incorporated herein by reference and subject to the other provisions of this Agreement, the Employee is hereby awarded 18,416 performance share units (“Performance Share Units”), which constitute the right to receive, without payment by the Employee therefor, (i) up to 44,199 shares of Stock upon the Company’s satisfaction of certain performance criteria as described in Section 2 below (the “Unit Delivered Shares”), and (ii) the right to receive, without payment by the Employee therefor, additional shares of Stock on the same basis as the Unit Delivered Shares, equal in value (determined as hereafter provided) to the dividends, if any, which would have been paid with respect to the shares of Stock underlying the Unit Delivered Shares had such Unit Delivered Shares been issued to the Employee on the Date of Grant (the “Deferred Dividend Shares”), in each case subject to the terms and conditions of the Plan and those set forth herein. For purposes of clause (ii) of the immediately preceding sentence, the number of Deferred Dividend Shares with respect to any dividend shall be calculated as of the date on which the dividend is paid to holders of shares of Stock. For the avoidance of doubt, no shares of Stock (including Deferred Dividend Shares) shall be payable in respect of the Unit Delivered Shares if the Unit Delivered Shares are forfeited, and no Deferred Dividend Shares shall be payable in respect of any dividend for which the record date falls on or after the date on which the Employee or other person entitled to the Unit Delivered Shares becomes the record owner of such shares of Stock for dividend record-date purposes. If the number of shares of Stock (including Deferred Dividend Shares) deliverable with respect to the Performance Share Units includes a fractional share, the value of such fractional share (determined as of the trading day immediately preceding the delivery date described in Section 2(c) or 2(e) below) shall be payable in cash in lieu of such fractional share. Except as otherwise expressly provided, all terms used herein shall have the same meaning as in the Plan.

The Unit Delivered Shares and the Deferred Dividend Shares are collectively referred to herein as the “Performance Share Award” or “this award.”

2. Vesting; Delivery of Stock; Termination of Employment .

(a) Vesting Generally . Subject to the following provisions of this Section 2 and the other terms and conditions of this Agreement, the Performance Share Award shall become vested (meaning that the Employee shall be entitled to receive a certain number of shares of Stock (as provided in Section 2(c) or 2(e) in respect of each Performance Share Unit as

determined pursuant to S ection 2(b)) if, and only if: (i ) the Employee remains continuously employed by the Company or its subsidiaries from the date hereof until the end of the Performa nce Period, as defined below, (ii ) there is a termination of Employment of the Employee pursuant to Section 2(d), as further provided in such Section, or (iii ) the conditions of Section 2(e) are satisfied on or before the last day of the Performance Period.

(b) Determination of Number of Unit Delivered Shares Upon Satisfaction of Performance Criteria . Notwithstanding anything to the contrary in this Agreement but subject to Section 2(e) below, shares of the Company’s common stock underlying the Performance Share Award will only become deliverable by the Company in respect of a vested Performance Share Award and only upon satisfaction of the achievement of certain internal ROIC and EBITDA Growth levels, as may be modified by Comparative TSR attainment, as described below (the “Performance Criteria”) during the period beginning January 1, 2018 and ending December 31, 2020 (the “Performance Period”). The number of Delivered Shares and Deferred Dividend Shares in respect of each vested Performance Share Unit, if any, shall be determined in accordance with Annex A hereto (the “Performance Unit Plan Schedule”). Performance Share Units are originally awarded on the basis of one Performance Share Unit to one Unit Delivered Share, subject to adjustment depending on the level of achievement set forth in the Performance Unit Plan Schedule. Intermediate values between specified levels of ROIC and adjusted EBITDA, as well as the extent of any modification based on intermediate levels of Comparative TSR, are determined by straight line interpolation.

(1) “ROIC” for the Company shall be an average of the Company’s actual ROIC for 2018, 2019 and 2020 and shall mean a fraction where the numerator is NOPAT and the denominator is Average Invested Capital. “NOPAT” is defined as adjusted operating income, as included in the Company’s press release, minus Cash Tax Paid as reported in the SEC Form 10-K. “Average Invested Capital” is defined as the average of the beginning and ending Invested Capital during the year. “Invested Capital” is defined as capital lease obligations, plus short and long term debt plus total stockholders’ equity minus an amount equal to cash, cash equivalents, restricted cash, and short-term investments. Invested Capital shall exclude investment amounts associated with aircraft acquisition until the first time that such aircraft is flown under a customer contract at which time all amounts accrued with respect to such aircraft shall be considered in the Average Invested Capital calculation from such date. Invested Capital shall be reduced by the amount of any investments held in the Company’s direct or indirect debt securities that remain outstanding and that have not otherwise been defeased.

(2) “EBITDA” for the Company shall mean adjusted income from continuing operations before interest, income taxes, depreciation expense and amortization expense as included in the Company’s press release. “EBITDA Growth” shall be calculated by averaging the percentage increase or decrease in EBITDA for each of the three years ended December 31 in the Performance Period. EBITDA increase or decrease for each twelve month period shall be calculated by subtracting EBITDA for the twelve months ended December 31 for the prior year from EBITDA for the twelve months ended December 31 for the current year and dividing the resulting difference in EBITDA by the EBITDA for the twelve months ended December 31 for the prior year.

(3) In the calculation of EBITDA Growth and NOPAT , amounts objectively demonstrated to be attributable to the following items will not be taken into account: (i) any benefit or detriment resulting from changes in the Company’s financial reporting ( including but not limited to changes in accounting principles) or from statutory changes in federal, state or foreign income tax rates; (ii) any a ggregate costs in excess of $5 00, 000 for business initiatives not specified in the Company’s operating plans; (iii) any costs related to retention, recruitment, or termination of executive officers; (iv) any costs related to collective bargaining, other labor negotiations, grievances , union motivated work disruptions determined to be in violation of the preliminary injunction issued by the Federal District Court for the District of Columbia on November 30, 2017 , or other disputes including labor unions in excess of the Company’s operating plans; and (v) any costs or the payment of any fines, penalties, deposits or settleme nt amounts in connection with (A ) foreign or domestic antitrust investi gations and related lawsuits, (B ) Brazilian customs or labor claims or investigations, or (C ) environmental, regulatory or compliance matters (including any related compliance or other costs or actions) resulting from changes in applic able law or otherwise. The ROIC ratio will exclude the unconsolidated results of Polar Air Cargo Worldwide, Inc. Adjustments under this paragraph will be made on a pre-tax basis .

(4) “Comparative TSR” shall mean, on a percentile basis, the Absolute TSR of the Company relative to the Absolute TSR of the component companies of the Comparator Group set forth in Annex A hereto, in each case measured over the applicable Performance Period, as reasonably determined by the Committee.

(c) Delivery of Unit Delivered Shares . In connection with the completion of performance, the Committee shall certify whether and at what level the Performance Criteria have been achieved. For the purposes of this Agreement, the term “Determination Date” means the date in 2021 on which the Committee makes such certification. Subject to the terms of this Agreement and satisfaction of any withholding tax liability pursuant to Section 5 hereof, as soon as reasonably practicable following the Determination Date, but in any event no later than March 15, 2021, the Company shall deliver to the Employee a certificate or certificates or shall credit the Employee’s account so as to evidence the number of Unit Delivered Shares and Deferred Dividend Shares, if any, to which the Employee is entitled hereunder, as calculated in accordance with Section 2(b) above.

(d) Death, Disability, Involuntary Termination not for Cause or Retirement .

(1) In the event of the termination of the Employee’s Employment (i) due to death, (ii) by the Company by reason of the Employee’s Disability (as defined below) or (iii) by reason of an involuntary termination by the Company not for Cause, in each case occurring after

the date hereof, but before the end of the Performance Period and before the occurrence of a Change in Control of the Company (as defined below) , the portion of the Performance Share Award that will vest shall be calculated by dividing the number of days from January 1, 201 8 until the date of such termination, by the total number of days in the Performance Period, multiplied by the number of Unit Delivered Shares and Deferred Dividend Shares in respect of each Performance Share Unit, if any, earned on the basis of actual achievement level of the Performance Criteria in the Performance Unit Plan Schedule.

(2) In the event of a termination of Employment by reason of the Employee’s Retirement (as defined below) occurring after the date hereof and before the end of the Performance Period and before the occurrence of a Change in Control of the Company, the Performance Share Award will vest in full, in respect of each Performance Share Unit, if any, earned on the basis of actual achievement level of the Performance Criteria in the Performance Plan Schedule.

(3) Any former Employee, upon Disability, involuntary termination by the Company not for cause Cause or Retirement, or the estate of an Employee, upon death, will continue to hold the vested portion of the Performance Share Award, subject to the restrictions and all terms and conditions of this Agreement, until delivery of Shares pursuant to Section 2(c). Subject to Section 2(e), the appropriate number of Unit Delivered Shares and Deferred Dividend Shares, if any (calculated as provided in Section 2(b)) shall not be delivered until the completion of the Performance Period and the Determination Date.

(4) Definitions . For purposes of this Agreement:

(a)

A termination of Employment shall be deemed to be by reason of “Disability” if immediately prior to such termination of Employment, the Employee shall have been continuously disabled from performing the duties assigned to the Employee for a period of not less than six consecutive calendar months, in which case such Disability shall be deemed to have commenced on the date following the end of such six consecutive calendar month period;

(b)

“Cause” shall mean (i) the Employee’s refusal or failure (other than during periods of illness or disability) to perform the Employee’s material duties and responsibilities to the Company or its subsidiaries, (ii) the conviction or plea of guilty or nolo contendere of the Employee in respect of any felony, other than a motor vehicle offense, (iii) the commission of any act which causes material injury to the reputation, business or business relationships of the Company or any of its subsidiaries including, without limitation, any breach of written policies of the Company with respect to trading in securities, (iv) any other act of fraud, including, without limitation, misappropriation, theft or embezzlement, or (v) a violation of any applicable material policy of the Company or any of its subsidiaries, including, without limitation, a violation of the laws against workplace discrimination; and

(c)

“Retirement” shall mean a termination of the Employee’s Employment with the Company for any reason other than Cause on or after the Employee’s attainment of age sixty (60) and ten (10) years of service with the Company; provided , however , that a voluntary resignation from Employment shall not be considered Retirement for purposes of this Agreement unless (1) the Employee shall have given not less than six (6) months’ advance written notice of such proposed retirement to the Chair of the Board (or such lesser period of notice as may be determined by the Board) and (2) a majority of the members of the Board (disregarding the Employee’s membership on the Board for these purposes) has approved such proposed retirement as a Retirement entitling th e Employee to vesting under Section 2( d )(2) or Section 2( e )(1), as applicable .

(e) Change in Control .

(1) Immediately following a Change in Control of the Company unless in connection therewith this award is assumed (or a substitute award granted) pursuant to Section 7(a)(1) of the Plan, if this award is then outstanding, ROIC and EBITDA Growth shall each be deemed to have been satisfied based on assumed achievement at the maximum achievement level, and Comparative TSR shall be deemed satisfied based on actual performance over a shortened performance period ending as of (and taking into account) the Change in Control of the Company (collectively, “Deemed CIC Achievement”) and this award shall be deemed fully vested on such basis and the vested portion of the Unit Delivered Shares and Deferred Dividend Shares underlying this award shall be delivered or paid to the Employee, subject to Section 2(c) above, upon the earliest of (x) as soon as practicable following the end of the Performance Period, but in any event no later than March 15, 2021, (y) within ten (10) days following such Change in Control of the Company, if such Change in Control of the Company occurs following a termination of Employment described in Section 2(d)(1) or Section 2(d)(2), and (z) within ten (10) days following a Change in Control Termination. Notwithstanding the immediately preceding sentence, if in connection with the Change in Control of the Company, this award is assumed (or a substitute award granted) pursuant to Section 7(a)(1) of the Plan, this award shall become vested only if (A) the Employee’s Employment continues until the end of the Performance Period, in which case this award will become fully vested at the end of the Performance Period, or (B) there is a Change in Control Termination before the end of the Performance Period, in which case this award will become fully vested in connection with the Change in Control Termination. The vested portion of the Unit Delivered Shares and Deferred Dividend Shares underlying this award, determined on the basis of the Deemed CIC Achievement, shall be delivered or paid to the Employee within ten (10) days following the earliest of (i) the vesting described in (A), (ii) the vesting described in (B) and (iii) in the event a termination of Employment described in Section 2(d)(1) or Section 2(d)(2) has occurred prior to such Change in Control of the Company, such Change in Control of the Company.

(2) For purposes of this Agreement, the following definitions shall apply:

(a)

Good Reason , (iii) by reason of the Employee’s death or Disability , (iv) or by reason of the Employee’s Retirement which is approved by a majority of the members of the Board (disregarding the Employee’s membership on the Board for these purposes) in accordance with Section 2 (d) ( 4 )( c ) hereof .

(b)

(i) a transfer or issuance of stock of the Company, where stock in the Company remains outstanding after the transaction, and one person, or more than one person acting as a group (as determined under the Treasury Regulations), acquires ownership of stock in the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company (however, if a person or group is considered to own more than 50% of the total fair market value or 30% of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group will not be considered a change in control for purposes of this Section 2(e));

(ii) the acquisition by a person or group, during the 12-month period ending on the date of the most recent acquisition by such person or group, of ownership of stock possessing 30% or more of the total voting power of the Company (however, if a person or group is considered to control the Company within the meaning of this sentence (i.e., owns stock of the Company possessing 30% or more of the total voting power of the Company), then the acquisition of additional control will not be considered a change in control for purposes of this Section 2(e));

(iii) the replacement of a majority of members of the Company’s Board of Directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board of Directors before the appointment or election; or

assets to certain related persons, as provided under the Treasury Regulations, or to an entity that is controlled by the shareholders of the Company immediately after the transfer, will not be considered a change in control for purposes of this Section 2(e)).

(c)

“Good Reason” means (i) a material reduction in the Employee’s duties and responsibilities from those of the Employee’s most recent position with the Company, (ii) a reduction of the Employee’s aggregate salary, benefits and other compensation (including any incentive opportunity) from that which the Employee was most recently entitled during Employment other than in connection with a reduction as part of a general reduction applicable to all similarly-situated employees of the Company, or (iii) a relocation of the Employee to a position that is located greater than 40 miles from the location of such Employee’s most recent principal location of Employment with the Company; provided , however , that the Employee will be treated as having resigned for Good Reason only if he or she provides the Company with a notice of termination within 90 days of the initial existence of one of the conditions described above, following which the Company shall have 30 days from the receipt of the notice of termination to cure the event specified in the notice of termination and, if the Company fails to so cure the event, the Employee must terminate his or her Employment not later than 30 days following the end of such cure period.

(f) Other Terminations of Employment . Except as provided for herein or in the Plan, any termination of Employment of the Employee occurring prior to the end of the Performance Period (including a termination of Employment initiated by the Employee) shall result in the immediate and automatic termination and forfeiture of the Performance Share Award.

3. Transfer . Any shares of Stock underlying the Performance Share Award that are delivered pursuant to Section 2 may be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed of in any other manner, in whole or in part, only in compliance with the terms, conditions and restrictions as set forth in the governing instruments of the Company, applicable federal and state securities laws or any other applicable laws or regulations and the terms and conditions hereof. This award itself shall not be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed of in any other manner, in whole or in part.

4. Expenses of Issuance of Stock . The issuance of stock certificates hereunder shall be without charge to the Employee. The Company shall pay, and indemnify the Employee from and against any issuance, stamp or documentary taxes (other than transfer taxes) or other charges imposed by any governmental body, agency or official (other than taxes) by reason of the issuance of the Stock underlying the Performance Share Award.

5. Tax Withholding . No shares or cash will be issued or paid under this award unless the Employee pays (or makes provision acceptable to the Company for the prompt

payment of) an amount sufficient to allow the Company to satisfy its tax withholding obligations, as determined by the Company. To this end, the Employee shall either:

(a)

pay the Company the amount of tax to be withheld (including through payroll withholding if the Company determines that such payment method is acceptable),

(b)

deliver to the Company other shares of Stock owned by the Employee prior to such date having a fair market value, as determined by the Committee, not less than the amount of the withholding tax due, which either have been owned by the Employee for more than six (6) months or were not acquired, directly or indirectly, from the Company,

(c)

make a payment to the Company consisting of a combination of cash and such shares of Stock, or

(d)

request that the Company cause to be withheld a number of vested shares of Stock having a then fair market value sufficient to discharge required federal, state and local tax withholding.

In no event shall the payment or withholding of taxes be made later than the end of the payment period prescribed in Sections 2(c) or 2(e), as applicable. In the event the Employee fails to timely pay or timely elect withholding of taxes in the manner described in Section 5(a), (b), (c) or (d), the Company reserves the right to withhold cash or a number of vested shares of Stock having a then fair market value sufficient to discharge required federal, state and local tax withholding.

6. Section 409A of the Code . Performance Share Awards granted pursuant to this Agreement are intended to be exempt from, or comply with, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended from time to time (the “Code”) and guidance issued thereunder and shall be construed accordingly. Notwithstanding anything to the contrary in this Agreement, if at the time of the Employee’s termination of Employment, the Employee is a “specified employee,” as defined below, any and all amounts payable under this Agreement on account of such separation from service that constitute deferred compensation and would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon the Participant’s death; except (A) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Section 1.409A-1(b) of the Treasury Regulations, as determined by the Company in its reasonable good faith discretion or (B) other amounts or benefits that are not subject to the requirements of Section 409A. For purposes of this Agreement, all references to “termination of employment” and correlative phrases shall be construed to require a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury Regulations after giving effect to the presumptions contained therein), and the term “specified employee” means an individual determined by the Atlas to be a specified employee under Section 1.409A-1(i) of the Treasury Regulations. Notwithstanding anything to the contrary in this Agreement, neither the Company, nor any subsidiary, nor the Committee, nor any person acting on behalf of the Company, any subsidiary, or the Committee, shall be liable to

the Employee or to the estate or beneficiary of the Employee by reason of any acceleration of income, or any additional tax, asserted by reason of the failure of this Agreement or any payment hereunder to satisfy the requirements of Section 409A of the Code or by reason of Section 4999 of the Code .

7. References . References herein to rights and obligations of the Employee shall apply, where appropriate, to the Employee’s legal representative or estate without regard to whether specific reference to such legal representative or estate is contained in a particular provision of this Agreement.

8. Notices . Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given when delivered personally or by courier, or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the party concerned at the address indicated below or to such changed address as such party may subsequently by similar process give notice of:

If to the Company:

Atlas Air Worldwide Holdings, Inc.
2000 Westchester Avenue
Purchase, New York 10577
Attention: General Counsel

If to the Employee:

At the Employee’s most recent address shown on the Company’s corporate records, or at any other address which the Employee may specify in a notice delivered to the Company in the manner set forth herein.

9. Governing Law . This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to principles of conflicts of laws of any jurisdiction which would cause the application of law, other than the State of New York, to be applied.

10. Rights of a Stockholder . The Employee shall have no right to transfer, pledge, hypothecate or otherwise encumber such Unit Delivered Shares or Deferred Dividend Shares. Once the Unit Delivered Shares and Deferred Dividend Shares vest and the shares of Stock underlying those units or shares have been delivered, but not until such time and only with respect to the shares of Stock so delivered, the Employee shall have the rights of a stockholder, including, but not limited to, the right to vote and to receive dividends.

11. No Right to Continued Employment . This Performance Share Award shall not confer upon the Employee any right with respect to continuance of employment by the Company nor shall this Performance Share Award interfere with the right of the Company to terminate the Employee’s employment at any time.

12. Provisions of the Plan . This Agreement and the awards and grants set forth herein shall be subject to and shall be governed by the terms set forth in the Plan, a copy of which has

been furnished to the Employee and which is incorporated by reference into this Agreement. In the event of any conflict between this Agreement and the Plan, the Plan shall control.

13. Counterparts . This Agreement may be executed in two counterparts, each of which shall constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS AS A SEPARATE PAGE]

IN WITNESS WHEREOF, the undersigned have executed this Performance Share Unit Agreement as of the date first above written.

ATLAS AIR WORLDWIDE HOLDINGS, INC.

By:

Name:

Adam R. Kokas

Title:

Executive Vice President & General Counsel

EMPLOYEE

William J. Flynn

Exhibit 10.5

ATLAS AIR WORLDWIDE HOLDINGS, INC.
RESTRICTED STOCK UNIT AGREEMENT

THIS RESTRICTED STOCK UNIT AGREEMENT, dated as of March 8, 2018 (the “Agreement”), is between Atlas Air Worldwide Holdings, Inc. (the “Company”), a Delaware corporation, and William J. Flynn (the “Employee”).

WHEREAS, the Employee has been granted the following award under the Company’s 2016 Incentive Plan (the “Plan”) as of March 8, 2018 (the “Date of Grant”);

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the parties hereto agree as follows.

1. Award of Restricted Stock Units . Pursuant to the provisions of the Plan, the terms of which are incorporated herein by reference and subject to the other provisions of this Agreement, the Employee is hereby awarded 36,832 restricted stock units (“Restricted Stock Units”), which constitute the right to receive, without payment by the Employee therefor, (i) 36,832 shares of Stock (the “Unit Delivered Shares”), and (ii) the right to receive, without payment by the Employee therefor, additional shares of Stock on the same basis as the Unit Delivered Shares, equal in value (determined as hereafter provided) to the dividends, if any, which would have been paid with respect to the shares of Stock underlying the Unit Delivered Shares had such Unit Delivered Shares been issued to the Employee on the Date of Grant (the “Deferred Dividend Shares”), in each case subject to the terms and conditions of the Plan and those set forth herein. For purposes of clause (ii) of the immediately preceding sentence, the number of Deferred Dividend Shares with respect to any dividend shall be calculated as of the date on which the dividend is paid to holders of Stock. For the avoidance of doubt, no shares of Stock (including Deferred Dividend Shares) shall be payable in respect of the Unit Delivered Shares if the Unit Delivered Shares are forfeited, and no Deferred Dividend Shares shall be payable in respect of any dividend for which the record date falls on or after the date on which the Employee or other person entitled to the Unit Delivered Shares becomes the record owner of such shares of Stock for dividend record-date purposes. If the number of shares of Stock (including Deferred Dividend Shares) deliverable with respect to the Restricted Stock Units includes a fractional share, the value of such fractional share (determined as of the trading day immediately preceding the delivery date described in Section 2(d) below) shall be payable in cash in lieu of such fractional share. Except as otherwise expressly provided, all terms used herein shall have the same meaning as in the Plan.

The Unit Delivered Shares and the Deferred Dividend Shares are collectively referred to herein as the “Award” or “this award.”

2. Vesting of Award; Delivery of Stock, Termination of Employment . Unless otherwise provided by the Committee, the Award under this Agreement shall be subject to the vesting schedule in this Section 2.

(a) Vesting; Delivery of Shares .

(1) Subject to the following provisions of this Section 2 and the other terms and conditions of this Agreement, the Award shall become vested (meaning that the Employee

shall be entitled to receive a certain number of shares of Stock as provided in Section 2(a)( 3 ) or Section 2(c)) on the basis of one Restricted Stock Unit to one share of Stock, and any related Deferred Dividend Shares shall become vested only upon the vesting of the underlying Restricted Stock Unit. The Award will vest in three annual installments as follows:

12,277 Restricted Stock Units shall vest on March 8, 2019;

12,277 Restricted Stock Units shall vest on March 8, 2020; and

12,278 Restricted Stock Units shall vest on March 8, 2021.

(2) Except as provided in Section 2(b) and 2(c) below, in the event of termination of the Employee’s Employment prior to the applicable date above, all unvested Restricted Stock Units shall immediately and automatically terminate and be forfeited (and no shares of Stock in respect of such Award that have not previously vested shall thereafter be issued).

(3) Subject to Section 2(d) below, shares of Stock will be delivered as soon as reasonably practicable following a vesting date described above, but no later than December 31 of the year in which such vesting date occurs.

(b) Death, Disability or Retirement .

(1) In the event of death or termination by the Company of the Employee’s Employment by reason of the Employee’s Disability (as defined below) occurring after the date hereof and before the occurrence of a Change in Control of the Company (as defined below), the Award shall become immediately and fully vested and shares of Stock will be delivered, subject to Section 2(d), as soon as practicable following such death or termination of Employment by reason of the Employee’s Disability, but no later than December 31 of such year. For purposes of this Agreement, a termination of Employment shall be deemed to be by reason of “Disability” if immediately prior to such termination of Employment, the Employee shall have been continuously disabled from performing the duties assigned to the Employee for a period of not less than six consecutive calendar months, in which case such Disability shall be deemed to have commenced on the date following the end of such six consecutive calendar month period.

(2) In the event of a termination of Employment by reason of the Employee’s Retirement (as defined below) occurring after the date hereof and before the occurrence of a Change in Control of the Company, the Award shall become immediately and fully vested and shares of Stock will be delivered as soon as practicable following such Retirement, but in any event no later than December 31 of such year. For purposes of this Agreement, “Retirement” shall mean a termination of the Employee’s Employment with the Company for any reason other than Cause on or after the Employee’s attainment of age sixty (60) and ten (10) years of service with the Company; provided , however , that a voluntary resignation from Employment shall not be considered Retirement for purposes of this Agreement unless (1) the Employee shall have given not less than six (6) months’ advance written notice of such proposed retirement to the Chair of the Board (or such lesser period of notice as may be determined by the Board) and (2) a majority of the members of the Board (disregarding the Employee’s membership on the Board

for these purposes) has approved such proposed re tirement a s a Retirement entitling the Employee to vesting under this Section 2(b)(2) or Section 2(c)(1) , as applicable .

(1) Immediately following a Change in Control of the Company, unless in connection therewith this Award is assumed (or a substitute award granted) pursuant to Section 7(a)(1) of the Plan, this Award, if then outstanding, shall vest in full and shares of Stock shall be delivered or paid to the Employee, subject to Section 2(d) below, within ten (10) days following the earlier of (x) the applicable vesting dates described in Section 2(a) above and (y) a Change in Control Termination that occurs before the last vesting date specified in Section 2(a). Notwithstanding the immediately preceding sentence, if in connection with the Change in Control of the Company, this Award is assumed (or a substitute award granted) pursuant to Section 7(a)(1) of the Plan, this Award shall continue to vest pursuant to its terms and shares of Stock will be delivered or paid to the Employee, subject to Section 2(d) below, within ten (10) days following the applicable vesting dates described in Section 2(a) above, except that upon a Change in Control Termination before the occurrence of the last vesting date specified in Section 2(a) above, this Award will become fully vested immediately prior to the Change in Control Termination and the corresponding shares of Stock shall be delivered or paid to the Employee, subject to Section 2(d) below, within ten (10) days following the Change in Control Termination.

(2) Definitions . For purposes of this Agreement, the following definitions shall apply:

(a)

“Cause” means (i) the Employee’s refusal or failure (other than during periods of illness or disability) to perform the Employee’s material duties and responsibilities to the Company or its subsidiaries, (ii) the conviction or plea of guilty or nolo contendere of the Employee in respect of any felony, other than a motor vehicle offense, (iii) the commission of any act which causes material injury to the reputation, business or business relationships of the Company or any of its subsidiaries including, without limitation, any breach of written policies of the Company with respect to trading in securities, (iv) any other act of fraud, including, without limitation, misappropriation, theft or embezzlement, or (v) a violation of any applicable material policy of the Company or any of its subsidiaries, including, without limitation, a violation of the laws against workplace discrimination.

(b)

“Change in Control Termination” means the termination of an Employee’s Employment following a Change in Control of the Company (i) by the Company and its subsidiaries not for Cause, (ii) by the Employee for Good Reason, (iii) by reason of the Employee’s death or Disability or (iv) by reason of the Employee’s Retirement which is approved by a majority of the members of the Board (disregarding the Employee’s membership on the Board for these purposes) in accordance with Section 2(b)(2) hereof.

(c)

“Change in Control of the Company” means a “change in control event” (as that term is defined at Section 1.409A-3(i)(5) of the Treasury Regulations) with respect to the Company, which generally will include the following events, subject to such additional rules and requirements as may be set forth in the Treasury Regulations and related guidance: (i) a transfer or issuance of stock of the Company, where stock in the Company remains outstanding after the transaction, and one person, or more than one person acting as a group (as determined under the Treasury Regulations), acquires ownership of stock in the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company (however, if a person or group is considered to own more than 50% of the total fair market value or 30% of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group will not be considered a change in control for purposes of this Section 2(c)); (ii) the acquisition by a person or group, during the 12-month period ending on the date of the most recent acquisition by such person or group, of ownership of stock possessing 30% or more of the total voting power of the Company (however, if a person or group is considered to control the Company within the meaning of this sentence (i.e., owns stock of the Company possessing 30% or more of the total voting power of the Company), then the acquisition of additional control will not be considered a change in control for purposes of this Section 2(c)); (iii) the replacement of a majority of members of the Company’s Board of Directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board of Directors before the appointment or election; or (iv) the acquisition by a person or group, during the 12-month period ending on the date of the most recent acquisition by such person or group, of assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all the assets of the Company, as determined under the Treasury Regulations (however, a transfer of assets to certain related persons, as provided under the Treasury Regulations, or to an entity that is controlled by the shareholders of the Company immediately after the transfer, will not be considered a change in control for purposes of this Section 2(c)).

(d)

Employee will be treated as having resigned for Good Reason only if he or she provides the Company with a notice of termination within 90 days of the initial existence of one of the conditions described above, following which the Company shall have 30 days from the receipt of the notice of termination to cure the event specified in the notice of termination and, if the Company fails to so cure the event, the Employee must terminate his or her Employment not later than 30 days following the end of such cure period.

(d) Delivery of Shares . Subject to the terms of this Agreement and satisfaction of any withholding tax liability pursuant to Section 5 hereof, when shares of Stock are delivered, the Company shall deliver to the Employee a certificate or shall credit the Employee’s account so as to evidence the number of shares of Stock, if any, to which the Employee is entitled hereunder, as calculated in accordance with this Section 2.

3. Transfer . Any shares of Stock that are delivered pursuant to Section 2(d) may be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed of in any other manner, in whole or in part, only in compliance with the terms, conditions and restrictions as set forth in the governing instruments of the Company, applicable federal and state securities laws or any other applicable laws or regulations and the terms and conditions hereof. This award itself shall not be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed of in any other manner, in whole or in part.

5. Tax Withholding . No shares or cash will be issued or paid under this Award until the Employee pays (or makes provision acceptable to the Company for the prompt payment of) an amount sufficient to allow the Company to satisfy its tax withholding obligations, as determined by the Company. To this end, the Employee shall either:

(a)

pay the Company the amount of tax to be withheld (including through payroll withholding if the Company determines that such payment method is acceptable),

(b)

(c)

make a payment to the Company consisting of a combination of cash and such shares of Stock, or

(d)

request that the Company cause to be withheld a number of vested shares of Stock having a then-fair market value sufficient to discharge required federal, state and local tax withholding.

In no event shall the payment or withholding of taxes be made later than the end of the payment period prescribed in Section 2(d). In the event the Employee fails to timely pay or timely elect withholding of taxes in the manner described in Section 5(a), (b), (c) or (d), the Company reserves the right to withhold cash or a number of vested shares of Stock having a then fair market value sufficient to discharge required federal, state and local tax withholding.

6. Section 409A of the Code . Awards granted pursuant to this Agreement are intended to be exempt from, or comply with, the requirements of Section 409A of Code and guidance issued thereunder and shall be construed accordingly. Notwithstanding anything to the contrary in this Agreement, if at the time of the Employee’s termination of Employment, the Employee is a “specified employee,” as defined below, any and all amounts payable under this Agreement on account of such separation from service that constitute deferred compensation and would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon the Participant’s death; except (i) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Section 1.409A-1(b) of the Treasury Regulations, as determined by the Company in its reasonable good faith discretion or (ii) other amounts or benefits that are not subject to the requirements of Section 409A. For purposes of this Agreement, all references to “termination of employment” and correlative phrases shall be construed to require a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury Regulations after giving effect to the presumptions contained therein), and the term “specified employee” means an individual determined by the Atlas to be a specified employee under Section 1.409A-1(i) of the Treasury Regulations. Notwithstanding anything to the contrary in this Agreement, neither the Company, nor any subsidiary, nor the Committee, nor any person acting on behalf of the Company, any subsidiary, or the Committee, shall be liable to the Employee or to the estate or beneficiary of the Employee by reason of any acceleration of income, or any additional tax, asserted by reason of the failure of this Agreement or any payment hereunder to satisfy the requirements of Section 409A of the Code or by reason of Section 4999 of the Code.

If to the Company:

Atlas Air Worldwide Holdings, Inc.
2000 Westchester Avenue
Purchase, New York 10577
Attention: General Counsel

If to the Employee:

At the Employee’s most recent address
shown on the Company’s corporate records,
or at any other address which the Employee
may specify in a notice delivered to the
Company in the manner set forth herein.

11. No Right to Continued Employment . This Award shall not confer upon the Employee any right with respect to continuance of employment by the Company nor shall this Award interfere with the right of the Company to terminate the Employee’s employment at any time.

12. Provisions of the Plan . This Agreement and the awards and grants set forth herein shall be subject to and shall be governed by the terms set forth in the Plan, a copy of which has been furnished to the Employee and which is incorporated by reference into this Agreement. In the event of any conflict between this Agreement and the Plan, the Plan shall control.

13. Counterparts . This Agreement may be executed in two counterparts, each of which shall constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS AS A SEPARATE PAGE]

IN WITNESS WHEREOF, the undersigned have executed this Restricted Stock Unit Agreement as of the date first above written.

ATLAS AIR WORLDWIDE HOLDINGS, INC.

By:

Name:

Adam R. Kokas

Title:

Executive Vice President & General Counsel

EMPLOYEE

William J. Flynn

Exhibit 10.6

ATLAS AIR WORLDWIDE HOLDINGS, INC.
PERFORMANCE SHARE UNIT AGREEMENT

THIS PERFORMANCE SHARE UNIT AGREEMENT, dated as of March __, 2018 (the “Agreement”), is between Atlas Air Worldwide Holdings, Inc. (the “Company”), a Delaware corporation, and the employee set forth on the signature page hereto (the “Employee).

WHEREAS, the Employee has been granted the following award under the Company’s 2016 Incentive Plan (the “Plan”) as of March __, 2018 (the “Date of Grant”);

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the parties hereto agree as follows.

1. Award of Performance Share Units . Pursuant to the provisions of the Plan, the terms of which are incorporated herein by reference and subject to the other provisions of this Agreement, the Employee is hereby awarded «PSUs» performance share units (“Performance Share Units”), which constitute the right to receive, without payment by the Employee therefor, (i) up to «PSUs» shares of Stock upon the Company’s satisfaction of certain performance criteria as described in Section 2 below (the “Unit Delivered Shares”), and (ii) the right to receive, without payment by the Employee therefor, additional shares of Stock on the same basis as the Unit Delivered Shares, equal in value (determined as hereafter provided) to the dividends, if any, which would have been paid with respect to the Stock underlying the Unit Delivered Shares had such Unit Delivered Shares been issued to the Employee on the Date of Grant (the “Deferred Dividend Shares”), in each case subject to the terms and conditions of the Plan and those set forth herein. For purposes of clause (ii) of the immediately preceding sentence, the number of Deferred Dividend Shares with respect to any dividend shall be calculated as of the date on which the dividend is paid to holders of Stock. For the avoidance of doubt, no shares of Stock (including Deferred Dividend Shares) shall be payable in respect of the Unit Delivered Shares if the Unit Delivered Shares are forfeited, and no Deferred Dividend Shares shall be payable in respect of any dividend for which the record date falls on or after the date on which the Employee or other person entitled to the Unit Delivered Shares becomes the record owner of such shares of Stock for dividend record-date purposes. If the number of shares of Stock (including Deferred Dividend Shares) deliverable with respect to the Performance Share Units includes a fractional share, the value of such fractional share (determined as of the trading day immediately preceding the delivery date described in Section 2(c) or 2(e) below) shall be payable in cash in lieu of such fractional share. Except as otherwise expressly provided, all terms used herein shall have the same meaning as in the Plan.

The Unit Delivered Shares and the Deferred Dividend Shares are collectively referred to herein as the “Performance Share Award” or “this award.”

2. Vesting; Delivery of Stock; Termination of Employment .

employed by the Company or its subsidiaries from the date hereof until the end of the Performa nce Period, as defined below, (ii ) there is a termination of Employment of the Employee pursuant to Section 2(d), as further provided in such Section, or (iii ) the conditions of Section 2(e) are satisfied on or before the last day of the Performance Period.

(1) “ROIC” for the Company shall be an average of the Company’s actual ROIC for 2018, 2019 and 2020 and shall mean a fraction where the numerator is NOPAT and the denominator is Average Invested Capital. “NOPAT” is defined as adjusted operating income, as included in the Company’s press release, minus Cash Tax Paid as reported in the SEC Form 10-K.. “Average Invested Capital” is defined as the average of the beginning and ending Invested Capital during the year. “Invested Capital” is defined as capital lease obligations, plus short and long term debt plus total stockholders’ equity minus an amount equal to cash, cash equivalents, restricted cash, and short‑term investments. Invested Capital shall exclude investment amounts associated with aircraft acquisition until the first time that such aircraft is flown under a customer contract at which time all amounts accrued with respect to such aircraft shall be considered in the Average Invested Capital calculation from such date. Invested Capital shall be reduced by the amount of any investments held in the Company’s direct or indirect debt securities that remain outstanding and that have not otherwise been defeased.

not limited to changes in accounting principles) or from statutory changes in federal, state or foreign income tax rates; (ii) any a ggregate costs in excess of $5 00,000 for business initiatives not specified in the Company’s operating plans; (iii) any costs related to retention, recruitment, or termination of executive officers; (iv) any costs related to collective bargaining, other labor negotiations, grievances , union motivated work disruptions determined to be in violation of the preliminary injunction issued by the Federal District Court for the District of Columbia on November 30, 2017 , or other disputes including labor unions in excess of the Company’s operating plans; and (v) any costs or the payment of any fines, penalties, deposits or settleme nt amounts in connection with (A ) foreign or domestic antitrust investi gations and related lawsuits, (B ) Brazilian customs or labor claims or investigations, or (C ) environmental, regulatory or compliance matters (including any related compliance or other costs or actions) resulting from changes in applic able law or otherwise. The ROIC ratio will exclude the unconsolidated results of Polar Air Cargo Worldwide, Inc. Adjustments under this paragraph will be made on a pre-tax basis.

(d) Death, Disability or Involuntary Termination not for Cause .

(1) In the event of the termination of the Employee’s Employment (i) due to death, (ii) by the Company by reason of the Employee’s Disability or (iii) by reason of an involuntary termination by the Company not for Cause, in each case occurring after the date hereof, but before the end of the Performance Period and before the occurrence of a Change in Control of the Company, the portion of the Performance Share Award that will vest shall be calculated by dividing the number of days from January 1, 2018 until the date of such termination, by the total number of days in the Performance Period, multiplied by the number of

Unit Delivered Shares and Deferred Dividend Shares in respect of each Performance Share Unit, if any, earned on the basis of actual achievement level of the Performance Criteria in the Performance Unit Plan Schedule.

(2) Any former Employee, upon Disability or involuntary termination by the Company not for Cause, or the estate of an Employee, upon death, will continue to hold the vested portion of the Performance Share Award, subject to the restrictions and all terms and conditions of this Agreement, until delivery of Shares pursuant to Section 2(c). Subject to Section 2(e), the appropriate number of Unit Delivered Shares and Deferred Dividend Shares, if any (calculated as provided in Section 2(b)) shall not be delivered until the completion of the Performance Period and the Determination Date.

(3) Definitions . For purposes of this Agreement:

(a)

(b)

(e) Change in Control .

(1) Immediately following a Change in Control of the Company, unless in connection therewith this award is assumed (or a substitute award granted) pursuant to Section 7(a)(1) of the Plan, if this award is then outstanding, ROIC and EBITDA Growth shall each be deemed to have been satisfied based on assumed achievement at the maximum achievement level, and Comparative TSR shall be deemed satisfied based on actual performance over a shortened performance period ending as of (and taking into account) the Change in Control of the Company (collectively, “Deemed CIC Achievement”) and this award shall be deemed fully vested on such basis and the Unit Delivered Shares and Deferred Dividend Shares underlying this award shall be delivered or paid to the Employee within ten (10) days following the Change in Control of the Company. Notwithstanding the immediately preceding sentence, if

in connection with the Change in Control of the Company, this award is assumed (or a substitute award granted) pursuant to Section 7(a)(1) of the Plan, this award shall become vested only if (A) the Employee’s Employment continues until the end of the Performance Period, in which case this award will become fully vested at the e nd of the Performance Period, or (B) there is a Change in Control Termination before the end of the Performance Period, in which case this award will become fully vested in connection with the Change in Control Termination. T he vested portion of the Unit Delivered Shares and Deferred Dividend Shares underlying this award, determined on the basis of the Deemed CIC Achievement , shall be delivered or paid to the Employee within ten (10) days following the earliest of (x) the vesting described in (A) , (y) the vesting described in (B), and (z) in the event a termination of Employment described in Se ction 2(d) has occurred prior to such Change in Control of the Company, such Change in Control of the Company .

(2) For purposes of this Agreement, the following definitions shall apply:

(a)

(b)

(iv) the acquisition by a person or group, during the 12-month period ending on the date of the most recent acquisition by such person or group, of assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all the assets of the Company, as determined under the Treasury Regulations (however, a transfer of assets to certain related persons, as provided under the Treasury Regulations, or to an entity that is controlled by the shareholders of the Company immediately after the transfer, will not be considered a change in control for purposes of this Section 2(e)).

(c)

terms and conditions hereof. This award itself shall not be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed of in any other manner, in whole or in part.

5. Tax Withholding . No shares or cash will be issued or paid under this award unless the Employee pays (or makes provision acceptable to the Company for the prompt payment of) an amount sufficient to allow the Company to satisfy its tax withholding obligations, as determined by the Company. To this end, the Employee shall either:

(a)

pay the Company the amount of tax to be withheld (including through payroll withholding if the Company determines that such payment method is acceptable),

(b)

(c)

make a payment to the Company consisting of a combination of cash and such shares of Stock, or

(d)

request that the Company cause to be withheld a number of vested shares of Stock having a then fair market value sufficient to discharge required federal, state and local tax withholding.

6. Section 409A of the Code . Performance Share Awards granted pursuant to this Agreement are intended to be exempt from, or comply with, the requirements of Section 409A of the Code and guidance issued thereunder and shall be construed accordingly. Notwithstanding anything to the contrary in this Agreement, if at the time of the Employee’s termination of Employment, the Employee is a “specified employee,” as defined below, any and all amounts payable under this Agreement on account of such separation from service that constitute deferred compensation and would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon the Participant’s death; except (A) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Section 1.409A-1(b) of the Treasury Regulations, as determined by the Company in its reasonable good faith

discretion or (B) other amounts or benefits that are not subject to the requirements of Section 409A. For purposes of this Agreement, all references to “termination of employment” and correlative phrases shall be construed to require a “separation from service” (as defined in Secti on 1.409A-1(h) of the Treasury R egulations after giving effect to the presumptions contained therein), and the term “specified employee” means an individual determined by the Atlas to be a specified emp loyee under Section 1.409A-1(i) of the Treasury Regulations . Notwithstanding anything to the contrary in this Agreement, neither the Company, nor any subsidiary, nor the Committee, nor any person acting on behalf of the Company, any subsidiary, or the Committee, shall be liable to the Employee or to the estate or beneficiary of the Employee by reason of any acceleration of income, or any additional tax, asserted by reason of the failure of this Agreement or any payment hereunder to satisfy the requirements of Section 409A of the Code or by reason of Section 4999 of the Code .

If to the Company:

Atlas Air Worldwide Holdings, Inc.
2000 Westchester Avenue
Purchase, New York 10577
Attention: General Counsel

If to the Employee:

13. Counterparts . This Agreement may be executed in two counterparts, each of which shall constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS AS A SEPARATE PAGE]

IN WITNESS WHEREOF, the undersigned have executed this Performance Share Unit Agreement as of the date first above written.

ATLAS AIR WORLDWIDE HOLDINGS, INC.

By:

Name:

Adam R. Kokas

Title:

Executive Vice President & General Counsel

Employee

Exhibit 10.7

ATLAS AIR WORLDWIDE HOLDINGS, INC.

RESTRICTED STOCK UNIT AGREEMENT

THIS RESTRICTED STOCK UNIT AGREEMENT, dated as of March 8, 2018 (the "Agreement), is between Atlas Air Worldwide Holdings, Inc. (the "Company"), a Delaware corporation, and the employee set forth on the signature page hereto (the "Employee").

WHEREAS, the Employee has been granted the following award under the Company's 2016 Incentive Plan (the "Plan") as of March 8, 2018 (the "Date of Grant");

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the parties hereto agree as follows.

1. Award of Restricted Stock Units. Pursuant to the provisions of the Plan, the terms of which are incorporated herein by reference and subject to the other provisions of this Agreement, the Employee is hereby awarded <<RSU_Number>> restricted stock units ("Restricted Stock Units"), which constitute the right to receive, without payment by the Employee therefor, (i) <<RSU_Number>> shares of Stock (the "Unit Delivered Shares"), and (ii) the right to receive, without payment by the Employee therefor, additional shares of Stock on the same basis as the Unit Delivered Shares, equal in value (determined as hereafter provided) to the dividends, if any, which would have been paid with respect to the shares of Stock underlying the Unit Delivered Shares had such Unit Delivered Shares been issued to the Employee on the Date of Grant (the "Deferred Dividend Shares"), in each case subject to the terms and conditions of the Plan and those set forth herein. For purposes of clause (ii) of the immediately preceding sentence, the number of Deferred Dividend Shares with respect to any dividend shall be calculated as of the date on which the dividend is paid to holders of Stock. For the avoidance of doubt, no shares of Stock (including Deferred Dividend Shares) shall be payable in respect of the Unit Delivered Shares if the Unit Delivered Shares are forfeited, and no Deferred Dividend Shares shall be payable in respect of any dividend for which the record date falls on or after the date on which the Employee or other person entitled to the Unit Delivered Shares becomes the record owner of such shares of Stock for dividend record-date purposes. If the number of shares of Stock (including Deferred Dividend Shares) deliverable with respect to the Restricted Stock Units includes a fractional share, the value of such fractional share (determined as of the trading day immediately preceding the delivery date described in Section 2(d) below) shall be payable in cash in lieu of such fractional share. Except as otherwise expressly provided, all terms used herein shall have the same meaning as in the Plan.

The Unit Delivered Shares and the Deferred Dividend Shares are collectively referred to herein as the "Award" or "this award."

2. Vesting of Award; Delivery of Stock, Termination of Employment. Unless otherwise provided by the Committee, the Award under this Agreement shall be subject to the vesting schedule in this Section 2.

(a) Vesting; Delivery of Shares.

(1) Subject to the following provisions of this Section 2 and the other terms and conditions of this Agreement, the Award shall become vested (meaning that the Employee shall be entitled to receive a certain number of shares of Stock as provided in Section 2(a)(iii) or Section 2(c)) on the basis of one Restricted Stock Unit to one share of Stock, and any related Deferred Dividend Shares shall become vested only upon the vesting of the underlying Restricted Stock Unit. The Award will vest in three annual installments as follows:

<<33%_of_RSU_Number>> Restricted Stock Units shall vest on March 8, 2019;

<<33%_of_RSU_Number>> Restricted Stock Units shall vest on March 8, 2020; and

<<33%_of_RSU_Number>> Restricted Stock Units shall vest on March 8, 2021.

(2) Except as provided in Section 2(b) and 2(c) below, in the event of termination of the Employee's Employment prior to the applicable date above, all unvested Restricted Stock Units shall immediately and automatically terminate and be forfeited (and no shares of Stock in respect of such Award that have not previously vested shall thereafter be issued).

(b) Death or Disability. In the event of death or termination by the Company of the Employee's Employment by reason of the Employee's Disability occurring after the date hereof and before the occurrence of a Change in Control of the Company, the Award shall become immediately and fully vested and shares of Stock will be delivered, subject to Section 2(d), as soon as practicable following such death or termination of Employment by reason of the Employee's Disability, but no later than December 31 of such year. For purposes of this Agreement, a termination of Employment shall be deemed to be by reason of "Disability" if immediately prior to such termination of Employment, the Employee shall have been continuously disabled from performing the duties assigned to the Employee for a period of not less than six consecutive calendar months, in which case such Disability shall be deemed to have commenced on the date following the end of such six consecutive calendar month period.

(1) Immediately prior to a Change in Control of the Company unless in connection therewith this Award is assumed (or a substitute award granted) pursuant to Section 7(a)(1) of the Plan, this Award, if then outstanding, shall vest in full and shares of Stock will be delivered or paid to the Employee, subject to Section 2(d), within ten (10) days following the Change in Control of the Company. Notwithstanding the immediately preceding sentence, if in connection with the Change in Control of the Company, this Award is assumed (or a substitute award granted) pursuant to Section 7(a)(1) of the Plan, this Award shall continue to vest pursuant to its terms and shares of Stock will be delivered or paid to the Employee, subject to Section 2(d), within ten (10) days following the applicable vesting dates described in Section 2(a), except that upon a Change in Control Termination before the occurrence of the last vesting date specified in Section 2(a) above, this Award will become fully vested immediately prior to the Change in

Control Termination and the corresponding shares of Stock shall be delivered or paid to the Employee, subject to Section 2(d) below, within ten (10) days following the Change in Control Termination.

(2) Definitions. For purposes of this Agreement, the following definitions shall apply:

(a)

"Cause" means (i) the Employee's refusal or failure (other than during periods of illness or disability) to perform the Employee's material duties and responsibilities to the Company or its subsidiaries, (ii) the conviction or plea of guilty or nolo contendere of the Employee in respect of any felony, other than a motor vehicle offense, (iii) the commission of any act which causes material injury to the reputation, business or business relationships of the Company or any of its subsidiaries including, without limitation, any breach of written policies of the Company with respect to trading in securities, (iv) any other act of fraud, including, without limitation, misappropriation, theft or embezzlement, or (v) a violation of any applicable material policy of the Company or any of its subsidiaries, including, without limitation, a violation of the laws against workplace discrimination.

(b)

"Change in Control Termination" means the termination of an Employee's Employment following a Change in Control of the Company (i) by the Company and its subsidiaries not for Cause, (ii) by the Employee for Good Reason, or (iii) by reason of the Employee's death or Disability.

(c)

"Change in Control of the Company" means a "change in control event" (as that term is defined at Section 1.409A-3(i)(5) of the Treasury Regulations) with respect to the Company, which generally will include the following events, subject to such additional rules and requirements as may be set forth in the Treasury Regulations and related guidance: (i) a transfer or issuance of stock of the Company, where stock in the Company remains outstanding after the transaction, and one person, or more than one person acting as a group (as determined under the Treasury Regulations), acquires ownership of stock in the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company (however, if a person or group is considered to own more than 50% of the total fair market value or 30% of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group will not be considered a change in control for purposes of this Section 2(c)); (ii) the acquisition by a person or group, during the 12-month period ending on the date of the most recent acquisition by such person or group, of ownership of stock possessing 30% or more of the total voting power of the Company (however, if a person or group is considered to control the Company within the meaning of this sentence (i.e., owns stock of the Company possessing 30% or more of the total voting power of the Company), then the acquisition of additional control will not be considered a change in control

for purposes of this Section 2(c)); (iii) the replacement of a majority of members of the Company's Board of Directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's Board of Directors before the appointment or election; or (iv) the acquisition by a person or group, during the 12-month period ending on the date of the most recent acquisition by such person or group, of assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all the assets of the Company, as determined under the Treasury Regulations (however, a transfer of assets to certain related persons, as provided under the Treasury Regulations, or to an entity that is controlled by the shareholders of the Company immediately after the transfer, will not be considered a change in control for purposes of this Section 2(c)).

(d)

"Good Reason" means (i) a material reduction in the Employee's duties and responsibilities from those of the Employee's most recent position with the Company, (ii) a reduction of the Employee's aggregate salary, benefits and other compensation (including any incentive opportunity) from that which the Employee was most recently entitled during Employment other than in connection with a reduction as part of a general reduction applicable to all similarly-situated employees of the Company, or (iii) a relocation of the Employee to a position that is located greater than 40 miles from the location of such Employee's most recent principal location of Employment with the Company; provided, however, that the Employee will be treated as having resigned for Good Reason only if he or she provides the Company with a notice of termination within 90 days of the initial existence of one of the conditions described above, following which the Company shall have 30 days from the receipt of the notice of termination to cure the event specified in the notice of termination and, if the Company fails to so cure the event, the Employee must terminate his or her Employment not later than 30 days following the end of such cure period.

(d) Delivery of Shares. Subject to the terms of this Agreement and satisfaction of any withholding tax liability pursuant to Section 5 hereof, when shares of Stock are delivered, the Company shall deliver to the Employee a certificate or shall credit the Employee's account so as to evidence the number of shares of Stock, if any, to which the Employee is entitled hereunder, as calculated in accordance with this Section 2.

3. Transfer. Any shares of Stock that are delivered pursuant to Section 2(d) may be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed of in any other manner, in whole or in part, only in compliance with the terms, conditions and restrictions as set forth in the governing instruments of the Company, applicable federal and state securities laws or any other applicable laws or regulations and the terms and conditions hereof. This award itself shall not be sold, assigned, pledged, hypothecated, encumbered, or transferred or disposed of in any other manner, in whole or in part.

4. Expenses of Issuance of Stock. The issuance of stock certificates hereunder shall

be without charge to the Employee. The Company shall pay, and indemnify the Employee from and against any issuance, stamp or documentary taxes (other than transfer taxes) or other charges imposed by any governmental body, agency or official (other than taxes) by reason of the issuance of the Stock underlying the Award.

5. Tax Withholding. No shares or cash will be issued or paid under this Award until the Employee pays (or makes provision acceptable to the Company for the prompt payment of) an amount sufficient to allow the Company to satisfy its tax withholding obligations, as determined by the Company. To this end, the Employee shall either:

(a)

pay the Company the amount of tax to be withheld (including through payroll withholding if the Company determines that such payment method is acceptable),

(b)

(c)

make a payment to the Company consisting of a combination of cash and such shares of Stock, or

(d)

request that the Company cause to be withheld a number of vested shares of Stock having a then-fair market value sufficient to discharge required federal, state and local tax withholding.

6. Section 409A of the Code. Awards granted pursuant to this Agreement are

intended to be exempt from, or comply with, the requirements of Section 409A of Code and guidance issued thereunder and shall be construed accordingly. Notwithstanding anything to the contrary in this Agreement, if at the time of the Employee's termination of Employment, the Employee is a "specified employee," as defined below, any and all amounts payable under this Agreement on account of such separation from service that constitute deferred compensation and would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon the Participant's death; except (i) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Section 1.409A-1(b) of the Treasury Regulations, as determined by the Company in its reasonable good faith discretion or (ii) other amounts or benefits that are not subject to the requirements of Section 409A. For purposes of this Agreement, all references to "termination of employment" and correlative phrases shall be construed to require a "separation from service" (as defined in Section 1.409A-1(h) of the

Treasury Regulations after giving effect to the presumptions contained therein), and the term "specified employee" means an individual determined by the Atlas to be a specified employee under Section 1.409A-1(i) of the Treasury Regulations. Notwithstanding anything to the contrary in this Agreement, neither the Company, nor any subsidiary, nor the Committee, nor any person acting on behalf of the Company, any subsidiary, or the Committee, shall be liable to the Employee or to the estate or beneficiary of the Employee by reason of any acceleration of income, or any additional tax, asserted by reason of the failure of this Agreement or any payment hereunder to satisfy the requirements of Section 409A of the Code or by reason of Section 4999 of the Code.

7. References. References herein to rights and obligations of the Employee shall apply, where appropriate, to the Employee's legal representative or estate without regard to whether specific reference to such legal representative or estate is contained in a particular provision of this Agreement.

8. Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given when delivered personally or by courier, or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the party concerned at the address indicated below or to such changed address as such party may subsequently by similar process give notice of:

If to the Company:

Atlas Air Worldwide Holdings, Inc.

2000 Westchester Avenue
Purchase, New York 10577
Attention: General Counsel

If to the Employee:

At the Employee's most recent address
shown on the Company's corporate records,
or at any other address which the Employee
may specify in a notice delivered to the
Company in the manner set forth herein.

9. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to principles of conflicts of laws of any jurisdiction which would cause the application of law, other than the State of New York, to be applied.

10. Rights of a Stockholder. The Employee shall have no right to transfer, pledge, hypothecate or otherwise encumber such Unit Delivered Shares or Deferred Dividend Shares. Once the Unit Delivered Shares and Deferred Dividend Shares vest and the shares of Stock underlying those units or shares have been delivered, but not until such time and only with respect to the shares of Stock so delivered, the Employee shall have the rights of a stockholder, including, but not limited to, the right to vote and to receive dividends.

11. No Right to Continued Employment. This Award shall not confer upon the Employee any right with respect to continuance of employment by the Company nor shall this Award interfere with the right of the Company to terminate the Employee's employment at any time.

12. Provisions of the Plan. This Agreement and the awards and grants set forth herein shall be subject to and shall be governed by the terms set forth in the Plan, a copy of which has been furnished to the Employee and which is incorporated by reference into this Agreement. In the event of any conflict between this Agreement and the Plan, the Plan shall control.

13. Counterparts. This Agreement may be executed in two counterparts, each of which shall constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS AS A SEPARATE PAGE]

IN WITNESS WHEREOF, the undersigned have executed this Restricted Stock Unit Agreement as of the date first above written.

ATLAS AIR WORLDWIDE HOLDINGS, INC.

By:

Name: Adam R. Kokas

Title: Executive Vice President and General Counsel

EMPLOYEE

<<Employee_Name>>

Exhibit 31.1

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

I, William J. Flynn, 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;

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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; and

d) 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; and

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: May 3, 2018		/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, Spencer Schwartz, 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;

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)) and internal control over financial reporting ( as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

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):

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: May 3, 2018		/s/ Spencer Schwartz
		Spencer Schwartz
		Executive 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 March 31, 2018 as filed with the Securities and Exchange Commission (the “Report”), we, William J. Flynn and Spencer Schwartz, Chief Executive Officer and Chief Financial Officer, respectively, of the Company certify that to our knowledge:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act 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: May 3, 2018

/s/ William J. Flynn

William J. Flynn

President and Chief Executive Officer

/s/ Spencer Schwartz

Spencer Schwartz

Executive Vice President and Chief Financial Officer