Apollo-led group to buy cargo-hauler Atlas Air for $2.9 billion

An investor group led by Apollo Global Management Inc. is acquiring Atlas Air Worldwide Holdings Inc. for about $2.9 billion, expanding its foray into aircraft leasing and charter flying as demand for air cargo cools from pandemic-era highs.

The consortium agreed to pay $102.50 a share in cash, or about 57% more than the stock’s 30-day average price, the companies said in a statement Thursday. Other members of the group include affiliates of J.F. Lehman & Co. and Hill City Capital. With items including debt, the deal’s enterprise value is about $5.2 billion.

The investment in Atlas, the world’s largest operator of Boeing Co. 747 jets, rounds out Apollo’s portfolio of aviation holdings. Purchase, New York-based Atlas has a fleet of 108 aircraft, about half of which are hump-backed jumbos, distinctive for noses that flip open to front-load bulky freight. Atlas also transports troops for the US military and trains flight crews for the Air Force One fleet.

The deal is expected to close in the fourth quarter and is subject to approval from Atlas shareholders. Once it becomes a privately held company, Atlas will continue to operate under the same brand and be led by current Chief Executive Officer John Dietrich.

Atlas rose 2.9% at 9:44a.m. in New York. The company’s shares had surged this week in anticipation of a possible deal, closing Wednesday at $96.78.

Global demand for air freight dipped 4.2% during the first half of 2022 from a year earlier, but was still 2.2% higher than pre-Covid shipping levels during the same stretch of 2019, according to the International Air Transport Association, an airline trade group. The sector has drawn a torrent of funding from investors looking to profit from logistics and shipping disruptions stemming from the pandemic and Russia’s invasion of Ukraine.

Apollo also holds stakes in Swissport, which provides airport services like fueling and baggage loading, and Sun Country Airlines. In addition to flying passengers, the hybrid low-cost carrier rents luxurious jets to professional and college sports teams. Both Atlas and Sun Country provide cargo jets to Amazon.com Inc.’s freight-hauling airline.

“We would not be surprised to see Apollo roll up the cargo business of their aviation portfolio companies down the road,” Helane Becker, analyst with Cowen, wrote in an Aug. 3 report on the deal rumblings.

Morgan Stanley advised Atlas Air Worldwide, while Evercore, Barclays, Goldman Sachs and Mizuho advised the investor consortium.