Order 2010

- 4

- 8
Served : April 15, 2010

UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation
on the 15 th day of April, 2010

Application s of

ATLAS AIR, INC.

for certificate s of public convenience and necessity
under 49 U.S.C. § 41102 to engage in interstate and foreign charter air transportation of persons, property

, and mail Dockets DOT

- OST

- 200 9

- 0267
and
DOT

- OST

- 2009

- 0268

ORDER TO SHOW CAUSE
PROPOSING ISSUANCE OF A CERTIFICATE

Summary

By this order, we tentatively conclude that Atlas Air

, Inc

. (“ Atlas ” )

, is a citizen of the United

States

, is fit, willing, and able to provide foreign charter air transportation of persons, property

, and mail, and should be issued a certificate of public convenience and necessity authorizing such operations, subject to conditions.

Background

Section 41102 of Title 49 of the United States Code (“the Transportation Code”) directs us to determine that applicants for certificate authority to provide interstate and foreign charter air transportation of persons, property

, and mail are “fit, willing, and able” to perform such transportation and to ensure that all operations relating to this authority conform to the provisions of the Transportation Code and the regulations and requirements of the Department. In making fitness findings, the Department uses a three

- part test that reconciles the Airline Deregulation Act’s liberal entry policy with Congress’ concern for operational safety and consumer protection. The three areas of inquiry that must be addressed in order to determine a company’s fitness a re whether the applicant (1) will have the managerial skills and technical ability to conduct the proposed operations, (2) will have access to resources sufficient to commence operations without posing an undue risk to consumers, and (3) will comply with t he Transportation Code and regulations imposed by Federal and State agencies. We must also find that the applicant is a
U.S. citizen.2

On October 23, 2009

, Atlas filed applications requesting authorization under 49 U.S.C. § 41102
in Dockets DOT

- OST

- 200 9

- 0 267 and DOT

- OST

- 200 9

- 0 268

, 1 which, if granted, would allow the applicant to engage in interstate and foreign charter air transportation of persons, property

, and
mail

. 2 Atlas accompanied its fitness application with fitness information required by section 204.3 of our regulations and supplemented its application on January 21 and March 29

, 2010

. 3

On November 13, 2009

, World Airways, Inc. (“World”), submitted a n a nswer to Atl as’ applications . In that filing, World asserted that an Angolan company would be providing the
aircraft and crew for Atlas’ proposed charter passenger operation s

. World argued that under this
arrangement

, Atlas would be in violat ion of the Department’s wet lease restri ction and therefore

, Atlas’ request for charter passenger authority should be denied

. 4

On November 23, 2009, the United States

- Africa Energy Association (“USAEA”) and SonAir

Servico Aereo , S.A., S.A.R.L. (“SonAir”) (collectively referred to hereinafter as the “Houston Express Parties”), filed a r eply in o pposition to World’s a nswer , alleging that World raise d meritless allegations that are irrelevant to Atlas’ fitness proceeding and instea d merely question ed the Houston Express Private Charter agreement

. 5 6 The Houston Express P arties also

state that a fitness proceeding is not the appropriate forum or context for reviewing a private charter arrange ment . Moreover, the Houston Express Part ies affirm ed that Atlas will operate the Houston Express C harter under an Aircraft, Crew, Maintenance, and Insurance (“ACMI”)

contract , which does not include a requirement that Atlas place Angolan cockpit or cabin

crew members in the aircraft used for the Houston Express flights.

On November 23 , 2009, Atlas filed a reply to World ’s answer , stating that the aircraft to be used for its proposed operations will be leased from a U.S. owner trust affiliated with Sonangol E.P.

, the Angolan oil exploration and production company, which in turn owns SonAir

, an Angolan company that manages the single

- entity charter program. Atlas will be responsible for providing crew, maintenance, and insurance and for operating the dry

- leased aircraf t. Atlas also stated that it has not entered into any agreement with SonAir requiring Atlas to accept crewmembers from

1 Atlas’ request for interstate authority lacks the required domestic service proposal. Therefore, we intend to suspend that request until Atlas provides such information to the Department. Should Atlas fail to submit a domestic service proposal within one year of being found fit, we intend to dismiss its interstate passenger charter application for failure to prosecute.

2 Atlas simultaneously filed, in Docket DOT

- OST

- 2009

- 0267, a request for an exemption from the provisions of 49 U.S.C. § 41101, which, if granted, would allow the applicant to conduct foreign operations without undergoing the Presidential review requirement.

3 Concurrently with it applications, Atlas filed a motion for confidential treatment under 14 CFR § 302.12 (“Rule 12”) to withhold from public disclosure certain information filed in support of its applications. A more detailed discussion regarding the applicant’s Rule 12 motion can be found in the CONFIDENTIAL TREATMENT section
of this order.

4 World accompanied its reply with a M otion for Leave to File an Otherwise Unauthorized Document. We will grant the Motion

. 5 USAEA is an association of entities involved in the exploration and development of the energy resources of
West Africa and acts as a charterer on behalf of its member s. USAEA has appointed SonAir as its authorized agent
to contract on its behalf with Atlas.

6 The Houston Express Parties accompanied its reply with a Motion for Leave to File an Otherwise Unauthorized Document. We will grant the Motion.3

SonAir for use on the Houston Express operation. Moreover, because a union and a collective bargaining agreement (“CBA”) govern Atlas employment issues

, Atlas pointed out, t he union
and CBA would require pilots on the Atlas Seniority List to perform the Houston Express operation

. In addition, according to Atlas, pursuant to the CBA, any Atlas pilot on furlough
would be recalled before t he air carrier hired new pilots. Furthermore, Atlas state d that should it choose to hire new pilots, those individuals would be placed at the bottom of the S eniority L ist and assigned to routes that span Atlas’ network of flight operations.

On November 30, 2009, the City of Houston and the Greater Houston Partnership (collectively,
“Houston ”), submitted a r eply

, express ing the importance of the Angola flight operation to the Houston economy. In its reply, t he Houston Parties also urged the Department to resolve the issues in this proceeding as expeditiously as possible. 7

We have reviewed Atlas’ application, the allegations raised by World, and the responsive pleadings of this case. There is nothing in the record that indicates control over Atlas an d its proposed operations will rest in the hands of non

- U.S. citizens. In fact, our review of the agreements submitted by Atlas describing the charter agreement support Atlas’ position that all crewmembers will be employees of Atlas and that SonAir will n ot be involved in the hiring of
Atlas’ crew. With respect to the aircraft to be leased by Atlas from Sonangol, the Department does not find that this arrangement is in violation of our regulations since the crew is supplied solely by Atlas and not supplie d by Sonangol. However, in order to ensure continuing compliance with our regulations, we intend to impose a requirement on Atlas, should it receive the authority it is requesting, that it report to the Department any and all new agreements, or changes to existing agreements, involving the Houston Express Parties

, its affiliates and/or

Son an gol

.

N o other special issues regarding the applicant have come to our attention. Under these circumstances, we propose to decide the issue of Atlas ’ fitness on the basis of the written record. As discussed below, we tentatively conclude that Atlas is a U.S. citizen and is fit, willing, and able to operate its proposed air service, subject to conditions. However, we will give interested persons an opportunity to show cause why we should not adopt as final these tentative findings
and conclusions.

FITNESS

The Applicant

Atlas is a corporation that was organized under the laws of the State of Delaware i n April 1992

. The applicant was found fit to conduct interstate and foreign scheduled all

- cargo air transportation in November 1992 and commenced operations under this authority in March
1993

. 8 The air carrier holds a Federal Aviation Regulation Part 121 operating certificate from
the Federa l Aviation Administration (“ FAA ”) and operates a fleet of 26 B

- 747 freighter aircraft

7 Houston a ccompanied its reply with a Motion for Leave to File an Otherwise Unauthorized Document. We will grant the Motion.

8 See Order 93

- 32

- 7, issued March 5, 1993.4

on a scheduled basis between the U

. S

. and S outh America, and globally on a non

- scheduled basis for other airlines, freight consolidators

, and the U.S. military.

Managerial Competence

Atlas’ Board of Directors consists of the following seven members, each of whom is a U.S. citizen: Messrs. Eugene I. Davis, Robert F. Agnew, Timothy J. Bernlohr, James S. Gilmore, III, Frederick McCorkle, and William J. Flynn, and Ms . Carol B. Hallett.

Table 1. Atlas’ Board of Directors

Name Citizenship Start Date Position Mr. Eugene I. Davis USA July 2004 Chairman and Chief Executive Officer of PIRINATE Consulting Group, LLC Mr. Robert F. Agnew USA July 2004 President and Chief Executive Officer of Morten Beyer & Agnew Mr. Timothy J. Bernlohr USA June 2006 Managing Director of TJB Management Consulting, LLC

Mr. James S. Gilmore

, III USA July 2004 Retired

Mr. Frederick McCorkle USA July 2004 Independent Businessman Mr. William J. Flynn USA June 2005 President and Chief Executive Officer, Atlas Air Worldwide Holding

Ms. Carol B. Hallett USA June 2006 U.S. Chamber of Commerce Of Counsel

Mr. Eugene I. Davis specializes in turnaround management, takeovers, and strategic planning. He has been a member of Atlas’ Board since July 2004. Mr. Davis is currently Chairman and Chief Executive Officer of PIRINATE Consulting Group, LLC.

Mr. Robe rt F. Agnew, a Board Member since July 2004, has over 30 years of civil and governmental aviation and marketing experience and has been a leading provider of aircraft valuations to banks, airlines, and other financial institutions worldwide. He is current ly President and Chief Executive Officer of Morten Beyer & Agnew.

Mr. Timothy J. Bernlohr, a Board Member since July 2004, has nearly 30 years of management experience and specializes in providing project specific consulting services to businesses in

tr ansformation, plan administration, and interim executive management. Mr. Bernlohr is currently the Managing Director of TJB Management Consulting, LLC.

Mr. James S. Gilmore, III

, the 68 th Governor of Virginia (1998

- 2002) , has been a Board Member
since Ju ly 2004. As a partner at the law firm of Kelly Drye & Warren, LLP

, he served as the Chair of the firm’s Homeland Security Practice Group. President George W. Bush appointed Governor Gilmore to the Air Force Academy Board of Visitors in 2003. He also ser ved as the Chairman of the Republican National Committee (2001

- 2002). Mr. Gilmore is currently retired.

Mr. Fredrick McCorkle, a Board Member since July 2004, is the former Deputy Commandant
for Aviation. He retired from the U.S. Marine Corps in 2001 after serving for 34 years. General5

McCorkle is a graduate of East Tennessee State University and holds a Master of Science in Administration from Pepperdine University. He is currently an Independent Businessm an.

Ms. Carol B. Hallet, a former ambassador to the Bahamas, served as President and Chief Executive Office of the Air Transport Association of America and was appointed by President George H. W. Bush, as the Commissioner of the United States Customs Serv ice.

The following t able identifies Atlas’ officers and other key management and technical personnel,
as well as each individual’s position and citizenship

.

Table 2. Atlas’ Key Management and Technical Personnel

Name Position Citizenship

Mr. William J. Flynn Director, President and Chief Executive Officer USA

Mr. John W. Dietrich Executive Vice President, Chief Operating Officer USA

Mr. Jason Grant Senior Vice President and Chief Financial Officer Canada

Mr. Adam Kokas Senior Vice President, General Counsel, Chief Human Resources Officer, and Secretary USA

Mr. Michael Steen Senior Vice President and Chief Marketing Officer Sweden Mr. Jeffrey Carlson Vice President, Flight Operations USA Mr. William Kelley Vice President, Safety and Regulatory Compliance USA Mr. Mark S. Swearingin Vice President, Technical Operations USA

Mr. John A. Aliberti Director of Safety USA

Mr. Michael A. Citrano Director of Operations USA

Mr. Lew Allen III Chief Pilot USA

Mr. Charles D. Souza Director of Maintenance USA Mr. Michael Sharbaugh Chief Inspector USA

Mr. William J. Flynn has held his current position as Director, President

, and Chief Executive
Officer of Atlas since 2005 . Before this, he held the same position s at GeoLogistics Corporation (2002

- 2005). Previously , he served as Senior Vice President, Merchandise Group (2000

- 2002), and Senior Vice President, Strategic Planning (2000) at CSX Corporation. Mr. Flynn held multiple positions with increased levels of responsibility at Sea

- Land Service, Inc

. : S ales Representative (1977

- 1978); Manager M arketing, Caribbean (1978

- 1980); Manager Marketing, Americas (1980

- 1983); General Manag er, Central America (1983

- 1987); General M anager, Puerto Rico (1987

- 1990); Vice P resident, Marketing (1990

- 1991); Vice Preside nt, Global Accounts (1991

- 1996); Vi ce President, Japan (1996

- 1997); Vi ce President, China (1997

- 1998);
and V ice President, Asia (1999). He earned a Bachelor of Arts in Latin American Studies from the University of Rhode Island (19 75), and a Master of Arts in Latin American Studies from the University of Arizona (1976).

Mr. John W. Dietrich , a member of the New York, Illinois, and Colorado Bar Association s , began his employment with Atlas as Assistant General Counsel in 1999 and wa s subsequently promoted, in 2003 , to Senior Vice President, General Counsel, and Chief Human Resources
Officer. He assumed his current position of Executive Vice President and Chief Operating
Officer in 2006. Mr. Dietrich served as a Paralegal (1986

- 1992 ) and a Litigation Attorney (1992

- 1999) for United Air Lines, Inc. He earned a Bachelor of Science from Southern Illinois6

University and a Juris Doctorate from the John Marshall Law School

. Mr. Dietrich is a Board
Member of two Atlas Air Worldwide, Inc. (“ AAWW ”) subsidiaries; Global Supply Systems, plc., and Polar Air Cargo Worldwide, Inc. (“Polar”).

Mr. Jason Grant , a Canadian citizen, joined Atlas in 2002 and has moved progressively through a series of positions: Director of Corporate Financ e (2002

- 2003); Senior Director of Financial Planning and Analy sis (2003

- 2004); Vice President of Financial Pl anning and Analysis (2004

- 2006); Vice Presi dent of Continuous Improvement (200 6

- 2007); Senior Vice President of Business Developm ent and Network Plan ning (2007); and Senior Vice President and Chief Financial Officer (2007

- present). Before joining Atlas, he was employed by two air carriers : American Airlines as Manager of Financial Analysis (2000

- 2001) ; and Canadian Airlines
International as Director o f Pension Investments (1999) and Manager of Financial Plan ning and Analysis (19997

- 1998) . Mr. Grant earned a Bachelor of Business Administration from Wi lfrid Laurier University (1995) and a Master of Business Administration from S imon Fraser University (1 997).

Mr. Adam Kokas , a member of the New York and New Jersey Bar Associatio n s , assumed his current position as Senior Vice President, General Counsel and Secretary in 2006 and Chief
Human Resource Officer in 2007

. Prior to joining Atlas, he served as a Corporate and Securities Partner for Robes & Gray, LLP (2006) ; a Corporate and Securities Associate/Partner for Kelley Drye & Warren, LLP (2001

- 2006) ; a Corporate Associate for Phillips Nizer, LLP (1998

- 2001); and a Corporate and Banking Associate at Giord ano, Halleran & Ciesla, P.C. (1996

- 1998). Mr.
Kokas holds a Bachelor of Arts in English and Political Science from Rutgers College (1993)
and a Juris Doctorate from Boston University School of Law (1996). He also serves on the
Board of Atlas’ affiliated compan ies; Polar, Titan Aviation Leasing Limited

– Americas, Inc.,
and Titan Aviation Limited.

Mr. Michael Steen

, a Swedish citizen

, has served as the applicant’s Senior Vice President and Chief Marketing Officer since 2007. Before joining Atlas, he held two positions at DHL International, Ltd .: Senior Vice President of Global Supply Chain Logistics (2006

- 2007) and
President of the Globa l Healthcare Sector (2005

- 2006). Mr. Steen served as Senior Vice
President of Sales and Marketing of the Americas for E XEL , Inc. , (2003

- 2005), which was subsequently acquired by DHL International, Ltd. Earlier , he held a number of positions with
increased levels of responsibility at KLM Cargo Royal Dutch Airlines : Sales Director, and Deputy Cargo Manager

, Sweden (1992

- 1993); Glob al Account Director (1993

- 1995); Director
of Sal es, Northern Europe (1995

- 1997); Hea d of Global Sales and Marketing of the Logi stics Business Unit (1997

- 1999); and Vice President for the Americas (1999

- 2003). Mr. Steen holds a degree in E conomic Science from Katrinelund Sports College in Gothenburg, Sweden and an Executive Masters in Business Administration from the Kellogg School of Management, Northwest University.

Mr. Jeffrey Carlson , a pilot with over 15,000 total flight hours logge d, served as Vice President of Flight Operations at Spirit Airlines (2006

- 2008) and has held the same position at Atlas since

2008. He also currently serves as President/Owner of Goose Creek Aviation. From 1989

- 1993 and again from 2003

- 2004, Mr. Carlson was employed by Fairbanks Farms as Vice President, Management Information Systems and Vice President, Business Development, respectively. He7

held a number of positions with increased levels of responsib ility at Nor thwest Airlines, Inc.:

DC

- 10 Second Officer Instructor/Check P ilot (1983

- 1995); B

- 757 First Office Instructor/Assistant Training Manager, B

- 747

- 400 First Office Instructor/Assistant Training Manager , A

- 320 Fleet Training Captain, Captain Instru ctor/Check P ilot, B

- 757 Fleet Captain Director (199 5

- 1997); Managing Director, Flight Procedures, Training and Standards (1997

- 1998); Managing Director, Flying/Chief Pilot (1998

- 2000); Vice President , Flight Operations (2000

- 2002); C aptain of B

- 747

- 400 (20 02

- 2004); and Captain of A

- 330 (2004

- 2006). Prior to that, Chautauqua Airlines employed him as a Senior Check Pilot/Airplane Instructor Pilot (1977

- 1983). Mr. Carlson earned a Bachelor of Science in Aeronautical Science from Embry Riddle Aeronautical University

.

Mr. William Kelley , an Airline Transport Pilot, has been employed as the applicant’s Vice President, Safety and Regulatory Compliance since 1999. From 2006

- 2007

, he served as Atlas’ Acting Vice President, Technical Operations. Prior to joini ng Atlas, Mr. Kelley was a member of the U.S. Air Force, where he served in numerous upper level management positions : Air Traffic Controller; Flight Operations; Chief of Airfield Management; and Chief of Safety (1979

- 1999). He earned a Bachelor of Scienc e in Professional Aeronautics and a Masters in Aeronautical Science from Embry Riddle Aeronautical University. Additionally, he was an Adjunct College Professor at his alma mater (1994

- 1999)

.

Mr. Mark S. Swearingin

, an Airframe and Powerplant Mechanic, served as Vice President of Technical Operations for SH&E Air Transport Consultancy (2006

- 2007) and has held the same position at Atlas since July 2007. Previously

, he developed skills in multiple areas of
maintenance management, having occupied the following positions: Executive Vice President of Air Canada (2005

- 2006); Vice President of Maintenance and Engineering for Midwest Airlines (2003

- 2005); Managing Director, Maintenance Control and Maintenance Planning (2002

- 2 003), and Director of Maintenance Planning, Maintenance Training (2000

- 2002) for US Airways; Division Manager for United Parcel Service Airlines (1987

- 2000); Maintenance Foreman, Maintenance Planner, and Mechanic for Northwest Airlines/Northw est Orient Air lines (1983

- 1987); and FBO Operations, General Aviation Mechanic for Crawfordsville Aviation (1980

- 1983). Mr. Swearingin holds a Bachelor of Science from Purdue University and is a member of the Board of Directors for New Directions Housing Corporation.

Mr. John A. Aliberti assumed his current position with Atlas as Director of Safety in 2004. He joined the air carrier in 1994 and has held a number of positio ns with the company : Aircraft Dispatch/ Commercial Planning (1998

– 2004); M anager of Operations and Airline Planning (1997

- 1998) ; System Route Analysis/Airline Operations Planning (1995

- 1997) ; and Aircraft Dispatcher (1994

- 1995). Prior to joining Atlas, Mr. Aliberti serve d as an Aircraft D ispatcher for multiple airlines : Nort h American A irlines (1993

- 1994); American Airlines (1992

- 1993); Varig
Brazilian Airlines (1992); Bu siness Express/Delta Connection (1992); and Pan American World Airways (1988

- 1992). He earned a n Associate of Applied Science Degree in Aerospace Technology from the St ate University of New York at Farmingdale, and a Bachelor of Science Degree in Aeronautics and Management from Dowling College.

Mr. Michael A. Citrano , an Airline Transport Pilot, joined Atlas in 199 3 as a B

- 747 Captain and assumed his current position as Director of Operations in 1994. Before joining Atlas, h e was8

employed by Southern Air Transport as a Line Check Airman and Pilot (1993) ; by Evergreen
International Airlines as a B

- 747 Captain (1991

- 1993) ; and by Easter n Airlines as a B

- 727 and

DC

- 9 Pilot in Command and Standards Manager

- Line Check Airman (1967

- 1991)

. M r. Citrano began his career in the aviation industry while serving in the U.S. Army (1964

- 196 7 ). He earned
a Bachelor Degree of Arts in Political Sc ience from Seton Hall University (1959

- 1963) and
furthered his education at the St. John’s School of Law ( 1963

- 1964 ).

Mr. Lew Allen

, III , an Airline Transport Pilot with over 12,500 total flight hours logged , joined
Atlas in 1996 and has served in three p ositions: B

- 747 First Officer (1996

- 1998); B

- 747 Captain (1998); and Chief Pilot (1998

- present). Prior to joining Atlas, Mr. Allen moved progressively through a series of positions at Markair, Inc. : B

- 737 Program Manager ( 1 995); B

- 737 Check Airman/Simulator Instructor (1993

- 1995); B

- 737 Captain ( 1991

- 1995); DCH

- 7 Check Airman/Captain ( 1 990

- 1991) ; and B

- 737 First Officer ( 1988

- 1990 and 1984 ). He held three positions at Security Aviation, Inc. : Chief Pilot

, Check Airman

, and Capta in (1986

- 1988).
Before that , he served for Air Logistics of Alaska, Inc. as a Check Airman/Captain and as a First
Officer for its fleet of CA

- 212 and CE

- 441 aircraft (1981

- 1984). Mr. Allen trained at the Northwest Aerospace Training Center (1996), United Airlines Flight Training Center (1992 and 1988), Flight Safety International, Inc. (1987), and the Boeing Flight Training Center (1998 and 1984).

Mr. Charles D. Souza, an Airframe and Powerplant Mechanic, assumed his current position

, Atlas’ Director of Maintenance , in 2008 . He has held multiple maint enance

- related positions:
Technical Director for SH&E A viation Consultancy (2007

- 2008); Director of Engineering/Quality for Me s aba Airlines (2002

- 2007); Inspection Manager (1999

- 2002), Line
Maintenance Manager (1989

- 1999), and Maintenance Control ler (1988

- 1989) for US Airways; and Aircraft Mechanic/Reliability Analyst for Northwest Airlines (1982

- 1988). Mr. Souza holds
a Bachelor Degree of Arts in Business Administration with a concentration in Finance from Metropolitan State University

. He attended Queens College for Management Skills for Supervisors , Brown Institute for Radio Telephone/Radar License

, and East Coast Aeronautical Technical School for Aviation Maintenance Technology training.

Mr. Michael Sharbaugh, an Airframe and Powerplant Mechanic, assumed his current position

, Chief Inspector , in 2008

. H e held a number of positions with increased levels of responsibility at
ABX Air: Manager of Maintenance Base Shops, Manager of Aircraft Structures, Director of Aircraft Modifications, Senior Director of Maintenance Support/ Administration, and Senior
Director of Quality Control (1991

- 2008). While employed at Eastern Airlines, Mr. Sharbaugh developed skills in multiple areas of maintenance management, having been Production Planner Aircraft Overhaul, Work Manager Aircraft Overhaul, Supervisor of the Electrical Shops, Manager of Aircraft Accessory Shops, and Manager of Aircraft Interior Shops (1979

- 1991). He
holds an Associate Degree in Specialized Technology from Pittsburgh Institute of Aeronautics, a
Bachelor Degree of Science in Aviation Maintenance Management from Embry

- Riddle Aeronautical University, and a Masters of Business Administration from Florida Intern ational University.9

In light of the experience and background of the applicant’s key personnel

, we tentatively
conclude that Atlas’ management team possesses the managerial skills and technical ability to conduct its proposed operations. 9

Operating P lan and Financial Position

Atlas intends to expand its B

- 747 all

- cargo fleet with two additional B

- 747 passenger aircraft, which will be dry leased f rom a U.S. owner trust affiliated with Sonangol, the Angolan oil exploration and production company, which in turn owns SonAir an Angolan company that manages the single

- entity charter program for which Atlas proposes to assume operations. The aircraft will be configured to have 10 first

- class seats, 143 business

- class seats, and 36 economy

class seats

. If g ranted the certificate authority it seeks, the applicant intends to assume the operation of a charter service , operating three weekly round

- trips from Houston, Texas

, to Luanda, Angola (the “Houston Express Charter”), that is currently being operated by an other

U.S. air carrier on behalf of USAEA

.

Under its proposed arrangement with SonAir, Atlas will be responsible for providing crew, maintenance, and insurance and for operating the dry

- leased aircraft. Atlas will be compensated

a contractually determined amount and will be reimbursed , by SonAir, for certain expenses
incurred , including start

- up and operating expense s , such as aircraft placement, fuel, landing and other fees, and ground operations. I n support of its proposed operations

, the appl icant submitted a confidential supplement to its application, which included forecasts of its pre

- operating costs
and first

- year revenues and expenses for its proposed certificated operations.

We have generally asked that applicants for new authority hav e resources sufficient to cover all

pre

- operating costs associated with the operations proposed and any negative working capital balance, plus a working capital reserve equal to the incremental operating costs that would be incurred in three months of oper ations. 10

In its application, Atlas submitted historical financial statements for the past three years showing that it earned a net profit during calendar year 2007 of $14 2.1 million on revenues of $1.1 billion, and incurred a net loss during calendar year 2008 of $24.4 million on revenues of $1.1 billion. In addition, financial reports available through the Bureau of Transportation
Statistics shows that for the 9

- months ending at September 30, 2009, Atl as earned a net profit of $57.0 million on reven ues of $682.0 million and at this same time the air carrier reported positive working capital of $96.5 million and net equity of $349.5 million. Furthermore, the applicant

9 Before authorizing an air carrier to conduct air transportation operations, the FAA also ev aluates certain of the applicant’s key personnel with respect to the minimum qualifications for those positions as prescribed in the Federal Aviation Regulations. The FAA’s evaluation of these key personnel provides an added practical and in

- person test

o f the skills and technical ability of these individuals. In February 2010, the FAA advised us that Atlas’ key technical personnel are acceptable to that agency in their respective positions.

10 Because projected operations during one or more of the fir st three months of anticipated actual air transportation services frequently do not include all costs of operations that will be incurred during a normal period of operations, it has been our practice to base our three

- month standard on one quarter of the first year’s operating cost forecast. In calculating available resources, projected revenues may not be used.10

provided third

- party verification that it has, as of January 15, 2010, approximatel y $578.8 million on deposit in it and its parent company’s name.

Based on the aforementioned forecast s , coupled with the applicant’s historical financial data, we find Atlas’ expense projections to be reasonable and that the applicant meets the Department ’s
financial fitness criteria.

I n light of the above, we tentatively conclude that Atlas has access to sufficient financial
resources to commence the operations it proposes without posing an undue risk to consumers or
their funds. 11

Compliance Disposition

The applicant states that there are no actions or outstanding judgments against its key personnel nor have there been any charges of unfair, deceptive or anti

- competitive business practices, or of fraud, felony or antitrust violations brought against any o f these parties in the past ten years.

Atlas did, however, identify several pending actions against it and its parent company , a Security and Exchange Commission (“SEC”) investigation into AAWW’s financial reporting for the period of 1999

- 2002

, and a pr ivate securities class action lawsuit against AAWW relating to that period of reporting

. Atlas states that the SEC investigation was settled in March 2007 with an
administrative order issued by the SEC that did not impose any civil penalties or fines on

A AWW or include any fraud allegations, and reports that the related class action was settled with a payment in January 2009.

Atlas also identified a number of separate class action suits against AAWW and Atlas’ sister

company, Polar

, among others, in the United States and substantially similar law suits in the province s of Ontario and Quebec, Canada. The lawsuits allege , among other things, that the defendants manipulated the market price for air cargo services sold domestically and ab road through the use of surcharge s in violation of antitrust laws. The suits brought in the Unite d States were consolidated for pre

- tri a l purposes in the United States Eastern District of New York. On September 26, 2008, a Magistrate Judge issued a decis ion recommending that the Federal District Court Judge grant the defendants’ motion to dismiss. On August 21, 2009, the Federal

District Cou rt Judge issued an opinion and o rder accepting the Magistrate Judge’s r eport and

r ecommendation except for the reco mmendation that the complaint be dismissed in its entirety. Polar and the other defendants have moved for reconsideration of that portion of the Judge’s decision, which remains pending.

A review of our records and other information available to us indi cated there are six open FAA investigations involving Atlas. On September 28, 2009, the FAA received a report that indicated one of Atlas’ aircraft was operating in excess of the maximum ramp and takeoff weight. This case is currently und er review by the FAA

. Additionally, on numerous oc casions (February 28, 2007; August 4, 2008; January 27, 20 09; April 4, 2009; and May 14, 2009), the

11 As is our practice, prior to making any authority awarded to Atlas effective, we will require the company to
demonstrate that it continues to have access to the financial resources needed to meet our financial test.11

FAA discovered, throug h routine inspections, that Atlas was in violations of various prev entive maintenance requirements. The se cases remain open by the FAA and have civil penalties associated with each violation, total ing $1

. 1 million

.

Despite the above infractions

, according to the FAA, the applicant has conducted it s operations
satisfactor ily and the agency knows of no reason why the air carrier should not be granted the authority it seek s

. Moreover, Atlas notes that neither it nor any of its key personnel have been
involved in an a ccident or incident in the year preceding its application or at any time in the past which remains under investigation by the FAA, the NTSB, or the company itself.

The aforementioned claims, lawsuits, and pending actions are routine to companies of similar size and scope to Atlas and AAWW. W e will take appropriate action i f we find that the outcomes of the pending cases negatively affect the financial wherewithal or compliance disposition of the applicant

.

In light of these circumstances, we tentatively find that Atlas has the proper regard for the laws and regulations governing its services to ensure that its aircraft and personnel conform to applicable safety standards and that acceptable consumer relations practices will be followed.

CITIZENSHIP

Section 4 1102 of the Transportation Code requires that certificates to engage in air transportation be held only by citizens of the United States as defined in 49 U.S.C. 40102(a)(15). That section specifies that the president and two

- thirds of the board of directo rs and other managing officers
be U.S. citizens

, that at least 75 percent of the outstanding voting interest be owned by U.S.
citizens , and that the applicant must be under the actual control of U.S. citizens

.

As stated previously, Atlas is a corporatio n o rganized under the laws of the S tate of Delaware

. It is wholly

- owned by AAWW

, a publicly traded Delaware corporation with no single shareholder owning 10 percent or more of its outstanding voting stock. AAWW holds a 49 .0 percent equity
interest i n Global Supply Systems Limited, of the United Kingdom, a 51 .0 percent equity interest

in Polar , a Delaware company , and a 100 percent equity interest in Titan Aviation Leasing
limited

, of Ireland. AAWW and Atlas share the same Board of Directors , all of whom are U.S.
citizens

.

Atlas states in its application that it is a U.S. citizen

. A review of the company’s By

- Laws
confirm that AAWW monitors trading of its stock through SEC filings and its Certificate of Incorporation and By

- L aws restrict foreign ownership of shares of its Common Stock. In
accordance with AAWW’s B y

- L aws, there is a separate stock record, the “Foreign Stock Record,” for the registration of Voting Stock that is beneficially owned by aliens, and at no time

will o wnership of AAWW’s shares representing more than the maximum percentage allowable by law will be registered in the Foreign Stock Record. If AAWW discover s that the combined voting stock registered in the Foreign Stock Record exceeds the maximum allowable percentage, AAWW will remove the voting stock in sufficient amount to reduce the combined voting power
of the shares to an amount that conforms to the maximum allowable percentage.12

In view of the foregoing, we tentatively conclude that Atlas is a U.S. citizen and that it is fit, willing, and able to provide air transportation services as a U.S. certificated air carrier, subject to
conditions.

OBJECTIONS

We will give interested persons 1 0 days following the service date of this order to show cause why the tentative findings and conclusions set forth here should not be made final ; 12 answers to objections will be due within 7 days thereafter. We expect such persons to direct their objections , if any, to the application s and points at issue and to support such objections with detailed economic analyses. If an oral evidentiary hearing or discovery procedures are requested, the objector should state in detail why such a hearing or di scovery is considered

necessary and what material issues of decisional fact the objector would expect to establish through a hearing or discovery that cannot be established in written pleadings. The objector should consider whether discovery procedures alone would b e sufficient to resolve material issues of decisional fact. If so, the type of procedure should be specified ( See Part 302, Rules 19 and 20); if not, the reasons why not should be explained. We will not entertain general, vague, or unsupported objections . If no substantive objections are filed, we will issue an order that will make final our tentative findings and conclusions with respect to Atlas’ fitness and certification.

EFFECTIVE CERTIFICATE CONDITIONS AND LIMITATIONS

If Atlas is found fit and iss ued the foreign certificate it seeks, its authority will not become
effective until the air carrier has fulfilled all of the requirements for effectiveness as set forth in
the terms and conditi ons attached to its certificate . Among other things, this incl udes (1) our receipt of evidence of Atlas’ authority from the FAA authorizing such operations , (2) evidence of liability insurance coverage that meets the requirements of section 205.5(b) of our rules

, (3) a statement of changes it may have undergone since its fitness was examined, and (4) evidence that
Atlas continues to have adequate financial resources available to it.

We also wish to remind Atlas of the requirements of 49 U.S.C. § 41110(e ), which requires that,
once an air carrier is found fit in itially, it must remain fit in order to hold its authority. To be assured that certificated air carriers continue to be fit after effective authority has been issued to them, we require that they supply information describing any subsequent substantial ch anges they may undergo in areas affecting fitness. Therefore, if Atlas is issued effective certificate authority and subsequently propose s substantial changes in its ownership, management, or operations, it must first comply with the requirements of secti on 204.5 of our rules. 13

12 By letter dated March 29, 2010, Atlas requested a shortened comment period.

13 The air carrier may contact our Air Carrier Fitness Division to report proposed substantial changes in its operations, ownership, or management, and to determine what additional information, if any, will be required under section 204.5. In addition, by notice dat ed July 21, 1998, the Department requested air carriers to provide a 30

- day advance notification of any proposed change in ownership, restructuring, or recapitalization. If the air carrier fails to file this updated information or if the information fails to demonstrate that the air carrier will continue to be fit upon implementation of the substantial change, the Department may take such action as is appropriate, including enforcement action or steps to modify, suspend, or revoke the air carrier's certifi cate authority.13

Moreover, as discussed in the FITNESS section of this order, our finding of fitness for Atlas is based on the operating plans described in its application, namely, performing passenger charter air transportation using two large a ircraft. Should the applicant propose to expand its operations
to include more than two large aircraft in its passenger operations , our fitness findings, particularly involving the adequacy of Atlas’ management and financial resources, might no longer apply. Therefore, s hould Atlas desire to operate more than two large aircraft in its passenger operations , it must first provide the Department with at least 45 days advance notice of such plans and prov ide updated information establishing it s fitness for such expansion. The compliance of the company with this requirement is essential if we are to carry out our responsibilities under section 41110(e). 14

Finally, if Atlas is granted effective authority, i t would be required to submit a detailed progress report, within 45 days following the end of the first year of certificated flight operations, to the Air Carrier Fitness Division. The submission of a first year progress report is conditioned upon
all new ly certificated air carriers and was adopted as policy by the Department to aid in monitoring the fitness of new air carriers. The report should include a description of the air carrier’s current operations (number and type of aircraft, principle markets served, total number
of full

- time employees), a summary of how its operations have changed during the year, a discussion of any changes it anticipates from its current operations during its second year, current financial statements, 15 and a listing of curre nt senior management and key technical personnel. The air carrier should also be prepared to meet with staff members of the Fitness Division to discuss its current and future operations.

REQUEST FOR CONFIDENTIAL TREATMENT

On October 23, 2009, Atlas filed a motion for confidential treatment under 14 CFR § 302.12 (“Rule 12”) to withhold from public disclosure certain information filed in support of its applications. Specifically, Atlas requested confidential treatment of the FAA certificate numbers, f

inancial and operational information, and projections related to the passenger charter service Atlas proposes to operate.

On November 3, 2009, World filed an answer to Atlas’ request for confidential treatment. World argued that the material Atlas is req uesting be afforded confidential treatment is not protected from public disclosure and is usually of the type that is released to the public. Specifically,
World stated that start

- up expenses and first

- year projected revenues; operating profit (loss), and net income (loss) are the types of information that are publically disclosed with every applicant applying for new certificate authority.

14 We also remind Atlas about the requirements of section 204.7 of our rules. This section provides, among other things, that (1) the certificate authority granted to a company shall be revoked if the company does not commence actual flyin g operations under that authority within one year of the date of the Department's determination of its fitness; (2) if the company commences operations for which it was found fit and subsequently ceases such operations, it may not resume certificated opera tions unless its fitness has been redetermined; and (3) if the company does not resume operations within one year of its cessation, its authority shall be revoked for dormancy.

15 These financial statements should include a balance sheet as of the end of t he company’s first full year of certificated flight operations and a 12

- month income statement ending that same date.14

On November 9, 2009, Atlas filed a motion for leave to file and repl y to World regarding the applicant’s confidenti al treatment request. Atlas asserted that World offered no legal or factual justification for the Department to deny confidential treatment of the air carrier’s forecasted revenues and costs. In that filing, Atlas attested that Exemption 4 to the Freedom of Information Act, 5 U.S.C. § 552(b)(4), as implemented by the Department’s Rule 12, allows applicants seeking certificate authority to keep information confidential if the disclosure of such information would likely cause the submitter substantial compe titive harm.

On November 13, 2009, a motion for leave to file and surreply of World was submitted to Docket DOT

- OST

- 0267 and DOT

- OST

- 2009

- 0268. In that filing, World asserted that Atlas attempted to prevent meaningful public participation by shielding its cost and revenue data from public view. World further stated, in that submission, that the Depa rtment has previously denied such confidential treatment requests in order to protect the public’s opportunity to review and

comment on such forecasts.

Rule 12 instructs us to evaluate requests for confidential treatment in accordance with the
standards of disclosure found in the Freedom of Information Act (5 U.S.C. section 552). Information may be withheld from disclosure under 5 U.S.C. 552(b)(4) if it is (1) commercial or financial, (2) obtained from a person outside of the government, and (3) privile ged or confidential ( Gulf and Western Industries, Inc. v. United States , 615 F.2d 527, 529 (D.C. Cir. 1979)).

There is no question that the information for which Atlas seeks confidential treatment is financial
or commercial in nature and that it was obtai ned from a person outside the government. The remaining question is whether the information is privileged or confidential

-- whether “disclosure of the information is likely to have either of the following effects: (1) impair the Government’s ability to obt ain necessary information; or (2) cause substantial harm to the competitive position of the person from whom the information was obtained” ( National Parks and Conservation

Association v. Morton , 498 F.2d 765, 770 (D.C. Cir. 1974)). Further, to be privileg ed or confidential, the information must not be of the type that is usually released to the public ( Gulf and Western Industries, Inc. v. United States , 615 F.2d 527, 530 (D.C. Cir. 1979)).

By letter dated December 3, 2009, the Department granted Atlas’ request to afford confidential treatment to its pre

- op erating and first

- year expenses, first

- year projected revenues, operating profits (loss) and net income (loss), and FAA certificate numbers for key Atlas personnel. We agree that the release of such ma terial would allow Atlas’ competitors and others to readily calculate the underlying economic terms of its service agreement with SonAir and Atlas’ competitors could then use this information to undermine its relationship with SonAir by offering more attra ctive terms. The information for which Atlas seeks confidential treatment is similar to that for which we have granted confidential treatment in the past, and we see no reason
not to do so here.

On December 8, 2009, Atlas submitted the Charter Service Ag reement between it and SonAir under seal with appropriate confidential marking. On March 29, 2010, the applicant submitted additional confidential material in response to the Department’s March 26, 2010

, request for15

additional information. We also are g ranting Atlas’ request for confidential treatment of this

information.

ACCORDINGLY,

1. We direct all interested persons to show cause why we should not issue an order making final our tentative findings and conclusions stated above and award a certificate to Atlas Air, Inc., authorizing it to engage in foreign charter air transportation of persons, property, and mail, subject to the attached specimen Terms, Conditions, and Limitations.

2. We direct any interested persons having objections to the issuance of an order making final any of the proposed findings, conclusions, or the certificate award set forth here to file such objections with the Department of Transportation Dockets, 1200 New J ersey Avenue, S.E., West Building Ground Floor, Rm. W12

- 140, Washington, D.C. 20590, in Dockets DOT

- OST

- 2009

- 0267 and DOT

- OST

- 2009

- 0268 and serve them upon all persons listed in Attachment A no later than 14 days after the service date of this order; answe rs to objections shall be filed no later than 7 days thereafter.

3

. We suspend the application for interstate charter authority requested by Atlas Air, Inc., in
Docket DOT

- OST

- 2009

- 0268, until a domestic service proposal is submitted to the Department.

4

. We deny the request from Atlas Air, Inc.

, for an exemption from t he provisions of
49 U.S.C. § 41101 to permit the applicant to conduct foreign charter air transportation of persons, property, and mail for an initial period of one year or until the grant of the requested foreign charter passenger certificate, whichever is earlier

.

5

. We grant all M otion s for L eave to F ile an O therwise U nauthorized D ocument

.

6

. We grant the request of Atlas Air, Inc. to reduce the comment period from 14 days and give interested persons 10 days following the service date of this order to show cause why the tentative findings and conclusions set forth here should not be made final.

7. We grant the request from Atlas Air, Inc. to afford confidential treatment to its pre

- operating
and first

- year expenses, first

- year projected revenues, operating profits (loss) and net income (loss), FAA certificate numbers for key Atlas personnel, an d to the Charter Service Agreement between SonAir Servico Aereo, S.A., S.A.R.L. and Atlas Air, Inc.

8. If timely and properly supported objections are filed, we will accord full consideration to the matters or issues raised by the objections before we t ake further action.

9

. In the event that no objections are filed, we will consider all further procedural steps to be
waived and we will enter an order making final our tentative findings and conclusions. 16

16 Since we have provided for the filing of objections to this order, we will not entertain petitions for
reconsideration.16

10

. We will serve a copy of this order on the pe rsons listed in Attachment A.

1 1

. We will publish a notice of this order in the Federal Register.

By:

SUSAN L. KURLAND Assistant Secretary
for Aviation and International Affairs

An electronic version of this document is available on the World Wide Web at http://www.regulations.govOrder 2010

- 4

- 8
Served : April 15, 2010



### Attachment 

### SPECIMEN
Terms, Conditions, and Limitations

ATLAS AIR, INC.

is authorized to engage in foreign charter air transportation of persons, property, and mail:

Between any place in the United States and any place outside thereof.

This authority is subject to the following provisions:

(1) The authority to operate under this certificate will not become effective until six (business) days after the Department has received the following documents; provided

, however

, that the Department may stay the effectiveness of t his authority at any time prior to that date:

(a) A copy of the holder's Air Carrier Certificate and Operations Specifications authorizing such operations from the Federal Aviation Administration (FAA).

(b) A certificate of insurance on OST Form 6410 evi dencing liability insurance coverage meeting the requirements of 14 CFR 205.5(b) for all of its aircraft.

(c) A statement of any changes the holder has undergone in its ownership, key personnel, operating plans, financial posture, or compliance history, s ince the date of the
Show Cause Order in this case.

(d) A revised list of pre

- operating expenses already paid and those remaining to be paid, as well as independent verification that the holder has available to it funds sufficient to cover any remaining p re

- operating expenses and to provide a working capital reserve equal to the operating costs that would be incurred in three months of operations.

(2) Pending receipt of effective authority, the holder may not accept payment of any kind (i.e., cash, check, or credit card), issue tickets for the operations proposed under this certificate, or enter into contracts with charter operators, and any advertiseme nt by the holder must prominently state: "This service is subject to receipt of government operating authority."

(3) The holder shall at all times conduct its operations in accordance with the regulations prescribed by the Department of Transportation for the services authorized by this certificate, and with such other reasonable terms, conditions, and limitations as the Department of Transportation may prescribe in the public interest.

(4) The holder shall at all times conduct its operations in accord ance with all treaties and agreements between the United States and other countries, and the exercise of the privileges granted by this certificate is subject to compliance with such treaties and agreements and withany orders of the Department of Transpor tation issued under them or for the purpose of

requiring compliance with them.

(5) The exercise of the authority granted here is subject to the holder's first obtaining from the appropriate foreign governments such operating rights as may be necessary.

( 6) The holder's authority under this certificate is effective only to the extent that such operations are also authorized by the Federal Aviation Administration (FAA), and comply with all U.S. Government requirements concerning security , including, but not limited to 49 CFR Part

1544

. 

(7) The holder shall at all times remain a "Citizen of the United States" as required by 49 U.S.C. 40102(a)(15).

(8) The holder shall maintain in effect liability insurance coverage as required under 14
CFR Part 205. Failu re to maintain such insurance coverage will render a certificate ineffective, and this or other failure to comply with the provisions of Subtitle VII of Title 49 of the United States Code or the Department's regulations shall be sufficient grounds to revok e this certificate.

(9) Should the holder propose any substantial change in its ownership, management, or operations (as defined in 14 CFR 204.2(l)), it must first comply with the requirements of 14 CFR

204.5.

(10) In the event that the holder does not c ommence actual flying operations under this certificate within one year of the date of the Department's determination of its fitness, its authority shall be revoked for dormancy, unless the holder is conducting operations under another type of certificate authority. Further, in the event that the holder commences operations for which it was found "fit, willing, and able" and subsequently ceases all such operations, its authority under all certificates held shall be suspended under the terms of 14 CFR 204.7 and the holder may neither recommence nor advertise such operations unless its fitness to do so has been redetermined by the Department. Moreover, if the holder does not resume operations within one year of its cessation, its authority shall be revoked f or dormancy.

 To assure com

pliance with all applicable U.S. Government requirements concerning security, the holder shall, before commencing any new service (including charter flights) to or from a foreign airport, contact its Principal Security Inspector (PSI) to advise the PSI of its plans and to find out whether the Transportation Security Administration has determined that security is adequate to allow such airport(s)
to be served.Order 2010

- 4

- 8
Served : April 15, 2010

Attachment A

SERVICE LIST FOR ATLAS AIR INC

MR JOHN MEITUS

LAW OFFICE OF JOHN MIETUS LLC

6701 DEMOCRACY BOULEVARD
BETHESDA MD 20817

- 7500 MR PETER LYNCH

ASST CHIEF COUNSEL F OR

ENFORCEMENT AGC

- 300
FEDERAL AVIATION ADM INISTRATION

800 INDEPENDENCE AVE NUE SW
WASHINGTON DC 20591

MR ALLEN TAYLOR

POI FOR ATLAS AIR INC

FAA NEW YORK FSDO

- 15
900 STEWART AVENUE
GARDEN CITY NEW YORK 11530 MR WILLIAM WEBER
CERTIFICATION SECTION MANAGER

FAA AFS

- 900
45005 AVIATION DRIVE SUITE 131

DULLES VA 20166

MR ADAM KOKAS

SENIOR VICE PRESIDENT AND GENERAL COUNSEL

ATALS AIR INC
200 WESTCHESTER AVENUE
PURCHASE NEW YORK 10577

- 2543 MR CLAY MORITZ RTS

- 42

OFFICE OF AIRLINE INFORMATION

DOT/RSPA/BTS E

- 36
1200 NEW JERSEY AVENUE SE
WASHINGTON DC 20590

MR RUSSELL POMMER

ASSOCIATE GENERAL COUNSEL AND DIRECTOR OF

REGULATORY AFFAIRS

ATLAS AIR INC

1147 PENNSYLVANIA AVE NUE NW
SUITE 875
WASHINGTON DC 20006 MS ANNE SUISSA RTS

- 42

OFFICE OF AIRLINE INFORMATION

DOT/RITA/BTS E

- 34

1200 NEW JERSEY AVENUE SE
WASHINGTON DC 20590

MR BERNARD STANKUS RTS

- 42

OFFICE OF AIRLINE INFORMATION

DOT/R ITA/BTS E

- 34

1200 NEW JERSEY AVE NUE SE
WASHINGTON DC 20590