3

                                
                                
                                
                                
                                
                            FORM 10-Q
                                
                                
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                                
                                
[ x ]     Quarterly Report Pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934
     For the quarterly period ended June 30, 1998

[    ]    Transition Report Pursuant to Section 13 or 15(d) of
      the Securities Exchange Act of 1934
                                
                                
                     Commission File Number
                             0-25732
                                
                                
                         ATLAS AIR, INC.
     (Exact name of registrant as specified in its charter)



     Delaware                             84-1207329
(State of other jurisdiction of         (IRS Employer
  incorporation or organization)        Identification No.)
                                
                                
                                
            538 Commons Drive, Golden, Colorado 80401
    (Address of principal executive offices)      (Zip Code)
                                
                                
                         (303) 526-5050
      (Registrant's telephone number, including area code)



Indicated 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.

                                   [ x ]   Yes         [   ]   No

As of August 3, 1998 the Registrant had 22,442,941 shares of $.01
par value Common Stock outstanding.

                ATLAS AIR, INC. AND SUBSIDIARIES
                                
                                
                              INDEX
                                                                 
                                                                 
                                                                 

PART I.   FINANCIAL INFORMATION

     Item 1.   Consolidated Financial Statements

          Consolidated Balance Sheets-
             June 30, 1998 and December 31, 1997

          Consolidated Statements of Operations-
             Six Months Ended June 30, 1998 and 1997

          Consolidated Statements of Cash Flows-
             Six Months Ended June 30, 1998 and 1997

          Notes to Consolidated Financial Statements

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


PART II.  OTHER INFORMATION

     Item 6.   Exhibits and Reports on Form 8-K

          Exhibit 27 - Financial Data Schedule

          Signatures
                ATLAS AIR, INC. AND SUBSIDIARIES
                                
                   CONSOLIDATED BALANCE SHEETS
                (In thousands, except share data)
                                                               
                                            June 30,     December 31,
                                              1998           1997
                                           (Unaudited)  
                 ASSETS
Current assets:                                                       
     Cash and cash equivalents            $    173,500   $      41,334
     Short-term investments                     33,333         111,635
     Accounts receivable and other, net         47,215          55,702
          Total current assets                 254,048         208,671
Property and equipment:                                               
     Flight equipment                        1,429,651       1,154,562
     Other                                       8,374           7,607
                                             1,438,025       1,162,169
     Less accumulated depreciation            (113,916)       (98,959)
           Net property and equipment        1,324,109       1,063,210
Other assets:                                                         
     Debt issuance costs, net of                                      
      accumulated amortization                  24,675          21,705
     Deferred lease costs                       22,324              --
     Deposits and other                          3,526           3,829
                                                50,525          25,534
               Total assets                 $1,628,682      $1,297,415
                                                                      
                    
  LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:                                                  
     Current portion of long-term debt    $     54,373    $     40,049
     Accounts payable and accrued                                     
      expenses                                  83,701          88,105
     Income tax payable                          8,143             154
          Total current liabilities            146,217         128,308
Long-term debt, net of current portion         901,642         736,026
Deferred aircraft obligations                  295,923         163,167
Deferred income tax payable                     31,841          31,085
Commitments and contingencies                                         
Stockholders' equity:                                                 
     Preferred Stock, $1 par value;                                   
      10,000,000 shares authorized;
      no shares issued                              --              --
     Common Stock, $0.01 par value;                                   
      50,000,000 shares authorized;
      22,511,659 and 22,450,229 shares                                
      issued, respectively                         225             225
     Additional paid-in capital                177,288         176,253
     Retained earnings                          78,187          62,803
     Treasury Stock, at cost; 75,336                                  
      and 19,073 shares, respectively           (2,641)          (452)
          Total stockholders' equity           253,059         238,829
               Total liabilities and                                  
                stockholders' equity        $1,628,682      $1,297,415
                                                         
                    
  The accompanying notes are an integral part of these consolidated
                        financial statements.
                                
                ATLAS AIR, INC. AND SUBSIDIARIES
                                
              CONSOLIDATED STATEMENTS OF OPERATIONS
              (In thousands, except per share data)
                           (Unaudited)
                                                             
                                  Quarter Ended      Six Months Ended
                                     June 30,            June 30,
                                  1998      1997      1998      1997
Revenues:                                                               
   Contract services          $  85,567  $  86,978 $ 163,178 $ 163,795
   Scheduled services                11      3,428       196     6,680
   Charters and other             2,372      3,496     4,210     5,476
      Total operatin revenues    87,950     93,902   167,584   175,951
                                                                      
Operating expenses:                                                   
   Flight crew salaries and                                           
    benefits                      7,692      7,129    14,449    13,947
   Other flight-related                                               
    expenses                      5,458      7,355    11,977    13,722
   Maintenance                   20,995     31,684    41,516    55,011
   Aircraft and engine                                                
    rentals                         945      7,709     2,186    15,485
   Fuel and ground handling       1,745      3,949     3,747     7,128
   Depreciation and                                                   
    amortization                 13,007      9,696    25,237    19,174
   Other                          6,590      9,934    15,411    17,896
     Write-off of capital                                             
      investment and other            -     27,100        --    27,100
        Total operating                                               
         expenses                56,432    104,556   114,523   169,463
Operating income (loss)          31,518   (10,654)   53,061      6,488
Other income (expense):                                               
     Interest income              2,931      1,582     4,592     3,491
     Interest expense           (18,410)  (12,490)  (33,185)  (23,647)
                                (15,479)  (10,908)  (28,593)  (20,156)
Income (loss) before income                                           
taxes                            16,039   (21,562)   24,468   (13,668)
(Provision for) benefit from                                         
income taxes                     (5,934)    7,870    (9,053)    4,989
Income (loss) before                                                  
extraordinary item               10,105   (13,692)   15,415    (8,679)
                                                                      
Extraordinary item:                                                   
  Gain from extinguishment                                            
   of debt, net of
   applicable taxes of $9,622        --     16,740        --    16,740
Net income                     $ 10,105  $   3,048 $  15,415 $   8,061
                                                                      
Basic earnings per share:                                             
  Income (loss) before                                          
   extraordinary item          $    0.45  $  (0.61)  $    0.69  $ (0.39)
  Extraordinary item                 --       0.75         --      0.75
     Net income                $    0.45  $   0.14   $    0.69  $  0.36
Weighted average common                                               
 shares outstanding              22,471     22,450    22,474    22,450
                                                                      
Diluted earnings per share:                                           
   Income (loss) before                                         
    extraordinary item         $    0.45  $  (0.61)  $    0.68  $  (0.39)
   Extraordinary item                --       0.75        --      0.75
   Net income                  $    0.45  $    0.14  $    0.68  $    0.36
Weighted average common shares                                        
outstanding                      22,597     22,542    22,577    22,542
               
  The accompanying notes are an integral part of these consolidated
                        financial statements.

                ATLAS AIR, INC. AND SUBSIDIARIES
                                
              CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (In thousands)
                           (Unaudited)
                                                 
                                         Six Months Ended
                                             June 30,
                                       1998           1997
Operating activities:                             
Net income                           $    15,415     $    8,061
Adjustments to reconcile net                                   
 income to net cash provided
 by operating activities:                                      
  Depreciation and amortization           25,411         19,861
  Amortization of debt issuance                                
   costs                                   2,606          1,530
  Gain on sale of property and                                 
   equipment                                  --        (1,366)
  Write-off of capital investment                              
   and other                                  --         27,100
  Change in deferred income tax                                
   payable                                   756          2,141
  Extraordinary gain                          --       (26,362)
  Changes in operating assets and                              
   liabilities:
    Accounts receivable and other          8,487        (9,335)
    Deposits and other                       303          1,484
    Accounts payable and accrued                               
     expenses                            (4,404)          7,022
    Income tax payable                     7,989        (5,431)
                                                               
         Net cash provided by                                  
          operating activities            56,563         24,705
                                                               
Investment activities:                                         
Purchase of property and                                       
equipment                              (153,554)      (193,244)
Sale of property and equipment                --          3,750
Purchase of short-term                                         
 investments                            (44,594)       (81,008)
Maturity of short-term                                         
 investments                             122,896        115,523
         Net cash used in                                      
          investing activities          (75,252)      (154,979)
                                                               
Financing activities:                                          
Issuance of Common Stock                   1,035             --
Purchase of Treasury Stock               (2,632)          (368)
Issuance of Treasury Stock                   412            327
Borrowings on notes payable              195,408        372,483
Principal payments on notes                                    
 payable                                (15,468)      (237,031)
Debt issuance costs                      (5,576)        (5,362)
Deferred lease costs                    (22,324)             --
         Net cash provided by                                  
          financing activities           150,855        130,049
                                                               
Net increase (decrease) in cash          132,166          (225)
Cash and cash equivalents at                                   
 beginning of period                      41,334          9,793
Cash and cash equivalents at end                               
 of period                            $  173,500       $  9,568
                                                  
                
     The accompanying notes are an integral part of these
              consolidated financial statements.

                ATLAS AIR, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
                                
                                
                                
1.   Unaudited Consolidated Financial Statements

      In  the  opinion of management, the accompanying  unaudited
consolidated   financial  statements  contain   all   adjustments
(consisting only of normal recurring items) necessary to  present
fairly  the financial position of Atlas Air, Inc. and its wholly-
owned  subsidiaries (collectively, the "Company") as of June  30,
1998 and the results of operations and cash flows for the periods
presented.  Certain information and footnote disclosures normally
included  in  financial statements prepared  in  accordance  with
generally  accepted accounting principles have been condensed  or
omitted  pursuant  to  the Securities and  Exchange  Commission's
rules and regulations.  The results of operations for the periods
presented  are  not necessarily indicative of the results  to  be
expected  for the full year.  Management believes the disclosures
made  are  adequate  to  ensure  that  the  information  is   not
misleading, and suggests that these financial statements be  read
in  conjunction  with  the Company's December  31,  1997  audited
financial statements included in its Annual Report on Form 10-K.

2.   Reclassifications

     Certain prior year amounts have been reclassified to conform
to current year presentation.

3.   Recently Issued Accounting Standards
     
     In  March 1998, the Accounting Standards Executive Committee
("AcSEC")   of   the  American  Institute  of  Certified   Public
Accountants  ("AICPA") issued Statement of Position ("SOP")  98-1
"Accounting  for  the  Costs of Computer  Software  Developed  or
Obtained  for  Internal  Use."  SOP  98-1  provides  guidance  on
accounting  for  the  costs  of computer  software  developed  or
obtained  for internal use.  Once the capitalization criteria  of
SOP  98-1  have  been met, certain internal and  external  direct
costs  of materials, services and interest should be capitalized.
SOP  98-1 is effective for financial statements for fiscal  years
beginning after December 15, 1998.  The Company believes that the
application  of SOP 98-1 will not have a material impact  on  its
financial statements.
     
     In  April 1998, the AcSEC issued SOP 98-5 "Reporting on  the
Costs of Start-up Activities."  SOP 98-5 provides guidance on the
financial reporting of start-up costs and organization costs  and
requires  such  costs  to  be expensed as  incurred.   Generally,
initial  application  of  SOP 98-5  should  be  reported  as  the
cumulative effect of a change in accounting principle.  SOP  98-5
is  effective for financial statements for fiscal years beginning
after  December  15, 1998.  Presently, the Company  is  deferring
certain start-up costs related to the introduction of new  Boeing
747-400 freighter aircraft into the Company's fleet.  The Company
expects that the net of tax effect of the application of SOP 98-5
in  the first quarter of 1999 to be in the range of $2 million to
$3 million.
     
     In  June  1998,  the  Financial Accounting  Standards  Board
("FASB")  issued  Statement  of  Financial  Accounting  Standards
("SFAS")  No.  133  "Accounting for  Derivative  Instruments  and
Hedging  Activities."   SFAS No. 133 establishes  accounting  and
reporting  standards  requiring that every derivative  instrument
(including  certain  derivative  instruments  embedded  in  other
contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value.  SFAS No. 133 requires that
changes in the derivative's fair value be recognized currently in
earnings  unless  specific  hedge accounting  criteria  are  met.
Special  accounting for qualifying hedges allows  a  derivative's
gains and losses to offset related results on the hedged item  in
the  income statement, and requires that a company must  formally
document, designate, and assess the effectiveness of transactions
that  receive  hedge accounting.  SFAS No. 133 is  effective  for
years beginning after June 15, 1999 and may be implemented as  of
the  beginning  of any fiscal quarter after June 15,  1998.   The
Company  has not yet quantified the impact of adopting  SFAS  No.
133 on its financial statements and has not determined the timing
of  or  method  of its adoption of SFAS No. 133.   However,  SFAS
No.133   could   increase  volatility  in  earnings   and   other
comprehensive income.
     
4.   Short-Term Investments

     Proceeds from the secondary public offering of the Company's
Common Stock in May 1996, plus additional funds, were invested in
various held-to-maturity securities, as defined in SFAS No.  115,
"Accounting   for   Certain  Investments  in  Debt   and   Equity
Securities," which requires investments in debt securities to  be
classified as held-to-maturity and measured at amortized cost  in
the  statement  of  financial  position  only  if  the  reporting
enterprise  has  the positive intent and ability  to  hold  those
securities  to  maturity.  The following  table  sets  forth  the
aggregate  fair  value,  gross unrealized  holding  gains,  gross
unrealized holding losses, and amortized/accreted cost  basis  by
major security type as of June 30, 1998 (in thousands):

                                                            
                                  Gross       Gross    (Amortizat
                    Aggregate  Unrealized  Unrealized     ion)
   Security Type       Fair      Holding     Holding    Accretion
                      Value       Gains      Losses
                                                       
Medium Term Notes   $   4,997   $       -- $        2   $       1
U.S.     Government     7,098            1           1         91
Agencies
Corporate Notes          5,713                      --        (4)
Market      Auction     15,100          --          --         --
Preferreds
     Totals          $  32,908  $        1   $       3    $    88

In addition, there was approximately $423,000 of accrued interest
on  Short-Term Investments at June 30, 1998.  Interest earned  on
these  investments  and  maturities  of  these  investments   are
reinvested in similar securities and cash equivalents.  In  April
1998,  the  Company  invested  approximately  $169.5  million  of
proceeds  from  the sale of its 9 1/4% Senior  Notes  in  similar
securities (see Note 5).

5.   Commitments and Contingencies

     In June 1997, the Company entered into an agreement with The
Boeing  Company  ("Boeing") to purchase 10 new 747-400  freighter
aircraft  to be powered by engines acquired from General Electric
("GE"),  with  options  to purchase up to 10  additional  747-400
aircraft  (the  "Boeing Purchase Agreement").   The  Company  has
arranged leveraged lease financing for the first three of the 747-
400  freighter  aircraft  to be delivered  (see  EETCs  discussed
below).  The Boeing Purchase Agreement requires that the  Company
pay pre-delivery deposits to Boeing prior to the delivery date of
each  747-400 freighter aircraft in order to secure  delivery  of
the  747-400  freighter aircraft and to defray a portion  of  the
manufacturing costs.  Based on the current expected firm aircraft
delivery  schedule, the Company expects the maximum total  amount
of   pre-delivery  deposits  at  any  time  outstanding  will  be
approximately $162.3 million, which was paid as of June 30, 1998.
Upon  each delivery, Boeing will refund to the Company  the  pre-
delivery deposits associated with the delivered 747-400 freighter
aircraft.   For the remainder of 1998 and for the year 1999,  the
Company   expects  to  pay  $39.9  million  and  $11.8   million,
respectively,  in  pre-delivery deposits in accordance  with  the
firm  order  pre-delivery deposits schedule.   In  addition,  the
Boeing Purchase Agreement provides for a deferral of a portion of
the  pre-delivery  deposits (deferred aircraft  obligations)  for
which  the Company accrues and pays interest quarterly at 6-month
LIBOR,  plus 2.0%.  As of June 30, 1998, there was $288.9 million
of  deferred  aircraft  obligations  outstanding,  which  is  the
expected maximum total amount of deferred aircraft obligations at
any  time,  based on the current expected firm aircraft  delivery
schedule, and the combined interest rate was approximately 7.8%.

     In  January  and February 1998, pursuant to an  early  lease
termination agreement negotiated in November 1997 with Philippine
Airlines   ("PAL"),   the  Company  delivered   to   Boeing   for
modification  to cargo configuration the aircraft  acquired  from
Marine  Midland  Bank in December 1996 and the aircraft  acquired
from  Citicorp  Investor  Lease, Inc.  in  May  1997.  The  first
aircraft was re-delivered to the Company at the end of April 1998
and  the second aircraft was re-delivered to the Company in  July
1998.   The financing for the modification to cargo configuration
was  provided under the Aircraft Acquisition Credit Facility  (as
defined  in  the Company's Form 10-K for 1997), under  which  the
Company borrowed a total of $3.3 million during the first quarter
of  1998 with respect to these aircraft.  In April 1998 and  July
1998,  the Company borrowed an additional $13.8 million and $17.2
million,  respectively, to pay for the final costs of  conversion
for these two aircraft.
     
     In  February  1998,  the Company completed  an  offering  of
$538.9  million  of  Pass  Through Certificates,  also  known  as
enhanced  equipment trust certificates (the "EETCs").  The  EETCs
are  not direct obligations of, or guaranteed by, the Company and
therefore   are  not  included  in  the  Company's   consolidated
financial statements.  In November and December 1997, the Company
entered  into  three  Treasury Note  hedges,  approximating  $300
million  of  principal, for the purpose of  minimizing  the  risk
associated with the fluctuations in interest rates, which are the
basis  for the pricing of the EETCs which were priced in  January
1998.   The  effect of the hedge resulted in a deferred  cost  of
$6.3  million, which will be amortized over the expected  twenty-
year life associated with this financing.  The cash proceeds from
the EETCs were deposited with an escrow agent and will be used to
finance   (through  either  leveraged  leases  or  secured   debt
financings) the acquisition of the first five of the 10 new  747-
400  freighter aircraft from Boeing scheduled to be delivered  to
the  Company  during the period July 1998 through December  1998.
There can be no assurance that the Company will be able to obtain
sufficient  financing to fund the purchase of the remaining  five
747-400  freighter aircraft, or if such financing  is  available,
that it will be available on a commercially reasonable basis.  If
it  is  unable to do so, the Company could be required to  modify
its expansion plans or to incur higher than anticipated financing
costs, which could have a material adverse effect on the Company.
In connection with the EETCs, the Company intends to seek certain
owner  participants who will commit lease equity financing to  be
used  in  leveraged  leases of such aircraft.   The  Company  has
arranged  for  equity participation for the first  three  747-400
freighter aircraft deliveries, of which one occurred at  the  end
of July 1998, one occurred in August 1998 and one is scheduled to
occur in October 1998.
     
     In March 1998, the Company entered into two 10-year agreements
with  GE  to provide all repair and overhaul work on the  engines
related to both the 10 firm and 10 option 747-400 freighter aircraft.
These agreements are based on a fixed cost per flight hour,  similar
to the Company's engine agreement with GE for its 747-200 fleet.

     In  April 1998, the Company consummated the offering of $175
million of unsecured      9 1/4% Senior Notes at 99.867% due 2008
(the  "9 1/4% Senior Notes").  The proceeds of the offering  will
be  used to repay $80 million of the Aircraft Acquisition  Credit
Facility  and for general corporate purposes, which  may  include
the   partial   funding  of  the  redemption  of  the   Company's
outstanding  12  1/4%  Pass Through Certificates  due  2002  (the
"Equipment Notes"), which are subject to redemption at the option
of  the Company on or after December 1, 1998.  Interest on the  9
1/4%  Senior  Notes  is payable semi-annually  on  April  15  and
October 15 of each year, commencing October 15, 1998.  The 9 1/4%
Senior  Notes  are redeemable at the option of  the  Company,  in
whole  or  in  part,  at  any time on or after  April  15,  2003,
pursuant  to  a  defined schedule.  The 9 1/4% Senior  Notes  are
senior  indebtedness of the Company, ranking pari passu in  right
of  payment  with all existing and future senior indebtedness  of
the  Company  and senior in right of payment to all  subordinated
indebtedness  of  the  Company.   The  9 1/4%  Senior  Notes   are
effectively subordinated, however, to all secured indebtedness of
the  Company  and  all  existing and future  liabilities  of  the
Company's subsidiaries.
     
     In  April 1998, the Company entered into a sublease and ramp
use  agreement  with American Airlines, Inc. for  145,000  square
feet  of  hangar, office and parking space at Miami International
Airport  in  support of the Company's increased operations.   The
lease is for a period in excess of four years and commences  July
1,  1998, at a monthly rate of approximately $105,000, subject to
an  annual escalation factor.  Additionally, effective August  1,
1998  the Company leased an additional 5,000 square feet  at  its
existing  facility  located  at  John  F.  Kennedy  International
Airport  ("JFK")  with a monthly rate increase  to  approximately
$70,000.
     
     In  May  1998,  the  Company agreed  to  purchase  a  Boeing
Business  Jet ("BBJ") from Boeing for approximately $30  million.
As  of  June  30,  1998, the Company had paid approximately  $9.0
million in pre-delivery deposits and there was approximately $7.0
million  of deferred aircraft obligations outstanding  for  which
the interest rate was approximately 7.8%.

      In  June  1998, the Company entered into an agreement  with
Lufthansa  Technik  Aktiengesellschaft ("Lufthansa  Technik")  by
which Lufthansa Technik will provide all required maintenance for
the  Company's  initial order of 10 747-400  freighter  aircraft,
plus  any  additional  747-400  freighter  aircraft  the  Company
purchases   pursuant  to  its  option  in  the  Boeing   Purchase
Agreement,  on a "power by the hour" basis for 10 years,  with  a
provision for the Company to terminate the agreement as  of  June
2003.   

     Under the FAA's Directives issued under its "Aging Aircraft"
program,   the   Company   is  subject  to   extensive   aircraft
examinations   and  may  be  required  to  undertake   structural
modifications  to its fleet to address the problem  of  corrosion
and  structural fatigue.  In November 1994, Boeing issued Nacelle
Strut  Modification Service Bulletins which have  been  converted
into  Directives by the FAA.  Six of the Company's Boeing 747-200
aircraft  will  have  to  be brought into  compliance  with  such
Directives  by  March  2000  at  an  estimated  total   cost   of
approximately  $3.0 million.  As part of the FAA's overall  aging
aircraft  program,  it  has issued Directives  requiring  certain
additional aircraft modifications to be accomplished. The Company
estimates  that  the modification costs per aircraft  will  range
between  $2  million  and  $3 million.  Twelve  aircraft  in  the
Company's fleet have already undergone the major portion of  such
modifications.   The  remaining seven aircraft  in  service  will
require  modification prior to the year 2009.   Other  Directives
have been issued that require inspections and minor modifications
to  Boeing  747-200  aircraft.  It is  possible  that  additional
Directives  applicable  to  the  types  of  aircraft  or  engines
included  in  the Company's fleet could be issued in the  future,
the cost of which could be substantial.
     
     On  February  24,  1997, the Company filed a  complaint  for
declaratory  judgment in the Colorado District  Court,  Jefferson
County  against  Israel  Aircraft  Industries  Ltd.  ("IAI")  for
mechanical  problems the Company experienced with respect  to  an
aircraft the Company sub-leased from IAI.  The Company is seeking
approximately $4 million in damages against IAI to be  offset  by
the  amount,  if any, the Company owes IAI pursuant to  the  sub-
lease.   IAI  had  the case removed to the U.S.  District  Court,
District   of   Colorado  on  April  21,  1997  and   has   filed
counterclaims alleging damages of approximately $9 million  based
on  claims  arising from the sub-lease.  The Company  intends  to
vigorously defend against all of IAI's claims.
     
     In March 1997, Air Support International, Inc. ("ASI") filed
a  complaint  against  the Company in the  U.S.  District  Court,
Eastern District of New York alleging actual and punitive damages
of approximately $13.5 million arising from the Company's refusal
to  pay  commissions  which ASI claims it is owed  for  allegedly
arranging   certain  contracts  between  the  Company   and   its
customers.  The Company intends to vigorously defend against  all
of ASI's claims.
     
6.   Subsequent Events

     In July 1998, the Company secured permanent financing in the
amount of $38.9 million from Banc One Leasing Corporation for one
of   the   aircraft  originally  financed  under   the   Aircraft
Acquisition Credit Facility.  The new financing carries a term of
10  years at an annual interest rate of  approximately 7.5%  with
quarterly debt service payments.

      In  July  1998,  the Company purchased a 747-200  freighter
aircraft  from  Air France Partnairs Leasing N.V. for  which  the
Company financed approximately $31.3 million through the Aircraft
Acquisition  Credit Facility.  This aircraft is  currently  being
leased to a third-party with a scheduled lease termination at the
end of January 1999.

     At the end of July 1998 and in August 1998, the Company took
delivery of the first and second of 10 747-400 freighter aircraft
it has contracted to acquire under the Boeing Purchase Agreement.
Financing  for  these  aircraft was  provided  through  leveraged
leases,  utilizing a portion of the funding provided by  proceeds
from  the  EETCs discussed above.  The Company has  entered  into
long-term  contracts with British Airways World  Cargo  ("British
Airways') and  Cargolux Airlines International, S.A. ("Cargolux")
for  the  operation  of  the first and second  747-400  freighter
aircraft, respectively.

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

     The Company provides airport-to-airport cargo transportation
services throughout the world to major international air carriers
generally  under  three- to five-year fixed-rate contracts  which
typically  require  that  the  Company  supply  aircraft,   crew,
maintenance  and  insurance (the "ACMI  Contracts").   The  cargo
operations  of  the Company's airline customers are  seasonal  in
nature, with peak activity occurring traditionally in the  second
half of the year, and with a significant decline occurring in the
first quarter.  This decline in cargo activity is largely due  to
the  decrease in shipping that occurs following the December  and
first quarter holiday seasons associated with the celebration  of
Christmas  and  the Chinese New Year.  Certain of  the  Company's
customers  have, in the past, elected to use that period  of  the
year  to  exercise their contractual options to cancel a  limited
number (generally not more than 5% per year) of guaranteed  hours
with  the Company, and are expected to continue to do so  in  the
future.  As a result, the Company's revenues typically decline in
the  first  quarter  of  the  year as  its  contractual  aircraft
utilization  level temporarily decreases.  The Company  seeks  to
schedule,  to the extent possible, its major aircraft maintenance
activities during this period to take advantage of any unutilized
aircraft time.

       The   aircraft   acquisitions,  lease   arrangements   and
modification  schedule are described in Note 6 of  the  Company's
December 31, 1997 consolidated financial statements.  The  timing
of  when  an  aircraft enters the Company's fleet can affect  not
only  annual  performance, but can make quarterly  results  vary,
thereby affecting the comparability of operations from period  to
period.

      The table below sets forth selected financial and operating
data  for the first and second quarters of 1998 and 1997 (dollars
in thousands).

                           1998                          1997        
                Cumu-      2nd       1st      Cumu-      2nd       1st
                lative   Quarter   Quarter    lative   Quarter   Quarter
Total                                                                    
operating                                                                
revenues       $167,584   $87,950   $79,634  $175,951   $93,902   $82,049
Operating                                                                
expenses        114,523  56,432      58,091   169,463   104,556    64,907
Operating                                                                
income (loss)    53,061    31,518    21,543     6,488  (10,654)    17,142
Other income                                                             
(expense)      (28,593)  (15,479)  (13,114)  (20,156)  (10,908)   (9,248)
Net income       15,415    10,105     5,310     8,061     3,048     5,013
Block hours      32,216    16,828    15,388    32,984    17,541    15,443
Average                                                                  
aircraft                                                                 
operated           17.3      17.7      17.0      18.4      19.5      17.2
Operating                                                                
margin                                                                   
(deficit)         31.7%     35.8%     27.1%      3.7%   (11.4)%     20.9%

Operating Revenues and Results of Operations

     Total operating revenues for the quarter ended June 30, 1998
decreased to $88.0 million from $93.9 million for the same period
in  1997, or approximately 6%.  This reflected the decline in the
average  number  of aircraft in the Company's  fleet  during  the
second  quarter of 1998, to 17.7 aircraft compared to 19.5 during
the  same  period  in  1997, or a decrease of  approximately  9%.
Total  block  hours for the second quarter of  1998  were  16,828
compared  to  17,541 for the same period in 1997, a  decrease  of
approximately  4%, principally reflecting higher utilization  per
average  aircraft  period over period.  Revenue  per  block  hour
decreased by approximately 2% to $5,226 for the second quarter of
1998 compared to $5,353 for the second quarter of 1997.  This was
substantially  due  to the decrease in the  volume  of  scheduled
service  operations period over period, for which  the  rate  per
block  hour is higher due to additional operating costs borne  by
the   Company   under   such  arrangements.   Scheduled   service
operations  are  performed on an ad hoc basis and  are  dependent
upon  excess availability of the Company's aircraft and  customer
demand.

      The  Company's  operating results  improved  from  a  $10.7
million  operating  loss for the second quarter  of  1997  to  an
operating profit of $31.5 million for the second quarter of 1998.
Results   of   operations  were  favorably  impacted   by   lower
maintenance costs due to the return upon lease termination at the
beginning  of  1998 of the five aircraft which  the  Company  had
leased  from  Federal Express Corporation (the "FedEx Aircraft").
The  FedEx  Aircraft experienced significantly higher maintenance
costs  and  were less reliable compared to the other aircraft  in
the Company's fleet.  In addition, operating results improved due
to  the increase in the percentage of owned aircraft compared  to
leased  aircraft in the Company's fleet period over period.   Net
income  of  $3.0 million for the second quarter of 1997 increased
by  232%  to a net income of $10.1 million for the second quarter
of 1998.

      Total operating revenues for the six months ended June  30,
1998 decreased to $167.6 million from $176.0 million for the same
period  in 1997, or approximately 5%.  This reflected the decline
in  the  average number of aircraft in the Company's fleet during
the  first half of 1998, to 17.3 aircraft compared to 18.4 during
the  same period in 1997, a decrease of approximately 6%.   Total
block  hours  for the first half of 1998 were 32,216 compared  to
32,984  for  the same period in 1997, a decrease of approximately
2%,   principally  reflecting  higher  utilization  per   average
aircraft period over period.  Revenue per block hour decreased by
approximately  3%  to $5,202 for the first  six  months  of  1998
compared  to  $5,334  for  the same period  in  1997.   This  was
substantially  due  to the decrease in the  volume  of  scheduled
service operations period over period, as discussed above.

      The  Company's operating results improved by  approximately
718%  from  a  $6.5 million operating profit for  the  first  six
months  of 1997 to an operating profit of $53.1 million  for  the
first  six  months of 1998.  Results of operations were favorably
impacted  by  lower maintenance costs due to the  return  of  the
FedEx  Aircraft upon lease termination at the beginning of  1998,
as  discussed above.  In addition, operating results improved due
to  the increase in the percentage of owned aircraft compared  to
leased  aircraft in the Company's fleet period over period.   Net
income  of  $8.1 million for the first half of 1997 increased  by
91% to a net income of $15.4 million for the first half of 1998.

Operating Expenses

      The  Company's principal operating expenses include  flight
crew   salaries  and  benefits;  other  flight-related  expenses;
maintenance; aircraft and engine rentals; fuel costs  and  ground
handling; depreciation and amortization; and other expenses.

      Flight crew salaries and benefits include all such expenses
for  the  Company's pilot work force.  Flight crew  salaries  and
benefits increased to $7.7 million in the second quarter of  1998
compared  to  $7.1  million  in  the  same  period  of  1997,  or
approximately  8%,  due to certain increased staffing  associated
with  overall  operational  requirements  and  with  the  planned
introduction of the 747-400 freighter aircraft into the Company's
fleet in the second half of 1998, which were partially offset  by
the lower block hours period over period.  On a block hour basis,
this expense increased by approximately 13% to $457 per hour  for
the second quarter of 1998 from $406 per hour for the same period
in  1997.   For  the  first six months of  1998,  actual  expense
increased  by  approximately  4%, from  $13.9  million  to  $14.4
million.  On a block hour basis, this expense increased  to  $449
per  hour  from  $423 per hour for the same period  in  1997,  or
approximately 6%.

      Other  flight-related expenses include hull  and  liability
insurance  on  the Company's fleet of Boeing 747  aircraft,  crew
travel  and  meal expenses, initial and recurring  crew  training
costs   and  other  expenses  necessary  to  conduct  its  flight
operations.

      Other flight-related expenses decreased to $5.5 million  in
the  second quarter of 1998 compared to $7.4 million for the same
period of 1997, and to $12.0 million in the six months ended June
30, 1998 compared to $13.7 in the six months ended June 30, 1997,
or approximately 26% and 13%, respectively.  These decreases were
primarily  due to lower insurance costs and a decrease  in  block
hours  period over period.  On a block hour basis, other  flight-
related  expenses declined by approximately 23% to $324 per  hour
for  the second quarter of 1998 compared to $419 per hour for the
same  period in 1997, and by approximately 11% to $372  per  hour
for  the six months ended June 30, 1998 compared to $416 per hour
for the same period in 1997.

      Maintenance  expenses include all expenses related  to  the
upkeep  of  the  aircraft, including maintenance,  labor,  parts,
supplies  and  maintenance reserves.  The costs of  C  Checks,  D
checks  and engine overhauls not otherwise covered by maintenance
reserves are capitalized as they are incurred and amortized  over
the  life of the maintenance event.  In addition, in January 1995
the  Company  contracted with KLM for a significant part  of  its
regular  maintenance operations and support on a fixed  cost  per
flight  hour  basis.  Effective October 1996, certain  additional
aircraft  engines  were accepted into the GE  engine  maintenance
program, also on a fixed cost per flight hour basis, pursuant  to
a 10 year maintenance agreement.

     Maintenance expense decreased to $21.0 million in the second
quarter  of 1998 from $31.7 million in the same period  of  1997,
and  to $41.5 million in the six months ended June 30, 1998  from
$55.0  million  in  the  six  months  ended  June  30,  1997,  or
approximately  34% and 25%, respectively.  These  decreases  were
primarily  due  to  the return of the FedEx Aircraft  upon  lease
termination at the beginning of the first quarter of 1998.  On  a
block  hour basis, maintenance expense decreased by approximately
31%  and  23%, respectively, primarily due to higher  maintenance
costs  associated  with the FedEx Aircraft in  the  1997  periods
compared to the other aircraft in the Company's fleet.

      Aircraft  and  engine rentals include the cost  of  leasing
aircraft  and  spare engines, as well as the cost  of  short-term
engine  leases  required  to replace  engines  removed  from  the
Company's   aircraft   for   either  scheduled   or   unscheduled
maintenance and any related short-term replacement aircraft lease
costs.

      Aircraft and engine rentals were $.9 million in the  second
quarter  of 1998 compared to $7.7 million in the same  period  of
1997, and were $2.2 million in the first half of 1998 compared to
$15.5  million  in  the  first half of 1997,  or  a  decrease  of
approximately  88%  and  86%, respectively.   During  the  second
quarter  of  1998  and for the first half of  1998,  the  Company
leased one aircraft as compared to the second quarter of 1997 and
the  first half of 1997 in which the Company leased six  aircraft
and  five aircraft, respectively.  The cost of engine rentals  in
the  1998  and 1997 periods was insignificant, due to  additional
spare engines purchased by the Company in prior periods.

      Because of the nature of the Company's ACMI Contracts  with
its  airline  customers, under which the Company  is  responsible
only  for the ownership cost and maintenance of the aircraft  and
for supplying aircraft crews and insurance, the Company's airline
customers bear all other operating expenses, including  fuel  and
fuel  servicing; marketing costs associated with obtaining cargo;
airport  cargo handling; landing fees; ground handling;  aircraft
push-back  and  de-icing services; and specific  cargo  and  mail
insurance.   As  a  result, the Company incurs  fuel  and  ground
handling expenses only when it operates on its own behalf, either
in  scheduled services, for ad hoc charters or for ferry flights.
Fuel  expenses  for  the  Company's  non-ACMI  contract  services
include both the direct cost of aircraft fuel as well as the cost
of  delivering fuel into the aircraft.  Ground handling  expenses
for  non-ACMI contract service include the costs associated  with
servicing the Company's aircraft at the various airports to which
it operates as well as other direct flight related costs.

      Fuel  and  ground handling costs decreased by approximately
56%  to  $1.7  million for the second quarter of 1998  from  $3.9
million  for  the  second  quarter  of  1997,  and  decreased  by
approximately 47% to $3.7 million for the first half of 1998 from
$7.1  million  for the first half of 1997.  These decreases  were
primarily  due  to  an  approximate  64%  decrease  in  scheduled
service,  charter and other non-ACMI block hours  in  the  second
quarter  of 1998 compared to the second quarter of 1997,  and  an
approximate  51%  decrease in such non-ACMI block  hours  in  the
first half of 1998 compared to the first half of 1997.

      Depreciation and amortization expense includes depreciation
on   aircraft,  spare  parts  and  ground  equipment,   and   the
amortization of capitalized major aircraft maintenance and engine
overhauls.

      Depreciation  and amortization expense increased  to  $13.0
million  in the second quarter of 1998 from $9.7 million  in  the
same  period of 1997, and to $25.2 million in the first  half  of
1998   from   $19.2  million  in  the  year-earlier  period,   or
approximately 34% and 32%, respectively.  These increases reflect
the  increase in owned aircraft, engines and spare parts for  the
second  quarter of 1998 and the first half of 1998 over the  same
periods  in  1997.   In  addition, Other  Revenues  include  $0.2
million  of depreciation for the first quarter of 1998 associated
with  the  net  lease of two aircraft, which  were  in  passenger
configuration during 1997 and the beginning of 1998, compared  to
$0.4  million  and $0.7 million of depreciation  for  the  second
quarter of 1997 and the first half of 1997, respectively.

       Other  operating  expenses  include  salaries,  wages  and
benefits  for  all  employees other than pilots;  accounting  and
legal  expenses;  supplies; travel and meal  expenses,  excluding
those of the aircraft crews; commissions; and other miscellaneous
operating costs.

      Other  operating expenses decreased to $6.6 million in  the
second  quarter of 1998 from $9.9 million in the same  period  of
1997,  and to $15.4 million for the first half of 1998 from $17.9
million  for  the same period of 1997, or approximately  34%  and
14%,  respectively.   On  a  block  hour  basis,  these  expenses
decreased  to  $392 per hour in the second quarter of  1998  from
$566  per  hour in the same period of 1997, and to $478 per  hour
for  the first half of 1998 from $543 per hour in the same period
of  1997,  or  approximately 31% and  12%,  respectively.   These
decreases  in cost from the prior year periods were due primarily
to  the  capitalization of certain start-up costs in  the  second
quarter of 1998 associated with the planned introduction  of  the
747-400  aircraft  and  certain manufacturer  credits,  partially
offset by increased staffing and other resources associated  with
the expansion of the Company's operations.

Other Income (Expense)

      Other  income  (expense) consists of  interest  income  and
interest  expense.  Interest income increased to $2.9 million  in
the  second quarter of 1998 from $1.6 million in the same  period
of  1997,  and to $4.6 million for the first six months  of  1998
from $3.5 million for the first six months of 1997, primarily due
to  the investment of proceeds from the Company's issuance of the
9 1/4% Senior Notes (as defined) in April 1998.  Interest expense
increased  to  $18.4 million in the second quarter of  1998  from
$12.5 million in the same period of 1997, and to $33.2 million in
the  first  half  of 1998 from $23.6 million in the  year-earlier
period,  or  approximately  47%  and  40%,  respectively.   These
increases  resulted  from  the  financing  associated  with   the
acquisition of additional aircraft and the costs of conversion to
freighter configuration between these periods and the issuance of
the 9 1/4 % Senior Notes in April 1998.

Income Taxes

      Pursuant to the provisions of SFAS No. 109 "Accounting  for
Income Taxes," the Company has recorded a tax provision based  on
tax  rates in effect during the period.  Accordingly, the Company
accrued taxes at the rate of 37.0% during the second quarter  and
first  half of 1998 and 36.5% during the second quarter and first
half  of  1997.   Due  to significant capital  costs,  which  are
depreciated   at  an  accelerated  rate  for  tax   purposes,   a
significant portion of the Company's tax provision for  the  1998
and 1997 periods is deferred.

Liquidity and Capital Resources

      At June 30, 1998, the Company had cash and cash equivalents
of   approximately  $173.5  million,  short-term  investments  of
approximately  $33.3 million and working capital of approximately
$107.8  million.  During the first half of 1998,  cash  and  cash
equivalents  increased approximately $132.2 million,  principally
reflecting  cash  provided  from  operations  of  $56.6  million,
proceeds  from debt issuance and equipment financings  of  $195.4
million,  net proceeds from the maturity and purchase  of  short-
term  investments of $78.3 million and proceeds from the exercise
of stock options of $1.0 million, partially offset by investments
in  flight  and  other  equipment of  $153.6  million,  principal
reductions of indebtedness of $15.5 million, debt issuance  costs
of $5.5 million, net treasury stock purchases of $2.2 million and
deferred lease costs associated with the financing of the 747-400
freighter  aircraft  of  $22.3 million.   The  Company's  overall
borrowing level increased to $956.0 million at June 30, 1998 from
$776.1 million at December 31, 1997.

     In June 1997, the Company entered into an agreement with The
Boeing  Company  ("Boeing") to purchase 10 new 747-400  freighter
aircraft  to be powered by engines acquired from General Electric
("GE"),  with  options  to purchase up to 10  additional  747-400
aircraft  (the  "Boeing Purchase Agreement").   The  Company  has
arranged leveraged lease financing for the first three of the 747-
400  freighter  aircraft  to be delivered  (see  EETCs  discussed
below).   The Boeing Purchase Agreement requires that the Company
pay pre-delivery deposits to Boeing prior to the delivery date of
each  747-400 freighter aircraft in order to secure  delivery  of
the  747-400  freighter aircraft and to defray a portion  of  the
manufacturing costs.  Based on the current expected firm aircraft
delivery  schedule, the Company expects the maximum total  amount
of   pre-delivery  deposits  at  any  time  outstanding  will  be
approximately $162.3 million, which was paid as of June 30, 1998.
Upon  each delivery, Boeing will refund to the Company  the  pre-
delivery deposits associated with the delivered 747-400 freighter
aircraft.   For the remainder of 1998 and for the year 1999,  the
Company   expects  to  pay  $39.9  million  and  $11.8   million,
respectively,  in  pre-delivery deposits in accordance  with  the
firm  order  pre-delivery deposits schedule.   In  addition,  the
Boeing Purchase Agreement provides for a deferral of a portion of
the  pre-delivery  deposits (deferred aircraft  obligations)  for
which  the Company accrues and pays interest quarterly at 6-month
LIBOR,  plus 2.0%.  As of June 30, 1998, there was $288.9 million
of  deferred  aircraft  obligations  outstanding,  which  is  the
expected maximum total amount of deferred aircraft obligations at
any  time,  based on the current expected firm aircraft  delivery
schedule, and the combined interest rate was approximately  7.8%.
At  the  end  of July 1998 and in August 1998, the  Company  took
delivery of the first and second of five 747-400 freighter to  be
delivered  in  1998.   The  Company has  entered  into  long-term
contracts  with  British Airways World Cargo ("British  Airways')
and  Cargolux Airlines International, S.A. ("Cargolux")  for  the
operation  of  the  first and second 747-400 freighter  aircraft,
respectively.

     In  January  and February 1998, pursuant to an  early  lease
termination agreement negotiated in November 1997 with Philippine
Airlines   ("PAL"),   the  Company  delivered   to   Boeing   for
modification  to cargo configuration the aircraft  acquired  from
Marine  Midland  Bank in December 1996 and the aircraft  acquired
from  Citicorp  Investor  Lease, Inc.  in  May  1997.  The  first
aircraft was re-delivered to the Company at the end of April 1998
and  the second aircraft was re-delivered to the Company in  July
1998.   The financing for the modification to cargo configuration
was  provided under the Aircraft Acquisition Credit Facility  (as
defined  in  the Company's Form 10-K for 1997), under  which  the
Company borrowed a total of $3.3 million during the first quarter
of  1998 with respect to these aircraft.  In April 1998 and  July
1998,  the Company borrowed an additional $13.8 million and $17.2
million,  respectively, to pay for the final costs of  conversion
for these two aircraft.
     
     In  February  1998,  the Company completed  an  offering  of
$538.9  million  of  Pass  Through Certificates,  also  known  as
enhanced  equipment trust certificates (the "EETCs").  The  EETCs
are  not direct obligations of, or guaranteed by, the Company and
therefore   are  not  included  in  the  Company's   consolidated
financial statements.  In November and December 1997, the Company
entered  into  three  Treasury Note  hedges,  approximating  $300
million  of  principal, for the purpose of  minimizing  the  risk
associated with the fluctuations in interest rates, which are the
basis  for the pricing of the EETCs which were priced in  January
1998.   The  effect of the hedge resulted in a deferred  cost  of
$6.3  million, which will be amortized over the expected  twenty-
year life associated with this financing.  The cash proceeds from
the EETCs were deposited with an escrow agent and will be used to
finance   (through  either  leveraged  leases  or  secured   debt
financings) the acquisition of the first five of the 10 new  747-
400  freighter aircraft from Boeing scheduled to be delivered  to
the  Company  during the period July 1998 through December  1998.
There can be no assurance that the Company will be able to obtain
sufficient  financing to fund the purchase of the remaining  five
747-400  freighter aircraft, or if such financing  is  available,
that it will be available on a commercially reasonable basis.  If
it  is  unable to do so, the Company could be required to  modify
its expansion plans or to incur higher than anticipated financing
costs, which could have a material adverse effect on the Company.
In connection with the EETCs, the Company intends to seek certain
owner  participants who will commit lease equity financing to  be
used  in  leveraged  leases of such aircraft.   The  Company  has
arranged  for  equity participation for the first  three  747-400
freighter aircraft deliveries, of which one occurred at  the  end
of July 1998, one occurred in August 1998 and one is scheduled to
occur in October 1998.
     
     In March 1998, the Company entered into two 10-year agreements
with  GE  to provide all repair and overhaul work on the  engines
related to both the 10 firm and 10 option 747-400 freighter aircraft.
These agreements are based on a fixed cost per flight hour,  similar
to the Company's engine agreement with GE for its 747-200 fleet.

     In  April 1998, the Company consummated the offering of $175
million of unsecured      9 1/4% Senior Notes at 99.867% due 2008
(the  "9 1/4% Senior Notes").  The proceeds of the offering  will
be  used to repay $80 million of the Aircraft Acquisition  Credit
Facility  and for general corporate purposes, which  may  include
the   partial   funding  of  the  redemption  of  the   Company's
outstanding  12  1/4%  Pass Through Certificates  due  2002  (the
"Equipment Notes"), which are subject to redemption at the option
of  the Company on or after December 1, 1998.  Interest on the  9
1/4%  Senior  Notes  is payable semi-annually  on  April  15  and
October 15 of each year, commencing October 15, 1998.  The 9 1/4%
Senior  Notes  are redeemable at the option of  the  Company,  in
whole  or  in  part,  at  any time on or after  April  15,  2003,
pursuant  to  a  defined schedule.  The 9 1/4% Senior  Notes  are
senior  indebtedness of the Company, ranking pari passu in  right
of  payment  with all existing and future senior indebtedness  of
the  Company  and senior in right of payment to all  subordinated
indebtedness  of  the  Company.  The  9  1/4%  Senior  Notes  are
effectively subordinated, however, to all secured indebtedness of
the  Company  and  all  existing and future  liabilities  of  the
Company's subsidiaries.
     
     In  April 1998, the Company entered into a sublease and ramp
use  agreement  with American Airlines, Inc. for  145,000  square
feet  of  hangar, office and parking space at Miami International
Airport  in  support of the Company's increased operations.   The
lease is for a period in excess of four years and commences  July
1,  1998, at a monthly rate of approximately $105,000, subject to
an  annual escalation factor.  Additionally, effective August  1,
1998  the Company leased an additional 5,000 square feet  at  its
existing  facility  located  at  John  F.  Kennedy  International
Airport  ("JFK")  with a monthly rate increase  to  approximately
$70,000.
     
     In  May  1998,  the  Company agreed  to  purchase  a  Boeing
Business  Jet ("BBJ") from Boeing for approximately $30  million.
As  of  June  30,  1998, the Company had paid approximately  $9.0
million in pre-delivery deposits and there was approximately $7.0
million  of deferred aircraft obligations outstanding  for  which
the interest rate was approximately 7.8%.

      In  June  1998, the Company entered into an agreement  with
Lufthansa  Technik  Aktiengesellschaft ("Lufthansa  Technik")  by
which Lufthansa Technik will provide all required maintenance for
the  Company's  initial order of 10 747-400  freighter  aircraft,
plus  any  additional  747-400  freighter  aircraft  the  Company
purchases   pursuant  to  its  option  in  the  Boeing   Purchase
Agreement,  on a "power by the hour" basis for 10 years,  with  a
provision for the Company to terminate the agreement as  of  June
2003.   
     
     In July 1998, the Company secured permanent financing in the
amount of $38.9 million from Banc One Leasing Corporation for one
of   the   aircraft  originally  financed  under   the   Aircraft
Acquisition Credit Facility.  The new financing carries a term of
10  years  at an annual interest rate of approximately 7.5%  with
quarterly debt service payments.

      In  July  1998,  the Company purchased a 747-200  freighter
aircraft  from  Air France Partnairs Leasing N.V. for  which  the
Company financed approximately $31.3 million through the Aircraft
Acquisition  Credit Facility.  This aircraft is  currently  being
leased to a third-party with a scheduled lease termination at the
end of January 1999.

     Due to the contractual nature of the Company's business, the
Company's  management  does not consider  its  operations  to  be
highly working capital-intensive in nature.  Because most of  the
non-ACMI  costs normally associated with operations are borne  by
and  directly  paid for by the Company's customers,  the  Company
does  not  incur significant costs in advance of the  receipt  of
corresponding  revenues.  Moreover, ACMI  costs,  which  are  the
responsibility  of  the  Company, are  generally  incurred  on  a
regular,  periodic  basis ranging from flight  hours  to  months.
These  costs  are  largely matched by revenue  receipts,  as  the
Company's  contracts require regular payments from its customers,
based  upon current flight activity, generally every two to  four
weeks.   As  a  result, the Company has not in  the  past  had  a
requirement for a working capital facility.

     Under the FAA's Directives issued under its "Aging Aircraft"
program,   the   Company   is  subject  to   extensive   aircraft
examinations   and  may  be  required  to  undertake   structural
modifications  to its fleet to address the problem  of  corrosion
and  structural fatigue.  In November 1994, Boeing issued Nacelle
Strut  Modification Service Bulletins which have  been  converted
into  Directives by the FAA.  Six of the Company's Boeing 747-200
aircraft  will  have  to  be brought into  compliance  with  such
Directives  by  March  2000  at  an  estimated  total   cost   of
approximately  $3.0 million.  As part of the FAA's overall  aging
aircraft  program,  it  has issued Directives  requiring  certain
additional aircraft modifications to be accomplished. The Company
estimates  that  the modification costs per aircraft  will  range
between  $2  million  and  $3 million.  Twelve  aircraft  in  the
Company's fleet have already undergone the major portion of  such
modifications.   The  remaining seven aircraft  in  service  will
require  modification prior to the year 2009.   Other  Directives
have been issued that require inspections and minor modifications
to  Boeing  747-200  aircraft.  It is  possible  that  additional
Directives  applicable  to  the  types  of  aircraft  or  engines
included  in  the Company's fleet could be issued in the  future,
the cost of which could be substantial.
     
     The   Company  has  performed  a  review  of  its   internal
information  systems  for Year 2000 ("Y2K")  automation  problems
through  a  company-wide  effort,  assisted  by  Y2K  experienced
consultants,  to address internal Y2K system issues and,  jointly
with  industry  trade  groups, issues  related  to  key  business
partners  which are common to other air carriers.  As  a  result,
the  Company does not anticipate that Y2K compliance will have  a
material  financial impact.  The Company has completed the  first
phase  of  this  project,  which included  an  inventory  of  its
computer  network  environment and an assessment  of  the  effort
involved  to  bring its internal computer system  environment  to
full  Y2K  compliance.   Due  to the Company's  relatively  young
systems,  its advanced client server, development and  data  base
architecture,  and its partial reliance on vendor representations
regarding  Y2K compliant third-party systems, related remediation
efforts  are  minimal and achievable.  Third-party  hardware  and
software  used  by  the  Company are,  for  the  most  part,  Y2K
compliant; those that are not compliant have broad customer bases
and  available  software upgrades.  A limited number  of  systems
remain  to  be reviewed for compliance, but are not  of  material
significance.  Initial review of the Company's 747-200  and  747-
400  aircraft  computer systems indicate that  most  all  of  the
systems  are  compliant,  and  those  not  compliant  are   being
addressed by Boeing sub-contractors.  A limited number of systems
need further analysis.
     
     The  Company  has  begun an ongoing program  to  review  the
status  of key supplier/business partner Y2K compliance  efforts.
While the Company believes it is taking all appropriate steps  to
assure  its  Y2K  compliance, it is  dependent  on  key  business
partner compliance to some extent.  The Company plans to have all
company-controllable systems Y2K tested and compliant by the  end
of   1998.    The   Company  anticipates  that  third-party   and
supplier/business partner systems will be fully addressed by mid-
1999  in  the  form of compliance remediation, plans  for  timely
remediation, or contingency plans.  The Y2K problem is  pervasive
and complex, as virtually every global computer operation will be
affected  in some way.  Consequently, no assurance can  be  given
that  all company-used third-party systems and suppliers/business
partners can achieve Y2K compliance.

      From  time to time the Company engages in discussions  with
third  parties  regarding possible acquisitions of aircraft  that
could  expand the Company's operations.  The Company is currently
in discussions with third-parties for the possible acquisition of
additional aircraft for delivery in 1998 and beyond.

      The  Company  believes that cash on  hand,  the  cash  flow
generated from its operations and the proceeds from the May  1996
public offering of its Common Stock, the August 1997 placement of
the  Company's 10 3/4 % Senior Notes and the April 1998 placement
of the 9 1/4 % Senior Notes, combined with availability under the
Aircraft  Acquisition Credit Facility and  the  proceeds  of  the
EETCs,  will  be sufficient to meet its normal ongoing  liquidity
needs for the next twelve months.

Forward-looking Information

      To  the extent that any of the statements contained  herein
relating  to  the Company's expectations, assumptions  and  other
Company  matters are forward-looking, they are made  in  reliance
upon  the  safe  harbor  provisions  of  the  Private  Securities
Litigation  Reform  Act of 1995.  Such statements  are  based  on
current  expectations that involve a number of uncertainties  and
risks  that could cause actual results to differ materially  from
those projected in the forward-looking statements, including, but
not  limited  to, risks associated with:  worldwide business  and
economic conditions; product demand and the rate of growth in the
air  cargo  industry; the impact of competitors  and  competitive
aircraft  and  aircraft financing availability;  the  ability  to
attract   and  retain  new  and  existing  customers;  normalized
aircraft  operating costs and reliability; management of  growth;
the  continued productivity of its workforce; dependence  on  key
personnel;  and  regulatory matters.  For additional  information
regarding these and other risk factors, reference is made to  the
Company's Annual Report on Form 10-K for the year ended  December
31, 1997.
                ATLAS AIR, INC. AND SUBSIDIARIES
                                
                                
                                
                                
                                
                   PART II. OTHER INFORMATION
                                
                                
                                
ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K


a.        Exhibits

               Exhibit 27 - Financial Data Schedule

b.        Reports filed on Form 8-K

               None.
                           SIGNATURES
                                



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




                         ATLAS AIR, INC.
                          (Registrant)
                                
                                
                                
                                
Date:  August 13, 1998       By:   /s/ Stephen C. Nevin
                                   Stephen C. Nevin
                                   Vice President and
                                   Chief Financial Officer
                                   Principal Accounting Officer