<PAGE>

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q



[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

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


                             COMMISSION FILE NUMBER
                                     0-25732


<Table>
<S>                                                              <C>
          ATLAS AIR WORLDWIDE HOLDINGS, INC.                                       ATLAS AIR, INC.
(Exact name of registrant as specified in its charter)           (Exact name of registrant as specified in its charter)

                     DELAWARE                                                          DELAWARE
         (State or other jurisdiction of                                   (State or other jurisdiction of
          incorporation or organization)                                    incorporation or organization)

                    13-4146982                                                        84-1207329
         (IRS Employer Identification No.)                                (IRS Employer Identification No.)

    2000 WESTCHESTER AVE., PURCHASE, NY 10577                           2000 WESTCHESTER AVE., PURCHASE, NY 10577
(Address of principal executive offices) (Zip Code)                (Address of principal executive offices) (Zip Code)

                 (914) 701 - 8000                                                    (914) 701 - 8000
(Registrant's telephone number, including area code)               (Registrant's telephone number, including area code)
</Table>

THIS COMBINED FORM 10-Q IS SEPARATELY FILED BY ATLAS AIR WORLDWIDE HOLDINGS,
INC. AND ATLAS AIR, INC. INFORMATION CONTAINED HEREIN RELATING TO ANY INDIVIDUAL
REGISTRANT IS FILED BY SUCH REGISTRANT ON ITS BEHALF. NO REGISTRANT MAKES ANY
REPRESENTATION AS TO INFORMATION RELATING TO ANY OTHER REGISTRANT.

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

                                                  [X] YES        [ ] NO

AS OF NOVEMBER 8, 2001 ATLAS AIR WORLDWIDE HOLDINGS, INC. HAD 38,230,922 SHARES
OF $.01 PAR VALUE COMMON STOCK OUTSTANDING.

AS OF NOVEMBER 8, 2001 ATLAS AIR , INC. HAD 100 SHARES OF $.01 PAR VALUE COMMON
STOCK OUTSTANDING. ALL SHARES ARE HELD BY ATLAS AIR WORLDWIDE HOLDINGS, INC.



<PAGE>

               ATLAS AIR WORLDWIDE HOLDINGS, INC. AND SUBSIDIARIES


                                      INDEX



<Table>
<Caption>
                                                                                  Page
                                                                                  ----
<S>                                                                             <C>
PART I.  FINANCIAL INFORMATION

         Item 1.           Consolidated Financial Statements

                           Consolidated Balance Sheets-
                              September 30, 2001 and December 31, 2000             3

                           Consolidated Statements of Operations-
                              Quarter and Nine Months Ended
                              September 30, 2001 and 2000                          4

                           Consolidated Statements of Cash Flows-
                              Nine Months Ended September 30, 2001 and 2000        5

                           Notes to Consolidated Financial Statements              6

         Item 2.           Management's Discussion and Analysis of Financial
                              Condition and Results of Operations                 12

         Item 3.           Quantitative and Qualitative Disclosures About
                              Market Risk                                         20


PART II. OTHER INFORMATION

         Item 1.           Legal Proceedings                                      21

         Item 6.           Exhibits and Reports on Form 8-K                       22

                           Signatures                                             23
</Table>




                                       2
<PAGE>

               ATLAS AIR WORLDWIDE HOLDINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<Table>
<Caption>
                                                                          SEPTEMBER 30,      DECEMBER 31,
                                                                               2001              2000
                                                                          -------------      ------------
                                                                           (UNAUDITED)
<S>                                                                        <C>               <C>
                                     ASSETS
Current assets:
     Cash and cash equivalents                                             $    236,431      $    493,723
     Short-term investments                                                     122,714            65,269
     Accounts receivable and other, net                                         128,465           145,937
                                                                           ------------      ------------
          Total current assets                                                  487,610           704,929
Property and equipment:
     Flight equipment                                                         1,647,362         1,537,047
     Other                                                                       47,208            43,815
                                                                           ------------      ------------
                                                                              1,694,570         1,580,862
     Less accumulated depreciation                                             (302,635)         (245,976)
                                                                           ------------      ------------
           Net property and equipment                                         1,391,935         1,334,886
Other assets:
     Debt issuance costs, net of accumulated amortization
           of $19,343 and $16,255, respectively                                  21,713            24,540
     Deposits and other                                                          52,629           109,702
                                                                           ------------      ------------
               Total assets                                                $  1,953,887      $  2,174,057
                                                                           ============      ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Current portion of long-term debt                                     $     62,780      $     55,018
     Accounts payable and accrued liabilities                                    69,214           135,287
     Income tax payable                                                              --            31,359
                                                                           ------------      ------------
          Total current liabilities                                             131,994           221,664
Long-term debt, net of current portion                                          964,551         1,037,789
Other liabilities                                                               329,246           286,120
Deferred income taxes                                                            29,840            76,278

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;
       38,230,757 and 38,227,757 shares issued, respectively                        382               382
     Additional paid-in capital                                                 305,914           305,871
     Retained earnings                                                          193,145           247,763
     Deferred compensation - Restricted Stock                                      (958)             (286)
     Treasury Stock, at cost; 4,889 and 60,824 shares, respectively                (160)           (1,524)
     Accumulated other comprehensive income                                         (67)               --
                                                                           ------------      ------------
          Total stockholders' equity                                            498,256           552,206
                                                                           ------------      ------------
               Total liabilities and stockholders' equity                  $  1,953,887      $  2,174,057
                                                                           ============      ============
</Table>

        The accompanying notes are an integral part of these consolidated
                             financial statements.



                                       3
<PAGE>

               ATLAS AIR WORLDWIDE HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


<Table>
<Caption>
                                                                        QUARTER ENDED                   NINE MONTHS ENDED
                                                                        SEPTEMBER 30,                     SEPTEMBER 30,
                                                                -----------------------------     -----------------------------
                                                                    2001             2000             2001             2000
                                                                ------------     ------------     ------------     ------------
<S>                                                             <C>              <C>              <C>              <C>
Revenues:
     Contract services                                          $    142,783     $    200,876     $    447,938     $    552,533
     Charters, scheduled service and other                             7,930            7,735           32,122           14,273
                                                                ------------     ------------     ------------     ------------
          Total operating revenues                                   150,713          208,611          480,060          566,806
Operating expenses:
     Flight crew salaries and benefits                                14,369           15,666           43,728           44,339
     Other flight-related expenses                                    11,564           16,479           35,307           44,504
     Maintenance                                                      28,522           37,838           90,177          106,149
     Aircraft and engine rentals                                      31,530           19,289           93,951           53,983
     Fuel and ground handling                                          9,119            9,768           20,050           20,577
     Depreciation and amortization                                    22,381           25,393           63,036           72,727
     Other                                                            23,892           22,208           86,993           60,981
     Profit sharing settlement expense                                    --               --           22,815               --
     Restructuring and impairment                                         --               --           71,214               --
                                                                ------------     ------------     ------------     ------------
          Total operating expenses                                   141,377          146,641          527,271          403,260
                                                                ------------     ------------     ------------     ------------
Operating income/(loss)                                                9,336           61,970          (47,211)         163,546
Other income (expense):
     Interest income                                                   4,060            7,278           16,881           20,165
     Interest expense                                                (20,719)         (32,035)         (64,176)         (96,435)
     SFAS 133 fair value adjustment of interest rate swap             (2,536)              --           (4,556)              --
                                                                ------------     ------------     ------------     ------------
                                                                     (19,195)         (24,757)         (51,851)         (76,270)
                                                                ------------     ------------     ------------     ------------
Income/(loss) before income taxes and
   cumulative effect of a change in accounting principle              (9,859)          37,213          (99,062)          87,276
Income tax benefit/(provision)                                         5,648          (14,141)          45,836          (33,172)
                                                                ------------     ------------     ------------     ------------
Income/(loss) before cumulative effect of a change in
  accounting principle                                                (4,211)          23,072          (53,226)          54,104

Cumulative effect of a change in accounting principle,
   net of applicable tax benefit of $933                                  --               --           (1,589)              --
                                                                ------------     ------------     ------------     ------------
Net income/(loss)                                               $     (4,211)    $     23,072     $    (54,815)    $     54,104
                                                                ============     ============     ============     ============

Other comprehensive income (unrealized loss on
securities, net of tax)                                                 (256)              --              (67)              --
                                                                ------------     ------------     ------------     ------------

Total comprehensive income/(loss)                               $     (4,467)    $     23,072     $    (54,882)    $     54,104
                                                                ============     ============     ============     ============

Basic earnings per share:
  Income (loss) before cumulative effect of a change in
    accounting principle                                        $      (0.11)    $       0.61     $      (1.40)    $       1.50
  Cumulative effect of a change in accounting principle                   --               --            (0.04)              --
                                                                ------------     ------------     ------------     ------------
  Net income (loss)                                             $      (0.11)    $       0.61     $      (1.44)    $       1.50
                                                                ============     ============     ============     ============
  Weighted average common shares                                      38,163           38,072           38,150           36,041
                                                                ============     ============     ============     ============

Diluted earnings per share:
  Income (loss) before cumulative effect of a change in
    accounting principle                                        $      (0.11)    $       0.60     $      (1.40)    $       1.49
  Cumulative effect of a change in accounting principle                   --               --            (0.04)              --
                                                                ------------     ------------     ------------     ------------
  Net income (loss)                                             $      (0.11)    $       0.60     $      (1.44)    $       1.49
                                                                ============     ============     ============     ============
  Weighted average common shares                                      38,163           38,618           38,150           36,416
                                                                ============     ============     ============     ============
</Table>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       4
<PAGE>

               ATLAS AIR WORLDWIDE HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<Table>
<Caption>
                                                                                NINE MONTHS ENDED
                                                                                  SEPTEMBER 30,
                                                                          -----------------------------
                                                                              2001             2000
                                                                          ------------     ------------
<S>                                                                       <C>              <C>
OPERATING ACTIVITIES:
Net income/(loss)                                                         $    (54,815)    $     54,104
Adjustments to reconcile net income/(loss) to net cash (used in)/
    provided by operating activities:
     Depreciation, amortization and other                                       61,135           72,727
     Allowance for account reserves                                             10,157              604
     Amortization of debt issuance costs and lease financing
        gains and losses                                                        (7,421)            (461)
     Adoption of SFAS 133 and gain on disposition of property
        and equipment                                                           (8,163)             436
     Restructuring and impairment                                               63,439               --
     Deferred income taxes                                                     (46,438)          26,232
     Changes in operating assets and liabilities:
       Accounts receivable and other                                             7,315          (31,225)
       Deposits and other                                                        3,071          (18,027)
       Accounts payable and accrued expenses                                   (67,734)         (17,788)
       Income tax payable                                                      (31,359)           6,702
                                                                          ------------     ------------
          Net cash (used in)/provided by operating activities                  (70,813)          93,304
                                                                          ------------     ------------

INVESTING ACTIVITIES:
Purchase of property and equipment                                            (164,048)        (311,343)
Proceeds from sale of property and equipment                                    53,887           13,808
Purchase of investments                                                        (85,178)         (76,535)
Maturity of investments                                                         76,163           88,015
                                                                          ------------     ------------
          Net cash used in investing activities                               (119,176)        (286,055)
                                                                          ------------     ------------

FINANCING ACTIVITIES:
Issuance of Common Stock                                                            43          107,021
Purchase of Treasury Stock                                                        (507)            (131)
Issuance of Treasury Stock                                                       1,396              948
Net proceeds from debt issuance and lease financing                             11,514          336,131
Principal payments on notes payable                                            (76,990)        (216,802)
Debt issuance costs and deferred lease costs                                    (2,759)         (12,341)
                                                                          ------------     ------------
          Net cash (used in)/provided by financing activities                  (67,303)         214,826
                                                                          ------------     ------------

Net increase (decrease) in cash                                               (257,292)          22,075
Cash and cash equivalents at beginning of period                               493,723          331,605
                                                                          ------------     ------------
Cash and cash equivalents at end of period                                $    236,431     $    353,680
                                                                          ============     ============
</Table>

        The accompanying notes are an integral part of these consolidated
                             financial statements.



                                       5
<PAGE>

               ATLAS AIR WORLDWIDE HOLDINGS, 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 Worldwide
Holdings, Inc. and its wholly-owned subsidiaries (collectively, the "Company" or
"Atlas") as of September 30, 2001 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, 2000 audited financial statements included in Atlas Air Inc.'s Annual Report
on Form 10-K.

Separate financial statements for Atlas Air, Inc. have not been included since
they are identical to the consolidated financial statements of Atlas Air
Worldwide Holdings, Inc. with the exception noted below in the Related Party
Transactions note 7.

2.       RECLASSIFICATIONS

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

3.       RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets". These standards revise the rules related to the accounting for business
combinations, goodwill and other intangible assets. SFAS No. 141 requires that
all business combinations initiated after June 30, 2001 be accounted for using
the purchase accounting method. SFAS No. 142 states that goodwill is no longer
subject to amortization over its useful life. Rather, goodwill is subject to at
least annual assessment for impairment and is to be written down to its fair
value only if the carrying amount is greater than the fair value. In addition,
intangible assets should be separately recognized if the benefit of the
intangible asset is obtained through contractual or other legal rights, or if
the intangible asset can be sold, transferred, licensed, rented or exchanged,
regardless of the acquirer's intent to do so. SFAS No. 141 is not expected to
have a material effect on the Company's financial position or results of
operations. SFAS No. 142 may have an impact on the financial statements of Atlas
Air Worldwide Holdings as it relates to any goodwill or intangible assets
acquired in the acquisition of Polar Air Cargo (see note 13). Management will
evaluate any effect of this standard in the fourth quarter.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations". This standard addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The standard requires recognition of the fair
value of a liability for an asset retirement obligation in the period in which
it is incurred and is effective for financial statements issued for fiscal years
beginning after June 15, 2002. This



                                       6
<PAGE>

standard is not expected to have a material effect on the Company's financial
position or results of operations.

In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets". This standard addresses financial accounting and
reporting for the impairment of long-lived assets and for long-lived assets to
be disposed of. This Statement supercedes SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of",
and the accounting and reporting provisions of APB Opinion No. 30 "Reporting the
Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", for the disposal of a segment of a business (as previously
defined in that Opinion). This standard is effective for financial statements
issued for fiscal years beginning after December 15, 2001, and interim periods
within those fiscal years. Management is reviewing the provisions of this
statement and does not expect them to have a material effect on the Company's
financial position or results of operations.

4.       INVESTMENTS

The Company invests excess cash in various available-for-sale securities, as
defined in SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". SFAS No. 115 requires investments in debt and equity securities
classified as available for sale be measured at fair market value and unrealized
gains and losses recorded in other comprehensive income.

Accrued interest included in cash and cash equivalents, and short-term
investments at September 30, 2001 was approximately $0.3 million, and $2.5
million, respectively. Accrued interest included in cash and cash equivalents,
short-term and long-term investments at December 31, 2000 was approximately $1.1
million, $0.6 million and $1.3 million, respectively. Interest earned on these
investments and related maturities is reinvested in similar securities.
Securities included in short-term investments either mature or are available to
meet operating requirements in less than one year.

The following table sets forth the aggregate fair market value, book value
(amortized/accreted cost) and unrealized gains/losses by major security type at
September 30, 2001:

<Table>
<Caption>
                                     Market value     Book value     Unrealized gain/(loss)
Type of Security                      ($ million)    ($ million)     ($ million)
----------------                     ------------    ------------    ----------------------
<S>                                  <C>             <C>             <C>
Money market                         $       42.5    $       42.5    $         --
Auction securities                           31.8            31.8              --
Corporate notes and bonds                    76.2            75.5             0.7
Municipal bonds                              53.8            53.8              --
Commercial Paper                             34.8            34.7             0.1
Euro bonds                                   23.8            23.6             0.2
Government agencies                          23.0            22.9             0.1
CD & notes                                   19.8            21.1            (1.3)
Accrued interest                              2.8             2.8              --
                                     ------------    ------------    ------------
Total                                $      308.5    $      308.7    $       (0.2)
</Table>

5.       OTHER COMPREHENSIVE INCOME

Total comprehensive income/(loss) for the three and nine months ended September
30, 2001 was ($4.5) million and ($54.9) million, respectively. Other
comprehensive income consisted of net



                                       7
<PAGE>

unrealized losses on securities of $0.3 million and $0.1 million, respectively
for the three and nine months ended September 30, 2001.

6.       PER SHARE AMOUNTS

Basic earnings per share were computed by dividing net income/(loss) before
cumulative effect by the weighted average number of shares of common stock
outstanding during the period. In addition, diluted earnings per share amounts
include potential common shares including restricted stock and options granted
under the Company's annual and long-term incentive plans. The number of diluted
shares is calculated using the treasury stock method, which excludes
anti-dilutive shares from the calculation. The following table sets forth the
computations of basic and diluted earnings per share before and after the
cumulative effect of a change in accounting principle (in thousands, except for
per share data):

<Table>
<Caption>
                                                     Three months ended September 30,  Nine months ended September 30,
                                                          2001             2000             2001             2000
                                                     -------------     -------------   -------------     ------------
<S>                                                  <C>              <C>             <C>               <C>
Earnings Attributable to Common Stockholders
        Net income/(loss) before cumulative
        effect of an accounting change                $     (4,211)    $     23,072    $    (53,226)     $     54,104
        Cumulative effect of an accounting
        change                                                  --               --           (1,589)              --
                                                      ------------     ------------     ------------     ------------
        Net income/(loss)                             $     (4,211)    $     23,072     $    (54,815)    $     54,104
                                                      ============     ============     ============     ============

Shares
        Weighted average shares outstanding
        (Basic)                                             38,163           38,072           38,150           36,041
        Employee options and shares                             --              546               --              375
                                                      ------------     ------------     ------------     ------------
        Weighted average shares outstanding
        (Diluted)                                           38,163           38,618           38,150           36,416
                                                      ============     ============     ============     ============

Earnings Per Share
        Basic
        Before cumulative effect of an
        accounting change                             $      (0.11)    $       0.61     $      (1.40)    $       1.50
        Cumulative effect of an accounting
        change                                                  --               --            (0.04)              --
                                                      ------------     ------------     ------------     ------------
        Net income/(loss)                             $      (0.11)    $       0.61     $      (1.44)    $       1.50
                                                      ============     ============     ============     ============

        Diluted
        Before cumulative effect of an
        accounting change                             $      (0.11)    $       0.60     $      (1.40)    $       1.49
        Cumulative effect of an accounting
        change                                                  --               --            (0.04)              --
                                                      ------------     ------------     ------------     ------------
        Net income/(loss)                             $      (0.11)    $       0.60     $      (1.44)    $       1.49
                                                      ============     ============     ============     ============
</Table>

For the three and nine months ended September 30, 2001 approximately 3.7 million
shares related to employee stock options were not considered in calculating
diluted earnings per share, because inclusion of such shares would have had an
anti-dilutive effect.

7.       RELATED PARTY TRANSACTIONS

During the current quarter, Atlas Air, Inc. declared and paid a $2 million
dividend to Atlas Air Worldwide Holdings, Inc. (Holding Co.) to satisfy working
capital requirements incurred during the ordinary course of business of Holding
Co. The transaction resulted in a reduction in the investment balance recorded
on Holding Co.'s investment in subsidiary and an increase in cash, and a
corresponding reduction in cash and retained earnings recorded in Atlas Air,
Inc.'s financial



                                       8
<PAGE>

statements at September 30, 2001. With the exception of this transaction, the
financial statements of the two companies are identical.

8.       RESTRUCTURING CHARGE

During the 2001 second quarter, the Company announced measures designed to
respond to the current global economic environment and the corresponding decline
in air cargo demand. Accordingly, during the second quarter the Company
announced it would furlough 105 crewmembers and reduce its ground-staff
workforce by 200 employees. Under the restructuring plan finalized by the
Company in the second quarter of 2001, the affected employees received severance
and termination benefits.

In accordance with Emerging Issues Task Force (EITF) No. 94-03, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Incurred in a Restructuring)" and Staff
Accounting Bulletin (SAB) No. 100, "Restructuring and Impairment Charges",
during the second quarter the Company recognized a liability for cost of
termination benefits to be provided to involuntarily terminated employees and
also recorded other liabilities associated with the restructuring. This
restructuring charge of $3.9 million is recorded in the 2001 income statement
for the nine months ended September 30, under the caption `Restructuring and
impairment'. This liability has been reduced by $2.6 million representing
primarily employee severance payments made since June 2001 and the liability at
September 30, 2001 was $1.3 million. The total number of employees terminated
through September 30, 2001 under the restructuring plan were 192.

9.       AIRCRAFT HELD-FOR SALE

Due to the current and forecast global economic environment and the
corresponding decline in air cargo demand, the Company restructured its
operating business plan and decided to take six aircraft out of service and make
them available for sale. These aircraft have been isolated from the rest of the
fleet and the Company is actively marketing the aircraft. Subsequent to
September 11, the Company experienced an increase in demand for charter
services, both commercial and military. To respond to this demand, the Company
utilized four of the six aircraft. However, the Company retains the flexibility
to take the aircraft back out of service should a buyer be found or charter
demand soften. The Company accounts for its aircraft in accordance with SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of". Accordingly, the aggregate carrying amount of the
aircraft of $246.2 million was reduced to the expected net realizable value of
$192.1 million, resulting in an impairment charge recorded in the second quarter
2001 of $54.1 million. The net realizable value of the aircraft was based on a
market assessment of the value of the aircraft. The impairment charge is
recorded in the 2001 income statement for the nine months ended September 30,
under the caption `Restructuring and impairment'.

10.      SFAS 121 IMPAIRMENTS AND OTHER EXIT COSTS

In conjunction with the closure of some of the Company's locations and employee
layoffs, the Company recorded an impairment charge of approximately $0.7 million
related to computer hardware and software and leasehold improvements at the
closed locations. The charge represents the entire carrying value of these
assets, as the Company believes that these assets have no resale value.

The changed business environment described above resulted in a review of the
Company's strategy related to the construction of its maintenance hangar at
Miami International Airport. The Company recorded an impairment charge of $12.5
million in the second quarter to write off $8.6 million of costs currently
capitalized and accrue for $3.9 million of costs related to site restoration and
lease termination costs to discontinue the project. The reserve balance as of
September 30, 2001 was $3.9 million.



                                       9
<PAGE>

The total impairment charge of $13.2 million is recorded in the 2001 income
statement for the nine months ended September 30, under the caption
`Restructuring and impairment'.

11.      COMMITMENTS AND CONTINGENCIES

In October 2000, the Company exercised options under the Boeing Purchase
Agreement for four additional 747-400's to be delivered in 2002. Advance
payments scheduled for the remainder of 2001 total $13.1 million. The Company
has entered into discussions with The Boeing Company that include the possible
deferral of the 747-400 deliveries otherwise scheduled for next year. Depending
on the outcome of these discussions, the deposit schedule may change. The
Company plans to use internally generated funds together with general Company
financings and aircraft financings to fund the remaining cost of these aircraft.

In March 2000, Atlas Air, Inc. received an order from the Government of India
("India") seeking approximately $1.1 million in taxes (plus interest of
approximately $1.1 million and possible penalties) for the tax year 1996 to
1997. During the second quarter 2001, this matter was resolved when the
competent tax authority in India sent a letter acknowledging that the Company is
exempt from Indian taxes under Article 8 of the India/U.S. tax treaty.

On May 24, 2000, the Airline Pilots Association (ALPA) filed suit against Atlas
Air, Inc. in the Southern District of Florida seeking to enjoin, as a violation
of the Railway Labor Act, its establishment of a subsidiary in the United
Kingdom to conduct overseas operations out of London Stansted Airport. The case
was recently moved to the Eastern District of New York and hearing of the case
is set to begin no sooner than December 2001. The Company believes the suit is
without merit and intends to defend its actions in the courts.

In April 2001, the Company announced that it has become a minority investor in a
new United Kingdom-based cargo airline, known as Global Supply Systems, Limited
(GSS). The Company will initially provide ACMI leases of Boeing 747 freighter
aircraft to airlines in the United Kingdom. Atlas' investment in GSS is subject
to receiving the requisite approvals from the appropriate authorities in the
United Kingdom.

12.      EFFECT OF THE EVENTS ON SEPTEMBER 11, 2001

Immediately following the terrorist attacks on September 11, the Federal
Aviation Administration (FAA) closed the U.S. airspace. Atlas resumed operations
on September 14, after the FAA order was rescinded.

During the period in which flight operations were suspended, Atlas experienced
contract revenue losses and incurred incremental expenses associated with crew
and aircraft repositioning and added security measures. The estimate of
incremental losses for the period during and immediately after the suspended
operations is approximately $10 million.

13.      SUBSEQUENT EVENTS

In early October, 2001, the Company received $10.1 million from the Federal
Government as its part of the first series of payments under the Air
Transportation Safety and Stabilization Act which provides direct cash
compensation to U.S. airlines for `direct and incremental' losses that resulted
from the terrorist attacks, for the September 11, 2001 through December 31, 2001
period. The Company is reviewing recently drafted guidelines from the U.S.
Department of Transportation that outline how payments under the Act will be
made, and is also assessing its projected 2001 fourth quarter financial results
to evaluate what the likely amount of the federal payments will be once the



                                       10
<PAGE>

full September 11 through December 31 period is complete. Such total amount will
be recognized in the fourth quarter.

On November 1, 2001, following the receipt of exemption authority from the U.S.
Department of Transportation related to the acquisition of Polar Air Cargo
(Polar), Atlas Air Worldwide Holdings, Inc. completed the previously announced
acquisition of Polar from GE Capital Aviation Services (GECAS), a GE Capital
company. The purchase price of $84 million was effectively reduced by $30
million through certain financing commitments as well as the restructuring of
the associated aircraft leases. In addition, approximately half of the purchase
price has been financed through a two-year amortizing term loan.




                                       11
<PAGE>

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

RESULTS OF OPERATIONS

         The cargo operations of our airline customers are seasonal in nature,
with peak activity typically occurring 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 January holiday seasons associated with the celebration of
Christmas and Chinese New Year. Certain 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
us, and are expected to continue to do so in the future. As a result, our
revenues typically decline in the first quarter of the year as our contractual
aircraft utilization level typically decreases. We seek to schedule, to the
extent possible, our major aircraft maintenance activities during this period to
take advantage of any underutilized aircraft time.

         The aircraft acquisitions and lease arrangements are described in Note
6 of Atlas Air, Inc.'s December 31, 2000 consolidated financial statements
included in the annual report on form 10-K. The timing of when an aircraft
enters or exits our fleet can affect not only annual performance, but can make
quarterly results vary, thereby affecting the comparability of operations from
period to period. In addition, the number of aircraft utilized from period to
period as spare or maintenance back-up aircraft may also cause quarterly results
to vary.

         The table below sets forth selected pro-forma financial and operating
data for the first nine months of 2001 and 2000 (dollars in thousands).

<Table>
<Caption>
                                                   2001                                                2000
                           --------------------------------------------------    --------------------------------------------------
                             CUMU-          3RD           2ND          1ST         CUMU-          3RD          2ND           1ST
                            LATIVE        QUARTER       QUARTER      QUARTER      LATIVE        QUARTER      QUARTER       QUARTER
                           ---------     ---------     ---------    ---------    ---------     ---------    ---------     ---------
<S>                        <C>           <C>           <C>          <C>          <C>           <C>          <C>           <C>
Total operating revenues   $ 480,060     $ 150,713     $ 149,035    $ 180,312    $ 566,806     $ 208,611    $ 191,783     $ 166,412
Operating expenses(a,b)      426,242       141,377       142,733      142,132      403,260       146,641      133,383       123,236
Operating income(a,b)         53,818         9,336         6,302       38,180      163,546        61,970       58,400        43,176
Other income (expense)(c)    (47,295)      (16,659)      (15,756)     (14,880)     (76,270)      (24,757)     (27,734)      (23,779)
Net income(loss)(a,b,c,d)     13,293        (2,613)          227       15,679       54,104        23,072       19,013        12,019
Block hours                   80,416        25,208        25,432       29,776       97,340        35,007       33,140        29,193
Average aircraft operated       35.0          35.8          35.0         34.2         32.0          33.0         32.6          30.5
Operating margin                11.2%          6.2%          4.2%        21.2%        28.9%         29.7%        30.5%         25.9%
</Table>

                  a) Q1 2001 results exclude $22.8 million pre-tax charge
                  related to the profit-sharing settlement expense

                  b) Q2 2001 results exclude $71.2 million pre-tax charge
                  related to restructuring, impairment and other and $7.0
                  million pre-tax account reserve charge

                  c) 2001 results exclude SFAS 133 adjustments to fair value

                  d) Net income is before cumulative effect of a change in
                  accounting principle.

OPERATING REVENUES

         Total operating revenues for the quarter ended September 30, 2001
decreased to $150.7 million from $208.6 million for the same period in 2000, or
approximately 28%. The average number of aircraft in our fleet during the third
quarter of 2001, including the six aircraft held for sale, was 35.8 compared to
33.0 during the same period in 2000. Total block hours for the third quarter of
2001 were 25,208 compared to 35,007 for the same period in 2000, a decrease of
approximately 28%.

         Operating revenue per block hour increased to $5,979 for the third
quarter of 2001 compared to $5,959 for the third quarter of 2000, reflecting
higher utilization of the B747-400 fleet compared to the B747-200 fleet and a
shift in charter pricing reflecting demand for charters with services beyond



                                       12
<PAGE>

that provided under ACMI arrangements. Contract service revenue was $5,664 per
block hour for the third quarter of 2001 compared to $5,738 per block hour
during the third quarter 2000.

         Total operating revenues for the nine months ended September 30, 2001
decreased to $480.1 million from $566.8 million for the same period in 2000, or
approximately 15% on a 17% decrease in block hours from 97,340 to 80,416. The
average number of aircraft in our fleet during the first nine months of 2001 was
35.0 compared to 32.0 during the same period in 2000.

         Operating revenue per block hour increased by approximately 3% to
$5,970 for the nine months ended September 30, 2001 compared to $5,823 for the
same period in 2000. Contract service revenue was $5,570 per block hour for the
nine months ended September 30, 2001 compared to $5,676 per block hour during
the same period in 2000.

OPERATING EXPENSES

         Our principal operating expenses include flight crew salaries and
benefits; other flight-related expenses; maintenance; aircraft and engine
rentals; fuel costs for non-ACMI contract services and non-revenue flights;
ground handling; depreciation and amortization; and other expenses.

         Flight crew salaries and benefits include all such current expenses for
our pilot work force. Flight crew salaries and benefits decreased to $14.4
million in the third quarter of 2001 compared to $15.7 million in 2000,
primarily due to a reduction in the aircraft block hours and the effect of
flight crew furloughs announced in the second quarter compared to the prior
period. While expense decreased by approximately 8% quarter over quarter, on a
block hour basis this expense increased by approximately 27% to $570 per hour
for the third quarter of 2001 from $448 per hour for the same period in 2000 due
to a decline in block hours and the reinstatement of pilot profit sharing.

         For the first nine months of 2001 expense remained fairly consistent
with the prior year, decreasing approximately 1% from $44.3 million to $43.7
million. On a block hour basis, this expense increased approximately 19% to $544
per hour from $456 per hour due to a decline in block hours and the
reinstatement of pilot profit sharing. First quarter 2001 includes $22.8 million
related to the profit sharing settlement on the profit sharing settlement
expense line, which restored profit sharing payments to crew members retroactive
to April 1999. The reduced crew staffing levels announced in May 2001, will
favorably impact flight crew salaries. The Company continues to review future
staffing levels, which could impact this expense category in the future.

         Other flight-related expenses include hull and liability insurance on
our aircraft, crew travel and meal expenses, initial upgrade and recurrent crew
training costs and other expenses necessary to conduct our flight operations,
such as communication and navigation fees.

         Other flight-related expenses decreased to $11.6 million in the third
quarter of 2001 from $16.5 million in the third quarter of 2000, a reduction of
approximately 30% due in large part to a similar reduction in aircraft block
hours for the same periods. For the nine months ended September 30, 2001 other
flight-related expenses decreased to $35.3 million compared to $44.5 million in
the same period of 2000, a reduction of approximately 21%. These decreases were
primarily due to reduced flying levels as compared to the same period in the
prior year. On a block hour basis, other flight-related expenses decreased
approximately 3% to $459 per block hour for the third quarter of 2001 from $471
per block hour for the same period in 2000, and decreased by approximately 4% to
$439 per hour for the nine months ended September 30, 2001 compared to $457 per
hour for the same period in 2000.

         Maintenance expense includes 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



                                       13
<PAGE>

engine overhauls not otherwise covered by maintenance reserves are capitalized
as they are incurred and amortized over the life of the maintenance event. In
January 1995 we contracted with KLM for a significant part of our regular
maintenance operations and support on a fixed cost per flight hour basis. In
December 1999, we entered into a ten-year maintenance agreement with MTU
Maintenance Hanover, a subsidiary of Daimler Chrysler Aerospace, to provide
regular maintenance at a fixed rate per flight hour for engines which were
previously serviced under the KLM agreement, plus additional engines. Pursuant
to a ten-year agreement with General Electric Company (GE), effective October
1996, certain additional aircraft engines were accepted into the GE engine
maintenance program, on a fixed cost per flight hour basis. During 1998, we
entered into separate long-term contracts with Lufthansa Technik for the
airframe maintenance and with GE for the engine maintenance of the 747-400
freighter aircraft, effective with the introduction of the 747-400 freighter
aircraft into our fleet during the second half of 1998. Our maintenance
contracts generally include provisions for annual escalation.

         Maintenance expenses are primarily driven by the level of flying
activity. As a consequence of reduced block hours, maintenance expense decreased
to $28.5 million in the third quarter of 2001 from $37.8 million in the same
period of 2000, a reduction of approximately 25%. For the nine months ended
September 30, 2001 maintenance expense decreased to $90.2 million from $106.1
million, a reduction of approximately 15%. On a block hour basis, maintenance
expense increased by approximately 5% quarter over quarter and increased by
approximately 3% for the first nine months of 2001 compared to the year-earlier
period.

         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 our aircraft for either scheduled or unscheduled
maintenance and any related short-term replacement aircraft lease costs.

         Aircraft and engine rentals were $31.5 million in the third quarter of
2001 compared to $19.3 million in the same period of 2000, an increase of
approximately 63%. For the first nine months of 2001, aircraft and engine
rentals were $94.0 million compared to $54.0 million in the first nine months of
2000, an increase of approximately 74%. The increases were due to the increase
in the number of leased aircraft period over period, which increased aircraft
rental expense, but reduced depreciation and interest expense. There have been
no new leases since the quarter ended December 31, 2000, but the Company, from
time to time, engages in discussions with third parties regarding possible lease
financing of aircraft currently in or new to our fleet.

         Because of the nature of our ACMI Contracts (Aircraft, Crew,
Maintenance and Insurance), our airline customers generally bear all other
operating expenses. As a result, we seldom incur fuel and ground handling
expenses except when we operate on our own behalf either in scheduled services,
for ad hoc charters or for ferry flights. Fuel expenses for our non-ACMI
Contract services, Charters and Scheduled service include both the direct costs
of aircraft fuel as well as the cost of delivering fuel into the aircraft.
Ground handling expenses for non-ACMI Contract service, Charters and Scheduled
service include the costs associated with servicing our aircraft at the various
airports to which we operate.

         Fuel and ground handling costs decreased by approximately 7% to $9.1
million for the third quarter of 2001 from $9.8 million for the third quarter of
2000, and decreased by approximately 3% to $20.1 million for the first nine
months of 2001 from $20.6 million for the first nine months of 2000. The quarter
and year-to-date decreases were primarily due to lower average fuel costs,
coupled with lower other ground handling costs in the current quarter for our
core operations offset by increases from charter demand with services beyond
that provided under ACMI arrangements.

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



                                       14
<PAGE>

overhauls. Owned aircraft are depreciated over their estimated useful lives of
20 to 30 years, using the straight-line method and estimated salvage values of
10% of cost.

         Depreciation and amortization expense decreased to $22.4 million in the
third quarter of 2001 from $25.4 million in the same period of 2000, a reduction
of approximately 12%, and to $63.0 million in the first nine months of 2001 from
$72.7 million in the year-earlier period, a reduction of approximately 13%.
These decreases primarily reflect the greater number of leased versus owned
aircraft in the fleet as compared to the prior quarter and prior year, and the
cessation of depreciation for aircraft currently held for sale; partially offset
by additions to property and equipment, computers and leasehold improvements.

         Other operating expenses include salaries, wages, benefits, travel and
meal expenses for non-crew members and other miscellaneous operating costs.

         Other operating expenses, increased to $23.9 million in the third
quarter of 2001 from $22.2 million in the same period of 2000. For the first
nine months of 2001 other operating expenses, excluding a $7.0 million charge
related to an allowance for account reserve recorded in the 2001 second quarter,
increased to $80.0 million from $61.0 million for the same period of 2000. These
increases were primarily due to additional personnel and other resources
required for the anticipated expansion and continued operation of our fleet
during the first half of 2001. On a block hour basis, these expenses increased
to $948 per hour in the third quarter of 2001 from $634 per hour in the same
period of 2000, an increase of approximately 49% and to $995 per hour for the
first nine months of 2001 from $626 per hour in the same period of 2000, an
increase of approximately 59%.

RESTRUCTURING AND  IMPAIRMENT

         During the second quarter, the Company announced measures designed to
respond to the current global economic environment and the corresponding decline
in air cargo demand. Accordingly, during the 2001 second quarter the Company
announced it would furlough 105 crewmembers and reduce its ground-staff
workforce by 200 employees. Under the restructuring plan finalized by the
Company in the second quarter of 2001, the affected employees received severance
and termination benefits.

         In accordance with Emerging Issues Task Force (EITF) No. 94-03,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (Including Certain Costs Incurred in a Restructuring)" and
Staff Accounting Bulletin (SAB) No. 100, "Restructuring and Impairment Charges",
during the second quarter the Company recognized a liability for cost of
termination benefits to be provided to involuntarily terminated employees and
also recorded other liabilities associated with the restructuring. This
restructuring charge of $3.9 million is recorded in the 2001 income statement
for the nine months ended September 30, under the caption `Restructuring and
impairment'. This liability has been reduced by $2.6 million representing
employee severance payments made since June 2001 and the liability at September
30, 2001 was $1.3 million. The total number of employees terminated through
September 30, 2001 under the restructuring plan were 192.

         The crew member furlough, which commenced in May 2001 was completed in
the second quarter. The ground staff layoffs and other associated restructuring
activities, which commenced in June 2001 were substantially complete by the end
of the third quarter. There were no revisions to the initial restructuring cost
estimates that were recorded in the second quarter. These restructuring
activities are expected to have no adverse material impact on the ongoing
operations of the Company.

         Due to the current and forecast global economic environment and the
corresponding decline in air cargo demand, the Company restructured its
operating business plan and decided to take six aircraft out of service and make
them available for sale. These aircraft have been isolated from the rest of the
fleet and the Company is actively marketing the aircraft. Subsequent to
September 11 the



                                       15
<PAGE>

Company experienced an increase in demand for charter services, both commercial
and military. To respond to this demand, the Company utilized four of the six
aircraft. However, the Company retains the flexibility to take the aircraft back
out of service should a buyer be found or charter demand soften. The Company
accounts for its aircraft in accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
Accordingly, the aggregate carrying amount of the aircraft of $246.2 million was
reduced to the expected net realizable value of $192.1 million, resulting in an
impairment charge recorded in the second quarter 2001, of $54.1 million. The net
realizable value of the aircraft was based on a market assessment of the value
of the aircraft. The impairment charge is recorded in the 2001 income statement
for the nine months ended September 30, under the caption `Restructuring and
impairment'.

         In conjunction with the closure of some of the Company's locations and
employee layoffs, the Company recorded an impairment charge of approximately
$0.7 million related to computer hardware and software and leasehold
improvements at the closed locations. The charge represents the entire carrying
value of these assets, as the Company believes that these assets have no resale
value.

         The changed business environment described above resulted in a review
of the Company's strategy related to the construction of its maintenance hangar
at Miami International Airport. The Company recorded an impairment charge of
$12.5 million in the second quarter to write off $8.6 million of costs currently
capitalized and accrue for $3.9 million of costs related to site restoration and
lease termination costs to discontinue the project. The reserve balance as of
September 30, 2001 was $3.9 million.

           The total impairment charge of $13.2 million is recorded in the 2001
income statement for the nine months ended September 30, under the caption
`Restructuring and impairment'.

OPERATING INCOME

         Operating income for the quarter ended September 30, 2001 decreased to
$9.3 million from $62.0 million for the same period in 2000, a reduction of 85%.
Operating income for the nine months ended September 30, 2001, excluding the
$78.2 million charge recorded in the second quarter related to restructuring,
impairment and account reserve and $22.8 million charge related to the pilot
profit-sharing settlement recorded in the first quarter, decreased to $53.8
million from $163.5 million for the same period in 2000, a reduction of
approximately 67%.

OTHER INCOME (EXPENSE)

         Other income (expense) consists of interest income, interest expense
and fair value changes in derivative instruments. Interest income for the third
quarter of 2001 was $4.1 million compared to $7.3 million for the same period of
2000, and $16.9 million for the first nine months of 2001 compared to $20.2
million for the same period in 2000, primarily due to reductions in the average
interest rates and reduced investment balances. Interest expense decreased to
$20.7 million for the third quarter of 2001 from $32.0 million for the third
quarter of 2000, and to $64.2 million for the nine months ended September 30,
2001 from $96.4 million for the nine months ended September 30, 2000, or
approximately 35% and 33%, respectively. This decrease reflects the effect of
principal payments during 2000 and the first nine months of 2001 and repayment
of debt on sale-leaseback aircraft, resulting in a shift from interest expense
to aircraft lease expense. The change in the fair value of the interest rate
swap from June 30, 2001 to September 30, 2001 of $2.5 million was recorded in
accordance with the provisions of SFAS 133.



                                       16
<PAGE>

INCOME TAXES

         Pursuant to the provisions of SFAS No. 109, "Accounting for Income
Taxes," the Company recorded a tax provision based on tax rates in effect during
the period. The Company's statutory rate differs from the effective rate due to
significant capital costs, which are depreciated at an accelerated rate for tax
purposes. Income tax expense for the first nine months of 2001 was positively
affected through the application of the newly enacted Extraterritorial Income
Exclusion (EIE) tax regime. EIE allows us to exclude 30% of our aircraft leasing
income from taxable income where the leased aircraft are used predominately
outside the United States. The income exclusion is effective for our qualifying
revenue beginning on October 1, 2000. The Company has recorded the entire
benefit of $8.7 million in 2001.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's balance sheet reflected cash and cash equivalents and
short-term investments of $359.1 million and $559.0 million at September 30,
2001 and December 31, 2000, respectively. As of September 30, 2001, all
investments with maturity dates exceeding 90 days are classified as short-term;
at December 31, 2000, investments with maturities exceeding one year were
classified as long-term and included in `Deposits and other'. Long-term
investments totaling $43.0 million were included in `Deposits and other' at
December 31, 2000. At September 30, 2001 the Company had working capital of
$355.6 million compared to $483.3 million at December 31, 2000.

         Cash used in operations for the nine months ended September 30, 2001
was $70.8 million, compared to $93.3 million provided by operations for the
first nine months of 2000. Cash used in operations for the nine months ended
September 30, 2001 was primarily attributable to the net loss for the period
adjusted for non-cash charges such as depreciation and impairment charges,
reduction in deferred tax liability, accrued expenses and income taxes, adoption
of SFAS 133 and gains on the disposition of property and equipment; offset by
reductions in deposits and other, and accounts receivables. Cash provided by
operations for the nine months ended September 30, 2000 was primarily
attributable to net income for the period adjusted for non-cash charges such as
depreciation, and increases in deferred tax liability and income tax payable;
offset by increases in accounts receivable and other, deposits and other, and
reductions in accounts payable and accrued expenses.

         Cash used in investing activities for the nine months ended September
30, 2001 was $119.2 million, compared to $286.1 million for the first nine
months of 2000. For the nine months ended September 30, 2001, cash used in
investing activities was comprised of purchases of property and equipment, net
of proceeds from the sale of equipment, of $110.2 million; and purchases of
short-term and long-term investments, net of maturities, of $9.0 million.
Property and equipment purchases in 2001 comprised primarily of initial deposits
associated with four new Boeing 747-400s, and other capital improvement costs
including aircraft maintenance. Cash used in investing activities for the nine
months ended September 30, 2000 consisted of purchases of property and
equipment, net of proceeds from the sale of equipment, of $297.5 million; offset
by maturities of short-term and long-term investments, net of purchases, of
$11.5 million. Property and equipment purchases in 2000 comprised primarily of
acquisition costs associated with the new Boeing 747-400 aircraft, purchases of
spare airframe and engine parts associated with the new aircraft in our fleet,
purchases of spare engines for the 747-400s, and other capital improvements
including leasehold improvements to our various offices and upgrades and
improvements to our accounting and inventory computer systems.

         Cash used in financing activities for the nine months ended September
30, 2001 was $67.3 million, compared to $214.8 million provided by financing
activities for the first nine months of 2000. For the nine months ended
September 30, 2001, cash used in financing activities consisted primarily of
principal payments on debt, net of proceeds, of $65.5 million and debt issuance
and deferred lease costs of $2.8 million; offset by proceeds from the issuance
of common stock and treasury stock, net of treasury stock purchases, of $0.9
million. Cash provided by financing activities for the nine months ended
September 30, 2000 consisted of proceeds from issuance of common stock of $107.0
million,



                                       17
<PAGE>

debt issuance and lease financing, net of principal payments, cash restricted
for letter of credit and debt issuance and deferred lease costs of $107.0
million and net proceeds from the issuance of treasury stock under the employee
stock purchase plan of $0.8 million.

         The Company believes that cash on hand and the cash flow generated from
operations will be sufficient to meet normal ongoing liquidity needs for the
next twelve months and beyond. The Company expects to fund future capital
commitments through internally generated funds, together with general Company
financings and aircraft financing transactions. However, there can be no
assurance that sufficient financing will be available for all aircraft and other
capital expenditures not covered by firm financing commitments.

         Certain of the Company's debt agreements contain financial ratio
covenants. As of September 30, 2001, the Company's requirement to meet those
covenants was waived by its lenders. The waiver expires December 14, 2001.
Throughout the quarter, the Company had been working with the Administrative
Agent and had arrived at an agreement which, among other things, would have
amended the subject covenants through December 31, 2002. The agreement was
subject to the simple majority approval of the lenders to the facilities. The
Company and the Agent had tentatively established a date for a presentation to
the lenders in these facilities for shortly after September 11, 2001. Given the
upheaval to both aviation and financial markets, the Company proceeded to seek
the short-term waiver of compliance noted above. The Company will shortly
commence negotiations with its lenders regarding an amendment to the covenant
levels through December 31, 2002. The Company is confident that it will be able
to negotiate such approval. If the Company is unable to successfully negotiate
such waivers prior to December 14, 2001, the lenders would have a right to
accelerate repayment of the related debt.

         In October 2000, the Company exercised options under the Boeing
Purchase Agreement for four additional 747-400's to be delivered in 2002.
Advance payments scheduled for the remainder of 2001 total $13.1 million. The
Company has entered into discussions with The Boeing Company that include the
possible deferral of the 747-400 deliveries otherwise scheduled for next year.
Depending on the outcome of these discussions, the deposit schedule may change.
The Company plans to use internally generated funds together with general
Company financings and aircraft financings to fund the remaining cost of these
aircraft.

RECENT DEVELOPMENTS

         On November 1, 2001, following the receipt of exemption authority from
the U.S. Department of Transportation related to the acquisition of Polar Air
Cargo (Polar), Atlas Air Worldwide Holdings, Inc. completed the previously
announced acquisition of Polar from GE Capital Aviation Services (GECAS), a GE
Capital company. The purchase price of $84 million was effectively reduced by
$30 million through certain financing commitments as well as the restructuring
of the associated aircraft leases. In addition, approximately half of the
purchase price has been financed through a two-year amortizing term loan.

OTHER INFORMATION

         Due to the contractual nature of our business, management does not
consider our 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 our customers, we do not incur significant costs in
advance of the receipt of corresponding revenues. Moreover, ACMI costs, which
are our responsibility, are generally incurred on a regular, periodic basis on
either a flight hour or calendar month basis. These costs are largely matched by
revenue receipts, as our contracts require regular payments from our customers
based upon current flight activity, generally every two to four weeks. As a
result, we have not had a requirement for a working capital facility.



                                       18
<PAGE>

         Under the Federal Aviation Administration's (the "FAA") Directives
issued under its "Aging Aircraft" program, we are subject to extensive aircraft
examinations and will be required to undertake structural modifications to our
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. All of our Boeing 747-200 and 747-300
aircraft have been brought into compliance with such Directives. As part of the
FAA's overall Aging Aircraft program, it has issued Directives requiring certain
additional aircraft modifications to be accomplished. We estimate that the
modification costs per 747-200 and 747-300 aircraft will range between $2
million and $3 million. Fifteen aircraft in our 747-200 fleet have already
undergone the major portion of such modifications. The remaining seven 747-200
aircraft will require modification prior to the year 2009. The remaining three
747-300 aircraft will require modification prior to 2012 - 2014 depending on
utilization. Other Directives have been issued that require inspections and
minor modifications to Boeing 747-200 and 747-300 aircraft. The newly
manufactured 747-400 freighter aircraft were delivered to us in compliance with
all existing FAA Directives at their respective delivery dates. It is possible
that additional Directives applicable to the types of aircraft or engines
included in our fleet could be issued in the future, the cost of which could be
substantial.

         We are subject to various international bilateral air services
agreements between the United States and the countries to which we provide
service. We also operate on behalf of foreign flag carriers between various
foreign points without serving the United States. These services are subject to
the bilateral agreements of the respective governments. Furthermore, these
services require FAA approval but not Department of Transportation ("DOT")
approval. We must generally obtain permission from the applicable foreign
governments to provide service to foreign points. Moreover, in some instances,
ACMI Contracts are subject to prior and/or periodic approvals of foreign
governments, whose decisions may be affected by ongoing negotiations and
relations with the United States. For example, a recent ruling by an aviation
agency of the British government concluded that one of our long-term wet-leases
of 747-400 to British Airways no longer meets the "exceptional circumstances"
exception necessary for their operating approval, due to changed market
conditions in the United Kingdom. Should other countries adopt similar rules
and/or begin enforcement of similar rules for political purposes, our business
could be adversely affected.

FORWARD-LOOKING INFORMATION

         Certain statements included or incorporated by reference in this Form
10-Q constitute "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act") and Section 2lE
of the Securities and Exchange Act of 1934, as amended (the "Exchange Act").
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause our actual results, levels of activity,
performance or achievements or industry results, to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by such forward-looking statements. Forward-looking statements represent
the Company's expectations and beliefs concerning future events, based on
information available to the Company at the date of this report. Some factors
that could significantly impact net income, revenues, expenses, and block hours
include, without limitation, the adverse impact of the September 11 terrorist
attacks on the economy in general; the demand for air cargo; the ability to
reduce operating costs and conserve financial resources, taking into account
increased costs incurred or to be incurred as a consequence of the attacks; the
higher costs associated with new airline security directives and any other
increased regulation of air carriers; the significantly higher costs of aircraft
insurance coverage for future claims caused by acts of war, terrorism, sabotage,
hijacking and other similar perils, and the extent to which such insurance will
continue to be available; the ability to raise financing in light of the
September 11 events; the price of jet fuel; actions of the U.S., foreign and
local governments; the economic environment of the airline industry and the
economic environment in general. In addition, forward-looking statements
generally can be



                                       19
<PAGE>

identified by the use of forward-looking terminology such as "may", "will",
"expect", "intend", "estimate", "anticipate", "believe", or "continue" or the
negative thereof or variations thereon or similar terminology. Although we
believe that the expectations reflected in such forward-looking statements are
reasonable, we can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from our expectations are disclosed under "Risk Factors" and
elsewhere in Atlas Air, Inc.'s Form 10-K for December 31, 2000.

         To the extent that any of the statements contained herein relating to
our 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:

o        worldwide business and economic conditions;

o        product demand and the rate of growth in the air cargo industry;

o        the impact of competitors and competitive aircraft and aircraft
         financing availability;

o        the ability to attract and retain new and existing customers;

o        normalized aircraft operating costs and reliability;

o        management of growth and complying with FAA policies;

o        the continued productivity of our workforce;

o        dependence on key personnel; and

o        other regulatory requirements.

     As a result of the foregoing and other factors, no assurance can be given
as to our future results and achievements. Neither we nor any other person
assumes responsibility for the accuracy and completeness of these statements.

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company's market risk sensitive
instruments and positions since disclosure in Atlas Air Inc.'s Annual Report on
Form 10-K for the year ended December 31, 2000.




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<PAGE>

               ATLAS AIR WORLDWIDE HOLDINGS, INC. AND SUBSIDIARIES



                           PART II. OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS


         In April 1999, Atlas Air, Inc. received notification from the National
Mediation Board ("NMB") that the Atlas crew members voted for representation by
the Air Line Pilots Association ("ALPA"). In accordance with the terms of our
profit sharing plan, we ceased paying profit sharing to our crew members newly
represented by ALPA. This action was approved by a ruling in the U.S. District
Court, but was later reversed by the U.S. Court of Appeals. On April 27, 2001,
Atlas Air, Inc. and ALPA reached an agreement resulting in the restoration of
profit sharing pay to Atlas crew members retroactive to April 1999. The Company
and ALPA have subsequently signed a stipulation voluntarily dismissing with
prejudice the litigation relating to the profit sharing plan. The financial
impact of the retroactive settlement is reflected in the first quarter financial
results, and includes 2001 amounts.

         In March 2000, Atlas Air, Inc. received an order from the Government of
India ("India") seeking approximately $1.1 million in taxes (plus interest of
approximately $1.1 million and possible penalties) for the tax year 1996 to
1997. During the second quarter, this matter was resolved when the competent tax
authority in India sent a letter acknowledging that the Company is exempt from
Indian taxes under Article 8 of the India/U.S. tax treaty.

On May 24, 2000, ALPA filed suit against Atlas Air, Inc. in the Southern
District of Florida seeking to enjoin, as a violation of the Railway Labor Act,
its establishment of a subsidiary in the United Kingdom to conduct overseas
operations out of London Stansted Airport. The case was recently moved to the
Eastern District of New York and hearing of the case is set to begin no sooner
than December 2001. The Company believes the suit is without merit and intends
to defend its actions in the courts.







                                       21
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


a.       Exhibits

                  None.

b.       Reports filed on Form 8-K

                  None.





                                       22
<PAGE>

                                   SIGNATURES




Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.




                       ATLAS AIR WORLDWIDE HOLDINGS, INC.
                                  (Registrant)




Date:  November 14, 2001       By:  /s/ Douglas A. Carty
                                    --------------------------------------------
                                    Douglas A. Carty
                                    Senior Vice President and Chief Financial
                                        Officer




                                 ATLAS AIR, INC.
                                  (Registrant)




Date:  November 14, 2001       By:  /s/ Douglas A. Carty
                                    --------------------------------------------
                                    Douglas A. Carty
                                    Senior Vice President and Chief Financial
                                        Officer




                                       23