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 September 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  November 2, 1998 the Registrant had 22,410,841 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-
                September 30, 1998 and December 31, 1997

               Consolidated Statements of Operations-
                Nine Months Ended September 30, 1998 and 1997

               Consolidated Statements of Cash Flows-
                Nine Months Ended September 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)
<TABLE>
<CAPTION>
                                                                
                                        September 30,     December 31,
                                            1998              1997
                                         (Unaudited)     
                                ASSETS
Current assets:                                                        
   <S>                                   <C>  <C>        <C>    <C>
   Cash and cash equivalents             $    153,351    $      41,334
   Short-term investments                     100,000          111,635
   Accounts receivable and other, net          65,108           55,702
        Total current assets                  318,459          208,671
Property and equipment:                                               
   Flight equipment                         1,429,915        1,154,562
   Other                                        8,978            7,607
                                            1,438,893        1,162,169
   Less accumulated depreciation            (128,112)          (98,959)
         Net property and equipment         1,310,781        1,063,210
Other assets:                                                         
   Debt issuance costs, net of                                        
accumulated amortization                       23,871           21,705
   Deposits and other                           3,219            3,829
                                               27,090           25,534
             Total assets                  $1,656,330       $1,297,415
                                                                      
                                   
                 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:                                                  
   Current portion of long-term debt     $     56,261     $     40,049
   Accounts payable and accrued                82,860           88,105
expenses
   Income tax payable                           8,424              154
        Total current liabilities             147,545          128,308
Long-term debt, net of current portion        935,690          736,026
Other liabilities                             269,206          163,167
Deferred income tax payable                    39,002           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;
    22,521,659 and 22,450,229 shares                                  
    issued, respectively                          225              225
   Additional paid-in capital                 177,448          176,253
   Retained earnings                           90,942           62,803
   Treasury Stock, at cost; 115,218                                    
    and 19,073 shares, respectively           (3,728)             (452)
        Total stockholders' equity            264,887          238,829
          Total liabilities and                                       
           stockholders' equity            $1,656,330       $1,297,415
</TABLE>
                                                         
                                   
   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)
<TABLE>
<CAPTION>
                                                                 
                                  Quarter Ended          Nine Months Ended
                                  September 30,            September 30,
                                1998        1997         1998        1997
Revenues:                                                                   
  <S>                         <C>         <C>          <C>          <C>
  Contract services           $ 98,027    $101,136     $261,205     $264,930
  Scheduled services               245         339          441        7,020
  Charters and other            10,917       2,722       15,127        8,198
    Total operating revenues   109,189     104,197      276,773      280,148
                                                                            
Operating expenses:                                                         
  Flight crew salaries and       9,661       7,491       24,110       21,437
   benefits
  Other flight-related           9,116       6,825       21,093       20,546
   expenses
  Maintenance                   23,869      33,458       65,385       88,470
  Aircraft and engine            3,977       7,794        6,163       23,279
   rentals
  Fuel and ground handling       2,570       1,909        6,317        9,024
  Depreciation and              15,600      11,010       40,837       30,183
   amortization
  Other                          8,680      13,977       24,091       31,888
  Write-off of capital              --          --           --       27,100
   investment and other
    Total operating expenses    73,473      82,464      187,996      251,927
Operating income                35,716      21,733       88,777       28,221
Other income (expense):                                                     
  Interest income                3,229       1,669        7,821        5,161
  Interest expense            (18,707)     (13,599)    (51,892)     (37,246)
                              (15,478)     (11,930)    (44,071)     (32,085)
Income (loss) before income     20,238                   44,706      (3,864)
 taxes                                      9,803
(Provision for) benefit from   (7,493)      (3,578)    (16,546)       1,411
 income taxes
Income (loss) before            12,745                   28,160      (2,453)
 extraordinary item                         6,225
                                                                            
Extraordinary item:                                                         
  Gain from extinguishment                                                  
  of debt, net of applicable                                                
  taxes of $9,622                   --          --           --       16,740
Net income                    $ 12,745    $  6,225     $ 28,160     $ 14,287
                                                                            
Basic earnings per share:                                                   
   Income (loss) before                                                     
    extraordinary item         $  0.57     $  0.28      $  1.25     $ (0.11)
   Extraordinary item               --          --           --         0.75
   Net income                  $  0.57     $  0.28      $  1.25      $  0.64
Weighted average common                                                     
 shares outstanding             22,431      22,450       22,460       22,450
                                                                            
Diluted earnings per share:                                                 
   Income (loss) before                                                     
    extraordinary item         $  0.57     $  0.28      $  1.25     $ (0.11)
   Extraordinary item               --          --           --         0.75
   Net income                  $  0.57     $  0.28      $  1.25      $  0.64
Weighted average common                                                     
 shares outstanding             22,534      22,530       22,562       22,538
</TABLE>
                                      
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)
<TABLE>
<CAPTION>
                                                       
                                               Nine Months Ended
                                                 September 30,
                                            1998              1997
Operating activities:                                    


<S>                                       <C>  <C>        <C>   <C>
Net income                                $    28,160     $     14,287
Adjustments to reconcile net income to                                
 net cash provided by operating
 activities:
   Depreciation and amortization               40,984           31,283
   Amortization of debt issuance and                                  
    lease financing costs                       3,739            2,418
   Gain on sale of property and                                        
    equipment                                      --           (1,090)
   Write-off of capital investment and                                
    other                                          --           27,100
   Change in deferred income tax                                      
    payable                                     7,917            9,007
     Extraordinary gain                            --          (26,362)
   Changes in operating assets and                                    
    liabilities:
     Accounts receivable and other            (9,406)          (15,310)
     Deposits and other                           610             (520)
     Accounts payable and accrued                                     
      expenses                                (5,245)           44,065
       Income tax payable                       8,270           (6,209)
                                                                      
        Net cash provided by operating                                
         activities                            75,029           78,669
                                                                      
Investment activities:                                                
Purchase of property and equipment          (260,627)         (335,526)
Sale of property and equipment                     --            3,750
Purchase of short-term investments          (206,029)       (1,270,707)
Maturity of short-term investments            217,664        1,270,890
        Net cash used in investing                                     
         activities                         (248,992)         (331,593)
                                                                      
Financing activities:                                                 
Issuance of Common Stock                        1,195               --
Purchase of Treasury Stock                    (3,894)             (802)
Issuance of Treasury Stock                        597              493
Net proceeds from debt issuance and                                   
lease financing                               361,091          769,719
Principal payments on notes payable          (66,871)         (479,185)
Debt issuance costs                           (6,138)          (16,365)
        Net cash provided by financing                                
         activities                           285,980          273,860
                                                                      
Net increase in cash                          112,017           20,936
Cash and cash equivalents at beginning                                
of period                                      41,334            9,793
Cash and cash equivalents at end of                                   
period                                     $  153,351      $    30,729
</TABLE>
                                                         
                                   
   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  September
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.  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 will be in the range of $1 million
to $2 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, if any, 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 September 30, 1998 (in thousands):

<TABLE>
<CAPTION>
                                                                    
                                           Gross      Gross     (Amorti-
                              Aggregate  Unrealized Unrealized  zation)
        Security Type            Fair     Holding    Holding   Accretion
                                Value      Gains      Losses
                                                               
 <S>                           <C>               <C>      <C>      <C>
 Commercial Paper              $  18,966         $2       $ --     $148
 Medium Term Notes                 5,004          5         --         1
 U.S. Government Agencies         20,019         19         --        --
 Foreign Debt                      2,302          1         --       (1)
 Market Auction Preferreds        53,300         --         --        --
      Totals                   $  99,591        $27       $ --      $148
</TABLE>

In addition, there was approximately $436,000 of accrued interest
on Short-Term Investments at September 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 that were delivered in July,  August  and
October  1998  (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.   There  were
approximately $143.1 million of pre-delivery deposits outstanding
at  September  30, 1998 which were included in flight  equipment.
For  the  remainder  of 1998 and for the year 1999,  the  Company
expects to pay $16.7 million and $11.8 million, respectively,  in
pre-delivery  deposits in accordance with  the  firm  order  pre-
delivery  deposits  schedule.  Upon each  delivery,  Boeing  will
refund  to the Company the pre-delivery deposits associated  with
the  delivered 747-400 freighter aircraft.  Boeing delivered  the
first three aircraft at the end of July 1998, in August 1998  and
in  October  1998,  respectively, and refunded  the  pre-delivery
deposits  associated with these aircraft.  These  three  aircraft
were  placed  into service under long-term contracts,  the  first
aircraft with British Airways World Cargo ("British Airways") and
the   second   and   third   aircraft  with   Cargolux   Airlines
International,  S.A.  ("Cargolux").   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 September 30, 1998, there was $235.6 million of
deferred aircraft obligations included in other liabilities,  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 have been used,
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,  each of which occurred at the end of July  1998,  in
August 1998 and in October 1998.  The Company has determined that
these leveraged leases are operating leases as defined under SFAS
No.  13  "Accounting  for  Leases" and lease  credits  are  being
amortized   over  the  lives  of  the  respective  leases,   with
unamortized credits included in other liabilities.
     
     In  March 1998, the Company entered into a 10-year agreement
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.   This  agreement is based on a fixed cost  per  flight
hour, similar to the Company's engine maintenance agreement  with
GE for its 747-200 fleet.

     In  April 1998, the Company completed 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 commenced  July
1,  1998, at a monthly rate of approximately $105,000, subject to
an  annual escalation factor.  Additionally, in the third quarter
of  1998, the Company leased an additional 8,000 square  feet  at
its  existing  facility located at John F. Kennedy  International
Airport  ("JFK")  with a monthly rate increase  to  approximately
$88,000.
     
     In  May  1998,  the  Company agreed  to  purchase  a  Boeing
Business  Jet ("BBJ") from Boeing for approximately $30  million.
As of September 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  included  in  other
liabilities  for which the interest rate was approximately  7.8%.
This  aircraft  will be used to transport Company  executives  on
business trips throughout the world.  The Company intends to sell
its  current corporate aircraft (currently owned by a  subsidiary
of  the  Company),  upon delivery of the BBJ, and  the  Company's
Chief Executive Officer has agreed to share in the ownership  and
operating costs of the BBJ.

      In  June  1998, the Company entered into an agreement  with
Lufthansa   Technik   Aktiengesellschaft  ("Lufthansa   Technik")
pursuant  to  which Lufthansa Technik will provide  all  required
airframe 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 fixed cost per flight 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, at which time the aircraft will be returned
to the Company's fleet.

       In   September  1998,  the  commitment  for  the  Aircraft
Acquisition Credit Facility was decreased from $250.0 million  to
$200.0  million in connection with a revision of terms  that  are
more  favorable  to  the Company, including  a  decrease  in  the
interest rate from LIBOR, plus 2.5%, to LIBOR, plus 2.0%.

      In September 1998, the Company entered into an agreement to
acquire  three  747-200  freighter  aircraft  from  Cargolux  for
scheduled deliveries in the fourth quarter of 1998.  In addition,
one   of   these  aircraft  will  be  leased  back  to  Cargolux,
immediately upon delivery to the Company.

     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.  Eight 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  $4.0 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 747-200 aircraft  will
range  between $2 million and $3 million.  Thirteen  aircraft  in
the  Company's  747-200 fleet have already  undergone  the  major
portion  of  such  modifications.  The  remaining  eight  747-200
aircraft will require modification prior to the year 2009.  Other
Directives  have been issued that require inspections  and  minor
modifications to Boeing 747-200 aircraft.  The newly manufactured
747-400  freighter  aircraft were delivered  to  the  Company  in
compliance with all existing FAA Directives.  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  October 1998, the Company purchased a 747-200 freighter
aircraft  from Cargolux (see Note 5) and immediately placed  this
aircraft  into service with Cargolux.  The Company financed  this
aircraft  through  the Aircraft Acquisition Credit  Facility  for
approximately $31.0 million.

     In October 1998, the Company entered into separate long-term
contracts  with Iberia Airlines of Spain and with  El  Al  Israel
Airlines  Ltd.  for  utilization of 747-200  freighter  aircraft.
These  contracts represent an expansion of the Company's customer
base  for  long-term contracts.  In addition, the  third  747-400
freighter  aircraft  delivered to the  Company  was  placed  into
service under a long-term contract with Cargolux (see Note 5).

             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.  In addition, the number of aircraft utilized from period
to  period  as spare maintenance back-up aircraft may also  cause
quarterly results to vary.

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

<TABLE>
<CAPTION>
                                            1998
                             Cumu-      3rd       2nd       1st
                            lative    Quarter   Quarter   Quarter

<S>                        <C>        <C>        <C>       <C>
Total operating revenues   $276,773   $109,189   $87,950   $79,634
Operating expenses          187,996     73,473    56,432    58,091
Operating income             88,777     35,716    31,518    21,543
Other income (expense)      (44,071)  (15,478)  (15,479)  (13,114)
Net income                   28,160     12,745    10,105     5,310
Block hours                  51,142     18,926    16,828    15,388
Average aircraft operated      18.2       19.9      17.7      17.0
Operating margin              32.1%      32.7%     35.8%     27.1%
</TABLE>
<TABLE>
<CAPTION>
                                            1997
                             Cumu-      3rd       2nd       1st
                            lative    Quarter   Quarter   Quarter

<S>                        <C>        <C>        <C>       <C>
Total operating revenues   $280,148   $104,197   $93,902   $82,049
Operating expenses          251,927     82,464   104,556    64,907
Operating income (loss)      28,221     21,733  (10,654)   17,142
Other income (expense)      (32,085)  (11,930)  (10,908)   (9,248)
Net income                   14,287      6,225     3,048     5,013
Block hours                  52,921     19,937    17,541    15,443
Average aircraft operated      19.1       20.4      19.5      17.2
Operating margin (deficit)    10.1%      20.9%   (11.4)%     20.9%
</TABLE>

Operating Revenues and Results of Operations

     Total operating revenues for the quarter ended September 30,
1998 increased to $109.2 million from $104.2 million for the same
period in 1997, or approximately 5%.  There was a decline in  the
average  number  of aircraft in the Company's  fleet  during  the
third  quarter of 1998, to 19.9 aircraft compared to 20.4  during
the  same  period  in  1997, or a decrease of  approximately  2%.
Total  block  hours  for the third quarter of  1998  were  18,926
compared  to  19,937 for the same period in 1997, a  decrease  of
approximately  5%,  reflecting a slightly lower  utilization  per
average  aircraft  period over period as a result  of  a  greater
requirement  for  spare  maintenance back-up  aircraft,  and  the
reduction  in average aircraft operated.  Revenue per block  hour
increased by approximately 10% to $5,769 for the third quarter of
1998 compared to $5,226 for the third quarter of 1997.  This  was
substantially  due to (1) the increase in the volume  of  charter
operations period over period, due partially to the operation  of
the  first  two  747-400  deliveries under non-scheduled  service
during  the  period of their FAA-required proving runs  prior  to
their  entry into scheduled service, for which the rate per block
hour  is  higher due to additional operating costs borne  by  the
Company  under  such  arrangements,  (2)  the  introduction  into
service  of  the  first  two  747-400 freighter  aircraft,  which
operate  on  a higher block hour rate than the 747-200  freighter
aircraft,  and  (3)  delayed delivery  credits  provided  to  the
Company with respect to the late delivery of the first and second
747-400  freighter  aircraft, pursuant  to  the  Boeing  Purchase
Agreement.  Charter operations are performed on an ad  hoc  basis
and  are  generally  dependent upon excess  availability  of  the
Company's aircraft and customer demand.

     The Company's operating results improved by 64% from a $21.7
million  operating profit for the third quarter  of  1997  to  an
operating profit of $35.7 million for the third 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 $6.2 million for the third quarter of 1997 increased by
105%  to  a net income of $12.7 million for the third quarter  of
1998.

     Total operating revenues for the nine months ended September
30,  1998 decreased to $276.8 million from $280.1 million for the
same period in 1997, or approximately 1%.  There was a decline in
the  average number of aircraft in the Company's fleet during the
first  nine  months of 1998, to 18.2 aircraft  compared  to  19.1
during  the same period in 1997, a decrease of approximately  5%.
Total  block hours for the first nine months of 1998 were  51,142
compared  to  52,921 for the same period in 1997, a  decrease  of
approximately  3%, reflecting a slightly higher  utilization  per
average  aircraft  period over period.  Revenue  per  block  hour
increased by approximately 2% to $5,412 for the first nine months
of 1998 compared to $5,294 for the same period in 1997.  This was
substantially  due  to  the increase in  the  volume  of  charter
operations  period over period, the introduction of  the  747-400
freighter aircraft and the delayed delivery credits, as discussed
above.

      The  Company's operating results improved by  approximately
215%  from  a $28.2 million operating profit for the  first  nine
months  of 1997 to an operating profit of $88.8 million  for  the
first  nine months of 1998.  Results of operations were favorably
impacted  by  lower  maintenance costs and the  increase  in  the
percentage of owned aircraft, as discussed above.  Net income  of
$14.3 million for the first nine months of 1997 increased by  97%
to  a  net  income of $28.2 million for the first nine months  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 $9.7 million in the third quarter  of  1998
compared  to  $7.5  million  in  the  same  period  of  1997,  or
approximately 29%, due primarily to increased staffing associated
with overall operational requirements and the introduction of the
747-400 freighter aircraft into the Company's fleet in the second
half of 1998.  The expense increased approximately 12% from $21.4
million  to  $24.1 million during the first nine months  of  1998
compared  to the year-earlier period.  Expense in both the  third
quarter  of 1998 and the first nine months of 1998 was  partially
offset  by a reduction in block hours period over period.   On  a
block hour basis, expense increased by approximately 36% to  $511
per hour for the third quarter of 1998 from $376 per hour for the
same  period in 1997, and by approximately 16% to $471  per  hour
for the first nine months of 1998 from $405 per hour for the year-
earlier period.

      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 increased to $9.1 million  in
the  third quarter of 1998 compared to $6.8 million for the  same
period of 1997, and to $21.1 million for the first nine months of
1998  compared to $20.5 million for the year-earlier  period,  or
approximately  34%  and 3%, respectively.  These  increases  were
primarily due to the quarter over quarter increase in crew travel
costs  associated  with  operational requirements  and  with  the
introduction of the 747-400 freighter aircraft into the Company's
fleet,  partially offset by the decrease in block  hours.   On  a
block  hour  basis,  other flight-related expenses  increased  by
approximately 41% to $482 per hour for the third quarter of  1998
compared  to  $342 per hour for the same period in 1997,  and  by
approximately  6% to $412 per hour for the first nine  months  of
1998 compared to $388 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 Royal Dutch Airlines ("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.  In  the
first  half of 1998, the Company entered into separate  long-term
contracts  with Lufthansa Technik Aktiengesellschaft  ("Lufthansa
Technik") for the airframe maintenance and with GE for the engine
maintenance  of  the 747-400 freighter aircraft,  in  conjunction
with the introduction of the 747-400 freighter aircraft into  the
Company's fleet in the second half of 1998.

      Maintenance expense decreased to $23.9 million in the third
quarter  of 1998 from $33.5 million in the same period  of  1997,
and  to $65.4 million in the nine months ended September 30, 1998
from  $88.5 million in the nine months ended September 30,  1997,
or approximately 29% and 26%, 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
25%  and  24%, 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 $4.0 million in the  third
quarter  of 1998 compared to $7.8 million in the same  period  of
1997,  and  were  $6.2 million in the first nine months  of  1998
compared to $23.3 million in the first nine months of 1997, or  a
decrease  of  approximately  49%  and  74%,  respectively.    The
reductions  in  quarter  and nine months  expense  in  1998  were
attributed  to  the  reduction in leased  aircraft  in  the  1998
periods compared to the 1997 periods.  The cost of engine rentals
in  the  1998  and  1997  quarterly and nine  month  periods  was
insignificant, due to the use of owned spare engines.

      Because of the nature of the Company's ACMI Contracts  with
its airline customers, under which the Company is responsible 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.  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.

      Fuel  and  ground handling costs increased by approximately
35%  to  $2.6  million for the third quarter of  1998  from  $1.9
million  for  the  third  quarter  of  1997,  and  decreased   by
approximately  30% to $6.3 million for the first nine  months  of
1998  from  $9.0 million for the first nine months of 1997.   The
increase  quarter over quarter was primarily due to the increased
charter operations and the nine month decrease was primarily  due
to  a  reduction in scheduled service compared to the same period
in 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  $15.6
million  in the third quarter of 1998 from $11.0 million  in  the
same  period  of  1997, and to $40.8 million in  the  first  nine
months of 1998 from $30.2 million in the year-earlier period,  or
approximately 42% and 35%, respectively.  These increases reflect
the  additional owned aircraft, engines and spare parts  for  the
third  quarter and nine months of 1998 over the same  periods  in
1997.

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

      Other  operating expenses decreased to $8.7 million in  the
third  quarter of 1998 from $14.0 million in the same  period  of
1997, and to $24.1 million for the first nine months of 1998 from
$31.9  million for the same period of 1997, or approximately  38%
and 24%, respectively. The reduced expense in cost from the prior
year  quarter  and  nine month periods was due primarily  to  the
capitalization of start-up costs in the second and third quarters
of  1998 associated with the introduction of the 747-400 aircraft
and  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 $3.2 million  in
the third quarter of 1998 from $1.7 million in the same period of
1997, and to $7.8 million for the first nine months of 1998  from
$5.2 million for the first nine 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 and the  return  of
deposits  and proceeds from financing the delivery of  the  first
two  747-400  freighter aircraft in the third  quarter  of  1998.
Interest expense increased to $18.7 million in the third  quarter
of  1998  from $13.6 million in the same period of 1997,  and  to
$51.9 million in the first nine months of 1998 from $37.2 million
in  the  year-earlier  period,  or  approximately  38%  and  39%,
respectively.   These  increases  resulted  from  the   financing
associated  with the acquisition of additional 747-200  aircraft,
the  cost of freighter conversions between these periods and  the
issuance  of  $175 million 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 third quarter  and
first nine months of 1998 and 36.5% during the third quarter  and
first  nine  months of 1997.  Due to the amount of owned  assets,
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  September  30,  1998, the Company  had  cash  and  cash
equivalents   of   approximately   $153.4   million,   short-term
investments  of approximately $100.0 million and working  capital
of approximately $170.9 million.  During the first nine months of
1998,  cash  and cash equivalents increased approximately  $112.0
million,  principally reflecting cash provided by  operations  of
$75.0   million,  net  proceeds  from  debt  issuance  and  lease
financing  of $361.1 million, net proceeds from the maturity  and
purchase  of short-term investments of $11.6 million and proceeds
from  the  exercise  of stock options of $1.2 million,  partially
offset  by  investments in flight and other equipment  of  $260.6
million,  principal reductions of indebtedness of $66.9  million,
debt  issuance  costs  of  $6.1 million and  net  treasury  stock
purchases of $3.3 million.  The Company's overall borrowing level
increased  to  $992.0 million at September 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 that were delivered in July,  August  and
October  1998  (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.   There  were
approximately $143.1 million of pre-delivery deposits outstanding
at  September  30, 1998 which were included in flight  equipment.
For  the  remainder  of 1998 and for the year 1999,  the  Company
expects to pay $16.7 million and $11.8 million, respectively,  in
pre-delivery  deposits in accordance with  the  firm  order  pre-
delivery  deposits  schedule.  Upon each  delivery,  Boeing  will
refund  to the Company the pre-delivery deposits associated  with
the  delivered 747-400 freighter aircraft.  Boeing delivered  the
first three aircraft at the end of July 1998, in August 1998  and
in  October  1998,  respectively, and refunded  the  pre-delivery
deposits  associated with these aircraft.  These  three  aircraft
were  placed  into service under long-term contracts,  the  first
aircraft with British Airways World Cargo ("British Airways") and
the   second   and   third   aircraft  with   Cargolux   Airlines
International,  S.A.  ("Cargolux").   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 September 30, 1998, there was $235.6 million of
deferred aircraft obligations included in other liabilities,  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 have been used,
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,  each of which occurred at the end of July  1998,  in
August 1998 and in October 1998.  The Company has determined that
these leveraged leases are operating leases as defined under SFAS
No.  13  "Accounting  for  Leases" and lease  credits  are  being
amortized   over  the  lives  of  the  respective  leases,   with
unamortized credits included in other liabilities.
     
     In  March 1998, the Company entered into a 10-year agreement
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.   This  agreement is 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 completed 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 commenced  July
1,  1998, at a monthly rate of approximately $105,000, subject to
an  annual escalation factor.  Additionally, in the third quarter
of  1998, the Company leased an additional 8,000 square  feet  at
its  existing  facility located at John F. Kennedy  International
Airport  ("JFK")  with a monthly rate increase  to  approximately
$88,000.
     
     In  May  1998,  the  Company agreed  to  purchase  a  Boeing
Business  Jet ("BBJ") from Boeing for approximately $30  million.
As of September 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  included  in  other
liabilities  for which the interest rate was approximately  7.8%.
This  aircraft  will be used to transport Company  executives  on
business trips throughout the world.  The Company intends to sell
its  current corporate aircraft (currently owned by a  subsidiary
of  the  Company),  upon delivery of the BBJ, and  the  Company's
Chief Executive Officer has agreed to share in the ownership  and
operating costs of the BBJ.

      In  June  1998, the Company entered into an agreement  with
Lufthansa Technik pursuant to which Lufthansa Technik will provide 
all required airframe 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 fixed cost per flight 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, at which time the aircraft will be returned
to the Company's fleet.

       In   September  1998,  the  commitment  for  the  Aircraft
Acquisition Credit Facility was decreased from $250.0 million  to
$200.0  million in connection with a revision of terms  that  are
more  favorable  to  the Company, including  a  decrease  in  the
interest rate from LIBOR, plus 2.5%, to LIBOR, plus 2.0%.

      In September 1998, the Company entered into an agreement to
acquire  three  747-200  freighter  aircraft  from  Cargolux  for
scheduled deliveries in the fourth quarter of 1998, of which  the
first  delivery  occurred in October 1998.   Upon  delivery,  the
Company  immediately  placed  this  aircraft  into  service  with
Cargolux.   The  Company  financed  this  aircraft  through   the
Aircraft  Acquisition  Credit Facility  for  approximately  $31.0
million.

     In October 1998, the Company entered into separate long-term
contracts  with Iberia Airlines of Spain and with  El  Al  Israel
Airlines  Ltd.  for  utilization of 747-200  freighter  aircraft.
These  contracts represent an expansion of the Company's customer
base for long-term contracts.

     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.  Eight 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  $4.0 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 747-200 aircraft  will
range  between $2 million and $3 million.  Thirteen  aircraft  in
the  Company's  747-200 fleet have already  undergone  the  major
portion  of  such  modifications.  The  remaining  eight  747-200
aircraft will require modification prior to the year 2009.  Other
Directives  have been issued that require inspections  and  minor
modifications to Boeing 747-200 aircraft.  The newly manufactured
747-400  freighter  aircraft were delivered  to  the  Company  in
compliance with all existing FAA Directives.  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 and the  cash  flow
generated  from its operations, 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:  November 11, 1998     By:   /s/ Stephen C. Nevin
                                   Stephen C. Nevin
                                   Vice President and
                                     Chief Financial Officer
                                   Principal Accounting Officer