Polar Air Cargo Inc. Business Information, Profile, and History

Company Perspectives:

Polar Air Cargo's mission is to work in partnership with international air freight forwarders and agents by providing them high quality, efficient services at competitive prices and with the highest safety standards of any airline in the world. International air freight forwarders and agents are assured that they and their customers will be served by Polar's experienced and proven air freight professionals in sales, customer service, flight operations, maintenance, freight handling, and accounting. We strive to be the "cargo airline of choice."

History of Polar Air Cargo Inc.

Polar Air Cargo Inc. is one of the world's leading all-cargo airlines. A subsidiary of Atlas Air, Inc., Polar operates a fleet of 15 Boeing 747s. Its operations have always been strongest in the Pacific, though the company operates scheduled routes to all inhabited continents. Polar markets its services mostly to freight forwarders.

A Niche in 1993

Air cargo was a growing business in the early 1990s in spite of the generally depressed state of the world economy. The founders of Polar Air Cargo saw their niche in the Pacific region served on a scheduled basis by Flying Tigers before its 1989 takeover by Federal Express.

Polar Air Cargo, L.P. was formed in January 1993 as a partnership between Polaris Holding Company, Southern Air Transport, Inc., and NedMark Transportation Services Inc. Southern Air, a major unscheduled cargo airline based in Miami, operated the planes, which were owned by Polaris Holding of San Francisco, a subsidiary of General Electric Capital Services; the three Boeing 747 freighters had formerly carried passengers for Pan American. NedMark, based in Long Beach, California, was formed to market the business mainly to freight forwarders.

Southern Transport began operating scheduled flights under the Polar Air Cargo name with a charter flight from New York to Vienna in April 1994. Scheduled operations began in May 1993 with a New York-Shannon, Ireland-Moscow route. This route was extended to Hong Kong and the United States for Polar's first transpacific service. Another connected New York to Hong Kong with stops in Los Angeles, Honolulu, and Sydney while returning via Taipei, Anchorage, and the major cargo hub of Columbus, Ohio.

Ned Wallace, head of NedMark, was named CEO of the partnership, supported by president Mark West. Wallace had been an executive with the Flying Tiger Line and was formerly chairman of Evergreen International. West had also been at both airlines. Though the market was competitive, Polar Air's planners sought to exploit low lease rates for aircraft and low rates for contract maintenance.

In March 1994, the whole arrangement was restructured due to Polar Air's rapid growth (the company would end the year with a fleet of nine planes). Southern Air Transport withdrew from the partnership entirely. NedMark Transportation Services changed its name to Polar Air Cargo Inc. on March 9, 1994. It was certified as an air carrier on July 4, 1994 and took over responsibility for flight operations. Polaris had formed a subsidiary called PALC II to lease the aircraft. Polaris was soon renamed GE Capital Aviation Services and relocated to Stamford, Connecticut.

Polar Air Cargo had 175 employees, 45 of them pilots, and operated a fleet of four Boeing 747s. Sales were about $168 million in 1994 and $234 million in 1995. Polar had become profitable in its first couple of months in business. The fleet numbered a dozen aircraft by July 1995. London, Amsterdam, and three stops in Brazil were added to the scheduled route network in 1996. Sales rose to $258 million, making Polar the largest all-cargo airline in the United States, according to Air Transport World.

Japan Added in 1997

The company launched scheduled service between the United States and Japan in April 1997, becoming only the third U.S.-based all-cargo airline in the market. During the year, Polar had also expanded its network to Bangkok, New Delhi, Manila, and Dubai.

Polar had 550 employees at the end of 1997. It posted a net profit of $4.3 million on sales of $335.3 million for the year, after losing $4.4 million on revenues of $256.2 million in 1996. The company's operations in the Pacific, its only profitable region in 1997, accounted for about three-quarters of revenues.

By 1998, Polar was the world's fourth largest all-cargo airline. It flew to 19 countries on five continents. Polar typically flew for freight forwarders, not passenger airlines. A marketing arrangement with Air New Zealand announced in August 1999 gave Polar a new stream of westbound cargo on its Pacific crossings. Polar's eastbound business had been much stronger.

The Asian financial crisis of 1997-98 greatly affected Polar's Pacific business, reducing the region's cargo traffic by one-third. Fortunately, U.S. and European markets remained strong, and there were good prospects for growth in other parts of the world.

In April 1998, Polar became the first all-cargo airline in the United States to equip its fleet with the Traffic Alert and Collision Avoidance System II (TCAS II). However, this was not designed to prevent mishaps such as one of the company's 747s being damaged at Anchorage International Airport in 2000 after 100 mph winds pushed it into a cargo loader.

Revenues were $300 million a year in the late 1990s. The shipping market contracted in 2001 as the world economy slumped. Polar laid off more than 50 workers, including two dozen pilots, or about 10 percent of staff.

Polar Bought by Atlas Air Holdings in 2001

Atlas Air Worldwide Holdings, Inc. announced the acquisition of Polar Air Cargo for $84 million in July 2001, and the deal was closed four months later. Atlas had been formed in Colorado around the same time as Polar Air and carried freight under contract for other airlines. It had long sought to enter the Japanese air cargo market, the world's fourth largest, where Polar had a presence with 16 weekly flights.

Polar had also been awarded coveted rights to fly between Hong Kong and Seoul. Polar began flying from the United States to Korea, via Hong Kong or Tokyo, in October 2001. Taipei and Manila were also connected to this service. Inchon, South Korea, became Polar's Asian hub, with more than two dozen flights a week starting in 2003. Polar planned to connect

Chronology

• Key Dates:
• 1993: Polar Air Cargo begins operations in a booming international freight market.
• 1997: Service from the United States to the lucrative Japanese market launched.
• 2001: Atlas Air acquires Polar.
• 2003: The company's headquarters are relocated from Long Beach, California to Purchase, New York. Hong Kong to its service from the United States to India via Europe in 2003. Polar operated 17 Boeing 747s at the time it was acquired by Atlas. The company employed 660 people, about a third of them at its Long Beach headquarters.
• Polar announced a code share agreement with Qantas in April 2002. Under the deal, the two carriers would market cargo space on each other's planes in the South Pacific. The company was also expanding its operations between the United States and Europe, increasing services to the United Kingdom, Ireland, Sweden, and continental Europe.
• In March 2003, Polar's head offices were moved to Purchase, New York, next door to those of Atlas Air. Polar's sales and marketing functions remained in Long Beach. Parent company Atlas Air Worldwide Holdings was entering a "prepackaged" Chapter 11 bankruptcy filing in December 2003.