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#Thank you <UNK>.
We will update that fly from time to time, but there's not a substantial difference really in a one month or so since we looked at that data.
IATA did talk about an improving June, and so, that's good.
The other thing we talked about on the investor day, IATA doesn't capture a lot of data.
It doesn't capture for example, the express operators, and Deutsche Post DHL, for example, issued their earnings today and the DHL express had an 8% increase in volume in the second quarter year-over-year.
That's not captured in IATA, but it is absolutely captured in our operations, because we operate a large part of that.
To the extent e-commerce is moving on the express operators, that doesn't get captured either and finally the charter market doesn't get captured in IATA.
IATA basically captures a scheduled services.
We were glad to see the increase in June that IATA reports, we are very much positioned in that, plus other markets.
And that's why I was talking about, our sense is there's going to be a peak this period.
I don't think there's one in ocean, but certainly believe there is one in air express and e-commerce.
No.
We had a return of a 747-8, as we were talking about.
In the second quarter.
Yes.
So couple things.
We've all seen the different commentary that Boeing has made over the last several weeks and at some point the 747 production is going to stop.
But as we step back and look at the aircraft that are out there for large, wide-body intercontinental flying, there are two choices, here's the 74, both the 747-400 and the 747-8 and the 777.
One of our prior calls we talked about the lower fuel prices or what may be persistently low fuel prices have added a new competitive life to the 747-400, and as you look at the global freight flows, as one considers global freight flows and what is moving, there is clearly demand for a freighter within nose-door frontloading capability to take oversized pieces and to serve those markets.
So in terms of our 747 platform, I believe there is good, long-term, useful life for the 747.
There are markets that it serves very effective and very well.
The 777 is a very good freighter, it's serves different markets and it serves different routes.
And with Southern, we're agnostic as to which freighter, but we think both have a long term position in the marketplace.
Boeing has obligations to serve that fleet, to support that fleet over time.
Nothing has been announced.
I suspect that for example the next Air Force One or DC-25 is going to be a 747 from Boeing, don't know that, but that it could be.
And in that context there's further reason for Boeing to support their airframe for some time to come.
Sure Steve, it's <UNK>.
It really is an outstanding result.
And if you look at our charter contribution, it's essentially flat and last year it had the benefit of the West Coast port disruption for some portion of the second quarter at the beginning of it.
So really an overall great result.
Your question is more about the yields, and so it's really if you strip out fuel, as you said and as we talked about, our net revenue per block-hour is up, and again, that includes the benefit that the prior year had of West Coast port disruption.
It's is driven by a few things, one, as <UNK> has talked about, we are able to take advantage of where opportunities are.
We've taken advantage of having the 747-8 included in charter, and so we're operating that in South America and doing quite well with it.
It's a terrific aircraft to operate there.
So we have benefited from that.
We've talked about higher demand from the military, so we've seen a pickup in demand for AMC cargo as well as passenger and that's included in the charter segment.
Those are the biggest drivers I think supporting that.
So it's really our opportunity to kind of hand-pick the best routes and rates that we can get.
It's the 747-8 being in charter and it's the incremental military business.
Not authorized to fly Iran yet.
Thanks Steve.
<UNK> as I talked to <UNK> about earlier, you have the incremental contributions from Southern that we haven't seen in the past.
We have a 747-8 that will be operating, our tenth 747-8, so we'll enjoy that for the full quarter.
We have the incremental two 767-300 with DHL.
And so, those really do drive it.
Maintenance, I know you're discounting a bit, <UNK>, but it's huge.
It is over $20 million difference versus 2015.
Last year was very different.
But if you look at the previous years, 2014, the second half of the year was about 71%.
2013 the second half of the year with about 30%.
Last year was different of course because the West Coast port impact.
But this year is starting to feel a little bit more typical, but clearly, heavily weighted in the fourth quarter for the reasons that we talked about.
Yes.
During the second quarter we had an adjustment related to state taxes, and so that drove the rate down in the second quarter.
For the full year, we still expect the effective rate to be somewhere around 31%.
So a couple of things.
We believe the 747-8 is a very viable aircraft.
We are meeting or exceeding the returns that we expected to generate on that aircraft from our business case.
As you think about some of the deployments we're serving today, particularly for someone like DHL, it's slot constrained environments like Hong Kong and Shanghai having 138 tons available to depart when you have one slot, versus a smaller aircraft type, the aircraft works very well.
We had one in charter, that's right, it has performed very well for us in charter.
And we've spent quite a bit of time on the call already talking about the charter results that we been able to drive so far this year and what is not a great market overall.
The lower operating cost for the 747-8 certainly contributes to that.
The one 747-8 is deployed in South America in our charter operations there.
We have a very substantial commanding market share in the Latin America trades.
With very hard utilizations on a round-trip business, given the nature of that trade.
The second 747-8 is returned from the customer, as we talked about, our choice, our preference is to put it into charter now, take advantage of the second half that we foresee, the peak that we foresee in the demand we see for that aircraft and I am very confident we will place that into ACMI, and we will have the opportunity to place the tenth into ACMI if that is the better disposition of that asset.
But the asset is performing very well.
From a [clearance] point of view.
Thank you.
I will let <UNK> answer the fair value part of the question first and I will come back to the market question I think you asked.
Sure.
<UNK>, from the value of the assets, no.
The way the accounting works, we have to look at cash flows from the aircraft over time, and the expected cash flows from the aircraft far, far exceed the value on the books, and so, not an issue from an impairment standpoint.
There's also a potential scarcity value.
These aircraft are excellent aircraft, and they are very young and customers love them.
So yes, a customer may have returned one, but as <UNK> said, we are very confident that it will be placed back in ACMI.
So these are terrific aircraft, and if Boeing is not producing them, if that were to happen, there could be tremendous scarcity value for those who have the aircraft, so they could become more valuable and not less valuable.
So to answer your question on equipment types, the 777 long haul point-to-point intercontinental flying, such as the way, for example DHL and FedEx have that deployed, that's an excellent aircraft.
Because you can't get to the range, the type of traffic that's being carried is lighter weight traffic, so more cube oriented than weight oriented and it works very well in the schedule touches Hong Kong, Cincinnati, Leipzig, Bahrain, Hong Kong.
That the great use of the 777.
The 747, whether it's a 400 or a -8, works very well in the stack yield network.
Hong Kong, Shanghai, (inaudible), Anchorage, Cincinnati in return.
Because you are onboarding and offloading cargo at each point along the way and so the through yield of that aircraft is an exceptional yield compared to just point-to-point flying.
So kind of, [courses for courses], and that is where you see someone like DHL committed to a fleet of both 747 and 777.
The other express operator, UPS, is going with the 747s and FedEx is going with 777 they have their reasons for doing that.
Fleet growth, so fleet growth will depend really on the customer and the market segment or sub segment of the market that we seek to serve.
Can I envision us in more 777s.
Yes.
Can we envision ourselves in more 747-8s.
Do I think our future is with old, expanding our fleet by going into aged 747s.
No.
I think the point on our 747-400 fleet is with this somewhat persistent lower fuel price, we're going to get the full value of the investments we made in those aircraft back in 1998 or so when the company first acquired those factory built player traders.
Thanks <UNK>.
Okay, well thank you very much Stephanie.
<UNK> and I would like to thank everyone on the call today for your interest in Atlas Air Worldwide.
We very much appreciate your sharing your time with us today.
And we look forward to speaking with you soon.
Thank you everyone.
