World Air Holdings Investor Call- World Air Holdings Acquires North American Airlines - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Ladies and gentlemen, thank you for standing by. And welcome to the World Airways Conference Call. [Operator Instructions]. I would now like to turn the conference over to Mark Macmillan (ph). Please go ahead sir.

UNIDENTIFIED CORPORATE REPRESENTATIVE: Thank you, and good morning, ladies and gentlemen. With me here at World Air Holdings company headquarters is Randy Martinez, our CEO and Gil Duarte, our CFO.

Before we begin, please be aware that during this call we will be discussing forward-looking statements as well as information within the meaning of the Safe Harbor provisions of Private Securities Litigation Reform Act of 1995. Statements made during the call regarding future financial and operating results, new markets, prospective customers and future growth of the company based on the management's current expectations are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in any forward-looking statements. Please give careful consideration to cautionary statements made in the company's press release or Form 10-Q filed with the SEC. Thank you.

Now it's my pleasure to turn the conference over to Mr. Martinez.

RANDY MARTINEZ, CEO, WORLD AIR HOLDINGS: Thank you, Mark and good morning. Thank you for joining us today, particularly given the short notice. What we'd like to do this morning is discuss the background and rationale for our recently announced acquisition, present what we see as the key financial and investor benefits, and then open the call for your questions.

This call is intended for discussion of our acquisition of North American Airlines. First, I'd like to say that this is a very exciting day for us, and a major step in the evolution of our company. We've been actively involved in a review of potential strategic options that would complement our current portfolio of services.

After a month of careful study and review I can tell you without a doubt that there is no better fit for us in the industry today than this acquisition. North American Airlines fits perfectly today into the World Air Holdings team. North American has a proud history, a diverse customer list, strong financial results, no long-term debt and an excellent reputation for performance, safety and reliability.

In terms of a quick background, on North American, it was the first charter airlines to provide Boeing 767 service to the Air Mobility Command; it also operated a feeder service to LL Airlines, operated Club Med charters from New York and handled the Bush-Cheney campaign aircraft in 2000.

North American was founded in 1989 by the former Chairman of the U.S. Civil Aeronautics Board, Dan McKinnon. And Dan will retire from the company knowing that he built a great chartered carrier, and that exciting opportunities lie ahead.

It's important to note that this transaction is not a merger. And World Airways and North American will operate as 2 separate operating entities. Each company has its own management, fleet, growth goals and customers. And each has been operating successfully and profitably. World Air Holdings and World Airways will continue to be headquartered in Peachtree City, Georgia. And North American will remain based at JFK airport in New York.

We plan no changes in day to day operations and the majority of both company's employees will see no changes in their work activities. Our focus as always, will center around safety and customer service.

Let me shift now to some of the acquisition benefits. The Air Mobility Command is a fair area of intersection. Both North American and World Airways have teamed successfully in the past to support airlift operations for AMC. And we believe that this acquisition makes us even more competitive for the future. There are now only 4 charter airlines in the United States providing day-to-day military passenger airlift support and World Air Holdings controls 2 of the 4.

North American also holds a very desirable extended range, twin-engine operation or ETOPS certification. With this transaction World Air Holdings attains this important capability without incurring the high induction cost or lengthy review process.

With North American fleet of 757s and 767s, and World Airways' MD-11s and DC-10s will strengthen our position for future AMC bids, not to mention other potential commercial expansion opportunities for both companies.

Some our customers prefer mid-size aircrafts. And as we looked out into the future, we knew we needed a much more comprehensive and flexible fleet of offerings. We considered building and diversifying our fleet internally, but the build versus buy review drove us to clear conclusion. Starting up a venture would have cost 10s of million of dollars and taken years to acquire all the necessary DOD and ETOPS qualifications and other certifications.

We have eliminated that complex and time-consuming process in a single transaction. The Board and management team at World Air Holdings believes this represents an excellent for our shareholders.

North American has generated more than 200 million in revenues last year, has been consistently profitable on both in operating and net income basis, since its inception in 1989. North American financials will be incorporated into World Air Holdings and we will report our financial performance at the combined holding company level in the future.

This is an all cash deal. And it will be accretive to earnings for 2005 without dilution to our shareholders. Plus there are some immediate and potential cost savings that makes this acquisition even more attractive.

First, World Air (ph) Solutions will offer immediate aircraft insurance cost savings in North American. Second, we will be eliminating the compensation and benefit costs associated with the office of the former CEO of North American.

Third, some minor organizational changes at World Air Holdings will consolidate selected functions for North American and World Airways. So there will be some cost efficiencies.

Fourth, there could be facility consolidations down the road and this is something that our transition team will be reviewing.

It is also possible that certain vendor and supplier discounts or cost savings could be achieved.

Moving to transaction cost. We expect these to total around 2 million. And this will largely affect the second quarter.

I'd also like to note that this transaction has no effect on status of our existing ATSB loan guarantee other than some minor covenant changes. The ATSB was actually very supportive of this transaction, as was the Department of Transportation.

Finally I'd like to cover the issue of North American schedule service operation much of which was just launched late last year. And although the service to the Caribbean and Hawaii found attractive certainly even more so in winter months, it's …