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Weak Freighter Rentals Mimic U.S. Economy

January 27, 2003

The difficulties being experienced by Atlas underline the fragility of the freighter market. The period in the run up to the Christmas period provided a respite for freighter operators who enjoyed a measure of growth. The sustained military build up in the Middle East is likely to provide further business for freight operators as well as some passenger carriers through to at least March. However, the airfreight business and small package industry is heavily dependent on the state of the global economy and while one-off events such as Christmas and military contracts may provide a measure of comfort, sustained economic growth is required to soak up still surplus capacity and allow rentals to increase. The high price of fuel, while less significant to the world economy than in past decades, nonetheless continues to eat into profit margins of operators and spoil the beneficial effect of increased revenues.

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