In a report published in November 2022, I explained why I believe Atlas Air (NASDAQ:AAWW) stock is a sell. Putting it really simple, for the spread between the current stock price and the offered acquisition price, investors have to wait until regulatory approval is granted and in that unknown timeframe there certainly are ways to deploy your cash elsewhere. Nevertheless, it's still interesting to look at how the cargo carrier has performed, which I will do in this report next to a discussion of the stock price performance and the progress on the acquisition by Apollo Global Management (APO).
The stock price performance really proves my point. Atlas Air share prices headed lower and the global stock markets went higher. The reason why Atlas Air share prices headed lower was due to some nervousness regarding opposition against the combination of Spirit Airlines (SAVE) and JetBlue (JBLU) which made investors less convinced on an approval for the take-over of Atlas Air by Apollo Global Management.
Fourth quarter results showed revenues of $1.21 billion, up from $1.16 billion last year, driven by higher block hour rates. In fact, revenues went up 4% while block hours declined 8%, suggesting that block hour rates went up around 13%. For air freight, the past years have been good and that's also why some investors felt like with the acquisition of Atlas Air, the goose that lays the golden eggs got slaughtered as many investors were hoping to benefit from the air freight demand translating into higher stock price for years to come. With the acquisition, that obviously won't happen now, but I also think it's important to realize that the air freight market is a very complex one that during times of normal economic growth is often times struggling and very susceptible to changes in global economic growth forecast changes. Overall, fourth quarter EBITDA dropped around 20%. A lot of this can be attributed to the adverse weather events this year that resulted in lower block hours flown and higher overtime related expenses. Apart from that, costs for fuel were higher, but these usually are absorbed on rate adjustments in the top line and inflation also puts some pressure.
For the full year, revenue rose 12.5% to $4.5 billion on 10% less block hours flown. Adjusted EBITDA for the year was $899.2 million compared to $1.1 billion last year. This is obviously driven by higher costs, not all of which are translated positively into the top line. Fuel costs rose 62%, while salaries and wages increased nearly 23% and travel-related expenses for ticket purchases for crews increased 30%. Overall, what we do see is that while a lot of cost increases can be passed through, it's not the case for all cost components. Moreover, we see that cargo demand is also dropped, with IATA reporting a 15.3% drop in December in what's normally a strong performing quarter. That should serve as an indication that as cargo demand further weakens, the challenging nature for air freight operators will once again prevail. So, I would not quite agree with the assessment that the acquisition of Atlas Air robs investors of an investment opportunity for the simple fact that you cannot project the high-demand environment from the last year into the future, and if you look at how things are trending now then you will see the trend is down and not up.
The reason why stock prices have fallen is because Atlas Air and Apollo Global Management intend to complete the transaction in the first quarter of 2023. That means that in three weeks or so the acquisition of Atlas Air by Apollo should be completed. However, at this time, both parties are awaiting final approval from the Department of Transportation. While other approvals have been secured, the DoT preparing to oppose the Spirit-JetBlue deals makes investors somewhat nervous on gaining regulatory approval for the acquisition of Atlas Air. While I don't believe Atlas Air should be facing any issues, the anti-consolidation and anti-M&A momentum for airlines is concerning, to say the least.
I do believe that Atlas Air stock has very little to offer. The results show and market assessments show that the air freight market is getting tougher. More importantly, the upside to the stock is limited, and while I do believe that the acquisition of Atlas Air will be approved with the latest steps of the DoT on blocking another airline deal the risk has obviously increased and right now there are other ways to make money instead of waiting for the transaction to be completed.