09 May Amazon Signs Agreements to Double Air Cargo Fleet
Amazon.com has agreed to lease another 20 Boeing 727 jets to provide air cargo services to support its (AMZN) package deliveries to its customers in a deal that will effectively double the size of its fleet.
Amazon has signed a 10-year agreement to lease 20 B767-300 converted freighters from Atlas Air Worldwide Holdings Inc.’s (NASDAQ:AAWW) Titan Aviation leasing and a seven year agreement with Atlas’s airline subsidiary Atlas Air Inc to operate the aircraft on a CMI (crew, maintenance and insurance) basis. Operations under the agreements are expected to begin in the second half of 2016 and ramp up to full service through 2018.
“We are excited to welcome a great provider, Atlas Air, to support package delivery to the rapidly growing number of Prime members who love ultra-fast delivery, great prices and vast selection from Amazon,” said Dave Clark, Amazon’s senior vice president of worldwide operations.
As part of the inherent value creation and to align interests and strengthen the long-term relationship, Atlas Air Worldwide granted Amazon warrants to acquire up to 20 percent (after the issuance) of AAWW’s common shares at a price of $37.50 per share over a period of five years, with vesting tied in part to the commencement of operations of the 20 B767-300 freighter aircraft and other conditions.
The agreements also provide for future growth of the relationship as Amazon may increase its business with Atlas. Atlas Air Worldwide granted Amazon warrants to acquire up to an additional 10 percent (after the issuance) of AAWW’s common shares at the same exercise price, over a period of seven years, with vesting tied to payments made by Amazon in connection with that business.
In March, Amazon.com announced it had signed similar agreements with Air Transport Services Group Inc. to provide and operate 20 B727s for periods of five and seven years.