Amazon has made another step forward in building an in-house trunk capability for airfreight in the US.
At the end of March, Atlas Air made a filing to the US Securities and Exchange Commission which disclosed that Amazon had agreed to lease five Boeing 737-800 this year from General Electric’s aircraft leasing division with Atlas Air providing the crewing and maintenance for 7 to 10 years. Amazon also has an option for a further 15 Boeing 737-800 under the same terms.
In addition, Amazon has negotiated an increase in its control of Atlas through the use of “incremental warrants that would allow it to potentially acquire up to a total of 39.9% (after the issuance) of (Atlas Air’s) common shares, an increase from up to 30.0% previously”. This will give Amazon the option to take a near-controlling stake in Atlas. However it appears that this is directly linked to the volume of business that Amazon may choose to do with Atlas as the SEC statement continues “the warrants relate to existing B767 activities and expected B737 CMI flying for Amazon, and they will also capture future growth of the relationship as Amazon may increase its business with Atlas Air.”
Amazon’s actions might be described as a rolling take-over but one that gives considerable flexibility to Amazon over the timing of any equity purchase.
Rival cargo provider ATSG has also entered into a similar agreement, although here up to ten Boeing 767-300F freighters are to be leased or chartered directly from ATSG, to complement the fleet already being utilised by Amazon. As is the case with Atlas, Amazon has used this opportunity to gain the option to buy 40% of the equity of ATSG through a system of warrants.
Presumably both of these aircraft fleets would operate under the existing ‘Amazon Air’ brand. It is believed that ASTG already operates 20 aircraft for Amazon Air, whilst Atlas operates 19 aircraft.
Although Amazon made no efforts to make this move public, it is significant. For it not only increases the volume of airfreight available to it but also moves the Seattle e-commerce company closer to creating a broad-based airfreight and express capability.
Source: Transport Intelligence, April 9, 2019
Author: Thomas Cullen
