ATSG confirms freighter operation deal with Amazon

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Air Transport Services Group (ATSG) has announced today agreements with Amazon Fulfillment Services, an affiliate of Amazon.com – to operate an air cargo network to serve Amazon customers in the USA.

The network from Wilmington, Ohio, will see the aircraft lessor lease 20 ATSG-owned Boeing 767 Freighter’s, logistics support while online retail giant Amazon has also been granted rights to purchase ATSG equity.

ATSG president and chief executive officer, Joe Hete says: “Since last summer, we have been working closely with Amazon to demonstrate that a dedicated, fully customised air cargo network can be a strong supplement to existing transportation and distribution resources.

“We are excited to serve Amazon customers by providing additional air cargo capacity and logistics support to ensure great shipping speeds for customers.”

The commercial agreements will include the leasing of 20 Boeing 767F aircraft to Amazon Fulfillment Services, by ATSG’s Cargo Aircraft Management (CAM), the operation of the aircraft by ATSG’s airlines, ABX Air and Air Transport International, and gateway and logistics services provided by ATSG’s LGSTX Services.

The duration of the 20 leases will be five to seven years and the agreement covering operation of the aircraft will be for five years.

Amazon senior vice president of worldwide operations and customer service, Dave Clark says: “We offer Earth’s largest selection, great prices and ultra-fast delivery promises to a growing group of Prime members and we’re excited to supplement our existing delivery network with a great new provider, ATSG, by adding 20 planes to ensure air cargo capacity to support one and two-day delivery for customers.”

In conjunction with the commercial agreements, ATSG also has agreed to grant Amazon warrants to acquire over a five-year period up to 19.9 per cent of ATSG’s common shares at $9.73 per share, based on the closing price of ATSG common shares on 9 February, 2016.

Additional information about these agreements will be provided in a Form 8-K that ATSG expects to file with the US Securities & Exchange Commission later this week.