Amazon Starts Air Freight Service

  • Mar 9, 2016 8:11pm GMT

Amazon is about to lease 20 Boeing 767 aircraft from Air Transport Services Group (ATSG).

"ATSG has been operating five 767 freighters in a trial network for Amazon, and Amazon itself recently hinted that it wanted to be able to count on some amount of own-controlled capacity to supplement the lift it buys from other providers (particularly UPS and FedEx)" according to Cargo Facts.

The lease was expected but the surprise was ATSG also has agreed to grant Amazon warrants to acquire over a five-year period up to 19.9 percent of ATSG’s common shares at $9.73 per share, based on the closing price of ATSG common shares on February 9, 2016.” By doing this Amazon will be able to buy almost a 19.9% for about $124 million.

With this deal between ATSG and Amazon Fulfillment Services Inc. FedEx and UPS will lose some business and has already a drop in share prices since the news broke. Cargo Facts claims, "The duration of the aircraft leases will be “five-to-seven years,” whereas the operating agreement will be for five years."

The interesting question is where the rest of the 767s will come from since most of the ATSG 767s are in service to other customers with long term leases.

For more details on the story visit Cargo Facts.