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In what could be seen as a blow to a major customer, Atlas Air has gone where ATSG went – a deal to lease and operate 20 aircraft for Amazon and sell the e-tailer up to 20% of its shares over a five-year period.
Atlas doesn’t currently have all the 20 767-300Fs needed for the operation; and the ones it does have are operated for its major customer (and now competitor as Amazon supplier), DHL.
It is expected to look at the conversion market for its additional needs.
Atlas’s dry leasing subsidiary, Titan, will own the aircraft and lease them to Amazon for 10 years, while Atlas will offer CMI for a seven-year term, a deal strikingly similar to that negotiated with ATSG.
While Atlas’s deal terms are two years longer than ATSG‘s, the full operation doesn’t start for two years – presumably when the whole fleet is acquired. Initial operations are, however, expected to begin in the second half of this year.
Since its acquisition of Southern Air, Atlas has relied on DHL for 27% of its revenue. The new deal with Amazon will question how Atlas will manage internal competition – Atlas and ATSG have, in effect, removed business from the express operators, including its major customer DHL.
Atlas Air Worldwide has granted Amazon warrants to buy up to 20% of its common shares at a price of $37.50 over a period of five years, with the deal tied into the launch of the whole operation with the 20-strong fleet, “and other conditions”, said Atlas in a statement.
It added: “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% (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.”
Sources have told The Loadstar that Amazon is, in fact, sourcing 60 aircraft – which means another 20 need to be found.
Amazon’s senior vice president of worldwide operations, Dave Clark, said: “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.”
Meanwhile, pilots working for Atlas, and other DHL suppliers in the US, yesterday announced plans to vote on strike action.
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