ATSG and Atlas clear the air on Amazon shareholding

There has been some confusion (much of it here at The Loadstar) over Amazon’s “ownership” of shares in its US air carriers.

And partners ATSG and Atlas Air are, understandably, keen to clear up misunderstandings.

It’s “a bit complicated”, in the words of one source, but the gist of the matter is that Amazon has never owned shares in either airline.

It has never sold any either. Instead, Amazon owns (unexercised) warrants, which gives it the right to buy shares at a set price.

It has “beneficial ownership” of stock. (Beneficial ownership means someone who enjoys the benefits of ownership, without being on the record as being the owner.)

So, what’s changed since the original agreement in 2016?  Not much, except that the carriers have issued additional warrants to Amazon, and more of the warrants have vested.

Simply put, Amazon has, to date, done nothing more than periodically report its beneficial ownership in the stock of each of the carriers, based on the number of warrants for which it could have exercised and obtained the corresponding shares, without triggering various regulatory or contractual requirements.

This number can change, based on the share price, or the number of shares of common stock.

Amazon has yet to purchase, and thus sell, a single share of stock in either Atlas or ATSG.

All of which means that Amazon is not bowing out – and is also not about to take control of either Atlas or ATSG – without some major overhauls in contracts and SEC filings, if it plans to do so by buying stock in the open market.

But, Amazon could in theory publicly put forward a formal offer and say, ‘hey guys, we’ll buy ATSG at $40 a share, and Atlas for $35’ – and take over both, if the shareholders agreed.

(And at those levels, selling out for both could be a no-brainer.)