Amazon Takes Minority Stake In Air Freight Partner
The eCommerce giant exercised warrants in ATSG that will let it acquire around 13.5 million shares in the cargo airline at around $9.73 per share. That comes out to around $131.9 million, according to a U.S. Securities and Exchange Commission (SEC) filing on Monday (March 8).
In a separate agreement, Amazon also worked on buying up 865,000 shares of ATSG. No cash exchanged hands, according to the filing.
Amazon has owned warrants in ATSG since 2016 and was granted warrants as part of an agreement to lease 20 Boeing 767s to help flesh out its fleet. It also owns warranty to buy a minority stake in the rival carrier Atlas Air Worldwide Holdings.
Amazon’s air fleet was also launched in 2016, aiming to help bring one- and two-day delivery to customers. ATSG and Atlas both still carry a bulk of Amazon packages and Amazon has also started to bring air cargo operations in-house, which CNBC reports could one day bring the company to rival FedEx and UPS.
Amazon, in a first for the company, has purchased 11 used Boeing 767-300 jets from Delta and WestJet. The company will likely lift the veil on its $1.5 billion air hub in northern Kentucky, which has space for 100 Amazon-branded planes and is expected to take on around 200 flights every day.
Amazon Air, the eCommerce giant’s cargo arm, is doing well these days and is on pace to double its size by this June.
A study by DePaul University’s Chaddick Institute for Metropolitan Development found that the number of flights from Amazon Air is likely to grow to 160 by June, representing twice what it had before.
Currently, the airline has 10 planes that aren’t in use. Some of those will be converted to freighters.