Amazon inks deal with ATSG for ten more Boeing 767-300 freighters

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Dec 24, 2018: Amazon Air has entered into new deal with US based aircraft lessor Air Transport Services Group (ATSG) to lease further ten Boeing 767-300 freighters, with options for even more.

The company will lease these ten aircraft from Cargo Aircraft Management, Inc. (CAM), ATSG’s leasing subsidiary, and place them with an ATSG airline for operation. CAM will deliver five of the B767s in 2019 and the remainder in 2020. All of the leases will be for 10 years, with the possibility to extend them for up to three more years.

This expands Amazon Air’s fleet to 50 aircraft - it leases a further 20 from ATSG and 20 from Atlas Air – when all the aircraft are delivered in two years.

Based on the deal, Amazon will also have the option to lease up to seventeen additional cargo aircraft from ATSG by January 2026 if it increases its shareholding in ATSG. This does not include the ten 767 lease commitments for 2019-2020 and the twenty 767 aircraft ATSG currently provides to Amazon.

The deal will also see ATSG extend its five-year leases of twelve B767-200F aircraft by two years into 2023, with an option to extend for up to three additional years, and its existing seven-year leases of eight B767-300F aircraft by three years until 2026 and 2027, with an option to extend for up to three additional years.

“Our customers love massive selection and fast delivery, and the Amazon Air capacity we are building enables Prime delivery speeds for customers from Seattle, Washington to Miami, Florida,” said Dave Clark, senior vice president of Worldwide Operations at Amazon.

As part of the deal for ten additional 767 leases and extensions of twenty existing 767 aircraft leases, Amazon will be issued warrants to expand its potential ownership stake in ATSG’s equity to approximately 33.2 percent.

ATSG informs: “Amazon already holds, or has rights to receive, warrants for the purchase of ATSG shares that would represent a 19.9 percent ownership stake in ATSG, if exercised prior to their expiration in March 2021. The new warrants will expire if not exercised within seven years from their issuance date.

The company adds: And if Amazon leases up to seventeen more ATSG cargo aircraft before January 2026, Amazon will be able to earn incremental warrant rights, increasing its potential ownership in ATSG’s equity from 33.2 percent up to 39.9 percent of ATSG’s fully diluted common shares currently outstanding.”

ATSG recently inked deal with lessor Jetran to acquire twenty B767 passenger aircraft.

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