It’s official: Air Transport Services Group confirms deal with Amazon to operate air transport network

After all the months of speculation about Amazon’s plans to build up its intermodal global infrastructure, Air Transport Services Group has today (9 March) confirmed that it has agreements with Amazon Fulfillment Services to operate an air cargo network to serve Amazon customers in the United States. In an official statement issued today, Joe Hete, President and CEO of ATSG, commented: “Since last summer, we have been working closely with Amazon to demonstrate that a dedicated, fully customized air cargo network can be a strong supplement to existing transportation and distribution resources.

“We are excited to serve Amazon customers by providing additional air cargo capacity and logistics support to ensure great shipping speeds for customers.”

The commercial agreements will include the leasing of 20 Boeing 767 freighter aircraft to Amazon Fulfillment Services by ATSG’s Cargo Aircraft Management (CAM), the operation of the aircraft by ATSG’s airlines, ABX Air and Air Transport International, and gateway and logistics services provided by ATSG’s LGSTX Services.

The leases for the 20 aircraft will be for five to seven years; the agreement covering operation of the aircraft will be for five years.

Dave Clark, Amazon senior vice president of worldwide operations and customer service, said: “We offer Earth’s largest selection, great prices and ultra-fast delivery promises to a growing group of Prime members and we’re excited to supplement our existing delivery network with a great new provider, ATSG, by adding 20 planes to ensure air cargo capacity to support one and two-day delivery for customers.”

Alongside the commercial agreements, ATSG has also agreed to grant Amazon warrants to buy over a five-year period up to 19.9% of ATSG’s common shares at $9.73 per share.

ATSG said that additional information about its agreements with Amazon will be provided in a Form 8-K that the aviation company expects to file with the U.S. Securities & Exchange Commission later this week.

ATSG, through its leasing and airline subsidiaries, is the world’s largest owner and operator of converted Boeing 767 freighter aircraft.

Yesterday (8 March), ATSG reported its financial results for 2015. Revenues for the group as a whole were up 5% to $619.3m for the year. Cargo Aircraft Management, ATSG’s aircraft leasing business, reported a 7% increase.