Amazon to launch air cargo network with 20 ATSG-owned Boeing 767 cargo planes

WILMINGTON, Ohio, 10 March 2016. Officials at Amazon Fulfillment Services Inc., an affiliate of Amazon.com Inc. (Nasdaq:AMZN) in Seattle, have contracted Air Transport Services Group Inc. (NASDAQ:ATSG) to help operate the company’s new air cargo network to serve Amazon customers in the United States. ATSG will lease 20 Boeing 767freighter aircraft to Amazon, as well as operate the cargo planes and provide support services.

The commercial agreements include:

• the leasing of 20 Boeing 767 freighter aircraft to Amazon Fulfillment Services by ATSG’s Cargo Aircraft Management (CAM),
• 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 duration of the 20 leases will be five to seven years. The agreement covering operation of the aircraft will be for five years.

“Since last summer, we have been working closely with Amazon to demonstrate that a dedicated, customized air cargo network can be a strong supplement to existing transportation and distribution resources,” explains ATSG President/CEO Joe Hete. “We are excited to serve Amazon customers by providing additional air cargo capacity and logistics support to ensure great shipping speeds for customers.”
“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,” says Dave Clark, Amazon senior vice president of worldwide operations and customer service.

In conjunction with the commercial agreements, ATSG has agreed to grant Amazon warrants to acquire over a five-year period up to 19.9 percent of ATSG’s common shares at $9.73 per share, based on the closing price of ATSG common shares on 9 February 2016.
ATSG is a provider of aircraft leasing and air cargo transportation and related services to domestic and foreign air carriers and other companies that outsource their air cargo lift requirements.

ATSG, through its leasing and airline subsidiaries, is said to be the world's largest owner and operator of converted Boeing 767 freighter aircraft. Through its principal subsidiaries, including two airlines with separate and distinct U.S. FAA Part 121 Air Carrier certificates, ATSG provides aircraft leasing, air cargo lift, aircraft maintenance services, and airport ground services. ATSG's subsidiaries include ABX Air Inc.; Airborne Global Solutions Inc.; Air Transport International Inc.; Cargo Aircraft Management Inc.; Airborne Maintenance and Engineering Services Inc., and LGSTX Services Inc.