Amazon takes stake in aircraft lessor ATSG for US$131m

Amazon exercised warrants in ATSG, allowing it to buy around 13.5 million shares for $131.9 million, or a 19.5 percent stake in the company.

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Amazon has snapped up a 20 percent stake in cargo airline operator and lessor Air Transport Services Group (ATSG), which operates part of the company’s air fleet.

The deal, valued at around $131 million, saw the e-commerce giant exercise warrants in ATSG, which will allow it to purchase around 13.5 million shares in the cargo airline at $9.73 per share, or more than $131.9 million, according to ATSG’s SEC filing on 8 March.

Amazon also purchased around 865,000 shares of ATSG on a cashless basis as part of a separate agreement.

ATSG said in the filing that the stock purchase is contingent upon approval by the US Department of Transportation, and once approved, Amazon will own 19.5 percent of the company.

There is also the potential for the e-commerce giant to exercise all its warrants which could bring its stake in the ATSG to 39.9 percent in the future.

Payload Asia learned that ATSG expects to operate 46 aircraft for Amazon, mainly B767s, by the end of 2021, up from 33 at the end of 2020. Amazon currently relies on ATSG and competitor Atlas Air to move a large portion of its packages.

Experts say that this move shows Amazon’s intent to grow its air freight network and be less reliant of third-party partners, leading to further belief that it could one day match up with FedEx and UPS.

Earlier this year, Amazon made its first-ever purchase of aircraft, bringing in 11 Boeing 767-300s, and mixing it up with the leased planes in its fleet.

The company is scheduled to open an air cargo hub at Cincinnati/Northern Kentucky International Airport this summer.

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