Air freight carrier Air Transport Services Group announced Friday (Dec. 21) it would operate 10 additional 767-300F aircraft on behalf of e-commerce giant Amazon. The carrier already operates 20 aircraft for Amazon, which has the option to lease an additional 17 aircraft under a new agreement with the carrier through December 2025.
“We are encouraged by the agreement announced this morning and the potential for continued long-term growth of this relationship over the next several years,” according to analyst Jack Atkins and associate Andrew Hall, both of Little Rock-based Stephens Inc.
Five of the 10 additional aircraft will be delivered in the second half of 2019, and the remainder delivered in the second half of 2020. The aircraft should be delivered before peak shipping season in each year. The agreement extends the lease of the 12 existing 767-200F in operation by two years and the eight 767-300F in operation by three years. Each 767-300F in operation contributes to between $3.5 million and $4 million in annual earnings before interest, tax, depreciation and amortization, according to Atkins and Hall.
As part of the agreement, Amazon has the right to purchase up to 20% of the carrier’s outstanding shares at $21.53 per share — a 17% premium based on the closing price Thursday (Dec. 20.) Along with the initial agreement, Amazon can purchase up to 33.2% of the carrier’s outstanding shares.
The lease option for 17 additional aircraft through December 2025 allows Amazon to lease any combination of 767-300F, 767-200F, 737-800F or A321-200F. Also, Amazon has a lease upgrade option to convert an existing 767-200F lease into a new 767-300F lease. If Amazon agrees to lease the 17 additional aircraft, the carrier would allow Amazon to purchase an additional 9.93 million shares.