Atlas enters into new CMI freighter agreement with Amazon

posted on 2nd April 2019 by Justin Burns
Atlas enters into new CMI freighter agreement with Amazon

Atlas Air Worldwide Holdings (AAWW) has entered into an amended and restated air transportation services agreement with Services – which will see AAWW’s wholly owned subsidiary Southern Air provide crew, maintenance and insurance (CMI) services to Amazon using Boeing 737-800 series aircraft.

The Boeing 737-800 aircraft will be leased by Amazon from a third party and sub-leased to Southern Air. The B737-800 CMI operations will be for a term of seven years, with an extension option by Amazon for 10 years.

Five aircraft are scheduled to be placed into service in this fiscal year. Amazon may, in its sole discretion, place up to 15 additional Boeing 737-800 aircraft into service with Southern Air by 31 May, 2021, subject to Amazon’s confirmation that it will exercise such options no less than 240 days in advance of the scheduled delivery date for each aircraft.

In connection with the agreement, AAWW said it has granted Amazon incremental warrants that would allow it to potentially acquire up to a total of 39.9 per cent (after the issuance) of AAWW’s common shares, an increase from up to 30 per cent previously.

The warrants relate to existing B767 activities and expected B737 CMI flying for Amazon, and they will also capture future growth of the relationship as Amazon may increase its business with AAWW.

This latest move comes after Amazon Air revealed in January this year that it was expanding its US domestic freighter network with the lease of a further 10 Boeing 767-300Fs from US aircraft lessor ATSG, with options for even more.

That would bring the e-commerce giant’s fleet of aircraft to 50 – it leases a further 20 from ATSG and 20 from Atlas Air – when all the aircraft are delivered in two years.