How Amazon Air is Expanding its Supply Chain Fleet

Air Transport Services Group, Inc. (ATSG), a leading provider of cargo aircraft leasing and air transportation services, has announced an agreement with Amazon to operate ten more Boeing 767 freighters for the Amazon Air network by the end of 2024. This extends the existing operating agreement to May 2029, with the right to extend after further five years.

“We’re pleased to further expand our leading role in the Amazon Air network that we started in 2016,” says Joe Hete, Chairman and CEO of ATSG. 

“Our operating capabilities will continue to support Amazon’s customer-centric commitments for years to come.”

What is Amazon Air?

Amazon Air, often recognized as Prime Air, serves as a virtual cargo airline dedicated to transporting Amazon packages. In 2017, it rebranded from Amazon Prime Air to Amazon Air to distinguish itself from the autonomous drone delivery service under the Prime Air banner.

Amazon Air's primary role is to transport Amazon packages from remote fulfilment centres that lie beyond Amazon's nearby ground transportation network in a particular region. Upon airlifting the buyer's order from the remote fulfilment centre to their region, the package might head to the regional Amazon Sortation Centre. Here, it could be directed either to a nearby Amazon Logistics Delivery Station for final-mile delivery or to a local post office for handover to the United States Postal Service. In some cases, Amazon Air packages skip the regional Amazon Sortation Centres altogether, heading straight to local Amazon Delivery Stations for final-mile delivery handled by Amazon Logistics.

Alongside ATSG, Amazon also collaborates with Delta Air Lines and WestJet, Shell Aviation and World Energy, Altavair, Elbe Flugzeugwerke, and Hawaiian Airlines.

What will this new agreement bring?

Key features of the new and amended agreements include

• ATSG airlines to operate the initial ten Boeing 767-300 freighters provided by Amazon beginning in Summer 2024, with the potential to add up to ten more aircraft
• Operating agreement extended to May 2029, with the option to extend for an additional five years
• ATSG has also agreed to extend the exercise period for vested warrants for 21.8 million shares it previously issued to Amazon, amend the vesting conditions and extend the exercise period for unvested existing warrants for 2.9 million shares, and issued new warrants for up to 2.9 million additional shares to Amazon.

“These additional aircraft will allow us to leverage our existing infrastructure and capabilities for expanded operating revenues,” adds Joe.

“This expanded and extended operating agreement is a testament to the dependability of our employees and the reliability we bring to the Amazon Air network. Our mission is to continue to provide Amazon with exceptional service while creating value for all of our shareholders.”

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