Amazon spends $131 million to take minority stake in air cargo contractor ATSG

  • Air Transport Services Group said in an SEC filing Monday that Amazon exercised warrants in the company that will give it a minority stake in the cargo airline.
  • Amazon owns warrants in both of its primary air freight partners, ATSG and rival Atlas Air.
  • It comes as Amazon continues to grow Amazon Air, its dedicated air service, with plans to open a $1.5 billion air hub in Kentucky later this year.

Amazon has taken a minority stake in Air Transport Services Group, an air freight partner that operates a significant share of the company's fast-growing aviation logistics unit.

Amazon exercised warrants in ASTG that will allow it to acquire about 13.5 million shares in the cargo airline at an exercise price of $9.73 per share, or more than $131.9 million, ASTG said in an SEC filing on Monday. As part of a separate agreement, Amazon also purchased approximately 865,000 shares of ASTG, with no cash exchanging hands, the filing states.

Shares in ATSG climbed more than 4.9% in early afternoon trading on Monday. Amazon shares were largely unmoved.

Amazon has owned warrants in ATSG since 2016. It was granted warrants as part of an agreement to lease 20 Boeing 767s from ATSG, one if its earliest deals with a cargo company to build out its burgeoning air fleet. Amazon also owns warrants to buy a minority stake in rival carrier Atlas Air Worldwide Holdings.

Amazon's air fleet, launched in 2016, is a critical part of its push to provide one- and two-day delivery. The company still relies on ASTG and Atlas Air to fly a large portion of its packages, but it has started to bring some air cargo operations in house, lending further credence to the belief that Amazon Air could one day rival FedEx and UPS.

In a first for the company, Amazon in January purchased 11 used Boeing 767-300 jets from Delta and WestJet. Later this year, the company is slated to lift the veil on its $1.5 billion air hub in northern Kentucky, which has capacity for 100 Amazon-branded planes and is expected to handle roughly 200 flights per day.

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