Atlas Air Worldwide Holdings Inc. will provide air transport services to assist electronic commerce giant Amazon.com Inc. in delivering packages to its customers.
The new commercial agreements include the operation of 20 Boeing 767-300 freighters for Amazon on a crew, maintenance and insurance basis by Atlas Air subsidiary, Atlas Air Inc., as well as dry leasing by its Titan Aviation leasing unit. The dry leases will have a term of 10 years, while the CMI operations will be for seven years with extension provisions for an additional three years.
Operations are set to begin in the second half of 2016 and ramp up to full service through 2018.
Atlas Air also granted Amazon warrants to acquire up to 20 percent of its common shares at $37.50 per share for five years and an additional 10 percent at the same price for seven years.
Following the announcement on May 5, Purchase-based Atlas Air’s stock skyrocketed more than 50 percent to $57.77 per share before closing at $48.66. The stock closed at $46.02 per share on Monday.
Over time, the agreements are expected to be “meaningfully accretive” to Atlas Air”™s earnings and cash flows.
“We are excited to begin a strategic long-term relationship with Amazon to support the continuing expansion of its e-commerce business and to enhance its customer delivery capabilities,” said Atlas Air president and CEO William J. Flynn.
Morgan Stanley & Co. LLC is serving as financial adviser and Cravath, Swaine & Moore LLP is serving as legal adviser to Atlas Air.
