Atlas Air Worldwide Announces Agreement with Amazon To Provide Air Transport Service
May 05 2016 - 7:30AM
Service to Include 20 B767-300 Aircraft
with a Lease Term of 10 Years
Atlas Air Worldwide Holdings, Inc. (Nasdaq:AAWW) announced today
that it will provide air cargo services to support Amazon’s
(Nasdaq:AMZN) package deliveries to its customers. The new
agreements are expected to be meaningfully accretive to Atlas Air
Worldwide’s earnings and cash flows over time.
“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 President and Chief Executive Officer William
J. Flynn. “We appreciate Amazon’s confidence in our capabilities,
global scale and operating excellence.”
The long-term commercial agreements will include
the operation of 20 B767-300 converted freighters for Amazon on a
CMI (crew, maintenance and insurance) basis by Atlas Air
Worldwide’s airline 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 a total term of 10 years).
Operations under the agreements are expected to begin in the second
half of 2016 and ramp up to full service through 2018.
“We are excited to welcome a great provider,
Atlas Air, to support package delivery to the rapidly growing
number of Prime members who love ultra-fast delivery, great prices
and vast selection from Amazon,” said Dave Clark, Amazon’s senior
vice president of worldwide operations.
As part of the inherent value creation and to
align interests and strengthen the long-term relationship, Atlas
Air Worldwide granted Amazon warrants to acquire up to 20 percent
(after the issuance) of AAWW’s common shares at a price of $37.50
per share over a period of five years, with vesting tied in part to
the commencement of operations of the 20 B767-300 freighter
aircraft and other conditions.
The agreements also provide for future growth of
the relationship as Amazon may increase its business with Atlas.
Atlas Air Worldwide granted Amazon warrants to acquire up to an
additional 10 percent (after the issuance) of AAWW’s common shares
at the same exercise price, over a period of seven years, with
vesting tied to payments made by Amazon in connection with that
business.
Morgan Stanley & Co. LLC is serving as
financial advisor and Cravath, Swaine & Moore LLP is
serving as legal advisor, both to Atlas Air Worldwide, in
connection with the transaction.
About Atlas Air Worldwide:
Atlas Air Worldwide is a leading global provider
of outsourced aircraft and aviation operating services. It is the
parent company of Atlas Air, Inc. (Atlas), Southern Air Holdings,
Inc. (Southern Air) and Titan Aviation Holdings, Inc. (Titan), and
is the majority shareholder of Polar Air Cargo Worldwide, Inc.
(Polar). Atlas Air Worldwide’s companies operate the world’s
largest fleet of Boeing 747 freighter aircraft and provide
customers the broadest array of 747, 777, 767, 757 and 737 aircraft
for domestic, regional and international applications.
Atlas, Southern Air, Titan and Polar offer a
range of outsourced aircraft and aviation operating services that
include ACMI service – in which customers receive an aircraft,
crew, maintenance and insurance on a long-term basis; CMI service –
in which customers receive crew, maintenance and insurance but not
an aircraft; express network and airport-to-airport cargo service;
cargo and passenger charters; and dry leasing of aircraft and
engines.
Atlas Air Worldwide’s press releases, SEC
filings and other information may be accessed through the Company’s
home page, www.atlasair.com.
This release contains “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 that reflect Atlas Air Worldwide’s current views
with respect to certain current and future events and financial
performance. Such forward-looking statements are and will be, as
the case may be, subject to many risks, uncertainties and factors
relating to the operations and business environments of Atlas Air
Worldwide and its subsidiaries (collectively, the “companies”) that
may cause the actual results of the companies to be materially
different from any future results, express or implied, in such
forward-looking statements.
Factors that could cause actual results to
differ materially from these forward-looking statements include,
but are not limited to, the following: our ability to effectively
operate the network service contemplated by our agreement with
Amazon, including the cost and timing of securing any aircraft
necessary to fulfill our agreement; our ability to obtain any
shareholder approvals that may be required with respect to the
equity arrangements expressed in our agreement with Amazon; the
ability of the companies to operate pursuant to the terms of their
financing facilities; the ability of the companies to obtain and
maintain normal terms with vendors and service providers; the
companies’ ability to maintain contracts that are critical to their
operations; the ability of the companies to fund and execute their
business plan; the ability of the companies to attract, motivate
and/or retain key executives and associates; the ability of the
companies to attract and retain customers; the continued
availability of our wide-body aircraft; demand for cargo services
in the markets in which the companies operate; economic conditions;
the effects of any hostilities or act of war (in the Middle East or
elsewhere) or any terrorist attack; labor costs and relations;
financing costs; the cost and availability of war risk insurance;
our ability to maintain adequate internal controls over financial
reporting; aviation fuel costs; security-related costs; competitive
pressures on pricing (especially from lower-cost competitors);
volatility in the international currency markets; weather
conditions; government legislation and regulation; consumer
perceptions of the companies’ products and services; anticipated
and future litigation; and other risks and uncertainties set forth
from time to time in Atlas Air Worldwide’s reports to the United
States Securities and Exchange Commission.
For additional information, we refer you to the
risk factors set forth under the heading “Risk Factors” in the most
recent Annual Report on Form 10-K and subsequent reports on Form
10-Q filed by Atlas Air Worldwide with the Securities and Exchange
Commission. Other factors and assumptions not identified above may
also affect the forward-looking statements, and these other factors
and assumptions may also cause actual results to differ materially
from those discussed.
Atlas Air Worldwide assumes no obligation to
update such statements contained in this release to reflect actual
results, changes in assumptions or changes in other factors
affecting such estimates other than as required by law.
Contacts: Dan Loh (Investors) – (914) 701-8200
Bonnie Rodney (Media) – (914) 701-8580
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