Amazon.com Inc., a U.S. based multinational technology giant has acquired a stake worth USD 131 million in Air Transport Services Group (ATSG), an American air cargo transport holding company. This move reinforces Amazon’s plans to expand its air freight operations.
An ATSG representative was quoted saying that Amazon has purchased a minority shareholding of 13.5 million shares by exercising warrants it had previously acquired in the aviation holding company.
Furthermore, the online retail giant also made a no cash deal for over 8,65,000 ATSG shares. The purchase will be finalized upon review and approval of the U.S. Department of Transportation.
Chief Financial Officer of ATSG, Quint Turner, was quoted saying that, Amazon will hold 19.5% equity in the Ohio based air cargo company. The minority stake will give Amazon power to influence appointment of one board of director in ATSG.
Amazon will have the potential to own as much as 39.9% of the cargo carrier, if it leases more aircraft and exercises all its warrants, Turner added. Amazon’s decision has established a valuable and strategic relationship between the two companies.
Chief Executive Officer of ATSG, Rich Corrado reportedly said that the company is projected to operate around 46 aircraft for Amazon by the end of 2021, up from 33 at the end of last year.
ATSG share price rose almost 5% after news of Amazon’s investment was revealed. However, Amazon share value was mostly unchanged.
Notably, ATSG had initially offered share warrants to Amazon in 2016, as part of an agreement which sanctioned ATSG to begin flying aircrafts for Amazon’s then-newly established air cargo unit.
Amazon had previously announced its first aircraft purchases at the beginning of 2021. It added 11 Boeing 767-300 jets to a fleet of leased planes. An air-cargo center at Cincinnati/Northern Kentucky International Airport is also to be set up by the end of this year.
Reportedly, Amazon is trying to reduce its dependency on logistics partners such as United Parcel Service Inc. by using air operation to transport goods from its warehouses.
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