AAWW and Amazon tie up cargo agreement and announce potential ownership deal

Atlas Air Worldwide Holdings (AAWW) announced (05-May-2016) it will provide air cargo services to support Amazon's 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. Details include:

• The long-term commercial agreements will include the operation of 20 Boeing 767-300 converted freighters for Amazon on a crew, maintenance and insurance (CMI) basis by Atlas Air Worldwide's airline subsidiary, Atlas Air, 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 2H2016 and ramp up to full service through 2018;
• As part of the relationship, Atlas Air Worldwide granted Amazon warrants to acquire up to 20% (after the issuance) of AAWW's common shares at a price of USD37.50 per share over a period of five years, with vesting tied in part to the commencement of operations of the 20 767-300F 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% (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. [more - original PR]