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            september 21, 2019

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Amazon confirms move into B737-800Fs with Southern Air CMI deal


Atlas Air Worldwide (AAWW) has confirmed that its wholly-owned subsidiary, Southern Air, will provide crew, maintenance and insurance (CMI) services to Amazon Air for up to 20 Boeing 737-800 freighters.
In an AAWW filing to the US Securities and Exchange Commission, the US aircraft lessor stated that the e-commerce giant may also acquire 39.9 per cent of AAWW's common shares, an increase from the 30 per cent agreed earlier.
Atlas Air said that the B737-800 aircraft will be leased by Amazon from "a third party" and sub-leased to Southern Air, London's Air Cargo News reported.
It stated: "The B737-800 CMI operations will be for a term of seven years, with an extension option by Amazon for a total term of 10 years. Five aircraft are scheduled to be put into service in this fiscal year."
It continued: "Amazon may, at its sole discretion, place up to 15 additional Boeing 737-800 aircraft into service with Southern Air by May 31, 2021, subject to Amazon's confirmation that it will exercise such options no less than 240 days in advance of the scheduled delivery date for each aircraft.
"In connection with the amended and restated agreement, Atlas Air Worldwide has granted Amazon incremental warrants that would allow it to potentially acquire up to a total of 39.9 per cent (after the issuance) of AAWW's common shares, an increase from up to 30 per cent previously.
"The warrants relate to existing B767 activities and expected B737 CMI flying for Amazon and they will also "capture future growth of the relationship as Amazon may increase its business with AAWW".
This latest freighter move comes after Amazon Air announced in January that it was expanding its US domestic freighter network with the lease of a further ten Boeing 767-300 freighters from US aircraft lessor ATSG, with options for even more.
That would bring the e-commerce giant's fleet of aircraft to 50 - it leases a further 20 from ATSG and 20 from Atlas Air - when all the aircraft are delivered in two years.
The B737-800 has a lower capacity (23.9 tonnes) compared with the B767 (58 tonnes) and this has led to some speculation that the aircraft would be deployed on routes within Europe.

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