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Atlas Air Worldwide Agrees To Offer Its Service To Amazon

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Atlas Air Worldwide Holdings, Inc. (NASDAQ: AAWW) disclosed that it would provide air cargo services to Amazon.com, Inc. (NASDAQ: AMZN) to support package deliveries to its customers. According to the company, the new agreements were expected to be meaningfully accretive to Atlas Air Worldwide's earnings and cash flows over time.

Atlas Air President and CEO, William Flynn, reacted to the development stating, "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. We appreciate Amazon's confidence in our capabilities, global scale and operating excellence."

The company indicated the long-term commercial deals included the operation of 20 B767-300 converted freighters for Amazon on a CMI (crew, maintenance and insurance) basis by its airline subsidiary, Atlas Air, Inc., and dry leasing by its Titan Aviation leasing unit. The company added that the dry leases would have a 10-year term while the CMI operations would be for seven years though there was provision for extension for a total term of 10 years. The company stated that the agreements enable it to commence the operations under in the second half of the current year and ramp up to full service through 2018.

Amazon's SVP of worldwide operations, Dave Clark, said, "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."

Aside from the transportation services, Atlas Air Worldwide also granted Amazon warrants purchasing a maximum of 20 percent (after the issuance) of AAWW's common shares at a price of $37.50 per share over a five-year period. The deal was tied partly with the commencement of operations of the 20 B767-300 freighter aircraft and other conditions.

 

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