Air Transport Services Group, Inc. (ATSG)

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Amazon reaches air cargo deal with Air Transport Services Group
1 hour 15 minutes ago - DJNF

By Ciara Linnane, MarketWatch
Air cargo company will serve Amazon customers across the U.S.

Air Transport Services Group Inc. said it has reached an agreement with Amazon.com Inc. to operate an air cargo network servicing Amazon customers in the U.S.

Wilmington, Ohio-based Air Transport Services (ATSG) said the deal includes the leasing of 20 Boeing 767 freighter aircraft to Amazon Fulfillment Services Inc., the operation of the aircraft and accompanying logistics services. The lease deals are for five to seven years, while the agreement to operate the aircraft is for five years.

"Since last summer, we have been working closely with Amazon (AMZN) to demonstrate that a dedicated, fully customized air cargo network can be a strong supplement to existing transportation and distribution resources," Air Transport Services Chief Executive Joe Hete said in a statement.

(https://w.graphiq.com/w/dKg5cjU4L3L)

As part of the pact, Air Transport Services has granted Amazon warrants to buy up to 19.9% of its stock at $9.73 a share over the next five years.

The stock closed Tuesday at $11.77, and was trading up 27% in premarket trade. Amazon shares were up 0.8%.

The deal could be bad news for parcel delivery companies United Parcel Service Inc.(UPS) and FedEx Corp.(FDX)

Amazon held talks last year with air cargo companies with the goal of reducing its reliance on traditional carriers, keeping down costs and avoiding delays, The Wall Street Journal has reported (http://www.marketwatch.com/story/amazon-seeks-cargo-planes-for-own-air-freight-operation-2015-12-18).

-Ciara Linnane; 415-439-6400; [e-mail]



(END) Dow Jones Newswires

March 09, 2016 08:20 ET (13:20 GMT)

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