Atlas Air will stop flying freighter aircraft for Amazon in the online retailer’s parcel network over the next year, and 25 aircraft controlled by Amazon will gradually be relocated to other operators, according to company pilots who posted about the changes in chat rooms and one who spoke with FreightWaves.
The decision to discontinue flight operations appears to have been initiated by Amazon (NASDAQ: AMZN). Where the Amazon-branded planes will end up is unknown, although it is now clear a portion of the fleet will be transferred to rival ABX Air.
Atlas Air will give up 17 Boeing 767-300 converted freighters and its entire fleet of Boeing 737-800 cargo jets, according to several pilots relaying news presented by CEO Michael Steen during a company town hall on Thursday. Under contracts scheduled to expire in 2026, Atlas provides crews, routine maintenance and insurance (CMI). Amazon is responsible for providing the aircraft, fuel and cargo.
The agreements give Amazon the option to terminate the contracts with 180 days of written notice, according to documents filed with the U.S. Securities Exchange Commission before Atlas was taken private in early 2023 by a consortium of investors led by Apollo Global Management. One of the circumstances allowing for early termination is a change of corporate control. The contract raises the possibility of Amazon paying a termination fee to Atlas Air, but whether that happens could not be determined.
“If Amazon exercises any of these termination rights, it could have a material adverse effect on our business, results of operations and financial condition,” Atlas Air Worldwide said in annual reports while it was a publicly traded company. Officials have not addressed how profitable the Amazon business has been in recent years, especially with a slowdown in domestic e-commerce volumes since the pandemic.
The 17 Boeing 767s operated by Atlas Air are owned by Atlas Air Worldwide’s leasing subsidiary, Titan Aviation, and leased to Amazon. The e-tailer, which separately hired Atlas to fly the aircraft, can now sign a CMI contract with another operator and have the aircraft transferred to its new partner. Amazon directly controls the eight 737-800s, which are leased from the Bank of Utah and are also expected to be placed with another cargo airline.
At least 10 of the 767s are expected to be placed on the operating certificate of ABX Air, one of two cargo airlines owned by Air Transport Services Group (NASDAQ: ATSG). In early May, ATSG announced that Amazon will provide 10 additional 767-300 freighters to operate on its behalf under a five-year contract and that ABX will begin flying in June. ATSG did not say where Amazon would obtain the aircraft.
Amazon has the right to place up to 10 more aircraft with ABX, which currently operates four B767-200s for Amazon. Sister airline Air Transport International operates more than 40 767s on Amazon’s behalf.
Amazon owns nearly 20% of ATSG. It previously owned a stake in Atlas Air, but its shares were bought out by the new ownership group.
Amazon’s other providers of outsourced air cargo service in the United States are Sun Country Airlines, which operates 737-800s, and Hawaiian Airlines, with two Airbus A330-300 converted freighters.
Atlas Air declined to comment, citing a required quiet period on public statements ahead of financial reporting to bondholders on Thursday. Media representatives for Amazon did not respond to multiple requests for information about the company’s plans for its private airline.
Moving forward without Amazon
Steen, the Atlas CEO, said the company doesn’t plan on furloughing any pilots who choose to stay, according to several pilot accounts of the town hall. Although Atlas Air is adding eight widebody freighters to the fleet this year, there could be a surplus of pilots until the airline picks up new business, which could mean less pay as pilots share available flight hours. Junior officers would be most affected by any reductions.
The 767 pilots displaced by the loss of Amazon business could opt to fly Boeing 777s or 747s but would need additional training to be certified for a different aircraft type.
Atlas Air is scheduled to receive two 777 production freighters from Boeing in the second half of the year. Trade publication Cargo Facts reported earlier this month that Atlas Air had purchased a pair of factory-built 747-400s that China Airlines retired from service in 2023.
Nippon Cargo Airlines last week renewed an agreement with Atlas to operate five of NCA’s 747-400 freighters between Asia and North America amid growing demand. Ocean shipping giant CMA CGM recently announced that it has struck a CMI agreement with Atlas Air to operate two Boeing 777 freighters on the trans-Pacific route, starting later this year. And YunExpress, a freight forwarder in China, in March signed a long-term charter agreement with Atlas for use of a second Boeing 777-200 freighter.
Click here for more FreightWaves stories by Eric Kulisch.
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