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Amazon (AMZN) to Expand Air Fleet by Leasing 12 Cargo Planes

Zacks Equity Research
·4 mins read

Amazon AMZN extends its partnership with Air Transport Services Group ATSG to lease 12 additional Boeing 767-300 converted cargo aircraft.

Notably, out of these 12 new cargo planes, one has already joined Amazon’s air fleet operations last month and the rest is expected to join by 2021.

The latest move is in sync with the company’s deepening focus on expanding its air cargo operations in a bid to ensure timely delivery of rising number of ordered goods.
Prior to the announcement, Amazon’s air fleet operations had a total of 70 aircraft in use, which will exceed 80 after the new ones get delivered.

This move is another step taken by the e-commerce giant to strengthen its in-house shipping and logistics service to support its Prime-based ultrafast delivery services and expand its fulfillment network.

Additionally, the latest announcement holds promise for the company during this coronavirus-led crisis, due to which consumers are afraid of stepping out of their houses and hence ordering every item online.

The company has been witnessing a flurry of orders since the onset of the pandemic-led lockdown.

Expanding fleet operations will add strength to the company’s existing delivery capacity, which in turn will help it enhance the shopping experience of customers during this unprecedented time. This will continue to instill investor optimism in the stock.

Coming to the price performance, Amazon has returned 34.2% on a year-to-date basis, outperforming the industry’s growth of 24.6%.


Strong Efforts to Expand Air Fleet

The latest move is likely to aid the performance of Amazon Global Air in the near term.

Apart from the recent deal, Amazon teamed up with a low-cost carrier, Sun Country Airlines, in December 2019 for flying a fleet of 10 converted Boeing 737-800 freighters.

Per the deal, these 10 cargo jets are meant for shuttle packages in a bid to bolster Amazon’s shipping services. The deal added Sun Country to Amazon’s existing domestic cargo partner base.

Further, Amazon’s previously expanded partnership with Air Transport Services Group to lease an additional 10 aircraft is noteworthy.

Additionally, the company’s partnership with Atlas Air Worldwide Holdings AAWW to expand its domestic air network is a positive.

The e-commerce giant’s tie-up with GE Capital Aviation Services (GECAS) to increase the number of aircraft is another positive. Per the deal, Amazon has leased 15 Boeing 737-800 aircraft from GECAS.

As part of the Amazon Air network, these cargo aircraft are expected to be fully operational by 2021.

Strengthening Freight Services

Amazon’s expanding aircraft portfolio bodes well for its ongoing work and investments to strengthen its air facilities at various airports.

The company joined forces with Woolpert for the development of its airport project, Amazon CVG Air Cargo Hub, at Cincinnati/Northern Kentucky International Airport. Notably, the hub, which will start operating in 2021, will include several parking positions, huge airfield pavement, support facilities and various platform levels on completion.

Further, the company is gearing up to open Regional Air Hub at San Bernardino International Airport next year. Another Regional Air Hub is likely to open later this summer at Lakeland Linder International Airport.

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. Revenue (TTM)
Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. revenue-ttm | Amazon.com, Inc. Quote

Wrapping Up

All the above mentioned strong endeavors are in sync with the company’s customer-oriented focus. It is leaving no stone unturned to enhance its delivery services further in order to sustain its customer and Prime momentum.

Therefore, we believe that the company is moving in the right direction by gaining control over the delivery services network, which is likely to continue providing it a competitive edge against retailers like Walmart WMT, Target and Kroger, among others, who are also making efforts to strengthen their delivery network to gain customer momentum.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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