ATSG’s airlines will start operating the 10 freighters from this summer with the option to add up to another 10 aircraft.
The agreement runs until May 2029 with the option to be extended for an additional five years.
Joe Hete, Chairman and CEO of ATSG, says, “These additional aircraft will allow us to leverage our existing infrastructure and capabilities for expanded operating revenues. This expanded and extended operating agreement is a testament to the dependability of our employees and the reliability we bring to the Amazon Air network.”
ATSG has also extended the exercise period for vested warrants of 21.8 million shares it previously issued to Amazon, amend the vested conditions and extend the exercise period for unvested warrants for 2.9 million shares, and issue new warrants for up to 2.9 million shares to Amazon.
ATSG has also released its first quarter results, reporting that revenue was down 3% to $486 million and adjusted EBITDA was down 8% to $127.3 million.
For Cargo Aircraft Management (CAM), aircraft leasing and related revenue was down 7% due to revenue from leasing 12 additional B767-300Fs and three Airbus A321-200s being more than offset by the return of 12 B767-200Fs and four B767-300Fs.
Revenue reductions associated with the B767-200 fleet include the effect of fewer cycles operated by lessees under ATSG’s engine power programme.
CAM deployed four newly converted B767-300Fs to external lessees during the quarter.
Three B767-300Fs and one B767-200F were returned when their leases expired, with one B767-300F and the B767-200F being leased to ABX Air.
CAM has 24 aircraft being converted or waiting to be converted at the end of the first quarter consisting of 13 767s, six A321s and five Airbus A330s.
For this year, ATSG expects adjusted EBITDA of $516 million, taking into account the 10 B767-300Fs for Amazon, assuming they are all in operation by December and taking into account the costs associated with bringing them into service and adding over 50 additional pilots to ABX Air.
Hete says, “We have made significant progress toward achieving positive free cash flow in 2024. The expansion of our flying agreement with Amazon should only help reach that goal. Our amended agreement also provides opportunity for a combination of up to ten lease extensions and/or additional assigned aircraft, beyond the initial ten we will bring into service this year.”