Amazon has taken a minority stake in Ohio-based air cargo lessor and contractor Air Transport Services Group (ATSG) in a US$132 million deal.

The e-commerce giant is exercising warrants that it held since 2016 and 2018 to acquire 13.5 million shares in the cargo airline — which translates to a 19.5% share in ATSG, according to a regulatory filing with the Securities and Exchange Commission (SEC) on March 8.

Amazon’s air fleet, launched in 2016, is a critical part of its efforts to provide one- and two-day delivery across the United States. It still currently still relies heavily on ATSG and rival carrier, Atlas Air, to transport a large portion of its packages — but has started to bring some air cargo operations in house.

Earlier this year, Amazon Air purchased 11 used Boeing 767-300 aircraft from Delta Air Lines and WestJet growing its own fleet as the cargo capacity squeeze during the pandemic increased opportunities to generate revenue from air freight. 

The Seattle-based Amazon is also scheduled to unveil a US$1.5 billion air hub in northern Kentucky later this year. It will reportedly have the capacity for 100 Amazon planes — capable of handling about 200 flights per day.

Amazon warrants in ATSG and Atlas Air

Amazon was granted warrants as part of an agreement that time to lease 20 Boeing 767s from ATSG as it looked to build its air fleet that time. 

Aside from ATSG, Amazon also owns warrants to buy a minority stake in Atlas Air Worldwide Holdings.

Pending regulatory approval, the deal translates to 13.5 million ATSG shares. Amazon also purchased 865,548 shares of Ohio-based ATSG common stock, according to its CFO Quint Turner.

In September last year, ATSG said it projects that its airlines will operate 38 Boeing 767s for Amazon Air by April 2021, 36 of which are leased to Amazon by ATSG’s Cargo Aircraft Management (CAM) subsidiary.