Amazon.com is set to take a stake in the parent of Hawaiian Airlines in a deal to expand the e-commerce giant’s cargo operations using Airbus cargo fleets.
Hawaiian Holdings Inc. issued a warrant that would allow Amazon to acquire up to 15% of the carrier’s outstanding shares, it said in a statement Friday. The orders will take effect over the next nine years.
The agreement was signed in Amazon’s reported plans for 2021 could mark a revival, with long-haul Boeing Co. and Airbus Cargo using its own planes to move goods, according to United Parcel Services Inc. And it will strengthen its rivalry with FedEx Corp. Amid a slow recovery in Asia-Pacific travel, a new source of income for Hawaiians, some countries have recently lifted travel restrictions linked to the coronavirus.
“Amazon’s business will not only improve Hawaii’s revenue diversity, but also help smooth the revenue volatility that is characteristic of Hawaii’s passenger business,” Deutsche Bank analyst Michael Linenberg said in a research note on Friday.
The announcement of the plan comes as Amazon’s cargo has grown at its slowest pace since the start of the pandemic – a sign that demand for the e-commerce giant is slowing. Amazon Air was founded in 2016 to transport products from the company’s warehouses to consumers.
Amazon, eager to expand the reach of its delivery network and reduce its reliance on third-party carriers, has combined leased and purchased aircraft from other companies, offering discounts especially for newer models coming off the assembly line. The service, which relies on pilots from a handful of partner carriers, has grown rapidly in recent years, leasing and buying more aircraft and tackling new airport hubs.
Hawaiian will operate the first 10 Airbus A330-300 freighters starting in 2023, and the fleet could expand based on Amazon’s demand. The airline will establish pilot bases in the continental US, expand existing maintenance bases and hire pilots, mechanics and other personnel. Hawaiian now carries cargo on passenger planes within Hawaii and between states and North America, Asia and Oceania.
“This relationship is a catalyst for growing our business and provides a unique opportunity to build on our established strengths as a source of revenue,” Hawaiian CEO Peter Ingram said in a statement.
Amazon will lease the aircraft to Hawaii to operate from Altair, according to an Airbus statement. The planes are being converted from passenger planes to freighters.
Philip Karam, director of global fleet and sourcing at Amazon Air, said in a statement that the planes, “the newest, largest aircraft for Amazon Air, will allow us to deliver more customer packages on each flight.”
Mary Schlangenstein, Bloomberg
