Atlas Air Worldwide Holdings (AAWW) disclosed earlier today that it entered into an Amended and Restated Air Transportation Services Agreement with Amazon.com Services, a subsidiary of Amazon.com (AMZN), pursuant to which Atlas Air's wholly owned subsidiary, Southern Air, will provide crew, maintenance and insurance services to Amazon using Boeing (BA) 737-800 series aircraft. The Boeing 737-800 aircraft will be leased by Amazon from a third party and subleased to Southern Air. The B737-800 CMI operations will be for a term of seven years, with an extension option by Amazon for a total term of 10 years. Five aircraft are scheduled to be placed into service in this fiscal year. Amazon may, in its sole discretion, place up to 15 additional Boeing 737-800 aircraft into service with Southern Air by May 31, 2021, subject to Amazon's confirmation that it will exercise such options no less than 240 days in advance of the scheduled delivery date for each aircraft. In connection with the agreement, Atlas Air has granted Amazon incremental warrants that would allow it to potentially acquire up to a total of 39.9% of its common shares, an increase from up to 30.0% previously. The warrants relate to existing B767 activities and expected B737 CMI flying for Amazon, and they will also capture future growth of the relationship as Amazon may increase its business with Atlas Air, the company said. Atlas agreed to issue to Amazon an incremental warrant to acquire 6,632,576 shares of AAWW common stock at an exercise price of $52.90 per share. Shares of Atlas Air are up 6%, or $2.75, to $50.97 in morning trading.
