Amazon to Build Its Own Delivery Network

Amazon.com Inc. is stepping up plans to build its own air delivery network, saying it will lease 20 Boeing Co. 767 freighters from Air Transport Services Group Inc., sending shares in the lessor up the most in six years.

Shares of Air Transport Services surged the most since March 2010, rising as much as 27 percent. They gained 18 percent to $13.89 at 1:12 p.m. in New York. As part of the deal announced Wednesday, Amazon also has the right to buy as much as 19.9 percent of Air Transport Services common shares over five years at $9.73 per share, based on its Feb. 9 closing price. Amazon shares fell almost 1 percent to $555.22.

As Amazon is expanding its Prime members, who pay an annual fee and get free, expedited shipping on millions of products, the agreement with Air Transport will “ensure air cargo capacity to support one and two-day delivery for customers,” said Dave Clark, Amazon senior vice president of worldwide operations and customer service, in a statement.

While the deal allows Amazon to add growth capacity, Sebastian said, over time it could also allow the company to compete more directly with firms like DHL Worldwide Express and FedEx in offering shipping and logistics services to third parties.

“In 20 years, Amazon will have its own delivery fleet,” said Michael Pachter, an analyst at Wedbush Securities Inc. who rates the stock outperform. “This is a baby step toward that goal.”

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