Courtesy of Benzinga.
Shares of Atlas Air Worldwide Holdings, Inc. (NASDAQ: AAWW) were trading up more than 30 percent on Thursday, driven by the announcement of a new deal with Amazon.com, Inc. (NASDAQ: AMZN).
The company also reported an earnings beat: Q1 Adj. EPS $0.31 vs $0.25 Est., Sales $418.615M vs $419.8M Est.
Under the terms of the agreement, Atlas Air will provide the online retailer with air cargo services to support package deliveries. The small-cap provider of outsourced aircraft and aviation services will operate 20 Boeing 767-300 converted freighters that will serve Amazon on a CMI (crew, maintenance and insurance) basis. Deliveries are projected to begin in the second half of 2016.
On top of this, the contract stipulates the retail giant receives warrants to acquire 20 percent of Atlas’s outstanding stock, at a price of $37.50 per share, at more than a 2 percent discount to the stock’s Wednesday closing price. In addition, Amazon has the option to purchase an additional 10 percent of the company over the next seven years, at the same exercise price. Shares are already trading close to $50.
Atlas Air said it expects the new deal to result in meaningful accretion to its earnings and cash flows over time, starting in 2017. “We are eager to capitalize on our ongoing initiatives and our opportunities with Amazon and Southern to drive substantial value and benefit for customers,” CEO William Flynn said in a statement.
Amazon CFO Brian Olsavsky recently explained, “The reason we add logistics capability and transportation capability is so we can serve our customers faster and faster delivery speeds and we’ve needed to add more of our own capacity to supplement our carriers and our partners.”
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
