News / ATSG thinks big on its future with Amazon and eyes expansion in China

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ATSG believes Amazon could need up to 100 aircraft and is planning significant expansion in the US and China, for both 767Fs and 737Fs.

Speaking at the Stifel, Nicolaus & Co Transportation & Logistics Conference this week, Joe Hete, CEO and Rich Corrado, COO, said ATSG, which recently bought 737 conversion company Pemco, hoped to do a great deal more business with Amazon.

Referring to Amazon’s decision to move its air hub from ATSG’s home of Wilmington, Ohio, to CVG airport in Cincinnati, Mr Hete noted: “Much as we would have liked it to stay, Amazon talked about parking for 100 aircraft at its new hub. We see this as a great opportunity to deploy assets for them.”

He added that Amazon could go into the narrowbody sector and “we are well-positioned if they decide to go for 737s, with Pemco.”

He added that the decision to move from Wilmington would not have a huge impact.

“Amazon has 17 aircraft under lease with us and Atlas, and only 10 are based in Wilmington anyway.”

Mr Corrado noted: “We knew Amazon would eventually take over its own hub. And it’s great they announced a long-term hub because it means they are here to say, and are going to get much bigger, and there will be more opportunities for us in the future.”

Referring to rival Atlas Air, he said: “We are well-positioned in the market, given that one of our competitors is going to be tied up for the next two years delivering airplanes for Amazon. We have assets that are ready to go and be deployed anywhere in the world.”

ATSG said it was extremely confident of the Asia market, and its joint venture carrier, with Okay Airlines and online retailer VIP Shop Holdings, would launch by the end of this year.

But it added it was planning to put two aircraft into China straight away.

Okay Airlines is to lease two feedstock 737 aircraft, converted by Pemco, and leased through ATSG’s Cargo Aircraft Management division, which will be moved into the JV airline, United Star Express, once it has launched.

“This shows you the power of our business model,” said Mr Corrado. “We also want to get 767s into China. We are seeing opportunities go by there and we want to get some revenue from there flowing into the business.

“There are low rates, but there are a lot of packages moving in China. The e-commerce market is very robust. We are real confident – not only on 737s, but on 767s as well.”

Pemco this week announced that it is to convert three 737-300s for China’s YTO Cargo Airlines.

Meanwhile, Atlas Air was said to have entered a lease agreement with Asiana Cargo for a 747-400 freighter.