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wjcandee
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Re: Amazon Fleet Discussion - 2020

Fri Sep 04, 2020 8:03 pm

Boof02671 wrote:
Clancy223 wrote:
On Thursday, Aug 20 Atlas starts two more stations... MIA-SJU-MIA on the 767 and PDX-LAL-RFD with a Southern 737.

That’s an awfully long flight PDX-LAL.


Agreed. It's about 5.5 hours. Alaska does something similar SEA-TPA with the 738 and 739. I suspect that going Westbound would be more challenging with any decent weight of cargo. But Westbound it only goes to RFD. Alaska neverthess does TPA-SEA on the 737-800 and 737-900, although it would appear to require the higher-gross-weight version of the aircraft to do that with a strong pax load.
 
Boof02671
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Re: Amazon Fleet Discussion - 2020

Fri Sep 04, 2020 9:06 pm

wjcandee wrote:
dcs921 wrote:
wjcandee wrote:
FWIW, I think that N304CM is still at TLV. There were some emissions that suggest that it was moving around the airport this morning, Israel time.


N304CM is still at TLV. It was on another test flight today as BDK18. Evidently it did not pass its initial test flight.

https://flightaware.com/live/flight/id/BDK18-1598877081-adhoc-0


There ya go. When we saw that it (at least in theory) was going to go from SNN to DTW, I asked whether it might be going to DL TechOps for some kind of engine work at DTW. Now that it seems that it is going to go to ATL instead (again, based on flight plans being loaded well in advance), does anybody have any thoughts or actual info about this theory?

Delta’s engine shop is in ATL, not DTW.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Fri Sep 04, 2020 11:26 pm

Boof02671 wrote:
Delta’s engine shop is in ATL, not DTW.


Evidently it was just going to ATL to clear customs. It went immediately to LCQ thereafter. I thought it possible that the non-standard routing was for a substantive reason, but it appears that it was not. They will do what they need to do at LCQ, it will fly somewhere for paint, it will go to AMES or HAECO Americas for post-paint conformity, and will be delivered presumably sometime around October 1.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Fri Sep 04, 2020 11:32 pm

And N503AZ is now in the system for a nonstop flight from PHL to TLV on Saturday morning EDT, 9/5/20. Apparently, PHL was simply a jumpoff point for an international flight, perhaps preferred by whatever contractor is providing the ferry crew.
 
USAirKid
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Re: Amazon Fleet Discussion - 2020

Fri Sep 04, 2020 11:36 pm

Boof02671 wrote:
wjcandee wrote:
I frankly didn't expect that there would be that much backhaul on the Amazon Hawaii flights. Hawaii is basically an airfreight destination, and whether it's Amazon or UPS, the traffic is very-directional and the prices reflect that.

The key for Amazon is to be able to do it themselves cheaper and/or faster and/or more-reliably than the service offered to Amazon by other providers (who also have the directionality issue to contend with). That Amazon has now raised the number of ONT/RIV flights to/from Hawaii to 3 round-trips suggests that they are happy with the price/quality equation.

When I worked the ramp in TPA for UA we had a DC10 go HNL-DEN-TPA, we would have pallets and containers of fresh pineapples everyday on the flight which originated in HNL.


Pineapples are no longer grown commercially in Hawaii for shipment to the contiguous-48. That has been usurped by Costa Rica and Guatemala. Plus lots of pineapple ships via sea.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Sat Sep 05, 2020 2:01 am

It's kind of fun to see how much is happening with the fleet, prior to what I anticipate will be a bit of a "freeze" on routes and aircraft additions prior to Peak.

As expected, N433AZ will be leaving ILN tomorrow to be painted at ROW. It is expected to go into service at ATI on or about 10/1, and constitutes the last aircraft to be leased to Amazon under the previous conversion/lease contract with CAM. The current contract for 12 had one to be delivered this year and 11 next year, so that should be it on that contract for this year as well. So after 10/1-ish, I don't think we will see any more 767s leased to Amazon this year. This is not to say that N381AN won't be going to ATI shortly to be used as a spare, and, thus, regularly on Amazon. It probably will, especially with the major spare, N395CM, under a contract for a DHL division in the South Pacific for an unknown period of time.

And, as previously-mentioned, N385AM arrived today at ILN, so we can anticipate that it will shortly head over to TLV for conversion kind of contemporaneously with N503AZ.
 
autopiloton
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Re: Amazon Fleet Discussion - 2020

Sat Sep 05, 2020 2:28 am

Hearing rumors that Amerijet will be operating planes for Amazon. Maybe the ultimate destination for the Amazon purchased planes... Will be interesting to see Amazon bring another 767 operator into the mix.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Sat Sep 05, 2020 4:33 am

autopiloton wrote:
Hearing rumors that Amerijet will be operating planes for Amazon. Maybe the ultimate destination for the Amazon purchased planes... Will be interesting to see Amazon bring another 767 operator into the mix.


I'm sure they would sell their children for that opportunity, and it is consistent with the new owners' business plan to move from their Island service to an ACMI model.

Given that Amerijet's existing jets are all leased from CAM, I can see why that might incline Amazon to pony up the financing on its own. And as people move up and through the Amazon organization, different leaders can bring different ideas about how to accomplish things.

I can't say that it didn't occur to me at least once before that if Amazon was going for an additional 767 operator, Amerijet would be under consideration, along with NAC (if it could get its act together on its 767s), possibly-Omni, maybe Kalitta (despite the rumoured past history), and some significantly-lesser carriers. That said, I can think of some significant reasons that Amerijet might not be a good fit. Unbelievable what a missed opportunity this was for ABX.

We will just have to see.
 
Bricktop
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Re: Amazon Fleet Discussion - 2020

Sat Sep 05, 2020 10:13 am

wjcandee wrote:
And N503AZ is now in the system for a nonstop flight from PHL to TLV on Saturday morning EDT, 9/5/20. Apparently, PHL was simply a jumpoff point for an international flight, perhaps preferred by whatever contractor is providing the ferry crew.

I woke up early and saw N503AZ on her way to TLV. Luckily she was trailing so easy to spot on this lovely morning.
I guess I log her as a B763 because she's not converted yet.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Sat Sep 05, 2020 5:24 pm

Bricktop wrote:
wjcandee wrote:
And N503AZ is now in the system for a nonstop flight from PHL to TLV on Saturday morning EDT, 9/5/20. Apparently, PHL was simply a jumpoff point for an international flight, perhaps preferred by whatever contractor is providing the ferry crew.

I woke up early and saw N503AZ on her way to TLV. Luckily she was trailing so easy to spot on this lovely morning.
I guess I log her as a B763 because she's not converted yet.


Her route from PHL took her way-South and way-East of me, so not visible. Glad you were able to see!

She's definitely still a B763. If you see her six months from now...different story.

Interesting that she was trailing. I wonder what Amazon puts in its Chemtrails. Probably something to make us stay at home but crave more stuff. (Kidding of course.)
 
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Harvestman
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Re: Amazon Fleet Discussion - 2020

Sun Sep 06, 2020 7:12 pm

Not sure how I missed the news about N768AX going into the Airborne Express scheme, but boy does it look good. Worth keeping an eye out for.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Sun Sep 06, 2020 7:31 pm

Harvestman wrote:
Not sure how I missed the news about N768AX going into the Airborne Express scheme, but boy does it look good. Worth keeping an eye out for.


Agreed 100%. It looks awesome. Interesting that they did it on an Amazon aircraft.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Sun Sep 06, 2020 10:59 pm

N349CM is scheduled to depart ROW tomorrow morning (9/7/20) after being painted for whomever it is that's going to lease her. Spare for ATI to use on Amazon? Amerijet? Cargojet? It will be interesting to see in whose colors she emerges. (I see that Planespotters now has her down for Amerijet, but I don't know what they're basing that on. They also have her as an NTU for Amazon as N479AZ, so we will see.)
 
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sunking737
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Re: Amazon Fleet Discussion - 2020

Sun Sep 06, 2020 11:11 pm

Why can't I find any photos online of this plane (N768AX) in its new colors???
"Don't believe it unless its parked on the ramp, or printed in the schedule...SUBJECT TO CHANGE"

I'm a SUNDUCK......Worked for RC & SY @ MSP
 
Allee
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Re: Amazon Fleet Discussion - 2020

Sun Sep 06, 2020 11:47 pm

sunking737 wrote:
Why can't I find any photos online of this plane (N768AX) in its new colors???


https://flic.kr/p/2jDqUhP
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 12:00 am

sunking737 wrote:
Why can't I find any photos online of this plane (N768AX) in its new colors???


Nice of Allee to post that link. Hopefully, the A.net screeners will allow a photo of it to be up on this site sometime soon...
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 12:27 am

Looks like CargoFacts picked up on our discussion here about the Amazon aircraft N503AZ. I don't have a subscription, so I can't see the whole story, but they do include details found only in the excellent analysis posted here. ;)
 
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Spacepope
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 1:00 am

wjcandee wrote:
Looks like CargoFacts picked up on our discussion here about the Amazon aircraft N503AZ. I don't have a subscription, so I can't see the whole story, but they do include details found only in the excellent analysis posted here. ;)


They should provide some gratis subscriptions to some of our expert analists and advisors here.
The last of the famous international playboys
 
autopiloton
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 4:27 am

N349CM isn’t going to ATI so Amerijet is probably correct. N381AN finished conformity for ATI but hasn’t been added to their Ops Specs yet. I was under the impression it was going to happen soon but guess that wasn’t so.

I was surprised to see N479AZ listed at all since Amazon isn’t due another aircraft until after the start of the year. N479AZ is now listed as “not assigned/reserved” on the FAA website. I don’t think ATSG has ever changed a tail number to an “AZ” number and flown it around without a Prime Air paint job. Maybe 409AZ..but can’t recall.

On the other hand..maybe this will be an Amazon plane in the future that Amerijet operates. Maybe someone in the office let the cat out of the bag by accident too soon.

wjcandee wrote:
N349CM is scheduled to depart ROW tomorrow morning (9/7/20) after being painted for whomever it is that's going to lease her. Spare for ATI to use on Amazon? Amerijet? Cargojet? It will be interesting to see in whose colors she emerges. (I see that Planespotters now has her down for Amerijet, but I don't know what they're basing that on. They also have her as an NTU for Amazon as N479AZ, so we will see.)
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 4:58 am

autopiloton wrote:

On the other hand..maybe this will be an Amazon plane in the future that Amerijet operates. Maybe someone in the office let the cat out of the bag by accident too soon.


Amerijet has been looking for more metal for some time, as their salespeople and new owners have been beating the bushes for business under their new ACMI emphasis, with some degree of success. CAM hasn't been able to give them anything before now, and under the doctrine of "he who hesitates is lost", I believe they "lost" a previous aircraft opportunity or two by not pulling the trigger fast enough. I was thinking for a while that N349CM was likely for them, but given the past recent history, I wasn't going to proclaim anything until I saw the thing in their paint scheme or saw some other public confirmation of it.

Put another way, I think Amerijet has a number of non-Amazon opportunities that they can use at least a couple of aircraft for. So the simple answer may be that this frame was thought to be going to Amazon but Amazon got the two non-FADEC retired ANA Cargo BCFs instead. The second one of those is on schedule for Amazon for 10/1, and that's why it went to paint at ROW on Saturday.

I agree with you that nobody has flown an AZ jet other than on Amazon. There have been jets that ATI flew as spares and later renumbered for Amazon, but typically once it has been registered with an AZ prime number, it isn't flown until it is dry-leased to Amazon, and those dry-leases do not permit it to be used on any other business. Which is why the ABX 767-200s all fly all manner of stuff for all sorts of clients -- except the 6 ones dry leased to Amazon which never fly anything else.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 5:03 am

Spacepope wrote:
wjcandee wrote:
Looks like CargoFacts picked up on our discussion here about the Amazon aircraft N503AZ. I don't have a subscription, so I can't see the whole story, but they do include details found only in the excellent analysis posted here. ;)


They should provide some gratis subscriptions to some of our expert analists and advisors here.


That would be sweet. The subscriptions aren't cheap.
 
jbs2886
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 6:36 am

I understand Amerijet is looking plausible, but any change the Amazon-acquires 767 could be used internationally? We’ve heard of expansions in Europe and the 767 airline rumor in Australia.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 8:07 am

jbs2886 wrote:
I understand Amerijet is looking plausible, but any change the Amazon-acquires 767 could be used internationally? We’ve heard of expansions in Europe and the 767 airline rumor in Australia.


Absolutely. 100-percent could be that the aircraft acquired from Canada and sent for conversion could be for use in another country than the US. The only thing is the NxxxAZ registration, which so far has been used in the US.
 
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 2:56 pm

sunking737 wrote:
Why can't I find any photos online of this plane (N768AX) in its new colors???

I shot it arriving at KBWI yesterday:
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yochai
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 3:18 pm

Some photos of N503AZ I took in TLV yesterday morning (rejected by a.net of course :spin: )

https://www.instagram.com/p/CEy9_MZBgeY/
 
jbs2886
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 6:59 pm

wjcandee wrote:
jbs2886 wrote:
I understand Amerijet is looking plausible, but any change the Amazon-acquires 767 could be used internationally? We’ve heard of expansions in Europe and the 767 airline rumor in Australia.


Absolutely. 100-percent could be that the aircraft acquired from Canada and sent for conversion could be for use in another country than the US. The only thing is the NxxxAZ registration, which so far has been used in the US.


Ahh good point in the registration.
 
MajMattMason
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Re: Amazon Fleet Discussion - 2020

Mon Sep 07, 2020 11:13 pm

Not sure if this has been discussed. 395AN and 392AN on the way to ATI by the end of the year, but I expect to see some slippage. Both, I believe, to be reassigned to Amazon in ‘21 at some future date.
381AN is 30 days plus late for ATI.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Tue Sep 08, 2020 3:46 am

MajMattMason wrote:
Not sure if this has been discussed. 395AN and 392AN on the way to ATI by the end of the year, but I expect to see some slippage. Both, I believe, to be reassigned to Amazon in ‘21 at some future date.
381AN is 30 days plus late for ATI.


Thank you, Major, for these details. They are very interesting.

N381AN actually went through conversion in about 5.5 months, which is a little faster than average. But it has been in TPA for seven weeks, and hasn't been painted. Generally, we see 2-4 weeks post-conversion at ILN. I don't really understand why AMES seems to be challenged in getting things done at normal speed. I would assume that TPA is a ghost town because I can't imagine that there is too much Frontier work at this point, and Frontier kept them busy. So why is working on a couple of 767s so hard? Likewise, the Delta/United 767-300 work at ILN is dead for now. Are there issues with Covid distancing and/or protocols or something? It seems odd. And now the aircraft to be leased to UPS goes to HAECO post-conversion rather than to ILN or TPA? I'm not sure what's up. I do notice that AMES in ILN is staying pretty-much right at 14 days for its two lines of UPS Large Display System upgrades, so at least they're not, to my knowledge, bollixing that important contract.

As I'm sure you know, 392AN got to TLV on 5/31/20 and 395AN got to TLV on 7/8/20. So I completely-agree with you that it's unlikely they would be in service before 12/31. Possible if everyone hurries on 392AN and it gets a spritz of grey paint over the bodywork. Probably not too likely on 395AN. A fair estimate is 6.5 months from arrival in TLV if it moves quickly through conversion, no real painting is involved, and conformity goes off without a hitch. But that's pretty-ambitious. That would be late January 2021.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Tue Sep 08, 2020 2:43 pm

And another retired Westjet 767-300 will be making its way to LCQ today. That's 3. One has left for TLV to be converted for Amazon. We will see what happens to the other 2. All depends on how fast Amazon wants them.
 
enplaned
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Re: Amazon Fleet Discussion - 2020

Tue Sep 08, 2020 5:43 pm

wjcandee wrote:
MO11 wrote:
Amazon bought C-FOGJ from WestJet on Thursday (to be N503AZ)


So this one is totally-weird.

Amazon is acquiring its own aircraft now? Do you know what Amazon entity bought it? (The FAA only shows that serial number as a pending import under that tail number, with the entity left blank.)



Assuming Amazon really is buying its own aircraft, the only possible reaction is "it's about time".

First of all, no one currently has lower cost of capital than Amazon. Therefore, the lowest possible capital cost for Amazon is to own the aircraft itself. Having Atlas or ATSG or even GE doing that on their behalf is capital inefficient. There was a time when GE had stellar credit - that time is now past. Amazon's credit is better than GE's.

Secondly, it may be that Amazon expects to be more of a taxpayer in the future - i.e. have sufficient profitability that it expects to actually pay cash taxes. If that's true, then depreciation coming off of the aircraft (which you only get when you own, not lease, the aircraft) may be useful for them in terms of sheltering profits.

Thirdly, owning the aircraft gives Amazon more, not less, flexibility. Amazon likes leasing things because it (before recent accounting changes) allowed them to keep them off its balance sheet - well, the recent accounting changes even the playing field in that respect (operating leases now go on the balance sheet).

Also, and I happen to know this from private communication, Amazon had this charmingly naive point of view that leasing is more flexible, which might be true if you're thinking about the spot market for truck trips, but is just silly when you enter into a 10 year lease with e.g. CAM or Titan or whatever. You're on the hook for... 10 years! And there will be lot of lease terms and conditions regarding, e.g. return conditions. Whereas if you own the thing, you have much more ability to do with it what you will. Want to get out of the business altogether and dump the aircraft as is? Fine, do it.

Plus, if you own the thing, then you're operating agreements can be shorter term, have more flexibility and greater ability to get out of them when you want, because your operator is not stuck with the capital cost of the aircraft if you walk away.

Fourthly, if you own the aircraft, then you enter into operating arrangements for the aircraft that do not include profit on the capital component. This is analogous to what regional airlines have been doing with majors. ATSG, etc, won't make as much absolute profit per flight, but their operating margin will stay as high because their revenue per flight will also be lower. It will still look good to Wall St.

In other words, it's kind of a no brainer. So why didn't Amazon go this way to start?

At least as of a couple years ago, Amazon didn't have a great reputation with lessors. Their view was that Amazon was, on a raw intellect basis, extremely powerful - but were arrogant and innocent of a lot of important industry nuance. Very smart but quite ignorant. So, overall, not as impressive as they viewed themselves.

But, "very smart" means that, over time, they will figure out the industry nuance. It sounds like that process is well underway.
 
jbs2886
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Re: Amazon Fleet Discussion - 2020

Tue Sep 08, 2020 5:51 pm

enplaned wrote:
wjcandee wrote:
MO11 wrote:
Amazon bought C-FOGJ from WestJet on Thursday (to be N503AZ)


So this one is totally-weird.

Amazon is acquiring its own aircraft now? Do you know what Amazon entity bought it? (The FAA only shows that serial number as a pending import under that tail number, with the entity left blank.)



Assuming Amazon really is buying its own aircraft, the only possible reaction is "it's about time".


There is no assuming - it is fact now. We just don't know what the plans are to do with those aircraft.
 
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sunking737
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Re: Amazon Fleet Discussion - 2020

Tue Sep 08, 2020 6:45 pm

Its now cheaper to buy your own planes outright, is it not?? If you own you can park if there is a down turn. We all know that the online buying as grown a lot in this year of craziness...
"Don't believe it unless its parked on the ramp, or printed in the schedule...SUBJECT TO CHANGE"

I'm a SUNDUCK......Worked for RC & SY @ MSP
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Tue Sep 08, 2020 6:56 pm

Enplaned,

I largely agree with your analysis. I pinned it mostly on the cost of capital combined with Amazon's growing in-house expertise and commitment to the project. Another member pointed out that Amazon recently issued bonds at .004 (i.e. 40 basis points). No lessor is going to beat that.

One of the things that Amazon got with the initial leases was a turnkey aircraft. The lessors did the aircraft selection, the negotiation for the used frames, the selection and monitoring of the conversion houses, the painting and conformity of the aircraft, and were responsible for doing so within established time frames. Every one of those steps has pitfalls to a newbie, and nobody is better at wringing value from a nickel than ATSG, who also pays for quality on the important things. Knowing what's important and what isn't, what's reasonable in the market and what isn't, etc., is something that they're good at, and, under a lease, responsible for. It also makes the "M" component of the CMI agreement more-predictable to the operator when the lessor does its job correctly on the above steps.

Amazon has a clause in all the CMI agreements that gives it the right to terminate for convenience on a couple of months' notice. And they're willing to exercise it, as Atlas found out. So owning the aircraft doesn't affect that component. Frankly, I think the reason that they didn't just do a straight-up charter to begin with was that the carriers couldn't carry the financial risk of acquiring all the metal to make a 40-plane operation possible, especially if the charter contracts were terminable on the terms that the CMI agreements are now. So Amazon took the capital risk in the form of 5-7-year leases with extension options while it explored the concept further, and the carriers took the operating risk with terminable-for-convenience CMI agreements, which they could and would be happy to carry. It was the proper split to put certain risks on Amazon and certain risks on the operators. Now that Amazon and the lessors have moved to 10-year leases of assets that have a roughly-20-year useful life, if that, and Amazon is all-in on operating an air network, it makes sense to bring the ownership in-house, having acquired the expertise (either by hiring or under contract) to manage the things that ATSG and Titan were doing for them.

I think that's the primary reasoning. I really enjoyed your analysis.

One other thought: ATSG made an amazing deal, in retrospect, when it inexpensively-optioned ALL but a couple of the retiring AA 767-300s from Jetran, which had a longtime deal with AA to take them. And it was a somewhat-ballsy move to do so, because ATSG didn't have a contract with Amazon at that point to take a bunch of them. The AA/Jetran deal gave ATSG a guaranteed flow of incredibly-well-maintained, single-owner, largely-identical 767-300s, with all the maintenance, history and complete-paperwork benefits that doing-so provides. This in comparison to the onesies-twosies that anybody else would likely have to do. Now that we're a couple of years down the line, more 767-300s are becoming available and would have anyway. But due to Covid, there's an enormous opportunity out there, and it makes sense for Amazon to jump on it before things turn around and the airlines and their whiny investors go, "Oh, crap." For those who would be happy with Pratt 4060s, the United fleet may offer an interesting opportunity. I know the GE is preferred, but I have to say that the Pratt is the engine that's likely to be in production longer, and have spares more-readily-available 15 years from now, because of the military tanker contract. Having a more-balanced fleet enginewise might be a good thing as green-time CF6s of the right flavor start to dwindle. Other carriers are already having problems finding decent green time engines for things like the MD11, and they (and many engine lessors) don't want to invest in a complete overhaul because they don't need another decade of useful engine life on an MD11. But Lightsabre is really the expert on the forum regarding all this.
 
enplaned
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 2:36 am

wjcandee wrote:
Enplaned,
I think that's the primary reasoning. I really enjoyed your analysis.


Thank you!

wjcandee wrote:
For those who would be happy with Pratt 4060s, the United fleet may offer an interesting opportunity. I know the GE is preferred, but I have to say that the Pratt is the engine that's likely to be in production longer, and have spares more-readily-available 15 years from now, because of the military tanker contract.


Maybe. It was my understanding that military and civil spares don't mix, but perhaps that's wrong. Or maybe it's only correct relative to certain types.

But on the GE engine side, remember that Fedex up thru this year is taking brand new, right off the production line, 767s including brand new CF6 engines. I have to assume that means that spare parts will be available for this aircraft type at least 20-30 years, if not longer, from now. I just cannot imagine Fedex buying those aircraft without expecting two or three decades of life, maybe longer. And therefore they must have received commitments from Boeing & GE to support the aircraft for that long.

It's pretty wild to think of 767s still flying as late as 2050 - considering they entered service in 70 years before.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 2:53 am

Enplaned: Very good points all around. You're absolutely right. I do think that as long as the aircraft is in service, it has to be supported. And a FedEx fleet is going to be large enough to support robustly. I remember Lightsabre talking about the minimum production run for certain engine parts, etc., and unless there is a large enough base still in operation, the cost to the operator becomes prohibitive, even though the engine is still technically-supported.
 
QF744ER
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 3:47 am

Whilst on the topic of engines, I recall seeing something recently that GE had purchased those ex QF and KLM 744’s especially for their engines to support US registered 767’s, I have a vague recollection they were for the FedEx fleet, but it could’ve also been for ATSG/CAM birds.

Was it FedEx that was switching new engines out on newly delivered 767F’s during their delivery conformity which is smart business?
 
USAirKid
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 5:52 am

wjcandee wrote:
I largely agree with your analysis. I pinned it mostly on the cost of capital combined with Amazon's growing in-house expertise and commitment to the project. Another member pointed out that Amazon recently issued bonds at .004 (i.e. 40 basis points). No lessor is going to beat that.


Wjcandee, my eyes popped when I read this. Its true that Amazon issued some bonds at 0.40% interest/40 basis points. But that was only for the $1 billion that is due in 3 years. The debt issue you were referencing:

On June 3, (2020) the company issued $10 billion in bonds in six batches, which it can use for general corporate purposes. Here is each one in more detail:

$1 billion due three years from now in June 2023 (3 years), carrying an interest rate of 0.4%.
$1.25 billion due five years from now in June 2025 (5 years), carrying an interest rate of 0.8%.
$1.25 billion due seven years from now in June 2027 (7 years), carrying an interest rate of 1.2%.
$2 billion due ten years from now in June 2030 (10 years), carrying an interest rate of 1.5%.
$2.5 billion due 30 years from now in June 2050 (30 years), carrying an interest rate of 2.5%.
$2 billion due 40 years from now in June 2060 (40 years), carrying an interest rate of 2.7%.
The weighted average cost of the debt is 1.76%. Further, you may remember that businesses get a tax break on interest expenses, which brings the after-tax cost of debt to 1.42%.

Source

Their total effective APR of all debt for quarter that ended in June 2020 was 2.31%. That effective rate will be lower for the quarter that ended September 2020. Source

So still very cheap debt, but not as cheap as 0.4%. Since Amazon didn't earmark any of these debts ("general corporate purposes") they should all be comingled when thinking about their interest rate.
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 8:18 am

USAIrKid: That's some good research! Stupid of me just to take a number from another member's post and repeat it without thinking it through or investigating it. The fundamental point is that Amazon can borrow going forward at very low rates, better than an ATSG/CAM or Atlas/Titan can do, and I should have left it at that.

I do think that what's relevant when thinking about a purchase today is the cost of capital going forward. From your analysis,that weighted average is under 2 percent. And Amazon could probably issue Equipment Trust Certificates or the like (i.e. secured debt) to finance these specific aircraft for a pretty-darn low number, too. But given that a preferred customer of say the Chase Private Bank could probably do no better today than 2.9 percent for a mortgage (which is a crazy-low number), the numbers you show in your research are still pretty-amazing, if not the near-T-Bill rates that I dopily-repeated.

Thanks for all the good work!
 
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B350pilot
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 2:34 pm

Press release issued today 09-09-2020 out of ATSG Group:

https://www.atsginc.com/investors/news- ... amazon-air

Air Transport Services Group, Inc. (Nasdaq: ATSG), the leading provider of medium wide-body aircraft leasing, air transportation and related services, today announced that ATSG will operate six more Boeing 767 freighters on behalf of Amazon Air under an existing CMI (Crew, Maintenance and Insurance) agreement with ATSG’s subsidiary, Airborne Global Solutions.
 
jbs2886
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 4:44 pm

B350pilot wrote:
Press release issued today 09-09-2020 out of ATSG Group:

https://www.atsginc.com/investors/news- ... amazon-air

Air Transport Services Group, Inc. (Nasdaq: ATSG), the leading provider of medium wide-body aircraft leasing, air transportation and related services, today announced that ATSG will operate six more Boeing 767 freighters on behalf of Amazon Air under an existing CMI (Crew, Maintenance and Insurance) agreement with ATSG’s subsidiary, Airborne Global Solutions.


Just to add, this is 6 of the 12 Amazon aircraft announced that Amazon would lease.
 
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B350pilot
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 4:54 pm

jbs2886 wrote:
B350pilot wrote:
Press release issued today 09-09-2020 out of ATSG Group:

https://www.atsginc.com/investors/news- ... amazon-air

Air Transport Services Group, Inc. (Nasdaq: ATSG), the leading provider of medium wide-body aircraft leasing, air transportation and related services, today announced that ATSG will operate six more Boeing 767 freighters on behalf of Amazon Air under an existing CMI (Crew, Maintenance and Insurance) agreement with ATSG’s subsidiary, Airborne Global Solutions.


Just to add, this is 6 of the 12 Amazon aircraft announced that Amazon would lease.


I am curious what company will actually operate/fly these...
 
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Spacepope
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 5:00 pm

B350pilot wrote:
jbs2886 wrote:
B350pilot wrote:
Press release issued today 09-09-2020 out of ATSG Group:

https://www.atsginc.com/investors/news- ... amazon-air



Just to add, this is 6 of the 12 Amazon aircraft announced that Amazon would lease.


I am curious what company will actually operate/fly these...


I know who I'd guess if I were a betting man.

ABX does such a good job when they want to, but they shot their own balls off and I think Amazon is not gonna forget that anytime soon.
The last of the famous international playboys
 
ILNFlyer
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 8:31 pm

B350pilot wrote:
jbs2886 wrote:
B350pilot wrote:
Press release issued today 09-09-2020 out of ATSG Group:

https://www.atsginc.com/investors/news- ... amazon-air



Just to add, this is 6 of the 12 Amazon aircraft announced that Amazon would lease.


I am curious what company will actually operate/fly these...


ATI according to the release.

ATSG Airline to Operate Six More 767 Freighters for Amazon Air

"ATSG subsidiary Air Transport International will fly all six of the 767s to be added to the Amazon CMI agreement. "
 
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B350pilot
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 10:07 pm

ILNFlyer wrote:
B350pilot wrote:
jbs2886 wrote:

Just to add, this is 6 of the 12 Amazon aircraft announced that Amazon would lease.


I am curious what company will actually operate/fly these...


ATI according to the release.

ATSG Airline to Operate Six More 767 Freighters for Amazon Air

"ATSG subsidiary Air Transport International will fly all six of the 767s to be added to the Amazon CMI agreement. "


excellent, need glasses. did not see that
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 11:11 pm

So, in sum, here's where we are:

This is what we knew already:

ATI is presently flying all the 767-300s from Amazon lease agreements with CAM covering deliveries in the period prior to 2021. That includes the ex-ANA-Cargo aircraft now in paint, which should be delivered about 10/1/20. (ATI is also flying 2 767-300s that Amazon dry-leased from AAWW/Titan/Andromeda, and ABX of course flies 6 767-200s from the original agreement.)

Now, going forward, for the period starting in 2021, Amazon is taking delivery of 11 aircraft of a recent 12-aircraft lease with CAM. The first of the 12 was already put in service this year (2020), and ATI is operating that.

This is what's new:

In this press release, we learned that, in 2021, the first five aircraft to be delivered of the remaining 11 will be operated by ATI, and their operation has been added to the master CMI agreement.

That leaves undetermined who will operate the six aircraft that will be delivered later in 2021. It also leaves undetermined the operation of however-many 767-300s Amazon will convert itself for delivery in 2021. Right now, we're up to 3 for sure, one in TLV and two in LCQ. It stands to reason that the last remaining retired Westjet 763 will also go to Amazon. So that's as many as 10 aircraft undetermined as to operator -- or at least not-yet-firmly-contracted-for. It also tells us that the issue of who will operate the other aircraft really won't be an issue for at least six months from now as to the Amazon-owned aircraft, and 9-ish months as to the final six from CAM. That gives plenty of time for the winner to make a deal and start training crews, if it isn't ATI.
Last edited by wjcandee on Wed Sep 09, 2020 11:24 pm, edited 1 time in total.
 
USAirKid
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Re: Amazon Fleet Discussion - 2020

Wed Sep 09, 2020 11:22 pm

I’ve been thinking a bit about the debt offering and Amazon’s recent direct purchase and conversion of a 763. I wonder if they’ve considered negotiations of buying the planes that they’re leasing from CAM. It’s not unprecedented, it’s what they did with their office buildings in Seattle.

(The original portion of the current Amazon campus was built by Paul Allen’s company, Vulcan, leased to Amazon, then it was later sold to Amazon. The newer skyscrapers were built and owned by Amazon directly.)
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Thu Sep 10, 2020 12:04 am

N385AM, the most recent retired AA 767-300 to be purchased by CAM, is on its way from ILN to SNN/TLV tonight (9/9/20) for conversion.
 
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sunking737
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Re: Amazon Fleet Discussion - 2020

Thu Sep 10, 2020 12:56 am

Now I will throw a wrench into all of this, What are the chances of more 737-800F flying for Amazon?? Either with SCX, SOO, or both??
"Don't believe it unless its parked on the ramp, or printed in the schedule...SUBJECT TO CHANGE"

I'm a SUNDUCK......Worked for RC & SY @ MSP
 
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B350pilot
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Re: Amazon Fleet Discussion - 2020

Thu Sep 10, 2020 1:59 am

Maybe boring but I geek out on this stuff.

Has anyone realized that UPS WorldPort at SDF is reportedly 120 acres big, (link: https://pressroom.ups.com/pressroom/Con ... 566696-701)

and the proposed Amazon CVG facility will be 650+ acres big? (link: https://www.cvgairport.com/about/next/a ... mazonatcvg)

Kinda cool, and incredible it will be 5X the size of WorldPort.

gonna need some more airplanes to fill that place up....
 
wjcandee
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Re: Amazon Fleet Discussion - 2020

Thu Sep 10, 2020 3:04 am

Well, it looks like what will open next year at CVG will be an 800k sq ft building with 24 aircraft parking locations and an expectation to operate 32 aircraft from there. Five years from then, if they build out the whole thing (which I expect they will), then it becomes 100 spots and a 2.6mm sq ft facility (like 3 times the size of the initial building).

But Amazon within a month or two of today will be operating at least 68 aircraft under CMI contracts, including the 18 737s. So there will be a huge number still of bypass flights.

The UPS Worldport sortation center is currently 5.2 million square feet. So it's bigger, if I'm reading all this correctly. But that Amazon is planning within 6 years to have a building half the size of the Worldport is still pretty-incredible!

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