Amazon (NASDAQ: AMZN) has placed two self-owned Boeing 767-300 freighter aircraft with Ontario-based Cargojet (TSX: CJT) as it continues to expand its air network. Cargojet announced Monday that the converted cargo aircraft will enter service in Canada by midyear under a four-year contract, with three successive two-year renewal options.
The new contract expands Cargojet’s existing arrangement with Amazon Canada Fulfillment Services to provide express delivery services within Canada.
E-commerce sales are surging in Canada, just as they are south of the border. Retail revenue from online sales in Canada is expected to grow from $25.3 billion in 2019 to $33 billion by 2024, according to Statista.
Amazon recently purchased 11 B767-300 aircraft — seven from Delta Air Lines (NYSE: DAL) and four from Canadian carrier WestJet — marking the first time it has taken direct ownership of air assets, rather than leasing them, in the five years since launching Amazon Air as a way to ensure two-day and next-day delivery commitments for Prime customers. The two aircraft assigned to Cargojet come from that tranche of passenger aircraft and are among the first to be retrofitted with cargo doors, reinforced flooring and other necessities for dedicated cargo operation.
Last month, Amazon awarded a contract to another transportation contractor, Air Transport International (ATI), a subsidiary of Air Transport Services Group (NASDAQ: ATSG), to fly the first self-owned all-cargo aircraft.
Cargojet operates a fleet of 27 aircraft for Amazon, DHL and international charter customers.
Amazon Air’s flight activity in North America increased a modest 4% in March from February, according to an analysis of daily flight data by Susquehanna Financial Group. The investment group said Amazon’s contract carriers — Atlas Air (NASDAQ: AAWW), Southern Air, ATI, ABX Air and Sun Country (NASDAQ: SNCY) — flew about 4,200 flights in March, or 137 per day, with an active fleet of 66 aircraft. Including flights in Europe operated by ASL Airlines, Amazon Air conducted 4,400 flights, or 143 per day.
Amazon has previously provided figures that it has more than 70 aircraft in its active fleet and expects to have at least 80 in service by the end of the year.
Amazon is scheduled to open its $1.5 billion North American hub at Cincinnati/Northern Kentucky International Airport in September.
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