WILMINGTON – Wilmington-based Air Transport Services Group, Inc. announced this morning agreements with Amazon Fulfillment Services, Inc., an affiliate of Amazon.com, Inc., to operate an air cargo network to serve Amazon customers in the United States.
The announcement ends months of speculation about such a deal at the Wilmington Air Park, which is owned by the Clinton County Port Authority.
The number of additional local jobs during the five-year agreement is unclear at this point for the project that had been code-named “Aerosmith.”
“We expect that the aircraft assets and other resources we are providing in support of this Amazon network will continue to benefit the local and regional economy here in Ohio,” President and CEO of ATSG Joe Hete told the News Journal in a written statement. “The actual impacts on employment and regional investment will depend on Amazon’s plans.”
For its part, Amazon spokesperson Kelly Cheeseman wrote, “There’s still much that we’re evaluating in regards to our ground operations, strategy and location. What I can say is that these planes provide critical capacity expansion to support the growth of Prime in the United States and we are excited about ATSG being a great new provider for Amazon customers.”
Back in the saddle — again
It began with a trial network, referred to as “Project Aerosmith,” carried out in Wilmington in secret, and with the Wilmington Air Park’s history as the former site of DHL’s air freight business.
“Since last summer, we have been working closely with Amazon to demonstrate that a dedicated, fully customized air cargo network can be a strong supplement to existing transportation and distribution resources,” said Hete, in an ATSG press release announcing the deal. “We are excited to serve Amazon customers by providing additional air cargo capacity and logistics support to ensure great shipping speeds for customers.”
The commercial agreements will include: the leasing of 20 Boeing 767 freighter aircraft to Amazon Fulfillment Services Inc. by ATSG’s Cargo Aircraft Management (CAM); the operation of the aircraft by ATSG’s airlines, ABX Air and Air Transport International; and gateway and logistics services provided by ATSG’s LGSTX Services, according to a press release. The duration of the 20 leases will be five to seven years; the agreement covering operation of the aircraft will be for five years.
ATSG spokesperson Paul Cunningham said the trial network which began last summer employed 35 local people, and he said additional openings will be posted to the career pages for ATSG and its subsidiaries.
“We offer Earth’s largest selection, great prices and ultra-fast delivery promises to a growing group of Prime members and we’re excited to supplement our existing delivery network with a great new provider, ATSG, by adding 20 planes to 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 the release.
“The agreement between ATSG and Amazon is obviously exciting news for our largest air park tenant, one of our community’s largest employers through all of its businesses,” Clinton County Port Authority Executive Director Dan Evers told the News Journal. “Irrespective of where the flight operations ultimately take place, we believe it reinforces for us that Clinton County, the Wilmington Air Park and this entire region is populated with exceptional aviation technology enabled and logistics employers as well as the employees that make that happen.”
Evers said that the announced deal “makes a great collection of companies even stronger” but doesn’t “stipulate a location in which the flight operations take place,” leaving it unclear how the deal will benefit the air park and the port.
“I know we want to work with ATSG and Amazon and do everything we can to maximize opportunities and success for the companies as well as, ideally, then, opportunities for the community as a whole,” Evers said, adding he hopes the air park can play a central role in their operations.
Additionally, Evers said there’s opportunity for synergy with the announcement.
“Anything that is good for aviation-related development is good for more than one tenant out here,” he said. “ And that’s part of the port’s focus and the development teams’ focus to find and advance those opportunities.
“Investment often begets investment; activity often begets activity,” Evers continued. “We can point to that as market legitimacy. … (We can say) clearly, this is a place you can do business successfully.”
“This announcement means ATSG has done all the right things,” said Clinton County Business and Economic Development Director Bret Dixon. “We as a community supported them.”
Dixon said the Wilmington Air Park is in a competitive position because it can provide a full range of services from maintenance and repair, through AMES, ground operations, through LGSTX, and flight, through multiple companies all at one location through one parent company.
ATSG’s corporate offices are also in Wilmington.
Dixon said he hopes the 20 planes leased by Amazon will become frequent visitors of the Wilmington Air Park, increasing commercial activity there. That activity will spill over into the rest of the community, Dixon estimated, increasing home ownership rates and transforming the community.
Meanwhile, he said, “there’s a whole bunch of people who love sorting packages … who love the airline industry.” Those workers will be helped by the ATSG-Amazon deal.
However, Dixon also said it’s important for the community to focus on continuing to grow, adding that the community should try to be partners with business in order to further encourage it for the benefit of both.
“As long as we, as a community, remember who we are and become a community that embraces business, embraces low taxes for business and, more importantly, for residents, we continue to build upon being the best small community in the nation at one point,” Dixon said. “If we continue to do that, we can solidify our place in this.
“People are cautiously optimistic,” Dixon said. “That’s how things start – with optimism. … (The news) made me feel like this great big door of optimism opened up and all things are possible.”
Ohio Governor John Kasich, a candidate for U.S. president, also issued a statement, calling the announcement “terrific news.”
“Amazon’s announcement today is terrific news and confirms the strong relationship we have built with them over the past year to expand and invest in our state,” read Kasich’s prepared statement. “Their continued growth here is the perfect example of the way Ohio is now attracting businesses of the 21st century with a diversity of industries, technologies and career opportunities. Wilmington has seen an exciting economic revival over the past few years, and Amazon’s plans add an important new chapter to that success story.”
In conjunction with the commercial agreements, ATSG also has agreed to grant Amazon warrants to acquire, over a five-year period, up to 19.9 percent of ATSG’s common shares at $9.73 per share, based on the closing price of ATSG common shares on February 9, 2016.
Additional information about these agreements will be provided in a Form 8-K that ATSG expects to file with the U.S. Securities & Exchange Commission later this week.
ATSG provides aircraft leasing and air cargo transportation and related services to domestic and foreign air carriers and other companies that outsource their air cargo lift requirements.
The subsidiary companies under ATSG include ABX Air, Airborne Global Solutions, Air Transport International, Cargo Aircraft Management, Airborne Maintenance and Engineering Services and LGSTX Services.
To visit ATSG’s website, go to www.atsginc.com, where it and its subsidiaries’ career pages can be accessed.
Reach Nathan Kraatz at 937-382-2574, ext. 2510 or on Twitter @NathanKraatz.